Will hidden taxes and competitive pressures make the NBN unsustainable?



This article is by Stephen King, Professor in the Department of Economics at Monash University. It originally appeared on The Conversation.

analysis Is the National Broadband Network sustainable? I do not mean this in a technical sense. While I am wary of the government using taxpayers’ money to ‘pick winners’ in technology, there are many people better placed than I am to crystal ball gaze into the best technology for the internet. Rather is the NBN economically sustainable?

The NBN is based on a tried-and-true scheme of hidden cross subsidies. The scheme is quite simple. The government provides a service that is much cheaper to provide in urban areas than in rural Australia. The government bans any private firms from providing this service. Then the government sets a single, uniform price for the service to customers across Australia. The price is high enough to cover all costs, which means that it is much higher than the underlying cost in the cities while it is usually below cost in the bush.

The uniform pricing means that the city-based consumers are effectively being taxed in order to cross subsidise the bush. If competition were allowed, businesses would enter the city market, undercut the government price and make profits. Prices to city customers would fall. Of course no private businesses would go into the bush. You can’t make money competing against a government price that is below cost.

Australia Post has used this type tax-and-subsidise scheme for decades. Australia Post sets a uniform price for delivering a standard letter any where in Australia and it is (effectively) illegal to compete against Australia Post to deliver a standard letter. Indeed, this model is so common for postal systems around the world that uniform pricing is sometimes called ‘postage stamp pricing’.

It is important, however, to understand the economics behind the scheme. The NBN version of the scheme has three key features. First, high-speed internet services will be sold to rural and regional Australia at a price below the cost of providing the services. This type of subsidised service is not necessarily a bad thing. It is important to make sure that rural and regional Australians have adequate services, including the internet, and the government has a role in providing those services. And sometimes this will mean that the service is sold below cost in rural Australia.

Second, because the loss on rural Australia must be funded, the government is effectively placing a ‘tax’ on high-speed fixed-line broadband delivered through the NBN in urban areas. This ‘tax’ will raise the funds to pay for the rural subsidy. Or as the Australian Financial Review put it: “[T]he NBN relies on money from dense urban areas like apartment blocks subsiding broadband for unprofitable and sparsely populated rural and regional Australians.”

Of course, it is not called a ‘tax’, but that is what it is. Urban consumers will pay higher prices for fixed-line internet services in order to fund the losses in the bush. This is the only way the NBN can make money.

I have problems with this part of the scheme. It is far from clear that artificially raising the price of internet access in the cities is a good way to raise money to cross-subsidise internet for the bush. Why not push up income or sales taxes instead? Why would we think that it is a good idea to tax new technology rather than other sectors of the economy? Of course, the NBN cross subsidy keeps the tax hidden and off the government budget. And it has worked for Australia Post for a long time.

Third, because competition in internet services in the city will prevent the government from raising money through its NBN tax, private competitors will be banned from competing against the NBN. But preventing competition is hard.

The NBN is already facing competition from mobile broadband, but with current technology, mobile broadband is expensive and relatively slow. The NBN also faces competition in central business districts where fibre networks are common. As the Business Spectator has noted it is not clear “why small to medium enterprises need the NBN when they have the option to utilise fibre Ethernet readily available from major providers in many areas.”

But the real competitive challenge may come from TPG installing Fibre-to-the-Basement in major apartment buildings. In September last year, TPG announced that it was planning to connect 500,000 apartments to high speed internet by bring fibre connections into the ‘basement’ of the buildings. TPG’s planned price is significantly less than what Optus is charging for similar services over the NBN.

The communications minister has referred TPG’s plans to Michael Vertigan as part of his cost-benefit inquiry into the NBN. But other telecommunications, companies like Telstra, have let it be known that if TPG can go ahead with its plans then they will be right behind.

This is a nightmare for the NBN. As Alan Kohler noted: “The government must either legislate for the National Broadband Network to be a monopoly or ditch it. There’s other no alternative.” But that is the problem. The government has legislated to prevent competition. That is why Telstra and Optus have to sell their HFC networks to the NBN – so they can be incorporated into the NBN or shut down. Either way, they can’t compete against the NBN.

