The NBN – Flying blind?

No cost benefit analysis done by Treasury and Greens Senator questions the ability to see forward

The Australian Greens Senator for Western Australia, Scott Ludlam has questioned whether the Federal Government’s $43 billion National Broadband Network (NBN) plan is “flying blind”.

Ludlam made the comments at the most recent Senate Select Committee on the NBN while questioning the executive director of the Department of Treasury, Richard Murray.

Although Senator Ludlam acknowledged long term benefits are intangible and difficult to model, he questioned how the Government would know how much they should be investing in the project if there have been no short term calculations.

“Aren’t we flying blind though in the short term if there’s not even been an attempt made to quantify the short term…recognising that long term it’s probably impossible…” Ludlam said in an unfinished comment.

Murray was commenting that there are still many uncertainties in the Government’s project to provide a faster and more cost-effective broadband.

The Treasury director also said although there have been studies there has been no attempt by the Treasury to make a cost benefit analysis of the NBN.


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He added there was too much information missing to undertake a cost benefit analysis but claimed there will be significant short and long term benefits, although he acknowledged these are also difficult to quantify.

“This would be a major modeling task and it would have significant uncertainties,” he said.

“There are significant benefits, they are difficult to quantify and this would be a major issue for any cost benefit analysis.”

Murray highlighted economic benefits such as a potential growth and increase in productivity with new technology that will be distributed across the economy. Other likely benefits include creating a more competitive environment, and through retail, the Government hoped to achieve more innovation in the market.

The Treasury official claimed the agency has measured the risks and given advice to the cabinet to deliver the project in a cost effective way.

Murray estimated the rollout of the NBN would be sometime between 2010 – 2011, but further details won’t be available until the completion of the implementation study being undertaken by KPMG and McKinsey.

Earlier in the same hearing the head of Australia’s peak independent research and policy advisory body told the Committee it had not been asked by the Government to play a part in the NBN rollout.

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Tags Richard MurrayNational Broadband Network (NBN)Department of TreasuryScott LudlamNBN

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