Coalition policy on the NBN

The opposition will be in a difficult position over the NBN over the next three years.

It seems a majority of the population believe it is a wonderful thing the government is giving us and Turnbull is unlikely to change anyone’s mind in the short term. So the opposition is going to look and sound very negative. At the next election voters will be told by the government that the coalition wants to snatch their broadband away. If in three years some people have got fibre and the rest are waiting, a threat to stop the rollout will not be popular.

Perhaps by then the early adopters will have seen that they have lost their ADSL connection. Presumably phone and pay TV will also be delivered by the fibre. If they are charged anything like the real cost there should be some grumbling. Even rioting in the streets perhaps. But more likely the NBN company will be told to hold wholesale prices down for some time. That will be popular politically but will make it just about impossible to get private investors. (Of course the government could require super funds to contribute to nation building by investing in NBN but I don’t think they would dare).

So if the coalition wins government in three years time it will inherit the problem. With all the delays, cost overruns and the usual cockups we see with governments executing major projects.

What does the coalition do then? Seal it off ? Sell it (or give it away) as an unfinished project? Finish it then sell?

Not easy. I hope someone is thinking about all this.

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12 Responses to Coalition policy on the NBN

  1. boy on a bike says:

    In 3 years time, they’ll still be stuffing around in Windsor’s electorate trying to get it cabled up. I say they spin the rural network off into a separate company, list it, and then tell all the Labor and independent MPs that all their parliamentary super has been invested in the new company.

  2. 2dogs says:

    Strictly speaking, the debts of GBE’s are no more secured than the debts of any other company. The coalition could just tell its financiers to get stuffed. One particularly delicious consequence is that the present director ministers may be personally liable for the debts, if NBNCo is found to be trading while insolvent.

  3. pedro says:

    “Strictly speaking, the debts of GBE’s are no more secured than the debts of any other company.”

    But how much of this stuff is “strictly speaking”. No govt would ever let a GBE fail and dud the creditors.

    I’m hoping that Ken is wrong about the level of expectation. I have not seen any poll numbers, but I’ll bet outside the stupid and young, the support is soft at best. Wait till the Libs start talking about the other things you can buy with the money.

    The pathetic case for the NBN keeps getting a battering as well. A UN report today. This will keep happening, in fact it will probably get worse.

  4. ken n says:

    pedro – I’m hoping I’m wrong, too.
    But if it keeps rolling out (and does get beyond Windsor’s electorate) in three years an incoming coalition government will still have a problem of what to do with it.

  5. pedro says:

    Very true Ken, it will have momentum, but presumably it will be saleable. Hopefully the next three years will be more spine and limbs and less digits.

  6. Chris M says:

    Three years time is perhaps a tad optimistic, start planning right now for what happens in the next 6 to 12 months.

  7. ken n says:

    Peter Martin has a very good post.
    http://www.petermartin.com.au/2010/09/were-spending-fortune-on-new-wires-in.html

    Are there any economists or economic writers saying the NBN is a good investment?

  8. Scott says:

    There’s an unsurprising but still disheartening amount of selfish blather from the brain-damaged Whirlpool cohort in the comments of Martin’s post.

    You simply cannot reason with infrastructure fetishists.

  9. Concerned Conservative says:

    If the Parliament runs until 2013, and Alcatel et al deliver on schedule, NBN will be rolled out to 1 million plus households. Hard to gracefully exit – Ken’s point is spot on.

  10. Entropy says:

    The obvious also includes the likelihood we will not be waiting three years until the next election. And that a bunch of hacks given lucrative senior positions in the NBN for prior services to the party can run a business of this scale. And that prioritising rural and regional will dilute the vote at the next election, with beneficiaries the kind that will never vote ALP. Meanwhile city based ALP voters will be wondering what happened to their promised fibre. And meanwhile interest rates rise as the NBN starts crowding out other activities.

    See? The Cowpat can eventually produce roses.

  11. ken n says:

    A good analysis in the Oz, Judith.

  12. ken n says:

    I was once trying to get approval for a capital investment of about $2 million. There was no direct payback – no increase in sales or cost saving – but I was sure that it was necessary to allow us to continue manufacturing on that site.
    I said to the finance director that I could not quantify the benefits. He said “You just have. You are saying they are at least $2 million, otherwise you would not be spending the money. Now let’s talk about how much more than that the investment is worth”.
    That was a good lesson.
    To those saying the NBN is a good investment at $43 billion, let’s ask “Would it still be a good investment at $50 billion? $75 billion? $100 billion?”
    How and where do you draw the line?

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