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Monday, 14 April 2014

NBN hypocrisy confirms contempt for process

NBN hypocrisy confirms contempt for process

NBN hypocrisy confirms contempt for process

10 hours 10 minutes ago

Malcolm Turnbull relentlessly pursued
Labor for going ahead with its NBN without first getting a cost-benefit
analysis, which makes it particularly galling that he is now doing the
same, writes David Braue.
The Australian public has
become so used to our elected politicians breaking their word that new
revelations of double-speak are greeted with little more than a shrug.

With the Abbott Government not only breaking repeated election promises around the National Broadband Network
(NBN) - but also this week engaging in unconscionable hypocrisy about
its planned expenditure of $41 billion without appropriate oversight - it's important that even the most jaded political observer take note.

The hypocrisy revolves around Communications Minister Malcolm Turnbull's decision to issue a new Statement of Expectations (SoE) to NBN Co, the company charged with rolling out the next-generation broadband network.

doing so, Turnbull has completely changed the architectural and
strategic direction of the NBN - without waiting for the results of the
cost-benefit analysis (CBA) that he commissioned in December, putatively
to guide his decision about the best path forward for the project.

Co under Labor suffered near continuous browbeating by Turnbull during
his nearly three years in opposition, with him repeatedly questioning
the credentials of its management and questioning at every opportunity
Labor's decision to begin the project without conducting an extensive
cost-benefit analysis (CBA).

In October 2009, Turnbull called Labor's NBN a "no cost-benefit analysis, no financial analysis required, $43 billion National Broadband Network thought bubble". A year later, he argued in an SMH editorial
that a CBA was "essential" to ensure that any future NBN would deliver
adequate returns to justify the expenditure of what was then $43 billion
for Labor's fibre-to-the-premise (FTTP) model. He wrote:

to glamorous ribbon-cutting opportunities, politicians love investing
taxes in big new projects. If anyone says 'cost-benefit analysis', it is
brushed away with a call to 'nation building'.

... The Gillard
government must urgently undertake a thorough cost-benefit analysis of
the network. Its stubborn failure to do so can only lead us to conclude
that it does not want to know what that analysis will reveal.
In a parliamentary address on October 26, 2010, Turnbull said:

NBN] has been subject to no financial scrutiny and, remarkably, the
government continues to refuse to submit it to a cost-benefit analysis.
Everything we know about good government and prudence tells us that a
cost-benefit analysis is required.
In November 2010, Turnbull said:

beggars belief that a government could be so reckless as to allow such a
massive investment to proceed without the publication of a business
case ... and, above all, without a rigorous cost-benefit analysis.
He mentioned the CBA again in February 2011 and many other times throughout his time in opposition.

need for a CBA remained a common part of Turnbull's rhetoric leading up
to the 2013 election and through the first months of his ministry. In
October 2013, he called ex-communications minister Stephen Conroy out on
claims the Coalition had abandoned its CBA, saying the government
remained "committed to a CBA".

In December 2013,
he raised Labor's failure to conduct a CBA and said that "forecasts,
business plans and practices need to be informed by sober reality".

Upon the launch of his own government's CBA,
Turnbull noted that the work of his expert panel - headed by Dr Michael
Vertigan AC and including Alison Deans, Professor Henry Ergas, and Tony
Shaw PSM - would "provide the Government with rigorous, robust and
independent advice that will help guide decisions on the future of fast
broadband and the NBN in Australia".

Outlining his government's NBN plans in February this year,
Turnbull said that the current "thoroughgoing cost-benefit analysis ...
should have been done by the previous government before they embarked
on this in the first place, but it is better late than never... As far
as the NBN project is concerned, the government's commitment is to be
completely transparent and treat the people of Australia as you would
treat the shareholders in a public listed company."

The examples
go on and on - which is why every Australian taxpayer and voter should
be deeply disturbed by the Minister's unilateral decision to proceed
with his favoured alternative model months before his own cost-benefit
analysis is complete.

In doing so, Turnbull has presupposed the
results of a CBA that could, assuming it is conducted fairly and
appropriately, very well find that there is a compelling case to
continue the current FTTP-based model. Indeed, there is no evidence at
all to suggest that Turnbull's favoured MTM model is the best NBN
approach to take - only that it will be the cheapest way of completing
the network.

Even Ziggy Switkowski, the Turnbull-appointed chair
of NBN Co, has openly said the CBA could repaint the correct direction
for the NBN - noting in recent Senate Select Committee testimony
that the CBA "may reach a different conclusion once estimates of social
benefits are made and offset against opportunity costs".

In other
words, even the NBN's own current architects expected Turnbull to wait
until the CBA was handed down before making any substantive changes to
the rollout model. In changing his formal expectations of NBN Co,
however, the Minister has irrevocably changed the project's direction
- and done so based on what is still flimsy, unsubstantiated evidence
that completely ignores the additional billions in expenditure that will
be incurred when the government begins updating the MTM network to FTTP
in the 2025 to 2030 time frame.

The pre-election Coalition
promised Australia governance at its best but in government it has
delivered one-eyed, dogmatic decision-making at its worst.

Turnbull defended his decision to issue the new SoE on the grounds that he was simply allowing NBN Co to "get on" with the rollout.

company has got to get on," he told journalists after the announcement,
five years to the day after NBN Co was established on the mandate of
then-prime minister Kevin Rudd and then-communications minister Stephen

Now, the company will apparently be freed to "get on" with
the rollout - although there is literally nowhere for it to go. After
all, delivery of the government's favoured multi-technology model (MTM)
- which discards the current future-proof FTTP rollout for a hodgepodge
of existing and new technologies - depends on a number of significant
obstacles (identified by NBN Co last year) including the incredibly complex renegotiation of the government's $11b Telstra Definitive Agreement.

Without that renegotiation complete, the government has no right to use Telstra's copper
to roll out any part of its MTM model - meaning that NBN Co has no
ability to roll out the model's dominant fibre-to-the-node (FTTN)

With negotiations expected to continue through most of
this year, there was certainly no need for Turnbull to rush to issue a
new SoE that steered NBN Co away from the existing FTTP rollout.
Turnbull could easily have done the right thing by waiting until the
completion of his own CBA - which itself will inform the authoring of an
updated NBN Co Corporate Plan, which will in turn spell out the details
of the new rollout.

Yet, it appears, he couldn't resist the
symbolism of changing NBN Co's marching orders on its birthday - a time
when new NBN Co CEO Bill Morrow, poached from Vodafone Hutchinson
Australia (VHA) to spearhead the network's new structure, is settling
into his role and unceremoniously oversaw the ejection of three of NBN Co's most senior, experienced executives.

one thing to change the NBN, as Turnbull has made no bones about
promising he would do. But when a Minister who was basically elected
into his current position by his strong and unwavering call for better
governance decides that those governance rules simply no longer apply to
him because it's inconvenient - this is cause for concern.

the current Government's alternative NBN still expected to cost well
over $40 billion, the Government's now-clear hypocrisy - and its open
contempt not only for its pre-election promises but its so-called
commitment to be "completely transparent" with the Australian public -
cannot be ignored. We may have become accustomed to a "no-surprises"
government that has proven to be anything but, but in the wake of
Turnbull's latest move, it's clear that when it comes to the NBN, there
are surely more unpleasant surprises to come.

journalist David Braue has been covering the telecommunications industry
since it was deregulated in 1997. Follow him on Twitter at @zyzzyvamedia. View his full profile here.

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