David Havyatt
September 2, 2015

NBN to underpin GDP growth

NBN to underpin GDP growth

Tony Abbott: asked whether we need to spend $50b of taxpayers funds on a “video entertainment system”

New research to be published today concludes that the NBN will result in a 1.8 per cent increase in Australia’s GDP by the mid-2020s.

The research paper is a partial summary of a study undertaken in the Centre for Energy-Efficient Telecommunications (CEET) at the University of Melbourne. It uses the computable, general equilibrium model of the Australian economy called ‘The Enormous Regional Model’ (TERM), developed by the Centre of Policy Studies based at Victoria University to model the impact of six broadband-enabled service categories.

These were cloud computing, electronic commerce, online higher education, telehealth, teleworking and entertainment services.

The study assumed the final mix of technologies and costs that were outlined in the NBN Strategic Review. The Corporate Plan released last week made some variations, but a quick analysis doesn’t suggest there would be a need to revise down the benefits as a consequence.

The significance of the ability to increase GDP by 2 per cent can be seen in the context of the outcomes of the G20 meeting held in Brisbane last year. Joe Hockey’s objective going in, for which success was claimed, was a plan to lift global GDP by 2 per cent by 2018. The NBN is a plan to do that again for Australia over the following period.

For Tony Abbott, who once asked whether we need to spend $50B of taxpayers funds on a “video entertainment system”, the news from the study is that entertainment services alone wouldn’t justify the investment.

The CEET study concluded that the biggest contributions to growth come from telehealth and teleworking.

It is perhaps unfortunate then that the Prime Minister, in those same remarks, dismissed telework and the impact it could make on roads funding. There is plenty of analysis on the impact that teleworking can have. National Telework weeks were conducted in 2012 and 2013, with strong industry support, to promote telework. It appears that National Telework week has since been abandoned.

The benefits of telehealth are also well documented, including the analysis by the ABC’s Nick Ross who suggested the entire cost of the NBN could be covered from the telehealth impact.

Malcolm Turnbull’s greatest achievement for the Coalition was to move their position from “we don’t need the NBN” to “we can do the NBN better.” Indeed a large part of his sales pitch was that he could deliver the undoubted benefits sooner than Labor.

But a critical question is whether the benefits automatically flow as a consequence of building the infrastructure, or whether more has to be done as well. Even if the benefits will flow, can Government action make the benefits occur faster, or have more impact?

That was the intent of Labor’s National Digital Economy Strategy and the 2013 update Advancing Australia as a Digital Economy.

The latter of these included a table of 34 digital productivity initiatives and 24 actions, with updates on each provided in response to questions on notice at Senate Estimates hearings last year. The 34 digital productivity initiatives included 10 that were directly health or aged care related and a further three that related to education for the healthcare workforce.

Two of the 34 initiatives have not yet been completed. The Department of Communications has advised that it is looking at the findings from the evaluations of the digital economy initiatives individually and as a whole. As two initiatives are still in progress, the government has not made a decision on the release of the findings.

These evaluations of these projects will be useful in identifying how the telehealth opportunities made available by broadband can be realised.

The 24 actions listed in Advancing Australia as a Digital Economy included this evaluation of the telehealth initiatives and the conduct of Telework Week.

It also included programs subsequently adopted by the Coalition Government on Employee Share Schemes and crowd-sourced equity funding.

The Digital First initiative was replaced by the workstream created by the Digital Transformation Office. The announcement of the DTO didn’t specify a target date equivalent to the 2016 date in the Digital First commitment.

The Coalition’s Digital Economy policy, released in September 2013 under the heading “Innovation and the digital economy isn’t just about broadband”, noted “A more digital, networked economy is about far more than broadband. It is about tumultuous change in workplaces – and the skills and capabilities individuals and firms need to succeed.”

Public servants will tell you that they are quite inured by reports of the kind of the CEET study. Everyone walking in the doors has some study extolling how much the economy will benefit if only their particular project is funded.

They possibly only have themselves to blame, having supported over time the suggestion that rigorous cost benefit analysis should accompany policy development. The challenge, as always with policy, is that even the most rigorous analysis still involves making predictions about the future.

The value of the CEET study isn’t the precision with which it may or may not accurately measure the size of the prize; it is in reminding us that there is a prize and the areas where we might most productively focus our efforts.

Despite the fact that he was commenting on the takeover of NICTA by the CSIRO as a consequence of savage budget cuts, Malcolm Turnbull still sounds like he believes in the prospects of innovation and the digital economy, saying, “Having a single national organisation will enable Data61 to produce focussed research that will deliver strong economic returns and ensure that Australia remains at the forefront of digital innovation.”

The Coalition Digital Economy policy committed the Government to release an updated National Digital Economy Strategy during its first term.

It committed to a greater focus on presenting an integrated view across the different tiers of government, with a view to ensuring digital policies and programs at national and State or Territory level complement rather than duplicate each other and a much clearer commitment to leveraging public sector ICT to lead by example.

The CEET report makes it clear that is an admirable goal, and that emphasis should be given to programs that support telehealth and telework.

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