blog Those of us who’ve been following the NBN debate for a while will remember that it wasn’t always the case that the National Broadband Network Company had been failing to meet its targets. If we go back a few years, there was an incredible sense of optimism about the project. The pitch for the NBN was always an easy one — it was a visionary project to provide a massive broadband service delivery boost to all Australians, stimulating investment in the IT sector and knowledge-based industries along the way, and forever dealing with the vertically integrated nature of Telstra. Of course, the rollout of the NBN has been delayed. As Informa senior analyst Tony Brown argues in the Sydney Morning Herald today (we recommend click here for the full article), it was precisely these delays which opened the door for the Coalition to argue for an alternative model:
“We all know the reasons for the failure to meet that original target … but what if NBN Co. had been able to hit that original plan, where would we be now? We will never know the answer to that question but it seems likely that Turnbull and the Coalition would be in huge trouble on the NBN and would have little choice but to cave in and broadly support the ALP’s version of the network.”
I argued along similar lines in April this year, when I examined the Coalition’s rival policy. At the time, I wrote:
You can argue the reasons for the current situation with the NBN forever — and God knows it’s always going to be a hot issue amongst the Australian public. You can argue that it was reasonable for the rollout of the NBN to be delayed because of NBN Co’s need to achieve a satisfactory outcome from its extremely complex negotiations with Telstra. You can argue that it was reasonable for the NBN to be delayed because the scope of its responsibilities was changed substantially as it took on responsibility for greenfields developments. You can argue that its latest three month rollout delay was reasonable, because it’s only a small, almost expected blip in a ten-year project. You can argue that its ongoing issues with its construction partners should also have been expected in a project of this magnitude. And in fact, I have argued for all of these concept.
However, what you can’t argue with is the fact that the current Labor Federal Government has been in power long enough — almost six years, by the time the September election rolls around — that it should have been able to complete enough work on its NBN project to make it irrevocable at this time.
In Australia’s Federal political system, it can be reasonably predicted that when a new government takes power after a long period in opposition, such as happened when Kevin Rudd took the reins from John Howard in 2007, that that new government will have at least two terms to implement its policies. The Australian electorate is willing to give politicians that chance to show us what they’re made of.
If I can put it this bluntly, Labor has had its chance to demonstrate that it can deliver on national broadband policy, and it has flubbed it. Realistically, if you can’t do more than finish deploying a couple of hundred thousand premises with fibre in six years in office, there is no reason for the electorate to give you another three years to rectify your mistakes.
At the moment, it is looking increasingly like Labor is going to lose the election and that Australia will be facing a Tony Abbott-led Government for at least the next three years, very likely with Malcolm Turnbull as Communications Minister. I’m on record as strongly supporting Labor’s NBN policy; on every front it’s a better policy than the Coalition’s alternative. However, there is policy and there is delivery, and when it comes to the NBN, at least, most people would have to agree that the very reason we are even debating which policy is better right now is that Labor tragically didn’t take the six years it had to lock in the NBN and make its FTTP model irrevocable.
Perhaps that should be a lesson for other politicians and political parties out there interested in the technology sector: Policy is nice, but delivering on policy is also important. Labor’s NBN is a very good policy. But right now, two terms after Labor took power in 2007, very few of us actually have better broadband as a result of it. The Coalition has taken a giant bet over the past several years opposing the NBN, given how popular the policy is with the electorate. In this portfolio, at least, it looks like that bet has paid off. Of course, one does wonder whether we’ll be having this same national debate all over again in a decade or so … when it becomes apparent that fibre to the node is just not good enough for the long term ;)
Image credit: NBN Co
I think the lack of rollout progress, for whatever reason, has made it easier for the Liberals to attack the NBN. I don’t think it is the cause, or that they would do anything different if it was on track.
The attacks started from day one, before there was any progress to measure, and whether the rollout was on track or not would not make a bit of difference. For example, how many times have Pink Batts and BER been mentioned as though they were total disasters, when infact they were not too bad at all, just another target for the Libs and their MSM mouth piece to attack.
A disagree that the Libs alternate policy is a response to the slow rollout. No matter what they couldn’t offer they same, it’s not in their nature to admit anything Labor does is in any way good. Based on following this for 6-7 years my feeling is they just had to offer an alternative, it would cost them too many votes not too. The policy, and its lack of much detail (I know, better than any other policy for detail, but they are trying to replace a work in progress and claiming cheaper/faster, etc) was just something they had to have to address the need for a policy, and what is in the policy, if the policy is achievable, if they can get the initial stage rolled out by 2016, if it is sufficient for needs for a reasonable, are all to them unimportant. It’s a policy to not lose votes. They will just sort out what they can do, or if they actually do anything, if they win.
Yep. Remember Hockey and company’s “off budget” antics?
The irony of the whole thing is that if Labor hadn’t pushed NBNCo, there would be much less criticism and possibility for criticism if the targets were lower originally. We might not be any further along, but it would be considerably harder for the Coalition to be criticising if they’d met targets.
My concern is now, will we have the same debate in 3 years time if the Coalition win and FTTN hasn’t gotten along very far and start all over again because of poor timeframing? And take another 10 years to cover the country properly….10 years after it should’ve started.
Absolutely. If the ALP had attempted little; if they’d set themselves low targets, or if they’d never tried at all, then we wouldn’t be having these conversations. We wouldn’t have to put up with the braying of a government that tries to spin delays of months (not years) into narratives of catastrophe and incompetence.
If the ALP is supposed to be incompetent at large-scale, big impact projects, what counter-example can the Coalition give? What example of their own superb project-management skills can they offer?
NONE, is of course the answer. They never tried, and so held themselves smugly immune from the possible accusation of incompetence or failure. Small ambitions make for minor achievements.
Joint Strike Fighter program?
But if conservatives were naturally gifted with superior inherent abilities we would see the State governments demonstrating their canny management skills.
When you hold a politician by the ankles and shake them down, they all squeal the same.
If the Coalition can propose Buy the Boats as a “credible” policy, there is no assuming what they would say about the NBN no matter how it had unfolded.