However, it is hard to stop competition from breaking out, especially when there is demand in the cities for fast, cheap internet. Even if the government is able to fend off the TPG threat, it is just the first of many. Indeed, the problem is that the government doesn’t know what competitive threats will face the NBN in the near future. The internet is not snail mail and the NBN is not Australia Post. Innovation will always create ways to undermine a legislated monopoly in a fast moving area of technology. So in the absence of (further) draconian legislation that will stifle innovation, the government can’t effectively legislate for the NBN to be a monopoly.

So what should the government do? Ditch the ‘National’ Broadband Network and replace it with the “Rural and Regional Broadband Network” (RRBN). Then set a reasonable price for the RRBN. This will be below cost but any loss should be funded using standard taxpayer receipts. Then allow urban internet competition through copper, fibre, mobiles and any other technology. This will ensure that the cities have fast internet at the lowest possible prices. Finally, forget any plans to eventually privatise the RRBN. It will be loss-making. That is the point.

Of course, this will require two characteristics of the government.

First, the wisdom to say that the original NBN plan, with its hidden tax, was always flawed. That should be easy because the plan was developed by the previous government. It is easy to blame them.

Second, the courage to make the cost explicit and put it back in the budget. This is where it should be with transparent taxes funding a transparent loss. But the previous government hid the cost using government accounting conventions for ‘future profitable’ projects. The current government can and should come clean on the cost to fix up the mess they have inherited.

Stephen King does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published on The Conversation. Read the original article.

Image credit: Max Romersa, royalty free

The Conversation


  1. I don’t have a problem with the the dense city / urban areas subsidising the cost of providing the service to rural areas. It’s a neat solution; it’s self-contained. If it works for the postal service then why not Internet access? They’re a similar utility, arguably…

  2. “Second, the courage to make the cost explicit and put it back in the budget”

    They accounted for it correctly. It wasn’t supposed to be on the budget because it was going to make money.

    If you want to change the model, you change the accounting. Courage has nothing to do with it.

  3. “make the cost explicit and put it back in the budget. This is where it should be with transparent taxes funding a transparent loss”

    This is just idiotic and a complete logic fail!

    It’s good good thing we didnt have this kind of attitude prevail when the sewerage, water, power and phone systems where being being deployed because they’d have never become standard essential utilities and we’d be worse off for it!

    • And possibly Medicare. The levy is a tiny percentage of the cost. Stephen King makes a case for raising it many times over.

      We should do the same thing with education too. Tax the childless heavily and give the money to the parents, who, without fail, will spend every last cent on educating their kids.

      A special levy to fund the activities of our many parliaments would be nice an transparent too.

  4. It is far from clear that artificially raising the price of internet access in the cities is a good way to raise money to cross-subsidise internet for the bush.

    That has happened already within the NBN. Water under the bridge. Even Malcolm has weighed in on the topic:


    “Second, the courage to make the cost explicit and put it back in the budget.”

    The NBN business is an investment; it has been accounted for correctly. Again even Malcolm has accepted that basic accounting practice. In fact his model I believe is expected to be accounted for in the same fashion.


    I’m not sure what the author of this article is attempting to suggest? Accounting, taxes and country folk aren’t really the causes of why NBN has been derailed.

    Rather, a hostile media empire, Telstra’s 2 year negotiation period, the asbestos debacle & strongly partisan politics and finally (and perhaps most often in the press) fumbled build targets, have had far far more input.

  5. It doesn’t just cover costs in the bush or lower density areas it also covers the “too hard basket” premises, and these are the ones who will miss out. Competition has no obligation to cover the premises and that is also part of the reason why we needed a new solution than let the market do it.

  6. The article is a little odd in some areas.

    Wholesale competition, in the old labor plan, it was very much allowed, the only real rule as i understood it was that the competitors network had to be open access and had to charge the same rates as NBNCo (or something like that).

    I’m also perfectly happy to go with a similar model to what Australia Post uses, i live in a ‘rural’ area, so i guess i could be bias, but if more people lived outside of the big cities, it would certainly take a lot of pressure off of them, look at over here in WA with Perth, like all good big cities, they have a water issue and a traffic issue, which could easily be reduced by telling people to move to a more regional/rural area.

