The World Bank’s lead ICT policy specialist has cautioned against pulling back on infrastructure spending like Australia’s National Broadband Network (NBN).
In the face of renewed economic turmoil in Europe and uncertainty of the pace of recovery in North America, Dr Tim Kelly told Computerworld Australia it would be prudent economic policy to forge ahead with expensive infrastructure spending like that of Australia's broadband plan.
“In principle, yes,” Kelly said in an emailed response. “It would send the wrong signal to the markets to back track on existing commitments to stimulus expenditure.”
The Federal Government first announced that the NBN Co would be established to build and operate a new, wholesale-only, open access, high-speed broadband network on 7 April 2009, partly to help stimulate the economy as the rest of the world reeled from the global financial crisis.
The Government has also claimed that the commencement of the NBN rollout in Tasmania late last year, the launch of the $250 million NBN Regional Backbone Blackspots Program in December, the March launch of Mainland Australia NBN trial sites, and several NBN Co industry consultations were proof that significant progress had been made on the NBN.
However, the Federal Opposition has said it would scrap what it calls a “reckless” project should it win power in the next election.
It has also slammed the $11 billion Heads of Agreement signed between the NBN Co and Telstra (ASX:TLS), calling the non-binding deal a "desperate" attempt to shore up its "ill-thought-through" NBN plan, despite many observers suggesting the deal will lower the cost of the rollout.
While Kelly did not want to comment directly on Australia’s project, he said there is a large range of untapped IT service and IT-enabled service opportunities that would be enabled to some extent by faster broadband.
“One example of this is in transport management,” he said. “There are a lot of potential benefits to consumers from having a well-functioning network to assist with congestion management, real-time information on parking availability and traffic flow, metering of vehicles in congested areas etc.”
Kelly also reiterated the intergovernmental organisation's view that broadband investment is a "no regrets" policy.
"We used the phrase "no regrets" investment to capture the idea that, even if broadband does not immediately deliver the direct benefits expected, in terms of jobs and competitiveness, it will certainly benefit the economy as a whole and therefore the indirect benefits (for instance in terms of capacity-building, opportunity creation or speeding up the general flow of information are substantial," he said. "In other words, the broader, intangible benefits of investment in broadband mean that it is rarely if ever a bad investment."
He added it is tough to say what the impact would be of waiting to invest or not investing at all in broadband, as might happen in Australia should the Federal Government change in the upcoming election. In Pictures: Broadband according to the OECD
“It is probably worth differentiating between impacts that would be slowed and other impacts that might not be realised at all,” he said. “In terms of impacts that would be delayed, this would include the benefits related to GDP growth. World Bank research has indicated a relationship between a 10 per cent increase in the penetration of broadband and a 1.4 per cent increase in GDP. If infrastructure investment is slowed, then it would take longer to achieve the 10 per cent increase in penetration, in which case the increase in GDP would also be achieved more slowly.
“Eventually, Australia would catch up, but it would clearly happen much more quickly if a public/private partnership were in place. In terms of impacts that might disappear, here one would look at commercial opportunities that might be seized by companies in other countries where broadband is already better developed.”