“If the Coalition can propose Buy the Boats as a “credible” policy, there is no assuming what they would say about the NBN no matter how it had unfolded.”
From a humanitarian viewpoint “buy the boats” is a great idea.
Instead of risking their lives sailing to Australia in old leaky fishing boats, they will be able to sail to Australia in the brand new fishing boats they bought with the money they got for the old boats.
Brand new boats for people smugglers, but old dodgy copper for NBN.
+100
Yes well…
In that case, let this be a lesson for all future governments…trying to be visionary and actually do something for “us” instead of bending us over, is futile (we apparently preferred to be bent over)…
Because if you do try to achieve something actually advantageous for us and our kids, we will be too fucking stupid to recognise it and we will whinge, whine and complain (not just at the stuff we should, but everything).
So my advice to Mr Abbott if/when he is elected. Tony, to be electorally safe you are best to not rock the boats (pun intended) just sit on your hands, do SFA and let nature take it’s course.
I believe that is the very definition of Liberal party policy, so I’m sure they can be trusted to hold the line ;-)
Because if you do try to achieve something actually advantageous for us and our kids, we will be too fucking stupid to recognise it and we will whinge, whine and complain (not just at the stuff we should, but everything).
In my 50+ years on this planet I’ve learnt that politics isn’t about “achieve[ing] something actually advantageous for us and our kids”, it’s about standing blindly for “what you believe in” ;o)
Fight the fights you can win Alex, the NBN has passed beyond the imagination of the Australian pubic apparently, it doesn’t mean we have to be happy about it, but sooner or later you have to accept that “the people” are willing to do things that obviously aren’t in their interest because it’s time for a change.
I’d still like to see the ALP get one more term before they get booted just so it cements the NBN (yes, I really do think it’s that important, even if I do get 104Mbps from my latest Speedtest.net ;o)), and as a realist, I don’t think Labor has been anywhere near as bad as what’s been made out (though they could really put a fire under NBN Co).
/shrug Such is life. I hope otherwise, but “the polls” tell me I’m wrong…
+1
I agree that Renai’s conclusion about the Coalition policy is probably inaccurate (there’s no way the current raft of LNP politicians would back Labor policy on this), but I do agree that if NBN targets had been met the LNP would be having a really hard time selling their alternative (and their party’s chances at the election). It’s just too easy for Liberal leaning voters to dismiss Labor as effective Government because, no matter how much the LNP may have lied and mislead the public on the NBN debate, the fact remains NBN Co have missed targets and fallen behind. Perhaps to an acceptable level for those if us who understand the scope and scale, but it’s no revelation that most people won’t understand or appreciate the complexities of managing and deploying a project of this scale, nor will they care.
Labor missed a trick letting the NBN miss targets – they needed to either allocate sufficient funds to overprovision the first stages of the rollout, or ensure the original targets were more conservative so they could actually be met. In fact, if they’d been overly conservative and we’re now exceeding all rollout targets, it would be difficult to find detractors of any stripe.
Except that, of course, you’d have the final build blowing out to the middle of next decade, which could have lost them the last election instead. Damned if you do, damned if you don’t. The thing is, though, that most people with a good understanding of the issue won’t be voting for a party that’s committed to ruining it; that will fall to those who don’t know or care to know. Could you actually please these people, anyway? Maybe not.
Maybe this (as with most) election will be a result of the ‘swinging voter minority’. I’d say there’s a strong argument that their vote could have been swayed by a successful NBN deployment project. Regardless of whether Labor could have controlled things better or not, this was still likely to be a pivotal issue upon which this election will be decided.
The best strategy for Labor in 2007 would have been to get their act together from day one, not bask in glory until the GFC and throw money at dumbass projects and handouts to pretend they are doing something.
On election in 2007 what should have happened was an initial structural separation of Telstra into 2 entities one retail and the other wholesale and their shareholdings separated.
Then a Government infrastructure upgrade program with new wholesale arm of Telstra subsidised by Government to the tune of $1500 per premises connected to Fibre to the Node and VDSL, $2500 for each premises connected to Fibre to the premises. This would mean a maximum cost of $30Bd to the government and leaving a “private company and network owner to design and build the whole shebang”. A large majority of the work would have already been done and the coalition would have had to have moved foreword, also it would have fitted with their private enterprise model and privatisation of Telstra.
The government then could have used the NBN as it’s GFC response instead of the other dumbass projects that weren’t ever going to be vote winners. Gillard must have been mental to believe that a scheme like BER was a goer as too little was being allocated to projects of real educational need because it was spread around too many electorates for political purposes. It would have been much better to have given to State Governments to spend on getting rid of demountables and improving heating.
+100
You’re +100ing something that makes absolutely no sense. Good job.
And you just got banned from Delimiter for posting several comments today attacking me personally. Good job.
Kevin…
IMO, that’s what was ‘primarily’ planned to occur, via the RFP’s.
The RFP’s was set up to look transparent, competitive etc, but also set up for Telstra to obviously win, IMO. But Sol’s Telstra submitted a non-compliant bid (*sigh*)… coincidence that no one else won?
@Kevin Cobley
On election in 2007 what should have happened was an initial structural separation of Telstra into 2 entities one retail and the other wholesale and their shareholdings separated.
How? The NBN was what was required to do that. Otherwise it would’ve required a buyout of the copper which, at the time, would’ve amounted to $15-20 billion.
The government then could have used the NBN as it’s GFC response instead of the other dumbass projects that weren’t ever going to be vote winners.
BER, HIP and Stimulus payments were all proven to be highly effective with only single % points of wastage in all reports. It boosted the construction sector, a sector that is the 4th largest in Australia with almost 1 million jobs and has a GDP affect near 8%. Not to mention the added advantage schools got out of it- yes, there were some schools that didn’t get what they wanted- it was a fast reaction package that was always going to have wastages The NBN, even if it had been started in 2008, would only be around halfway through now, maximum and only indirectly attributed perhaps 1% total to GDP over 6 years. The HIP, BER and Stimulus payments were are instantaneous reaction to an instantaneous problem. The NBN is national infrastructure built for decades, not for stimulus. You cannot compare the 2. Trying to build the NBN for “stimulus” would’ve been a monumental failure.
