BCA suggests canning the NBN

The Business Council of Australia (BCA) has called for the Federal Government to apply a cost-benefit analysis of the National Broadband Network (NBN), further suggesting that funding to the national infrastructure project be put on hold to pay for the damage of the Queensland Floods.

In its Budget Submission 2011-12 paper to the Federal Government, the business lobby group said a major financial question for the government was whether it was currently investing in the right infrastructure projects.

“Decisions by governments to select infrastructure projects for funding and implementation must be accompanied by a cost–benefit analysis to ensure that scarce economic resources are being diverted to their most productive use,” the submission reads.

The BCA said while government should maintain its commitment to fund important economic infrastructure, the current shortage of funds and labour required in Australia’s export sectors and that needed to support rebuilding efforts from flood damage in the eastern states meant spending on infrastructure for the purpose of stimulating the economy was no longer necessary.

“Any infrastructure project that is currently being supported by government but which has not been demonstrated to provide a net benefit to the Australian economy should be strongly reconsidered,” the submission reads. “The largest of these projects is the National Broadband Network.

“The costs of poor infrastructure decisions are not always immediately apparent but become evident over time. Projects with low or negative economic and social returns effectively hold back the growth of the economy and ultimately act to lower living standards."

According to the BCA, a “coherent and comprehensive” ‘national infrastructure plan’ that would translate the large body of policy advice provided by Infrastructure Australia and others into an actionable plan that prioritises policy reforms and projects for implementation was required.

“One of the priorities of the plan should be to implement policy frameworks that leverage private funds by encouraging private businesses to invest in infrastructure,” the submission reads. “This can be achieved through pursuing infrastructure pricing reforms to better reflect costs and in making planning regimes more efficient and certain.

“Public–private partnerships (PPPs) are well-understood arrangements for transferring construction and operational risks to private partners while government retains regulatory and demand risk.”

The BCA joins fellow business lobby group, the Australian Chamber of Commerce and Industry (ACCI) which in September called on the Federal Government to address concerns within the business community that the NBN’s cost could be covered by future economic benefit.

"There is also a hard headed approach .... which says that we need to ascertain whether the productivity benefits and economic benefits are likely to offset the costs because the costs are very substantial," ACCI chief executive, Peter Anderson told Network 10 at the time.

"There needs to be, I think, more transparency in what those costs are, but I think business does recognise that in the short term at least there will be some costs which are not able to be returned in a direct way," he said.

"There will also need to be some subsidisation into regional Australia, that's recognised with major infrastructure like this, but we don't want to sign a blank cheque off if we are going to roll out major infrastructure like this.

"There does need to be hard headed economic approach to these kind of decisions even though the instinct in the business community is that there can be a real productivity kick and benefit with getting on with the job."