Turnbull and Clare's broadband talkfest

Both sides of politics are talking up digital infrastructure, but neither appears serious about instigating the kind of reform the sector needs.

Last week was a busy time for the Australian telecommunications industry, although what was missing among the many fine words spoken was action in addressing an economy that’s increasingly being left behind.

Kicking off the week at the Tech Leaders Forum on the Gold Coast, the federal secretary to the communications minister, Paul Fletcher, delivered an opening keynote that outlined the government’s progress in his portfolio.

Fletcher’s speech featured the narrative – which communications minister Malcolm Turnbull continued at the My Broadband launch later in the week – that Labor’s NBN vision never articulated the problems it was intended to solve.

There is some validity in that argument – the Rudd and Gillard governments’ chronic inability to articulate its policies will go down in history – however the current government’s actions illustrate a general incoherency in the approach of successive governments to building infrastructure and developing policies. 

Bungled infrastructure

Malcolm Turnbull illustrated this problem at the release of the government’s Broadband Availability and Quality Report on Thursday last week, when he queried the new My Broadband website on the status of Sydney’s Norwest Business Park.

Anyone familiar with doing business in that part of Sydney knows broadband access has been terrible, with inadequate ADSL services and a difficult to access Optus fibre network that interestingly doesn’t seem to appear on the My Broadband website.

That a modern, recently developed commercial centre has such dire connectivity is a case study of why the national broadband network was needed in the first place, after 30 years of bipartisan incompetence in Canberra’s telecommunications policy.

Much of that incompetence was due to a profound ignorance by both politicians and federal government bureaucrats as to the realities of Australia’s telecommunications infrastructure.

“It is extraordinary that in six years of Labor talking about Australians having inadequate broadband they never bothered to do the work of actually identifying where services were good, bad or indifferent,” Turnbull told the media at Thursday’s announcement.

That the same could be said of the poor homework done prior to the Howard government’s privatisation of Telstra, Fraser’s splitting of the PMG or the Hawke and Keating governments’ grievous mistakes that have bungled Australia’s telecommunications infrastructure.

Bringing the NBN on track

Back in the real world, NBN Co chief executive Ziggy Switkowski and chief operating officer Greg Adcock were candid at the company’s mid-year briefing on Friday about the challenges in resolving the project’s problems, with management standing firm against Canberra’s meddling.

When Business Spectator queried Switkowski about delivering Turnbull a revised corporate plan by the middle of the year, he emphasised, “We’re going to do what makes commercial sense. We’re going to meet deadlines when we are able to provide quality output.”

Adcock also had a sensible view on getting the project’s troubled relationships with contractors resolved: “It’s fair to say the contracts aren’t satisfactory to any party in the relationships,” he said, affirming that agreements with delivery partners were being renegotiated.

Missing investment and training

However, infrastructure is only part of the story in getting Australia into the digital economy. Having government and private sector policies that encourage investment and employment into the sector are essential if the nation is going to do anything more than download cat videos with its high-speed internet connections.

The need to fund new industries has become apparent this year as the last vestiges of 1950s industrial policy, in the guise of Victoria’s Alcoa and Ford plants, shut down.

Business Spectator has covered the campaign to reform taxes on employee share options previously and last week PricewaterhouseCoopers joined the fray with its proposals on reforming fundraising rules.

The firm’s director for Venture Capital and Private Equity, Steve Maarbani, pointed out in the Google-commissioned report “The Start-up Economy” that the Australian start-up sector has the capacity to create 540,000 new jobs by 2033.

At an event in Sydney on Thursday, Maarbani and PwC discussed the opportunities for crowd-based equity funding, describing how Australia invests around $7.50 per head each year in venture capital – a 10th of the investment seen in the United States.

In the United Kingdom, alternative finance markets have doubled in 2012-13 and equity based crowd funding grow 618 per cent on the back of regulatory changes. Meanwhile, in Australia businesses of all types – not just tech start-ups – remain starved of capital and unable to invest.

Both Fletcher and shadow communications minister Jason Clare touched on tax reform in their Tech Leaders speeches, but it’s hard to escape the feeling that Australia’s politicians are missing the bigger picture.

After his speech, journalists challenged Fletcher about the government’s withdrawal of the Digital Technologies Curriculum last December, which left several years of planning and consultation on developing students’ modern workforce skills in limbo.

Clare’s upbeat speech may have wooed many of the cynical tech journalists who’ve become accustomed to dour pronouncements but the opposition spokesperson had little to say on substantive reforms beyond pledges to amend in the Copyright Act to reflect modern needs.

Lacking the vision

Both Fletcher and Clare’s silence on major reforms was disappointing, as both – along with Malcolm Turnbull – were part of the Australian American Leadership Dialogue tour of Silicon Valley last December where they saw first hand how US industry is developing.

“This is an industry which is full of confidence about its capacity to disrupt sectors of the economy,” Fletcher told Business Spectator before his keynote.

“A visit to Silicon Valley can’t help but remind you of the start-up culture in the US, people’s willingness to take risks and the importance of employee share schemes in incentivising people to join a start-up and take a risk, because there’s a very material upside if you do well.”

Clare reflected Fletcher’s thoughts in his closing speech: “If we are going to be successful in this increasingly competitive environment, we have got a lot to do.”

Yesterday at the G20 finance ministers’ meeting, Treasurer Joe Hockey committed to accelerating economic growth. He’s going to need deliver more Malcolm Turnbull and Paul Fletcher’s fine words if he wants to build Australia’s digital industries.