It would have been much better to have given to State Governments to spend on getting rid of demountables and improving heating.
That would’ve defeated the purpose of the Stimulus spending- it would’ve taken even longer for the money to make its’ way into the economy handing it to State governments and allowing more red tape to tangle the funds up. It might’ve had less wastage, but would’ve missed its’ purpose- preventing a recession. Also, that wasn’t Gillard. That was Rudd.
Look, the NBN hasn’t been handled anywhere near as well as it should have been. As a result, we’re probably going to end up with a far far far from optimal national network. However, comparing it to the stimulus packages which were and were proven to be, by numerous government and independent reviews, successful in their purpose of stimulating the economy to keep it out of recession. Trying to say the NBN could’ve done the same job frankly shows a complete misunderstanding of the point of those policies and the NBN.
Great to see some sense being brought to bear, Seven_tech. Unfortunately the fact that Renai, with all he knows about the topic, can ‘+100’ a comment as misguided and ignorant as Kevin’s speaks volumes for perceptions within the public.
Look, I know most people aren’t economists, but have you been paying any attention? Do you all have the memory of a goldfish? Have you even noticed the ongoing stories of a third Greek bailout? Do you not remember the billion dollar financial industry bailouts that occurred around the world; at least in the USA and UK? The federal government here did an exceptional job, reacting quickly and appropriately. I’m not going to waste time on that argument again – the negative perception of the public towards the government despite their excellent fiscal management when the country was in crisis is another PR failure from a party that clearly has communications problems, and those are proving to be their undoing.
I think the public has a handle on what Labor ‘fiscal management’ is all about.
In the May Budget the deficit was predicted to be $18b, two months out from that prediction the deficit has jumped to $30.1b for 2013-2014, with a revenue write down of $33b over the next four years.
@Fibroid
In the May Budget the deficit was predicted to be $18b, two months out from that prediction the deficit has jumped to $30.1b for 2013-2014, with a revenue write down of $33b over the next four years.
This is the only thing I’m gonna post about this, because it’s off-topic and you shouldn’t have even brought it up, but I’ve got news for you- that was Treasury that predicted that. The same Treasury that will be doing so under the Coalition. It is widely known the forward revenues took a hit because of the mining boom drop off. You’re blaming Labor for estimates that weren’t theirs to make.
I see so the actual political party in power is not responsible for anything, it’s always someone else’s fault figures that are wrong.
The problem is seven_tech you don’t vote for a Treasury department, or a DBCDE or a NBN Co etc on polling day, if the figures are wrong it as seen as Labor got the figures wrong and the vote maybe influenced accordingly, that’s how being responsible as the Minister of a portfolio works.
@Fibroid
You’re putting words in my mouth. When did I say Labor weren’t responsible for anything to do with government? I said they’re not responsible for predicting revenues & expenditure in the Budget. They’re responsible for managing those numbers so one stays lower than the other due to some influences within their control and some without.
The problem is Fibroid, you want to blame all of the current problems we have- financial, NBN, Asylum, Education ranking, etc. Etc.- all on this Labor government from what I can see.
I don’t think this government have done the best job. I think they’ve done a reasonable job of the economy under pressure outside their control. So do a lot of economic analysts. Does that mean they couldn’t do better? Nope. Does that mean everything they’ve done or tried, was right? Nope (Data retention and filter anyone?….)
What I do believe is that there has been a concerted effort to make this government look a lot worse than they are. And the government being hopeless at communicating otherwise. Have a look at last night’s MediaWatch.
I also believe the documented ways a possible incoming Coalition are going to ‘fix’ what’s wrong, are reckless and in a lot of cases, stupid. Does that mean I believe some of the things Labor are suggesting aren’t? Nope (Asylum Seekers, Aust. car industry funding etc.).
You need to stop trying to brush off what you decree to be bias without analysing what I and other people say. I’m unlikely to vote for either major party in the election, but I will vote along the policies I feel are important, like the NBN. That is not an automatic assumption I agree with everything Labor do so please stop trying to suggest it is.
Excellent posts Seven_Tech
One point I would like to make from the original post is that at the time of the GFC it was simply not possible to commit manpower to the NBN without paying very high wages because we still had the peak of the mining investment in play.
Arguably the next few years are the perfect time to be doing a major infrastructure program like the NBN. Mining companies have pulled about $100B of investment and reports are that contractors are working for about 25% less than they were a year ago. All of this while bond rates are very low. By the time the NBN is done, bond rates should be on the up again and by then it would be producing its full cashflow.
http://data.worldbank.org/country/australia
http://www.rba.gov.au/chart-pack/pdf/chart-pack.pdf
http://www.oecdbetterlifeindex.org/countries/australia/
http://www.imf.org/external/datamapper/
http://www.imf.org/external/pubs/ft/scr/2012/cr12308.pdf
All in all Australia is pretty good in relation to the rest of the world. Doesn’t mean we can sit pretty. There are still risks and the global financial situation affects us. The mining boom is over, and that has been one of Australia’s largest investment areas since 2004 ish, coincidentally about the same time as our Manufacturing sector started a dive into the abyss.
Looking at these details, I don’t think you can blame Labor completely for our woes, indeed it appears they have done well to keep us in such a good position. The loss in manufacturing areas is the big concern. Even when our dollar was low, it appears manufacturing was crashing, probably due partly to lack of govt support in the Howard years, and the addition of Mining boom taking investment dollars.
But I am just a Layman. Look at the figures yourself. Its all there. And from several different sources.
Where are you getting those numbers from? Revenue projections come from Treasury and Finance, and the latest figures from them expect a deficit in the range of $21b this financial year, $18b next.
Whoever is leading the Government has little to nothing to do with revenue projections, and a little less with revenue writedowns. They plan based around what Treasury and Finance tell them, and when those departments get it wrong, its their fault, not the Governments.
Think I’m wrong, back your statement up. I can back mine up quite easily.
