Home' Future Building Australian Infrastructure Review : Volume 3 Number 2 Contents futurebuilding 75
Volume 3 Number 2
Public Sector Reform Panel
Competition in telecommunications is moving to
a whole new paradigm as a result of the building of
What is now being built is the only sensible,
commercial and economic decision that could've
There's been glib political talk that we've
got a monopoly NBN; well, of course we've
got a monopoly.
There are many people who would argue
that you can't afford one NBN, let alone two or
three or four of them.
We are developing infrastructure for this century,
or at least for the next 50 years, that, in terms of
providing a high-speed broadband network, is
fundamentally sound and, with the role of the ACCC
in dealing with pricing structures by the NBN, will
work out very well indeed.
There's an issue about cost-bene t analysis.
The cost has two business plans; the cost has
been established and there will always be a minor
increment in their costs as things go along. But the
cost has been established. The nancial returns have
also been established according to two business
plans, and they have been examined. They show an
internal rate of return of 7.1 per cent.
The real issue about bene ts is twofold. There's
a social bene t associated with the development of
the NBN, which relates to about 25 per cent of the
geography of Australia. That's the 25 per cent that's
rural and regional Australia, and we have a social
contract with them that says they will have services
that are as good as possible on an equitable basis to
what we have in the more densely populated parts of
Australia. It's dif cult to assess that.
It's a political and social decision that has been
made for decades in this country in respect of dams,
roads and trains, and everything else in infrastructure.
The other element is this: when you look at high-
speed broadband, some look at it in a very short-term
perspective. What is, I think, virtually impossible for
the best economists and the best visionaries, is to
establish what true high-speed broadband will offer,
not ve years down the track, but 10 and 20 and 30
and 40 years out, because that's the nature of the
lifetime of this particular infrastructure.
We need to recognise that there's a social
investment, and it's going to inevitably lower the rate
of return down to that 7.1 per cent.
And we need to recognise that what we are
building is that multi-lane highway for broadband
that will take us out for 30 or 40 or 50 years, that
will replace that 100-year-old copper infrastructure,
which is now badly degraded and needs to be
replaced. And nally, just think in the more visionary
sense about the sorts of bene ts we can get. Think
about it in terms of health and the other things you
could do, and think of the bene ts that ow from it.
TM: At the time this was done, there was a debate
about whether or not you could subject the NBN
to a cost-bene t analysis. I strongly supported the
argument that if you tried to do a cost-bene t analysis
that embraces things in addition to the economic
considerations, you would have had pie in the sky
stuff that would've invariably been wrong.
The only way to be sensible was to subject it
to a full, rigorous commercial analysis to generate
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