Productivity Commission slams NBN planning

Productivity Commission slams NBN planning

Summary: The Productivity Commission has slammed the former government's planning of the National Broadband Network project for failing to conduct a cost-benefit analysis.

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The man who headed up the Department of Communications when the NBN was still in its planning stages has now said that the planning of the project should have included a cost-benefit analysis.

Last year, the Productivity Commission was tasked by Treasurer Joe Hockey to review the government's role in building national infrastructure and the costs, competition, and productivity issues associated large infrastructure projects.

The Productivity Commission's draft report, released today (PDF), stated that there were many examples where inadequate project selection led to costly outcomes for users and taxpayers, and highlighted that the lack of a cost-benefit analysis for the NBN is one such example.

"An Australian government example is the decision by the previous government to proceed with the National Broadband Network without doing a thorough analysis of its costs and benefits," the report stated.

The commission said that all analysis of the project was focused on how best to implement the government's policy objective of fibre to the premises, rather than considering the merits of different options.

"Rather than conduct a cost-benefit analysis of the project, the government commissioned an Implementation Study (released in May 2010), which was a detailed examination of the NBN project. The study was concerned with how best to implement the government's stated policy objectives, but did not evaluate those objectives," the report stated.

The report states that through making public cost-benefit analyses for projects, it improves the transparency behind government decisions, and strengthens the incentives for decision makers to focus on the overall net benefits of a project.

The Implementation Study, conducted by KPMG and McKinsey consulting firms, was heralded by Communications Minister Stephen Conroy as proof that the then-AU$43 billion fibre-to-the-premises project was achievable and viable, and would be completed in 2018.

The 2010 study was conducted following the appointment in 2009 of Peter Harris as the secretary for the Department of Communications. Harris left the department to head up the Productivity Commission shortly before the September 2013 election.

ZDNet asked the Productivity Commission whether Harris accepted some level of responsibility for the planning around the NBN in his time as the department secretary. However, the Productivity Commission did not respond by the time of publication.

Since then, NBN Co has subsequently stated that due to delays in the negotiations with Telstra and the competition regulator's decision to force NBN Co to connect out to 121 points of interconnect, the NBN would not be finished until 2021. NBN Co's strategic review conducted after the election has estimated that the current project would not be completed until 2024.

As one of the six NBN reviews commissioned since the September election, Communications Minister Malcolm Turnbull has now appointed a panel of four experts to conduct a cost-benefit analysis into broadband and the regulatory environment for the NBN. The panel is due to report back to the government in June.

The sixth NBN review announced last week will also examine the advice provided to the former Labor government between April 2008 and May 2010, when the Implementation Study was released.

The Productivity Commission is accepting submissions on the draft report until April 4, 2013.

Topics: NBN, Government, Government AU, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

18 comments
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  • Does anyone know if the ANAO has also done an audit?

    I would be damned surprised if they did not come to the same conclusions about the poor planning etc of the NBN. "$4.7 billion and not a cent more", said Conroy. Absolutely laughable.
    1,2,3
    • I'm waiting for the Royal Commission...

      ...
      The Guv
      • Within the next year or two Labor's debt

        with hit something like $600bn.

        I am more than happy for a RC into the utter incompetence and waste caused by Labor in only 6 years. Something like $600bn of debt and nothing to show for it. That is really not the legacy that I wanted for my kids and grand kids.
        1,2,3
        • "Something like"?

          "Something like $600bn of debt and nothing to show for it."

          Got proof of that champ, or is it something you saw in a Murdoch rag?
          Tinman_au
          • Those are the forward estimates.

            Do you proof it is wrong or do you just like to be contrary for the sake of it?
            1,2,3
          • All lies

            Where i live, the ALP spent over 600 million on bridges, hospital extensions, port upgrades, new roads, road upgrades and the list goes on. To say there is nothing to show for the spending is laughable. Every time i see the LNP member cutting the tape to a ALP funded venture it makes my blood boil because he always takes the credit. You sir are a Murdoch shill odviously and NO i aint no ALP supporter either, i just dont believe everything puppa Murdoch says.
            JohnnyJammer
          • Even the Left-wing ABC agrees with the level of debt

            so why can't you?