    • Ray
      “The article is a little odd in some areas.”

      In my humble opinion a classic example validating the reality and context of the term “The Lucky Country”, along with the drivel sprouted by so many , especially in the media – those that can do, those that can’t become critics and commentators and shock jocks.

      Forcing the innovative and inventive into increasingly high cost CBD and/or Commercial real estate, wasting so much scarce money in a non productive area. A recipe for long term failure.

      Building the capabilities of the regional and rural and outer suburban areas would be far more productive.
      Silicon Valley never was a high rental CBD or Commercial area, which is the reason for it’s success

    • @Ray Herring: Wholesale competition, in the old labor plan, it was very much allowed, the only real rule as i understood it was that the competitors network had to be open access and had to charge the same rates as NBNCo (or something like that).

      Yeah, that it what I thought too. Anybody was allowed to compete with the NBN – but on the same terms. I think that mostly meant they couldn’t sell retail, or maybe it was just that they had to retail for exactly the same price they charged themselves – and the ACMA determined that price.

      Since the entire article was based on the premise the NBN prevented competition at the wholesale level, that would turn it into rubbish.

      But something has changed. Before the CBN we didn’t have people like TPG wanting to build their own networks. Now we do. I like to know what the change is.

  7. I disagree with the underlying theory that competition at its most lean provides the greatest economic benefit. This really is an ideological construct and is only ever true for short periods of time in the development of a market. History has repeatedly shown that businesses are not in the business of competing. It is in their nature to capture market segments and then push the price as far as the market will bear. Australia is somewhat unique on the world stage of having duopolies in basically every part of our economy (including our politics and its paymasters) and a culture completely ingrained in economic rent-seeking.

    Just assume this model was implemented; can you imagine what happens to the country regions that have to continually come back to the political leadership of the day to justify their continued subsidies? That system encourages corruption in the political process as the squeakiest wheel gets the grease come election time.

    The original NBN plan was aware of a much broader set of issues relevant to Australia’s situation and was a more robust and suitable project as a result. This article is ideology flying in the face of reality.

  8. What a pile of codswallop!

    Private Enterprise will always charge the highest price they can get away with, while providing the minimum level of service. Their only motivation is profits for their rich owners. Community Service is of zero importance.

    Public Enterprise will charge break-even costs, and will return any profits to the community. Local employment and public service will be an important part of their operations.

    Australia Post is easily criticised: Over the years the politicians have done everything possible to nobble their operations. They have been forced to take on the work of other departments without compensation, and private companies (eg couriers) have been allowed to cherry pick and tear the guts out of their operations.

    And journalists are paid to generate spin. All Private Enterprise is good, and All Public Service is bad. Worse than that, it’s Socialism.

  9. Thank God the author had no influence through the 20th century, that worship at the alter of the infallibility and greatness of the private sector and the market will deliver the best result for the nation.
    Look at the list of what we as a Nation would not be blessed with, and how backward and second rate with large primitive 3rd world standard areas our economy would be.

  10. There is of course the alternate viewpoint of the same coin.
    The Government has the responsibility for the economic and social wellbeing of THE NATION and has to plan well ahead, decades in fact – that is why stability and impartiality is of prime importance in the public service.
    To provide the essential communications infrastructure and diversity a healthy Nation needs, practical long term solutions that prudently manage the taxpayers money. In that framework, the solution of Taxpayers footing the bill for all but the highly profitable areas is effectively the taxpayer subsidising those operators and subscribers, from the National perspective they are sucking off the taxpayer teat.

    The most equitable solution would be a development of the zoned approach where a surcharge is placed on the high profit zones on a subscriber and data volume basis which then subsidises the unprofitable areas rather than wasting taxpayer dollars that could be used for education, health and our security, at the same time strictly enforcing an open access platform Nation wide

  11. Stephen, you must be one of the blokes that mentored Turnball to come up with MTM mess that will leave Australia behind just about every other nation on the planet.

    For someone with your education, to completely overlook fixed line communications as a ‘natural monopoly’ beggars belief.
    How many power lines, scheme water pipes, and sewerage lines do you want down your street??? Ohhh happy to have one of each.

