ACCC chairman: Cost-benefit analysis for NBN unnecessary

A cost-benefit analysis demanded by the Coalition and business leaders is an unnecessary step for the National Broadband Network (NBN), according to the competition regulator.

Australian Competition and Consumer Commission chairman Graeme Samuel told The Australian newspaper that although the NBN is to cost taxpayers around $43 billion, spending a large amount of money on a visionary project for the future is what governments are supposed to do.

He said it is nearly impossible to predict or measure the long-term social and economic benefits of a large project like the high-speed fibre optic broadband internet network.

"It is this crystal ball gazing that can't be done, and ultimately with these things that's where government steps in because the private sector won't do the crystal ball gazing," Mr Samuel said. "That's where the government steps in to provide the vision."

This new perspective goes against many recent opinions in the media from the likes of the Coalition’s communications spokesman Malcolm Turnbull, as well as business leaders like the Business Council of Australia’s president Graham Bradley, Westpac’s chief executive Gail Kelly and Future Fund chairman David Murray, who all feel a cost-benefit analysis is absolutely necessary before undertaking such a large venture.

In a speech yesterday, Mr Turnbull again urged the government to undertake a cost-benefit analysis.

"For those who cry out 'nation building' and 'vision' when matters of finance are raised consider this: why is subsidising the provision of a near infinite range video and entertainment services to every Australian home more worthy than building a decent public transport system in our cities, better hospitals and roads, let alone fast trains and water infrastructure?

"Governments deal with scarce resources – your taxes – and they owe it to us to rigorously prioritise and analyse the projects on which those taxes are spent.

"The government must immediately undertake a thorough cost benefit analysis of this project. It is not too late, the die is far from cast. There is still time to get the broadband services we need at a price we can afford."

Meanwhile, the NBN Co’s chief executive Mike Quigley announced he is undertaking a business case for the project, taking into account expenses, cash flows, and the ability for the project to earn a profit.

The line in the sand looks to be the difference between purely economic approaches taken by a business plan, versus social benefits inherent in a proper cost-benefit analysis.

Mr Samuel said measuring social benefits of the NBN was an extremely complex task, as its resulting influence on life in rural and regional areas would be felt in ways disassociated with financial profits.

Mr Samuel said, "I don't think people are right or wrong in seeking a cost-benefit analysis. I just think they have confused a private cost-benefit analysis, which is the business case, with the social cost-benefit analysis, which is the one government has to step in with its vision."

Financial and social impacts on the Australian community are the two main perspectives being focussed on, but Mr Samuel’s opinion is the government is involved with the massive undertaking because it falls into a realm where vision of the future is more pertinent than measurable business-based outcomes, which are standard in smaller private industry projects.

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