            ". . .a path that gets us away from $123 billion of deficit, and starts to pay down the logjam of $667 billion of debt."

            http://www.abc.net.au/news/2014-03-13/joe-hockey-correct-on-australia-debt-and-spending/5310736
            1,2,3
          • It's ok

            It's OK to admit you were wrong mate, no need to get abusive
            Tinman_au
        • Get your facts straight!

          Ok, let's have an economy like the rest of the world and suffer right along with them. If Liberals were in power that is what would have happened.

          If you want to talk about waste then look at the current NBN trashing. Not going fibre all the way means before the NBN is finished in 2024, they will have to replace all that expensive junk copper stuff with fibre anyway, and at at taxpayer expense that is much higher than done properly in the first place. THAT IS THE WASTE because it is for political and not sound planning reasons this is going to happen.

          Joe Hockey like any treasurer is right to try and save taxpayer money, but he is knowingly creating a large expense shortly to save a few pennies now. It is for political reasons, and you as a taxpayer should be pissed of at that!

          Do not be blinded by all this productivity commissions stuff, it is there to shift the blame of what Joe Hockey knows is to come before 2024 and deflect attention from the true cause of wasted taxpayer $'s - blind trashing of the NBN to save $1 now but pay and extra $3 later when everyone has forgotten who did that! ...I'll give you a clue - it was not Labour.

          ...pay attention and get your fact straight champ, unless you like being led like a sheep by Murdoch propaganda.
          bzdata2
        • Abbott's legacy

          Will enable your uneducated grand kids to be paid $2/hour down the mines or waiting on the tables of his select persons of caliber while communicating via tin cans & string.

          Uncle Rupert's propaganda machine is doing a fine job in convincing the gullible on the evils of building any infrastructure other than roads or attempting to keep up with the rest of the planet in communications.
          grump-a1eeb
  • I think the election campaign has started early

    The question is, if the commission found nothing wrong, would there have been a report?
    John L. Ries
  • There are CBAs and CBAs

    What use is the current CBA that is being undertaken, other than political?
    The terms of reference are set so that weaknesses of Malcolm's solution are ignored. What use is a CBA that says FTTN is 30% cheaper up until 2020, deliberately ignoring the fact the the total cost is 50% greater by 2025?
    Pilfer-52cec
    • The commissions are there to misdirect the the true long term waste by NLP

      All this commission stuff is there to take attention away from the true waste that the NLP now has to own up to, but of course politically cannot! Like you say why save a penny now to spend $1 later - NOW THAT IS BAD PLANNING!
      bzdata2
  • Wonder if the P.C can provide Saturday's lotto numbers

    They obviously believe they can accurately predict our future and our economies future needs, after all that is an essential prerequisite for a CBA that is of ANY value
    Abel Adamski
  • *snigger*

    "The commission said that all analysis of the project was focused on how best to implement the government's policy objective of fibre to the premises, rather than considering the merits of different options."

    Great line Josh! It sums up the new NBN perfectly: "How dare you believe that fibre is the future! Don't just look at the best way of implementing this universally accepted technology of the future, but go and find alternatives that might be cheaper or faster in the short-term, even if it means remediating Telstra's copper/raising HFC from the grave/putting everyone on wireless and having to renegotiate that deal with Telstra that took 2 years to work out!"
    The Guv
    • So short-sighted !

      I agree totally - if the same CBA criteria had been applied to infrastructure projects such as the Snowy Mountains Hydro-electric Scheme, the water and sewerage systems, and our road and rail networks, none of these initiatives would have ever gotten off the ground either !
      amg3826
  • Find alternatives to fibre .... .

    For heavens sakes - start by looking at alternatives to the incompetent architecture put to gether by the clowns in NBN Co and then once there is a reasonable design look at other alternatives as well - get some FttH experts in or just listen to what the existing FttH industry is saying.
    Rossyduck
  • Difference between presidential and parliamentary government

    In presidential systems, committees and commissions investigate the current administration; in parliamentary ones, they investigate past ones?
    John L. Ries