The numbers came from the Treasurer Chris Bowen in his pre-election economic statement.
‘Treasurer Chris Bowen has revealed a $33.3 billion black hole over the forward estimates in today’s pre-election economic statement, with the budget deficit to hit $30.1 billion in the current financial year’
http://www.businessspectator.com.au/news/2013/8/2/federal-budget/budget-deficit-blowout-tip-30bn
Thanks. Comments from Treasury and Finance in their Pre-election Economic and Fiscal Outlook report, dated August 13, say otherwise.
http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/PEFO-2013
Appendix A, page 5, and its those departments that make the revenue predictions, not the Government in power, so I’m inclined to believe them at this moment. As a side note, take account of where they predict total revenue to be over the next few years, and try to remember that when the Coalition starts showing deficits.
Keep an eye on the spending amounts, and take another look when the Lib’s get in.
It cuts both ways is the point – the Government is at the mercey of these departments best guesses. Hockeynomics though seems based around stating over and over that they are lieing, and their numbers arent to be trusted, so where are they sourcing their figures from?
TrevorX,
The best reponse to the effectiveness of government stimulus is that the treasury found that there was no correlation between a stimulus package and increased economic growth in that country.
If we look across the tasman sea to our closest neighbour, they did not have a mining boom, but they did have a couple earthquakes instead and they have still managed to return to surplus ahead of us with better economic performance. That is because after the GFC all new expenditure had to be offeset by cuts elsewhere to the budget. [Not “saves” as Wayne Swan likes to refer to new taxes]
By the treasury’s own figures the stimulus package had an economic multiplier of 0.6 on the economy when Keynesian economics states that it has to be greater than 1. Which implies that there have been many other factors at work with international exposure playing a much larger effect than domestic forces.
@Michael
And yet, practically every analyst and economic academic said without it, we’d be in considerably worse shape…
And how many of these analysts were saying that CDO’s were good investments up until 2007?
Everyone said that all the banks HAD to be bailed out, but the only country that did not do it recovered in record time, i.e. Iceland.
It is not a black and white proposition, the first stimulus package was fairly well targeted and on time (apart from a few cheques to dead people ^^). It is the second one that is controversial and which most people refer to when they said it should have been stopped or wound back.
Remember Seven_Tech, there are just as many who question the size, timing or application of the stimulus as those who completely support, if not more.
Michael
Whilst this thread is tending off topic, I do think that it still has relevance to the whole entwined NBN/Labors competence debate
http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-what-actually-did-save-australia/
http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-the-pink-batts/
http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-all-these-lies/
http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-this-debt-nonsense/
At least read the articles and verify the information and evidence
This is an evidence based forum
I get frustrated when parrots regurgitate falsehoods as facts
In relation to NBN delays, to a large degree Telstra has been in control and regulated the rollout for whatever their purpose may be (Remediation and asbestos), maybe incompetence or their contracted role was too much for their volume project management capability, which had a serious deleterious effect on the the contractors, subbies and the NBN rollout
Abel, without wanting to go to much further off track as Seven_tech has pointed out we are delving too deeply into economics.
I do agree facts are important. I did briefly look into your links. As far as your website’s view on the GFC and the stimulus package, it strongly pushes the view that the stimulus is responsible for avoiding the recession, when our treasury tried to correlate that relationship it found no correlation between countries stimulus packages and increased economic growth. The treasury analysis also looks at the size of the package which punctures Independant Australia’s key argument that it was the size of our stimulus package that saved us instead of a combination of factors.
But my view is if the budget was in a better position, then infrastructure and debt would be much more acceptable to the public.
@Michael
This is far too far off-topic now.
Suffice to say, I have never said nor thought all the stimulus spending was necessary. But the first package payments, BER and HIP were and achieved real outcomes, measurable and quantifiable. The second payments should’ve been targeted better and I acknowledge freely it was a high proportion of wastage for results in that package. But that is to be expected when a government needs to respond to the worse economic crisis in 75 years ASAP. Wastage is unwanted, but a usual side-effect. It was better than the alternative. And ignoring that the rest of the package was. by and large, extremely successful is simply disingenuous.
> And yet, practically every analyst and economic academic said without it, we’d be in considerably worse shape…
The part of a broader global economic debate about the effects of austerity measures, stimulus, etc. during economic downturn is still up in the air. When it comes specifically to Australia, the early academic research and reports supported the 2010 government paper claims because there was no other data.
Private research was predominantly crediting the resources surge for saving Australia from recession. But since 2011, there has been a flood of new research, to add to the previous private research, that all concludes the stimulus was not responsible for saving Australia from recession. In fact the most recent papers argue that the stimulus damaged the Australian economy through higher interest rates and the dollar:
Tony Makin, Griffith University:
Makin, A 2010, ‘Did Fiscal Stimulus Counter Recession? Evidence from the National Accounts’, Agenda, vol. 17, no. 2, pp. 5-16.
http://equella.rcs.griffith.edu.au/research/file/055c468c-8ef7-9a9e-7ec2-bd76df858ae5/1/2010-08-did-fiscal-stimulus-counter-recession-evidence-from-the-national-accounts.pdf
“In the long run, the multiplier is dead”
http://epress.anu.edu.au/apps/bookworm/view/Agenda,+Volume+18,+Number+1,+2011/6681/guest_makin.xhtml
“Australian Government Failure and the Green Loans program”:
http://www.tandfonline.com/doi/abs/10.1080/01900692.2011.635464#.UhxtDBZemZc
extract:
> Since the 2007 federal election, the Australian government has implemented numerous new programs, many with dual economic and environmental objectives. A significant number of these initiatives have not only proved unsuccessful, but have also been criticized for their implementation and subsequent management.
