NBN and the common good – write offs and Telstra’s interest in buying it.

Looking back over the last 30 years less emphasis is now placed on the ‘common good’ than was the case before the 1980s. I will link this to the NBN a bit further in this analysis.

Over the last few decades, often for very good reasons, we began to privatise what had been government businesses and public agencies that operated on the basis of the common good, and in many cases this has been largely beneficial. If we compare the stale telecommunications market 30 years ago with the vibrant industry it is today, with the plethora of new services and competition that makes most of it affordable, it becomes clear that this development has delivered good outcomes.

There are plenty of beneficial developments in other sectors as well. However, for example in energy, we have also seen the opposite happening. Energy has become less affordable since privatisation took place, and for the consumers there has been little or no innovation in that market. So the outcomes are not always the same.

But whether privatised or not most of those services still serve the common good. This hasn’t changed, and vigilance and a balanced approach is therefore needed in the management of the common good. Some of it can indeed be served well through privatisation and competition while this might not be the case in other areas.

Since the arrival of neo-liberalism there has been a lot of pressure on the common good. Universities, aged care facilities, public television, museums, cultural institutions, parks and other common good facilities are being forced to become more commercial and are often financially pushed to the brink. This is not what people want; it is something that suits financial institutions and the shareholders of big business. They more than often are only interested in profits and money transactions with the attached attractive fee structures – there is increased awareness about a clear mismatch between neo-liberal policies and the common good.

Most people will, if asked, oppose the ongoing commercialisation of our common good, there is increased political pressure to address these issues.

We did see an interesting development here in relation to the NBN. At the outset this project was seen to be serving the common good. We need a modern viable society and economy and the NBN was seen as critical infrastructure in that respect. A mainly fibre optic infrastructure is needed, and it did not make economic sense to have competing companies delivering two or three such networks. We also don’t have competition and overbuild in water, gas and electricity infrastructure. So in relation to the NBN it was decided that the government would invest in national infrastructure (being the common good). The industry agreed with this plan and it had the support of 80% of the voters.

Unfortunately neo-liberalism got in the way when a new government arrived. Their ultimate wish was to kill the whole project, but they could not destruct the investments that were already made, and so they watered down the plan in such a way that it added very little to the common good. As a matter of fact, after an investment of $50 billion we end up with a network that is not much better than an ADSL2+ network that Telstra could have built for a fraction of that outlay.

Some of you who have followed my comments on the NBN will have heard me say over the last two or three years that to return the NBN to an economically viable situation a roughly 50% write-down is needed, there are even people arguing for an 80% write-down.

I am no longer alone in making such statements. PcW, Standard & Poor’s and the Productivity Commission have all said the same thing, but during the PM-ship of Malcolm Turnbull – the architect of this 2nd rate solution  – this was not discussable. Now the opposition has cautiously indicated that a write-off might indeed be needed, and this has not elicited the usual response from the government. This time they decided to stay quiet on the issue, an admission that something needs to be done to save the NBN from financial disaster.

A write-down would also provide a better foundation for the job to be finished over the next 5 to 10 years, either with fibre-to-the-home or fibre-to-the-curb technologies.

With both sides now warming up to this idea the NBN is moving back into common good territory, where it clearly needs to be.

Interestingly at the same time Telstra jumped in – as has been foreshadowed by me – as a potential saviour of the NBN  being possibly interested to buy the nbn company. This will set a whole new discussion in motion regarding the common good as nobody want to see a return to the Telstra monopoly from the 1990s and early 00s.

When, in the mid 00s,  I was involved in the NBN, as a strategic adviser to the minister, my sole reason for advocating a national broadband network related to the social and economic benefits of such national infrastructure for e-health, education, sustainability, innovation, smart cities, smart energy, etc. The FttH investment in the NBN would create benefits for these sectors; and in turn it would be worth hundreds of billions of dollars to our society and economy – being the common good. However under neo-liberal policies, the government strongly believe that they should not be involved in this and leave it all to market forces. This with the knowledge that despite 25+ inquiries and regulatory changes in the telecoms market during the 1990 and early 00s, the market had not delivered the anticipated outcomes for the country

Under the current government we have not progressed on these issues and it could be argued that the industry in now a worse position. Furthermore by not adhering to the original common good strategy for the NBN we have now wasted billions of dollars and will have to invest tens of billions more to finish the job. That is not a good outcome.

Nevertheless it looks as though that there soon will be a new opportunity to discuss the value of the NBN as our common good and define its key reason for existence as a tool in the delivery of good social and economic outcomes for our country. Based on this – but only with bipartisan support – we can develop the right industry and regulatory environment; it just frightening that we are not yet having this discussion, as a society we do need to be well prepared before we start this discussion, otherwise it  could well be hijacked again by partisan  politics.


Paul Budde




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