The Big Build That Impoverished Australia
The original National Broadband Plan wasn’t particularly controversial, as far as Labor policy goes. Back in 2007, Kevin Rudd still styled himself as an 'economic conservative,' and the initial plan reflected that stance. It proposed a modest investment of public funds (sourced by selling shares in Telstra) in partnership with internet service providers to upgrade the ageing copper network. The plan aimed to foster competition by separating Telstra’s roles as both wholesaler and retailer. As a young computer enthusiast, the prospect of fast internet was exciting. What emerged, however, was a very different beast.
Two years later, inspired by American libertarian Ron Paul, my perspective on government provision of 'fast internet' had shifted. The proposed public-private partnership fell apart when the government couldn’t - or wouldn’t - strike a deal with Telstra or the Optus-led G9 consortium. Then, in early 2009, the Rudd government announced the creation of NBN Co, tasked with building and operating a fibre-optic network at a cost of $43 billion. This came on top of the $78 billion in spending promises made since the Global Financial Crisis hit in late 2008. It was a Keynesian spending spree that neither Labor nor the Coalition has since managed to rein in, leaving Australians to bear the burden through higher living costs. I knew we were in for a wild ride.
Proponents of government 'nation-building' projects often argue that certain technologies wouldn’t exist without government intervention. The cliché "who will build the roads?" is familiar to every libertarian. But Australia’s broadband woes in 2007 were of the government’s own making. Back in 1994, the then publicly owned Telstra partnered with Foxtel to undermine Optus’ hybrid fibre-coaxial (HFC) network. Even after Telstra’s partial privatisation in 1997, legislative protection of Telstra’s monopoly stifled competition and innovation. The Howard government’s policies left the market unable to deliver alternative networks, paving the way for Rudd to declare 'market failure' and sell the grand NBN as a solution.
What better way to spend public funds during a cost-of-living crisis than to pick a fight with one of the world’s most prolific entrepreneurs?
Where is the NBN today? Sixteen years and seven prime ministers later, it has cost $57 billion and loses over $1 billion annually. Rudd’s promise of a seven-year build and privatisation within five years remains a pipe dream. There’s no indication the NBN Co will ever be sold off. In fact, Prime Minister Albanese has promised another $3 billion and pledged to keep the NBN in public hands if re-elected this year. I have little confidence that a newly elected Coalition government would muster the courage to privatise it, likely citing 'national security' as an excuse to avoid action.
The sunk costs of the NBN since 2009 are staggering, and the mismanagement continues. Take Sky Muster, the satellite launched in 2015 to deliver broadband to rural Australia. It is now obsolete, with customers abandoning it for Elon Musk’s Starlink - a low-earth orbit satellite system offering lower latency and better value. A rational public enterprise would celebrate private innovation and withdraw from the satellite broadband market. Instead, NBN Co plans to launch its own low-earth orbit satellites to compete with Starlink - at taxpayers’ expense. What better way to spend public funds during a cost-of-living crisis than to pick a fight with one of the world’s most prolific entrepreneurs?
Closer to home, NBN Co is offering free Fibre to the Premises (FTTP) upgrades to households, regardless of need or existing infrastructure. I received this offer in mid-2024, even though I was already connected to iiNet’s high-speed HFC network. Seeing an opportunity to diversify my home’s infrastructure, I signed up with a no-contract retailer. Within a week, contractors had installed fibre to my premises at no cost to me. The result? Internet speeds that were slower (yes, slower) than my previous HFC connection. Less than a month later, iiNet offered me a $20 monthly discount on my old plan. Naturally, I made the switch back. Thanks to NBN Co, taxpayers funded an unnecessary fibre installation that I discarded within weeks.
Neither Labor nor the Coalition has since managed to rein in, leaving Australians to bear the burden through higher living costs.
The low debt balance sheet inherited by Rudd and Swan in 2007 is now a distant memory. Interest on the national debt exceeds $40 billion annually and continues to climb. The promise of the NBN was to grow the economy, empower business and make Australians more prosperous. The reality is quite the opposite. Alongside the NDIS and other grandiose government spending, the NBN has crippled the economy, leaving Australians - both current and future generations - poorer.
We’ve tried big government. It delivered us here. Is it time to give small government a chance?
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Fantastic article and I totally agree. I remember when Rudd announced it to the press - which was the first time anyone in Government had heard anything about it - there had been no needs analysis, no costing, no planning; nothing. It was blatantly obvious it was going to be a typical socialist government project disaster. Sure enough, the costs kept rising, the timeframes kept slipping, and the performance kept falling. And almost 20 years later, predictably, a mobile phone connection will outperform the top-shelf domestic NBN connection, and cost less.
Excellent article and if we have another 3 years of labour expect more and more expensive failures. There is tragedy at the end of the tunnel. Victoria shows all the symptoms of a failed state. Debt repayments force higher taxes which in turn force individuals and businesses to leave, forcing yet higher taxes and a repeat of the above. Soon the state will be unable to fund itself. Already happening with a policing crisis. Eventually shrinking revenues and burgeoning debt costs beget fiscal collapse. Thereafter free markets will be the only option!