Nicolaas Groenewold
“Australia and the GFC: Saved by Astute Fiscal Policy?”
http://www.business.uwa.edu.au/__data/assets/pdf_file/0018/2254050/12-28-Australia-and-the-GFC,-Saved-by-Astute-Fiscal-Policy.pdf
Stimulusgate
http://search.informit.com.au/documentSummary;dn=928239710318109;res=IELBUS
> The Australian government’s 2010 Budget Papers present econometric evidence that purports to show a positive and ‘highly statistically significant’ relationship between the size of stimulus spending and subsequent economic growth in a sub-set of G20 countries. The analysis concluded that those countries, such as Australia, that adopted early and large fiscal stimulus packages had subsequently outperformed those that had not done so. This analysis, however, turns on an untenable and substantial truncation of the available sample, and suggests a failure of quality-control processes with Treasury.
ANU’s Warrick McKibbin has written a lot on the topic:
http://scholar.google.com.au/citations?user=4RHyulIAAAAJ&hl=en&oi=ao
He saw the GFC coming and presented the most accurate model of it. He attributes Australia’s success to Chinese commodity demand surge and the fed cutting interest rates.
John Freebairn:
http://cf.fbe.unimelb.edu.au/ECOProfiles/prePublications.cfm?SID=54
The big private research houses that argued against the stimulus as recession saver (none argued for it) were Merrill and Deloitte Access Economics. You should read the Deloitte Access Economics report, it is very widely cited.
@Joe
This, as I said to Michael, is well off-topic now. Feel free to email me by clicking on my name and going to my blog to talk more.
As a wide reaching statement- the economic stimulus would never have saved Australia on its’ own- the Chinese stimulus and commodity boom and mining boom played and integral and critical role. But without it at all, we almost certainly would’ve dipped into recession.
No worries Seven_tech,
I do agree, we are diverging significantly from the main point, but just to wrap it back,
I do feel that with a strong economy large nation building projects are much easier to get off the ground. If the budget is in good shape (ours is not bad, but deficit size is worrying for position in economic cycle) and Infrastructure Australia has vetted a range of projects as it was originally meant to be doing when it was set up, then projects could easily be started when there is a need.
Renee how much of the build being completed would make the NBN “irrevocable? Would meeting every target have achieved this, or would the Libs have complained about it anyway?
To those (or that) saying the NBN should have been used as a stimulus response, please. It takes a long time to take a project of this size from conception through to work even starting, no amount of money being thrown at it changes that. The fact is that by the time GFC hit NBNCo didn’t even exist, so there was nothing to throw money at.
“If I can put it this bluntly, Labor has had its chance to demonstrate that it can deliver on national broadband policy, and it has flubbed it. Realistically, if you can’t do more than finish deploying a couple of hundred thousand premises with fibre in six years in office, there is no reason for the electorate to give you another three years to rectify your mistakes.”
I think you have hit the nail on the head there Renai, if Labor can’t get it right in six years what makes anyone think that nine years of trying to get it right will fix it.
It’s not just about missing a target singular, it’s about missing targets plural requiring two attempts at getting the targets right since 2010, and redefining of a rollout term to just scrape in at the end of June, and in the wings waiting to be released is the next installment of the never ending dynamic that is the NBN Co Corporate plan.
What is interesting is that the last plan only produced in August of last year had the time frame 2012-2015 on the cover, so what does 2015 mean as a end date parameter if they have another plan being worked on ready to be released in 2013 just over 12 months later?
In all probability the Coalition will end up releasing the final documented vestige of the Labor NBN era, the total irony of that little media exercise the Coalition will control has not escaped everyone I hope.
@Fibroid
What is interesting is that the last plan only produced in August of last year had the time frame 2012-2015 on the cover, so what does 2015 mean as a end date parameter if they have another plan being worked on ready to be released in 2013 just over 12 months later?
I’m not gonna go over the rest of your post, because it’s been done to death. But, on this point, NBNCo. do a Corporate Plan for the forward 3 years, every year. That is part of their required mandate. Complaining they keep labeling it for 3 years and then changing it every year to one year further on is just ridiculous- that’s their mandate, to update it every year.
So if it is a mandate as you put it, the NBN Co Corporate plan is what just a best effort of what may happen? – and if it takes nine years or more to get it right then that’s ok.
You have not addressed the point of why put 2015 on the cover of the latest plan at all if the amount of amendments since August 2012 ( with rollout figures downgraded again April this year) are so high it requires a brand new plan in 2013, is that just a feel good end date?
“that’s their mandate, to update it every year.’
They didn’t update in 2011, so the mandate (your term) is also dynamic, so it’s not a mandate.
@Fibroid
You have not addressed the point of why put 2015 on the cover of the latest plan at all if the amount of amendments since August 2012 ( with rollout figures downgraded again April this year) are so high it requires a brand new plan in 2013, is that just a feel good end date?
Because it is a 3 year plan?? 3 years is a standard business plan. Would you put 2012-2013 if it was a plan based on predictions for 2012-2015??
They didn’t update in 2011, so the mandate (your term) is also dynamic, so it’s not a mandate.
It was a mandate given to them by the NBN Senate Committee in their first report in 2011.
@seven_tech
‘Because it is a 3 year plan?? 3 years is a standard business plan.’
So it’s a three year plan that lasts only one year in the case of the 2011-2013 plan published in December 2010, and a three year plan that only lasts just over one year in the case of the 2012-2015 plan, so the yet to be published plan will cover which three years that is really only one year (unless you need a rushed amendment in between to scrape into a particular target deadline as in April this year) this time around?
‘It was a mandate given to them by the NBN Senate Committee in their first report in 2011.’
The Senate Committee mandated the NBN Co had to produce a new Corporate plan every 12 months, where was this stated?
@Fibroid
Actually, it’s not a mandate. It’s a law. See NBNCo. statement of Corporate Intent, page 6. It quite clearly states ‘Consistent with section 42 of the CAC Act 1997, NBNCo. will provide a 3 year Corporate Plan updated yearly’
Anyone have a small palm tree I can mash my face up against?
Anyone?
IMO, it would certainly be something ‘new and preferable’ to having to keep going round and round with our ‘friend’ and his obvious, blatant political irrationality…
“If I can put it this bluntly, Labor has had its chance to demonstrate that it can deliver on national broadband policy, and it has flubbed it. Realistically, if you can’t do more than finish deploying a couple of hundred thousand premises with fibre in six years in office, there is no reason for the electorate to give you another three years to rectify your mistakes.”