    I suppose the “tax” healthy people are paying into Medicare will be the subject of your next article. Let’s not stop there. Why not follow up with the ‘hidden taxes’ for support of ABC and SBS. I’m ashamed of what our country has become thanks to the mind set displayed in your article and echoed by Abbott and his cronies.
    I’ll counter with a echo from another source.

    “We want our country back” … s. ludlam

  12. Rudd’s incompetence was the major problem with the whole NBN process, he wanted to take Australia back to the good old days when we had a “Government owned national telecommunications carrier” and rid us of that nasty private company Telstra.

    When the crisis of 2008 occurred the NBN should have been the centrepiece of stimulus.

    The dumbass school buildings scheme had the inherent fault of the Federal Government attempting to segway into a state government responsibility, education being way down the list of items the voting public was interested in with the demographics favouring older Australians. The insulation scheme had the inherent fault it was a freebee, so obviously huge numbers of orders were going to be placed with not enough accredited suppliers.

    Telstra should have been forced by legislation to divide into 2 companies “Telstra” iSP, mobile operator, Foxtel and the other sundry bits and pieces. The second company “Comlink” which would be the wholesale owner of the network infrastructure (all the copper infrastructure, Telstra’s old national fibre cable and exchanges).

    How the process for a national broadband fibre construction process should have been implemented;
    All shareholders would receive for their existing Telstra shares one share for the new “Telstra” and one for “Comlink”, so no disadvantages would occur to any share holder, also they would not be allowed to sell their shares unstapled for 7 years.

    Tenders should also be offered for the provision of satellite services, and some assistance for the launches paid to service remote areas, the satellite system would be a separate entity and would not be allowed to be operated by Telstra or Comlink .

    The new company “Comlink” would continue to wholesale existing telephony and be paid by the government $2000 for every for every fibre broadband service passed in the street.
    When distribution areas are all fibre, the copper would be disconnected, homeowners being given 3 months to select a new ISP/Phone provider and arrange the install.
    There would need to be some regulation of the wholesale charges, this is done with gas an electricity already.
    The requirement that 90% of households should be passed
    ISP’s would provide the termination equipment at the home and connect the installation from the street and be paid $200 per connection with the balance paid for by the customer in their annual charges.
    “Comlink” would be given ten years to complete the work, with penalties for failure to keep the project on time.

    Total cost to the government would be $27 billion dollars over 10 years or $2.7 billion dollars per year, the remainder of the cost would be from new share issues, borrowings and wholesale revenue generated by the wholesaler.

    The alternative approach for a “Government owned NBN” would be to tender the whole NBN system to Hauwei, Cisco, Alcatel or Samsung and allow them to bring in very cheap overseas labour and have penalties for not keeping the program on schedule.

    • Big problem w/ the “forced separation” route

      First you would need to get legislation passed… not very likely w/ the hostile opposition senate at the time.

      And second you would *need* to pay out Telstra for the “loss of business revenue” by the seperation. And you would have to compensate *BOTH* sides of the Telstra divide.

      And would you honestly believe “splitting the shares” would be taken as enough compensation? This is Telstra we are talking about here. On top of that if I was a stockholder being told I own split shares w/ no guarantee on the viability of the company to function or be profitable as before *AND* being told I could not sell? I would be out for blood if Telstra ever agreed to that!

  13. as a simple lad, i thought we had a market now via which we have our internet delivered! i also understand that the ‘speed’ varies greatly from area to area – even in the CBDs this appears to be the case; the outer areas (a couple of Kms less and more variable’

    my question is: If competition is going to deliver NBN equivalent performance WHY DONT WE HAVE IT NOW??

    I notice that i have a single copper wire passing (which delivers < 1Mb (rare even sunny periods – dry periods) – not the multiple that competition is said to provide leading to NBN like speeds.

    it seems that people are confusing cherry-picking with competition!

    Also such claims ignore the social benefits of a nation wide rollout.

    I would like also some assistance of how we achieve even the degree of competition at the ISP level we do now?

    i look forward to being able to choose the highway i use or the airport i fly from!!

