Labor’s NBN ‘rushed, chaotic’, says audit
BIG taxpayer-funded infrastructure projects worth more than $1 billion could face stringent new hurdles after a landmark audit has found the policy process for developing Labor’s National Broadband Network was “rushed, chaotic and inadequate”.
In a devastating critique into the formation of Australia’s biggest infrastructure projects, former Productivity Commission head Bill Scales has found the NBN Co set up to develop the high-speed internet network was given a job that only a “well-functioning, large and established” telecommunications company could do under the tight timetables for the rollout. For a start-up, it was an “impossible assignment”.
Mr Scales said he was told that some of those involved in the first 12 months of the NBN Co were “making it up as they went”, while others related a “salutary anecdote” that, in the early days of NBN Co, ‘‘all we had (to guide us) was the press release and a bunch of business cards”.
In a move that will reignite political debate over the NBN, the Coalition late yesterday tabled the 186-page audit into the process that led to the formation of Labor’s NBN. It is significant as it contains sweeping recommendations on what future actions Canberra should take when considering major projects such as the network. It also comes ahead of an independent cost-benefit analysis into broadband and the regulatory arrangements for the NBN.
The audit examined the original “Mark I” NBN policy — based on 2007 election promises by then opposition leader Kevin Rudd of $4.7bn public funding towards building a fibre-to-the-node network — and the vastly more ambitious $43bn Mark II policy that replaced it.
Both were developed under the Rudd Labor government. In April 2009, after the world’s economy was rocked by the financial crisis, the original proposal was replaced with a $43bn plan for the government to go it alone and build a fibre-to-the-premise network.
The audit finds that the public policy process for developing the NBN Mark II received only “perfunctory” consideration by cabinet. NBN Mark I was “in general conducted appropriately from a public policy perspective”.
“By contrast, with NBN Mark I, the public policy process for developing NBN Mark II was rushed, chaotic and inadequate,” it says.
The plan got just 11 weeks’ consideration and “there is no evidence that a full range of options was seriously considered”.
“There was no business case or any cost-benefit analysis, or independent studies of the policy undertaken, with no clear operating instructions provided to this completely new government business enterprise, within a legislative and regulatory framework still undefined, and without any consultation with the wider community,” the report says.
In other findings, the audit says full cabinet did not consider the policy until very early on the April 2009 morning it was announced, and its role was to “rubber-stamp” a decision by the strategic priorities and budget committee of cabinet.
It also revealed that public servants had “difficulty” in having their “voice” heard on many of the most important policy matters related to Labor’s NBN policy, often finding their advice was ignored or that they were excluded from contributing.
Communications Minister Malcolm Turnbull, who is overhauling the NBN and promising to use a mix of technologies to meet its rollout targets rather than largely relying on fibre-to-the-premise — is certain to use the audit to criticise Labor.
However, the Coalition is likely to face pressure to be seen to fully adopt all seven recommendations.
Mr Scales has recommended that large public-sector projects costing more than $1bn be subject to a cost-benefit analysis and that the results be made public before the project starts.
The Coalition has promised that all federally funded projects worth more than $100 million would undergo a cost-benefit analysis by Infrastructure Australia. The Coalition’s infrastructure policy does not require that this cost-benefit be publicly released.
Instead, it expects Infrastructure Australia to justify its decisions and commits the government to prioritising projects based on “proper” cost-benefit analysis.
Labor has accused the Coalition of investing billions of dollars on roads projects that have not been subject to cost-benefit analysis.
Mr Scales calls on parties promising projects in their elections pitches to commit to having them fully costed by IA or the Productivity Commission, with the costs of the project made public.
Under this proposal, both major parties would have to commit to releasing a project plan for public comment before it starts.
On top of this, government should take “special care” in setting realistic timetables on big, complex projects and reforms.
In other recommendations, Mr Scales says governments should use a “taking stock approach”, potentially involving the Productivity Commission, when it is clear that the approach to major projects or reforms is unlikely to do what was expected.
This was because the report finds that after NBN Mark I collapsed, the public policy process for a revised NBN “vision” was done in 11 “chaotic” weeks in 2009. “The decisions made by the Rudd Labor government during this 11-week period and the means by which they were made had, and will continue to have, a profound effect for many years on the rollout of Australia’s NBN, its cost and its effectiveness,” it says.
Former communications minister Stephen Conroy, who championed the NBN, declined to comment on findings made by the Scales audit, saying he has defended the formation of the NBN policy in the past.
However, he did use the review to attack Mr Turnbull’s previous policy initiatives, including a 2007 $10bn national water management plan for the Murray-Darling Basin, which he said would not pass the call for cost-benefit analysis put forward by the Scales review. “Malcolm Turnbull’s three signature policies, water, cloud seeding and the NBN Mark III, all fail the Scales test,” Senator Conroy said.
Last night, Mr Rudd’s office said it was logistically impossible to get a comment.
The independent investigation also called into question the role that the competition regulator played in the Labor government’s 2009 decision to shift its technology choice from a cheaper-to-deploy fibre-to-the-node network to the Rolls-Royce fibre-to-the-premise model.
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