How many years did the Howard government have to deliver better internet, remind me again?
In all fairness, the Howard Government didn’t actually try and do it.
The effort they put into trying to stimulate the existing commercial interests into improving Australia’s connection appears to have been relatively laughable.
In a nutshell, this is what I see as wrong with the Liberal party. They dont spend money, they encourage others to spend money, through incentives and the like.
The flaw being that those companies are only interested in the bottom line profit, so look for maximum profit for minimum outlay, which in the end never delivers the best product available.
And never will while you try to get profit focussed companies to do the hard stuff.
If the method did work, we wouldnt be having this conversation. Telstra would have rolled out FttN before it became an issue, and their bluff wouldnt have needed to be called by Labor. Twice they were given the chance to be pro-active (other was ADSL2), and twice they failed to capitalise.
Why do people think they have changed so much in 6 years? If anything, they are worse, as witnessed by the asbestos in the pits issue. They knew it was a problem and have known for a decade, and rather than deal with it, left it until the last possible moment.
I agree, with Caveats.
A demand based system can work really well if there is demand, and an incentive to meet the demand. The issue in Australia is the main incumbent, has little incentive.
The issue with Demand in general, is that sometimes the demand comes quicker than supply can meet.
Lets face it, the only reason Cable and then DSL became affordable was when first optus, and then all the other competitors came into the market.
So we had demand, but limited supply because the incumbent had no incentive to open up.
The problem is ultimately Telstra. The fear I do have is that NBN co will become another Telstra because some bright spark in some government in the future will decide they need to make money by becoming a retailer. Sigh….
@Woolfe
Your fears are relatively allayed. It is law that NBNCo. cannot supply a retail service. Of course, law can be changed. But it would need to get through the Senate and that’s not going to happen any time soon.
I believe Telstra, long before it was telstra, probably before it was telecom, was in the same situation.
@Woolfe
No, Telstra/Telecom/PMG was always a retailer from day 1.
Yeah, fair enough. Your fear with NBN Co becoming retail is fair enough, though I think there are plenty of things that need to go wrong before that happens, and plenty of court cases to win as well.
I cant think of any of the big ISP’s that wouldnt challenge the decision, given the creation of the NBN has basically destroyed their ability to develop fixed line infrastructure for decades. Any Government that tries to change that is setting itself up as a massive target.
As a wholesale monopoly, there is no reason they would need to anyhow. With a captured market of 10,000,000 plus a further 2,000,000 businesses, its going to generate enough income at the wholesale level that I expect the fears to go the other way – tie up wholesale development to the detriment of competition.
And yes, fully agree that Telstra is the major reason we are in this situation. That and Howards decision not to separate into wholesale and retail. That single decision, and we basically have NBN Co a decade ago.
And I still wonder why people are so scared of Govt monopolies. In the right circumstances, they are the right decision. To me, those circumstances are where basic human needs are being provided – water, electricity, communication. Privatise those, and you end up with a situation where necessary services can be denied in the name of profit.
Absolutely.
This recent comment by John Quiggin breaks down the folly that was the Telstra privatisation, and discusses the importance of public ownership of natural monopolies:
http://www.theguardian.com/commentisfree/2013/aug/21/national-broadband-network-elections
Yeah, fair point. I didn’t really follow this sort of thing back when Telstra/Telecom entered the retail market.
I am also of the opinion that the infrastructure needed to be gutted out of Telstra when it was privatised. But they knew they would not get anywhere near the share price they did without the infrastructure.
I am generally for govt monopolies on infrastructure. They tend to focus better on providing the service, because that is there mandate, rather than just make money. Of course the problem with them is the usual government bloat, and corruption.
“In a nutshell, this is what I see as wrong with the Liberal party. They dont spend money, they encourage others to spend money, through incentives and the like.”
The issue with the reverse is that there is a serious lack of responsibility and accountability emanating from many government departments (State / Federal & LNP / ALP) when it comes to spending taxpayer funds. People will never spend other peoples money effectively on other people because the incentives are just not there.
There are always deadweight losses from collecting taxes. Our most effective taxes Company taxation & Income taxation have losses associated with them of over 30c per dollar raised. Then there is the associated premium which is given to almost any government project. There will be losses on both sides of the equation. The BER is a great example, the Orgil report found that government school projects cost on average 30% more than catholic schools (leaving aside private schools as they had a different management structure). Both groups had the same time constraints, same goals, but the government cost more.
That is the logic behind a small government philosophy, you use government resources for what is necessary and nothing else. It should not interfere where it is not needed as the resources will be more effectively used in the private sector. By removing unnecessary expenditure from the budget, more money can be allocated to infrastructure projects which wont be funded by the private sector.
The hard truth is that people will work hardest when working for themselves.
Lots of philosophy there, but not a lot of substance. What real, tangible differences do you believe there would be under a privately-run operation, other than reduced coverage and greater prices?
I’m not entirely certain, it could go either way. So much of it would ultimately depend on the supporting legislation and regulatory bodies.
A similar situation is the electricity distribution networks. They are a natural monopoly (much more so than broadband, as there are no competing technologies). The Gillard government commissioned a review into their management of the networks on a state by state basis and found that the ones that had been privitised offered lower prices to consumers.
In conclusion if it is done poorly then it would be an absolute disaster, there is no competition between states, no way to balance the monopoly. If it is done well, there is a lot of potential. It would be impossible to judge without seeing the actual legislation. There are a lot of risks.
I don’t know much about electricity pricing and privatisation, but what you said didn’t match with what I’d already heard–in fact the opposite, so I Googled “privatisation and australian energy prices” and these are some of the things I found on the first page:
– An article headlined “Privatised power ‘failed to cut prices’ – The Australian”
– An article headlined “Privatisation has failed to deliver cheaper electricity – News Weekly”
– A quote from the Australian Services Union, “South Australia, which has a fully privatised electricity industry, has the highest prices of all states”
– A quote from the Australia Institute, “It reveals that far from privatisation reducing costs it is likely it has contributed to price increases. ”
– And the kicker, a quote from an article on The Conversation:
“There is only one small problem with privatisation: the long-term history of the electricity industry has shown it almost always leads to disaster. University of Wollongong professor, Sharon Beder, has provided the evidence in the book Power Play: The Fight to Control the World’s Electricity. It supplies much needed historical context to the battle between public and private ownership played out over more than one hundred years in the United States and Britain, and the last couple of decades in Australia, Brazil and India.