  14. What rot! Can you imagine the scenario under this plan. Open slather in the cities – all of us city folk potentially benefit. Then say a billion dollar line item in the budget to subsidise the bush. Roll on a few years and that billion dollars will become regular revenue, start to be used for other things and then be subject to cutbacks. What happens with our car rego – its supposed to cover road funding, however govt does not have a seperate accounting stream for rego costs in, road funding out – instead its all part of consolidated revenue and govt then funds or doesn’t fund roads as it likes – none of us have any idea if the amount being spent is matching what they are collecting. Exactly the same situation occurs with public electricity companies – govt gets dividends in and then spends it other than power line maintenance, therefore the electricity company charges us more. Having the service which is provided fund itself in its own budget is the only correct thing to do.

  15. …and a (metro-based) economist opens this old can of worms again. Nice.

    Sure, if I was an economist, I’d say that too. But I’m not – so here’s my take:

    Remember the private investment model of the last ~20 years, and how it provided awesome, cheap internet to all Australian businesses and households in metro areas? oh wait… that’s right, the market FAILED. Let’s not go back there, shall we – trying the same thing twice and expecting a different result seems like stupidity, if not insanity.

    Fact is, we need some level of the evil ‘draconian’ leglisation to bring ubquitous, 21st century Austalia’s broadband to a broad range of Australian businesses, governments and individuals. That’s not economics, that’s common sense.

  16. JOHN: Yep, total codswallop. An insult to the intelligence. Private enterprise just wants to cherry-pick the best customers and then charge them monopoly rents. Any apartment building that got their cable from a particular carrier would be hostage to whatever sums the carrier wanted to charge. It’s like getting someone to build the driveway into your house and letting him charge a toll. Guess how much he would charge!.
    I think we’ve been here before – with Telstra

  17. And around it goes again.

    The premise of this article – government pay for regional and rural areas and let metro sort itself out via private competition – lands us right back at 2005. In 2005 the National Party presented a paper from its Page Research Institute think tank. http://optics.michaelwyres.com/documents/page_barnaby_nbn.pdf
    This paper effectively said what this article does i.e. that the govt should fund FTTP in regional and rural areas, and lease the infrastructure to RSPs. It said back then they were approached by a syndicate that claimed they could do it for $7 billion in 5 years and Telstra said $30 billion in 20 years. Clearly the truth is somewhere in the middle.
    The Nationals even claimed that Labor stole their idea when Labor announced their FTTP NBN.

    So why are the Nationals silent on this now?
    Why is no-one asking the Nationals to blow the dust off this paper and have it considered as part of the studies being done at the moment. The Nationals are supposed to be part of the Coalition, and are supposed to actually get a say after all. Its time to put some pressure on the Nationals to open their mouths, and actually do something worthwhile for the people in their electorates.

  18. Why is this article comparing overpriced Optus to what TPG intend to offer at some point if they build FTTB? At least compare it to the more competitively priced NBN plans.

  19. I agree with Steven King. This uniform pricing is a rip off. If you chose to live in a regional area, you should pay the true cost of living there.

    Electricity – higher cost to supply should mean regional people charged more. Metro less.

    Health – go to a regional hospital and you should be requred to pay more as it costs more to provide the services.

    Roads – Regional areas should pay more for their registration to fund roads also. As they are used less freqently than the thousands that subsidise the metro roads.

    Govt Services – There are lots of state govt services that should also have increased charges for regional areas undet this improved model.

    Education in regional areas should also have an additional payment required, as these schools are more costly to operate than their metro counterparts.

    The idea of having a standard boradband socket in each house in Australia is absurd as there is no service that can use that.

    • Nice friday irony there, Naga… :)

      You forgot that petrol should cost more too. Oh, wait it does. Forget that one then.

      Maybe the NSW charges on real estate transactions should be more in regional areas so the cheaper housing cross-subsidises the metro areas?

    • @ Naga: “The idea of having a standard boradband socket in each house in Australia is absurd as there is no service that can use that”

      You mean, like the standard phone socket that’s already in every home, and the standard electricity connection that’s in every home? Those both started life as government-owned monopoly services, delivering a standard, ubiquitous, and cross-subsidized utility service into your house. Absurd, right?

