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|RUDD PUTS MEGA BITE ON TAXPAYERS||Email this page||Back|
|Friday, April 17, 2009||Printer Friendly Version|
Rudd puts mega bite on taxpayers
The PM is in danger of being a debt builder rather than a nation builder
From The Australian , Page 20, Thursday 16 April 2009
Just like water, taxpayers' money is an extremely scarce resource in the current climate. Yet Kevin Rudd just goes on spending as if there is a giant money tree growing in a corner of the prime ministerial courtyard.
A worrying trait of Mr Rudd and his ministers is the way they talk about taxpayers' billions as though they are millions, and the bigger the numbers the looser they are on detail. This suggests a disturbing disconnect from reality.
You only have to watch the incredible performance of Finance Minister Lindsay Tanner when he was asked on Sky News to add some flesh to the Government's bare-bones commitment to establish a new government majority company to build a $43 billion fibre-to-the-premise, satellite and wireless national broadband network (take two).
Could he give an indication of projected take-up rates? After dismissing this as a "pointless exercise", when pressed for an estimated price users could expect to pay, Mr Tanner said: "It's too early to predict."
In the most painful moment, he completely gave the game away. So we won't be seeing any projections of likely revenue? He paused and responded: "Ah, no."
Despite the admission that Labor's latest broadband policy foray was little more than a back-of-the-envelope job, senior ministers were out spruiking for mum-and-dad and private sector investors. "We believe this will be a very attractive investment," Treasurer Wayne Swan told radio listeners.
Malcolm Turnbull quite rightly pointed out that any private company that behaved with such reckless abandon would be hauled before the Australian Securities and Investments Commission.
There is no doubt that fast broadband is an important driver of economic activity, but with a Government that is racking up debt and a deficit at a rate unprecedented in this country, many are quite rightly questioning if this project is our nation's No 1 priority, and most importantly if it can be afforded and whether it be viable. According to Mr Tanner: "The key thing here is Australia can't afford not to do this."
Countless newspaper letter writers have reminded the Government of other priorities they would prefer taxpayer dollars of this scale to be spent on, namely our water crisis. We can't drink the internet," one noted.
The reality is that this latest broadband announcement was clearly cooked up to mask the complete failure of Communications Minister Stephen Conroy to deliver on the unrealistic broadband promises he made in Opposition.
The minister wasted 18 months and about $20 million running a clearly flawed tender process that collapsed in a heap. And it must not be forgotten that Labor pledged to deliver new high-speed broadband services under an NBN by the end of last year.
What I find most galling is that anyone who has the audacity to question this latest project, promised without any semblance of a business plan, is dismissed as anti-broadband, which is a complete nonsense.
As Opposition spokesman for communications, I also bring six years of experience as this country's longest-serving finance minister.
And what Labor is proposing is full of holes. As the Coalition has said from the time Labor first got interested in broadband, the reality is that any major fibre-based network upgrade will have to involve Telstra.
Even after the company was kicked out of the ill-fated tender process, Senator Conroy was not being truthful when he maintained he could deliver an NBN without them.
This was a myth, and if this latest project is to proceed in any way, shape or form, the nation's biggest telco will need to be involved, either through the provision of capital or of equity in the form of existing infrastructure, including its considerable fibre-optic cable deployments.
But even if Telstra ends up being a major equity partner in this yet to be established National Broadband Network Corporation, it will still remain an extremely risky venture, with the bulk of that risk shouldered by taxpayers.
The Government is unable to even say whether this project has a $43 billion cap, or how it will be financed if the private sector, including the nation's telcos and other investors, do not stump up a stake of up to 49 per cent in the company.
Is Mr Rudd seriously prepared to go it alone and expect taxpayers to wear the entire project cost? That is too ludicrous to even contemplate.
I am also curious about the Government's Aussie Infrastructure Bonds, which it plans to sell to raise project debt, presumably billions of dollars' worth.
These bonds will provide a guaranteed rate of return, underwritten by taxpayers. From a position of heavy debt and deficit, the Government will be forced to borrow, simply to pay bond holders the annual interest rate of return for the life of the bonds.
And if the long line of analysts are correct and this proposition is not commercially viable, the Government read taxpayers will not only be carrying enormous project debt but will be left with a 51 per cent stake in a company that is not profitable a stake that nobody would buy, short of at a fire sale price.
History is full of failed and costly examples of governments trying to pick technology winners. In late 2007, Labor was telling us that broadband speeds of 12 megabits per second were the way of the future. Yet just 18 months later they are now saying 100Mbps is what we need.
The reality is that Labor has no idea what customer demand there will be for fixed-line broadband services in 2018, the absolute earliest this project could be finished. The phenomenal rate of wireless broadband take-up in the past 12 months should also serve as a cautionary note.
While Mr Rudd wants to be seen as a nation-builder, he is in serious danger of being best remembered as a debt and inflation builder.
Nick Minchin is the Opposition spokesman for broadband, communications and the digital economy. He is Australia's longest-serving finance minister