Beder shows throughout this history, industry practised the modern art of propaganda, conducting public relations blitzes to convince consumers private ownership was superior, despite public anger with poor service and unjust pricing. Although industry attempted to equate public ownership of electricity monopolies with communism, they had no principled dispute with monopolies as long as ownership, control, profits and decision-making were private.”
In other words, the theory/ideology simply doesn’t live up to the hype, so why do people continue to be wilfully misled?
“propaganda … to convince consumers private ownership was superior, despite public anger with poor service and unjust pricing”, “no principled dispute with monopolies as long as ownership, control, profits and decision-making were private”; I notice here there are some common threads between the electricity privatisation ‘lobby’ and the telecommunications privatisation ‘lobby’.
There is something else I encourage you read, as it hits a little ‘closer to home’, a The Guardian piece entitled “NBN: we would have been better off without privatisation”
I backtracked the senate report as it was last year.
http://reneweconomy.com.au/2012/gillards-electricity-plan-its-a-band-aid-not-a-cure-77623:
And a direct link to the relevant page in the report:
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=electricityprices_ctte/electricityprices/report/c03.htm#anc2
Section 3.70 onwards is interesting reading.
Figure 3.6 is a graph of relevant distribution prices.
Having a look at your articles, 3 of them refer to the same report which is interesting. It does highlight issues with monopolies becoming complacent (Increasing managers & sales staff). But it seems to focus mainly on Victoria as it was the first state that privatised rather than a comparative analysis.
The UNSW article merely claims that SA has the highest prices and therefore their model is the worst, it says nothing about how prices have changed over time.
I haven’t looked internationally. I just thought it very interesting that it had in fact lowered prices in Australia.
Well it seems to me a matter of conflating correlation with causation, here. And even the correlation isn’t very strong, evidently. I’m not at all convinced that the private sector “does it better”, and can see where the profit motive can actually mean that things will be worse (as I said, higher prices and reduced coverage; and monopolistic complacency). If only there was a happy marriage between self-accountability and non-profitability.
Having said that, I don’t think that NBN Co’s issues have necessarily resulted from lack of accountability, so it’s hard for anyone to even conclude from those issues that NBN Co suffers from a lack of accountability. NBN Co has made some (in hindsight, and you know what they say about hindsight) unrealistic timeframe projections, and that has resulted in giving the Opposition ammunition. But the Liberal-led Opposition would continue to oppose the NBN both on principle (ideological) and for political gain, even if they weren’t given this ammunition.
I think it’s all just unfortunate, really. This is such an important project for Australia, and the risk that in a change of government it will be restructured into a network with built-in obsolescence is just too great to take, so I can’t justify anyone who considers this issue important preferencing the Coalition ahead of Labor, even if Labor haven’t been perfect.
Kevin’s promise in 2007 was “world-class broadband”, and Labor has been slow to deliver, that’s true. But Abbott’s current promise is “faster broadband” for most people, and let’s face it, that’s nothing on world-class broadband, and certainly not what we’ll need to compete on the world stage now or in the future. Labor have run with that idea, and just released a new campaign called Abbott’s Internet which treats the Coalition plan like the joke that it is, and demonstrates that if we went down along that path, we would (continue to) be a laughing stock to the rest of the world. It’s actually kind of brilliant, probably the single best execution of social media advertising so far, in what has been quite the dull election campaign. And I think it actually makes a very fair point, considering how much Malcolm likes to use overseas examples.
Just another note, going back to electricity here, I only read the summary of the TAI report, but it points out some clear issues with privatisation of the electricity infrastructure: increased uptake of non-generating/non-provisioning-related staff, and increased infrastructure costs; the costs of which are both passed on to consumers. If all of Foxtel’s sales reps are any indication, I can see how this could happen and be an issue – private (monopoly) companies are too focused on selling a product and maximising price to provide a good service at reduced cost.
Additionally, the report you linked does indeed show an increase in prices for publicly-owned electricity generation above privately-owned electricity generation – but it’s clear in the text (if not in the graph you pointed out, figure 3.6) that these appear to be a revenue raising tactic of the state government.
“3.76 Professor Garnaut noted that it was essentially a policy question for the relevant state government and they could choose to lower electricity prices:
The question is different in publicly owned and privately owned networks. Where they are publicly owned—and this is overwhelmingly the case in New South Wales, Queensland, Western Australia and I think Tasmania—the issue does not involve any effect on the wealth of private firms. Here it is a straightforward public policy question. Really the question is: is artificially raising the price of electricity a good way for these governments to raise revenue? I would suggest that it is generally not a good way, and it is within the power of the governments themselves to apply a lower rate of return and bring down electricity prices. That will have an effect on government revenue. I would expect that there will be alternative forms of revenue that could give you the fiscal effect you want at much lower cost to the community.[99]”
I mean it’s clear there is something dodgy going on with those state governments, and I agree that is an issue, but it also seems clear that there has been no observed benefit of privatisation here (at least, from the graph you referenced). Professor Garnaut makes it clear that the price rises observed are artificial, and could be reduced if the state governments chose. I didn’t read the full text, but from what I did read it hadn’t been concluded whether private or public operations leads to better price and service outcomes, so it’s certainly possible that it could go either way – but greater retail margins and greater non-generating costs imply that retail prices may well be higher.
At least, it’s clear that monopolies tend to lead to minimum outcomes for maximum price, and if Telstra are any indication, profit-driven private monopolies are much worse in this respect. Is there an existing or potential model like the NBN (with one wholesale infrastructure provider and many small service providers) for electricity generation and/or transmission?