      Broadband is the new utility in town – it has become an essential service, and just like electricity and telephones it’s a natural monopoly – it simply doesn’t make practical or economic sense to duplicate the infrastructure for the sake of competition at a wholesale level. Can you imagine another company building power poles alongside the existing ones, so that we had an alternative electricity supplier? Stupid, right?

      Remove your head from the sand, and take a look around.

    • @Naga

      I think what you fail to realise, is that if you suddenly start charging the regional/rural areas more, those people will likely just move to the big cities like what you obviously live in.

      Now you have to think to yourself, if a potential 1M people from rural/regional areas of a particular state decided to up and move to the big city for that state, could that city handle the influx of people?

      Now the state would have to spend even more on infrastructure in the city to try and alleviate the congestion issue not only on the roads but in the buildings too.

      By moving people out of the big cities and into regional/rural areas, you tend to save a bit of money (in the long run) as certain things don’t require as much maintenance on them (though you wouldn’t know it over here in WA, they repair Bussell Highway between Bunbury and Busselton at least 6 times a year).

      • “I think what you fail to realise, is that if you suddenly start charging the regional/rural areas more, those people will likely just move to the big cities like what you obviously live in.”

        The more likely scenario would be they would increase the price of all the goods they provide to the city to allow for their increased comms prices. Meat, vegetables, fruit, grain, wool, cotton etc would all rise. Naga and the other Naga-ites would be effectively paying a cross subsidy regardless. The difference with price rises from the base regional/rural areas, everyone along the supply chain will bump up their little bit too.

  20. Why is is it when we look to emulate what other first world countries to do we always to one that is in a bigger hole than us and was the primary cause of the GFC instead of looking to the richer first countries.

  21. Malcolm Fraudband’s website is now in the serious business of deleting comments he doesn’t like, today’s new strategy render all the comments unviewable.
    This is the first time he’s ever done this, must have just started reading the comments.

  22. Well if the regional areas pay more for services, than what is there to stop them from charging more for the food they produce to cover their costs.

  23. Not sure what the ‘best of breed’ comment is. Fibre is best of breed. It’s physics.

  24. Note to the Author.. Telstra and TPG are talking FTTB ONLY and only to MDU’s
    At a conservative guess 50% of the Urban population doesn’t live in MDU’s. Do you propose a status quo for that 50%?

  25. Yes but this method as been used for yonks as you rightly point out for Oz Post. Only a Government monopoly can get away with such subsidisation. In effect the city folks subsidise the regional folks. Up to a point it is fair. Don’t we want decentralisation any more. Obviously developers prefer more concentration and apartments as they make more money. But the country is screaming out for regional development

    Why not use the NBN to help that aim. Its the smart way for a country like ours to go

  26. The biggest flaw in this article is that it suggests that the government must fund its expenditure with taxes (or borrowing). Expenditure and taxes are unrelated for a government which is sovereign in its own currency. The Australian government can ‘afford’ anything so long as it’s priced in AUD. Which makes all the stuff about cross subsidies rather redundant.

      • Nope. Just that the government is monopoly issuer of net AUD financial assets. That’s all.

        • Did you know,

          The Australian government does not control the amount of money in the economy. The government can issue bonds to raise addition finance but does not control the supply of money in the economy. There is an independent body which oversees this function.

          • Demand for credit has the biggest bearing on the supply of money in the economy. The RBA influences this with interest rates, but does not control how much money is actually created.

          • It’s all an artificial man-made construct anyway – it’s about time we evolved to a Star trek economy. :-)

    • Did you know you can get bank notes in the billion dollar denomination in Zimbabwe?

      • Yes. And that has nothing to do with Australia. Let me guess – “All government spending is inflationary” or something to that effect? Zimbabwe’s hyperinflation was caused by violent land reforms – how is that relevant to here?

        • Winston
          Interesting your take on Zimbabwe AKA RHODESia..

          Not really the forum for this discussion, however begging indulgence for some clarification which may well be pertinent for us, considering we have a Rhodes Scholar as our ruler (The more appropriate term for the Rhodes Scholar rather than P.M)
          Any intelligent person understands history especially economic is written by those in power, the other truism is that power corrupts and absolute power corrupts absolutely.

