OECD calls for broadband cost-benefit analysis

The Organisation for Economic Co-operation and Development (OECD) has warned that governments need to weigh up investment in telecommunications infrastructure, which the opposition has used to pressure the Federal Government to conduct a cost-benefit analysis on its $43 billion NBN proposal.

The Organisation for Economic Co-operation and Development (OECD) has warned that governments need to weigh up investment in telecommunications infrastructure, which the opposition has used to pressure the Federal Government to conduct a cost-benefit analysis on its $43 billion NBN proposal.

"Policy makers need to evaluate the costs and benefits of any public investment in telecommunications infrastructure and select projects which can stimulate current demand, but simultaneously expand the productive capacity of the economy in the longer term," said the France-based OECD in a briefing pack released this week that detailed national broadband research.

The comments were immediately seized on by Shadow Communications Minister Nick Minchin as evidence for his claim that the government should carry out a comprehensive cost-benefit analysis on the NBN project before its commencement.

Communications Minister Stephen Conroy has denied the need for such a study and has insisted Minchin's stalling tactics were threatening the likely benefits of the NBN.

A spokesperson for Conroy today declined to directly respond to Minchin's comments or the OECD report, instead pointing to comments Conroy made last week in a speech.

Conroy said the NBN would cost less than the $43 billion proposal on the basis that current network owners, such as Telstra, could "vend-in" to the NBN.

"We expect that there will be substantial private sector interest in this network. This includes the possibility that companies will want to vend-in existing assets that can support the National Broadband Network for equity or some other financial arrangements," said Conroy last week.

"We expect that the actual cost to be significantly lower than $43 billion for a number of reasons, including the substantial contingency intentionally built into the estimate," he said.

But even if Minchin does force the government to submit the NBN to a cost-benefit analysis some economists say that may be impossible. Last week, a report by Australian economic research group Access Economics stated there was insufficient data to estimate the benefits of a high-speed broadband network.

Still, Minchin said in a statement this morning, "This [OECD] advice makes a mockery of Communications Minister Stephen Conroy's naive and arrogant dismissal of the need for a thorough cost-benefit analysis."

The report did, however, call for governments to make information about broadband proposals available to the public, said Minchin. A recommendation he said ran counter to Conroy's refusal to make public the ACCC and expert panel reports into the first terminated $4.7 billion NBN tender process, and a factor that is likely to be a sticking point should the government require support in the Senate from key independents when it attempts to pass legislation for the NBN roll-out.