NBN: There they go again


Just when I thought the whole NBN cost-benefit analysis had gone away, there it is again. And this time from a surprising source: the normally relevant, Peter Martin. In The Age today, there is yet another lament about the lack of a cost-benefit analysis for the NBN. As I wrote a few weeks back, the commercial-based justification for the NBN is most likely false. Rather than calling for a costly analysis for something that we (a) probably know the answer to and (b) won’t change the Government’s decision cut to the chase and let’s all agree that there is no such justification and every time the Government says there is it is perpetuating a falsehood or an unsubstantiated hypothesis rather than trying to obscure that fact with continue claims for economic analysis.

And while I am on it, could someone please produce positive evidence that such an analysis was done for the Snowy. I have scoured Hansard and found no evidence for it. Surely, if all these people say it is exists, there should be a record. Would someone please find it?

And another thing, Martin writes on The Concorde: “The fastest passenger plane ever was a massive government project conceived in the absence of a cost-benefit study. Its benefits never approached its costs.” The last statement is true, the first is not. Ken Arrow, while he was at the Council of Economic Advisors, did (or supervised) that cost-benefit analysis for supersonic air travel (this was back in the 1960s) and the project was killed in the US because the benefits were much less than the costs. The point being that no CBA stands in the way of blind political will. This isn’t an argument for a CBA but an argument for evidence-based policy. The CBA sniping obscures the bigger issue.

Finally, where Martin hints at but sadly devotes little scarce column space to is the competition issue. Right now, the sense I get from statements from ACCC head Graeme Samuel is that he is not going to treat the NBN and the Government in its clearly business endeavour as the Trade Practices Act envisions and examine whether the deals being done with Telstra are anti-competitive or not. I can’t for the life of me see how we can justify having independent competition policy analysis without following formal public benefit processes and open submissions. Yet that seems to be just what might happen. I would be thrilled to be corrected on this but perhaps journalists should start holding Samuel’s feet to the fire on this issue rather than spending time on what is now an irrelevant side-show.

[Update: OK Malcolm Turnbull gets serious about the competition issues. Keep it up.]

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