          The Nation of Rhodesia was drafted and established applying the principles of Cecil Rhodes (Look up the real story of how he built his wealth, gold and diamond mining with brutal working conditions for his workers) The landed Gentry were not much different to the slave owners of the Deep South of the US.
          The principle borrowed from his ideal the British Nobility – the concept of born and trained to rule under their Lord and Master (he missed the key bit of Noblesse Oblige) with first second and third class citizens and at the bottom the disposables, those to be used abused and discarded to build the wealth of the first class citizens, some which trickles down to the small second and third classes. Essentially a feudal/dictatorial society. What happened was a changing of the guard whilst retaining the structure, unfortunately destroying the economy in the process. The lessons of the French Revolution were not learnt.
          However uprising will become impossible with the 24/7 surveillance we will be subjected to (all those lovely smart TV’s with built in camera’s and microphones to add to the mix).
          The trend to push for WiFi micro cells everywhere will enable micro camera surveillance linked into every cell – for the security and safety of the citizens of course, and they will be gullible enough to fall for it

        • Winston,

          “The Australian government can ‘afford’ anything so long as it’s priced in AUD”

          This states that the government is able to print money infinitely without any negative consequences. This has been shown to be false time and time again. Let me expand upon Zimbabwe as it is a more recent example than Germany post WWII.

          In Zimbabwe as you correctly stated their land reforms destroyed their economy. It was NOT the land reforms which led to the hyperinflation but how they decided to react to their economy crashing. They decided to cover their budget deficit by printing more money (as you have suggested we should do). The rate at which they were printing money was so great that printed money became worthless and they have reverted to a barter economy or foreign currencies only.

          Their own currency became worthless due to the rate at which it was printed.

          In simple terms the intrinsic or underlying value of the countries assets never changed (or even fell) but they had 1000x or 1 000 000x as much currency in circulation.

          • No, I did NOT say “the government is able to print money infinitely without any negative consequences” – that’s ridiculous. It could create money infinitely, yes, but the limiting factor would always be inflation. A government would be silly to do that.

            But what it means is that the government can, if it so wished, buy anything at any time provided it was priced in AUD. The author suggests that it could only do this via taxing (or borrowing), but that is false as there is no *intrinsic* limit on government spending. There may be political or even legal limits, but they are self-imposed and could therefore be altered. This means that any argument about federal government being able to ‘afford’ important infrastructure like the NBN (or spending on health, education etc.) is nonsense, as it’s ultimately just a political decision whether to do so or not.

            In Zimbabwe, money printing was the response by the dysfunctional government of trying to *keep up* with inflation, which was caused by the land reforms (i.e. same demand but a massive destruction of productive capacity). So the money became worthless as there was no production to back it up. It’s not an example relevant to Australia.

  27. The author writes that the Internet is not snail mail and NBN Co is not Australia Post. What an amazingly pointless observation. The Internet and snail mail are both communication services, and NBN Co and Australia Post are both government monopolies providing those services.

    This article’s entire premise is based on the furphy that there are technologies available in the next 50 years that will be able to compete with fibre to the premises (a telling example given in the article is “wireless”). If those technologies were to exist, then competition might deliver better outcomes for those in the city (only). The fact is, they don’t. In an all-fibre model, NBN Co is best designed as a cross-subsidised government monopoly.

    The issues with the (real) NBN have never been its design – while not perfect, it’s a masterwork, the issues have been the delays that have impacted on its rollout.

    Of course, as the watered-down non-NBN doesn’t use future-proof fibre-to-the-premises (and so private companies MAY simply compete – with fibre-to-the-basement and fibre-to-the-premises), the author may be correct in his conclusions – completely coincidentally, though, as the logic and evidence that led to his conclusions were flawed.

  28. What a BS story!!

    I honestly would not mind if the city covers costings for the rural areas.
    I live in the city, my estate is about 11 years old, my ADSL internet is congested and slow. Had trouble just downloading school apps for my kids from iTunes.

    If NBN is implemented like it was supposed to have been, everyone would have some benefit including the Telcos, and at some point in time the Govt.


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