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News, Telecommunications - Written by Renai LeMay on Thursday, November 1, 2012 11:40 - 125 Comments
Market better to deliver broadband, says Abbott
news Tony Abbott this week said the private sector could deliver broadband cheaper and more swiftly than the Government’s National Broadband Network project, in comments which Communications Minister Stephen Conroy said illustrated a growing divide between the Opposition Leader and Shadow Communications Minister Malcolm Turnbull.
According to Turnbull, the Coalition’s current broadband policy focuses on immediately commissioning the Productivity Commission to conduct a cost/benefit analysis into how best to pursue the nation’s broadband needs, and then likely changing the NBN model to pursue a fibre to the node, instead of fibre to the home strategy. The Coalition would also likely continue the current policy of using wireless and satellite technologies to serve rural and regional areas, pursue the separation of Telstra’s wholesale and retail operations, and maintain the HFC cable networks operated by Telstra and Optus.
However, in an opinionated article published in the Financial Review newspaper this week with respect to the Federal Budget, Abbott appeared to reject parts of that model. “Government spending will come down because we will end Labor’s waste, we won’t throw good money after bad on the NBN when faster broadband can more affordably and more swiftly be delivered through a competitive market,” the Opposition Leader wrote.
The comments appear to refer more to the broadband policy which the Coalition took to the 2010 Federal Election, which focused on incentivising the telecommunications market to deliver broadband outcomes, rather than Turnbull’s approach, which, like Labor’s, would feature dramatic government intervention in the sector.
Abbott’s comments reflect the second time over the past several weeks that Abbott has appeared to make a statement contracting Turnbull’s position on an issue. Several weeks ago, for example, Abbott said a Coalition Government would “pause” the Federal Government’s NBN project and save money in the Federal Budget by doing so. “Now, if we can get our borders under control, if we can pause with unnecessary white elephants such as the National Broadband Network, I am confident that we can make the savings that will be needed to give the forgotten families of Australia the cost of living relief that they deserve,” he said.
Abbott’s comments appeared to refer to the persistent Coalition idea that the tens of billions of dollars the Federal Government is investing in its NBN project should be classified as an expense under the Federal Budget; an expense which could be cut to and re-allocated to other projects. However, the Coalition is believed to have been factually incorrect in its claims that the NBN funding should be included on the Federal Budget as an expense and could thus be cut to save money. Most of the funding for the NBN does not appear in the Budget, as, according to accounting standards, it is not an expense as generally understood, but is actually an investment expected to generate (according to its corporate plan) a modest return of 7.1 percent on the Government’s investment, over the period through to 2030.
According to a research note published last year by the Parliamentary Library of Australia, Labor is technically correct on this matter, and the Coalition is wrong. “Australia has adopted internationally accepted accounting standards, and these are applied in the budget treatment of the NBN,” the library’s Brian Dalzell, who works in its economics division, wrote in the report.
Turnbull has over the past several years made a number of similar statements. However, in early September, facing substantial criticism on the issue from the Government and industry commentators, in a small note published at the end of a lengthy response to a critique of the Coalition’s rival NBN policy by Business Spectator, Turnbull appeared to acknowledge the correctness of the NBN budget treatment — a position which would be the reverse of the one Abbott appeared to take today.
“Under the accounting rules the expenditure on the NBN does not count towards the budget outcome – so much deficit or surplus – but it is cash – real money – nonetheless and it does add to the debt burden of Australians,” Turnbull said at the time.
Abbott’s comments come as the Opposition Leader continues to appear to take a dissimilar view of telecommunications policy than Turnbull. In general, Abbott’s views on the NBN over the past several years have focused around cancelling or dramatically winding back the project. In comparison, Turnbull’s comments on the matter have increasingly focused on changing the technology used in the project — moving to a fibre to the node rollout, instead of Labor’s more ambitious fibre to the home plan — while still using much of the current structure of the current NBN project.
For example, in June news Turnbull gave what he described as a “solemn undertaking” to the Australian people that a Coalition Government would “complete the job of NBN Co”, instead of ripping up the network or abandoning Labor’s NBN policy altogether. This appears to have led to concerns by some Coalition backbenchers that Turnbull’s approach is too similar to that of Labor.
In a statement released this morning, Communications Minister Stephen Conroy said it was Abbott, rather than Turnbull, who “calls the shots” on Coalition broadband policy. “Over the last ten months, the Opposition Spokesman, Mr Turnbull, has delivered 20 speeches, issued 36 media releases, and sent 1,341 tweets, but still has not released a broadband policy,” Conroy said. “While Mr Turnbull professes a commitment to fast broadband, Tony Abbott does not. While Mr Turnbull has now acknowledged that the investment in the NBN is not part of the budget expenditure, Tony Abbott does not. While Mr Turnbull has said the Coalition will roll out a broadband network, Tony Abbott does not support him.”
“In just the last two weeks Mr Abbott has again labelled the NBN an ‘unnecessary white elephant’; he has said that he would ‘pause’ the NBN to make budget savings; and he has stated that he will simply rely on the ‘competitive market’. It is time Mr Turnbull cleared up the confusion by admitting the Coalition will not build the NBN and that everything he has said for the last year is a sham.”
It is perhaps true that journalists such as yours truly and Conroy himself are making a mountain out of a molehill here in alleging that there is a gulf between Abbott and Turnbull when it comes to broadband policy. I don’t think Abbott is actively attempting to sabotage Turnbull or to illustrate a policy difference between them. Personally, I think it is just that Abbott does not fundamentally understand broadband policy in general, and the personal differences between former Opposition Leader Turnbull and the man who ousted him several years ago are too great for them to work closely enough on common messaging in this area and on Abbott’s education.
There is, of course, no love lost between Abbott and Turnbull. If Abbott falls, many expect that Turnbull will be one of the leading candidates to take the Coalition’s reins once again (or could it be Shadow Treasurer Joe Hockey, who has also demonstrated a poor understanding of broadband?). And they also come from fundamentally different political backgrounds; Turnbull being a liberalist in the traditional sense of the word, and Abbott being an arch-conservative; and a religious one.
However, Conroy’s also fundamentally right. Turnbull has not yet actually delivered a formal Coalition broadband policy; all we have to go by right now are speeches, tweets, press releases and blogs. We don’t know whether Turnbull has taken such a policy to the Shadow Cabinet for approval; but one suspects that he has not, given Abbott’s poor understanding of the policy dynamic in the portfolio.
Liberal Party research showed after the 2010 Federal Election that poor broadband policy was a key reason it didn’t win government. One can only hope, for the Coalition’s sake, that it does not make the same mistake twice. Of course, one must also realise that if Labor does retain power in the next Federal Election, that Labor’s NBN project would proceed. At this stage, in the absence of a better policy, this is an objectively good thing. 100Mbps broadband to almost every residence and business premise in Australia? Labor’s NBN policy has its own flaws. But underlying it is the prospect of a massive improvement in basic service delivery; and that’s something we should all be able to agree on.
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