As a career public servant I can tell you there is most definitely accountability with spending. Having done costing reports that feed to treasury, finance, the federal govt, and states and territories, I can say from personal experience that what gets spent is very micro managed.
The public doesnt see it because its not newsworthy unless something goes terribly wrong, but the accountability is there.
Exactly.
So I’m being asked to choose between a party (LNP) that has had 12 years in office and done close to nothing for Australian internet, and a party (Labor) that has had 6 years in office and made less progress than promised. They are both failures, but Labor is much less of a failure in this regard. Let’s give Labor six more years and then see how they stack up.
@Harimau
Doing something for the internet doesn’t mean the one and only solution is $44.1b to rollout FTTP to 93% of residences in Australia, even if it takes Labor 12 years to get it right, and adjusting funding figures and downgrading rollout figures on the fly as and when required.
Those regional and rural residences that had their exchanges upgraded to ADSL2+ under the Coalition Broadband Connect program which happened in just a few months all over Australia, and allowed all ISP’s to resell ADSL2+ out of those exchanges and also the massive subsidies given to residential satellite installations out of the reach of ADSL available to ISP’s to resell plans from might not agree with your glib assessment, ‘the Coalition did nothing’.
I said “close to nothing”. I was very careful not to make a glib assessment like “they did nothing”.
“Those regional and rural residences that had their exchanges upgraded to ADSL2+ under the Coalition Broadband Connect program which happened in just a few months all over Australia, and allowed all ISP’s to resell ADSL2+ out of those exchanges…”
Really?
As I recall it, Telstra bluntly refused to switch on ADSL2+ in any of their exchanges (hmm and who owns the exchanges) meaning Australians were denied ADSL2+ until Telstra decided we could have it.
They switched it on post JWH…
At what point to people realize no one has tried this massive project of this scale before.
How can accurate targets be designed let alone meet if you have nothing to go off.
The roll out is off target although this is true, but the targets are a best guess anyway.
1 can never understand the full needs of a build until you actually try to build it. You can take all the precautions you want but at the end of the day, there are tonnes of variables that can never be thought of let alone overcome johnny on the spot.
@Fibroid
It’s telling that $400 million over 12 years to give people speeds their neighbours were getting on ADSL and giving them speeds on satellite that were akin to early 2000’s DSL speeds….for 2 times the price and 1/10th the quota doesn’t say they did nothing….
If you believe the Coalition did a good job at communications policy in the 12 years they were in….I’m sorry, I have nothing left to say to you on that subject.
I didn’t say it was a good job, but it certainly wasn’t ‘close to nothing’, especially if you got ADSL2+ or satellite out of it, which you are still using today for BB while waiting-waiting-waiting for NBN Co FTTP or NBN Co wireless to come to your residence ‘real soon now’.
Keep in mind also seven-tech the Coalition operationally separated Telstra, so that Telstra Wholesale, Retail and Key network services operate as separate entities, this happened way back in July 2006, we are still waiting after six years of Labor and many promises for the structural separation of Telstra to take place.
There is a lot of waiting when it comes to Labor.
There is more than a touch of irony in the probability that both the Operational and Structural Separation of Telstra will be pushed through by Coalition Governments, don’t you think?
@Fibroid
I didn’t say it was a good job, but it certainly wasn’t ‘close to nothing’
But you’d not admit it is the Coalition’s fault we are in this position?? You go on to say:
Keep in mind also seven-tech the Coalition operationally separated Telstra
And:
There is more than a touch of irony in the probability that both the Operational and Structural Separation of Telstra will be pushed through by Coalition Governments, don’t you think?
No. I don’t think it’s ironic at all. In fact, I think we’re lucky NBNCo. are as advanced as they are that it is almost impossible to ever wind back the deal for structural separation. It was a Labor government who setup the operational separation of Telstra as well as the structural separation. They set both up in 1996, but Howard was swayed by big players to keep Telstra structurally whole when elected in 1997. And that, coupled with absolute minimal investment in the telecoms sector for over a decade is why Australia is now languishing in 43rd place on the speed scale and why millions of Australians can’t even get ADSL.
You talk fondly about the top-hat upgrades the Howard government produced- 400K premises were covered. About 4%. That’s less than have been covered already by the improvements of the NBN, as small as they are. And that’s all they did for fixed line in over a decade. Functionally separating Telstra, but not structurally, led to 3/4 of a decade of piss poor competition, poor service and massively high prices that have only in the past few years been seriously gained upon, with no thanks whatsoever to the Coalition- just the ACCC and pioneers like Hackett, Internode and even iiBorg…ahem, net.
And you talk of satellite subsidies? What did we end up with? ABG that gave 500Kbps-2Mbps (normally on the lower side to be affordable) at contentions reaching well above even the worst of HFC for prices that would be ludicrous for ADSL, let alone satellite. They were simply made from utterly unaffordable, to only mostly unaffordable.
I find it absolutely incredible that you can support the Coalition’s treatment of telecommunications even against a poorly run NBN. Even what has been done on the NBN to date already eclipses over a decade of the Coalition, but in half the time. And don’t say “but yes, for how much more?” You’re very well aware that if the NBN were to keep going, the money spent is spread across each premises yet to be built for what has already been spent getting the core network off the ground. You can’t live in a house without its’ foundations laid and can’t complain when they take half the money before you see any results.
Gee Fibroid, what a surprise, another rose coloured glasses, rewriting of history…
“Keep in mind also seven-tech the Coalition operationally separated Telstra, so that Telstra Wholesale, Retail and Key network services operate as separate entities, this happened way back in July 2006, we are still waiting after six years of Labor and many promises for the structural separation of Telstra to take place.”
http://www.budde.com.au/Research/Australia-Operational-Separation-of-Telstra.html
Australia – Operational Separation of Telstra: September 2005, following several years of fruitless discussions, the government announced the operational separation of Telstra. Australia is one of several countries who followed the UK (where such far-reaching regulatory reforms have already been introduced) and launched their own initiative. However, the government ruled that implementation of the reforms will be carried out by Telstra, and the Minister will monitor the situation. Two years later nothing has happened, with the Minister basically deferring this issue till the review in 2009.
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