Canberra's NBN proxy war

“If we are elected to government, there will be an NBN” declared opposition spokesperson Malcolm Turnbull last Friday in an interview on Sydney radio station ABC 702.

Confirming Turnbull's statement the opposition launched their Real Solutions for All Australians policy paper on Saturday which promises a faster and cheaper broadband network than Labor's current project.

On the government side, the weekend finished with further exasperation as NBN Co released a disappointing progress report on Sunday.

All three of these events illustrate how the National Broadband Network has become a proxy war for the many spending and revenue fights we're going to see ahead of the federal poll later this year.

The opposition embracing the need for a national broadband network is no surprise as it cost the Liberal Party government the 2010 Federal election, however the project exposes problems in both parties' policies ahead of this year's poll.

Malcolm Turnbull's comments on Friday illustrated the Liberal Party's contradictions, specifically his criticism of the government's four billion dollar target for the mobile spectrum auction.

“Governments have got to weigh up two competing priorities.” Turnbull said. “One is to achieve the best result for the taxpayer, but also to enable, to ensure that this incredibly valuable spectrum, this is the 700 spectrum which is ideal for high speed wireless broadband, is to ensure that it is affordable.”

Turnbull's quandary sums up the problem both sides of politics face – promising affordable services and benefits while balancing a budget in the post GFC economy.

Part of the Liberal Party solution to this quandary is to carry out cost benefit analyses on all federally funded infrastructure projects valued at over $100 million, including a retrospective one on the National Broadband Network.

Taxpayers will no doubt welcome a thorough and fair process for all big ticket ministerial brainwaves, had such a policy been in place during the Howard government years boondoggles like the Darwin - Alice Springs railway may never have gone ahead. 

Policies like this though have a habit of biting new governments. It's quite possible we could see the NBN passing a fairly run analysis while one or more of six motorways identified in the Liberal Party policy paper failing the cost-benefit test, much to the chagrin of a Liberal state government.

At this stage of the political cycle Labor should have an advantage in having a working broadband network in contrast to the opposition's proposed delays and uncertainty however NBN Co's slow progress is making it harder for the government to sell the project's benefits.

This problem was again emphasised this morning when NBN Co released their quarterly progress figures showing only an additional 127,000 premises passed in the first half of this financial year, well short of the 448,000 needed to meet their July targets.

Along with struggling to meet construction targets, the rate of connections is also worrying. For the project to break even as planned in 2018, it's essential that the network attracts paying customers.

While offering free trial connections may fix the poor activation rate and solve an immediate political problem for the government it will probably exacerbate the cashflow issue.

The government's political problems with the NBN – the project's perception of being poorly planned and costed coupled with the slow roll out – are matched by the opposition's contradictory position on telecommunications. 

How this issue pans out during the next six months of campaigning may again determine who forms the next government, how we build our networks will almost certainly determine how our economy performs through the 21st century.