Business Council renews calls for NBN cost-benefit analysis

The Business Council of Australia has joined the Opposition in calling for a detailed cost-benefit analysis of the NBN, in part to ensure the project doesn't bleed money as a result of "scoping inadequacies".

In a 150-page report [PDF] entitled "Groundwork for Growth" and prepared by consultancy Port Jackson Partners, the council urged the Federal Government to conduct "a detailed cost-benefit analysis" as part of the $53 million NBN implementation study.

"A commitment was made to spend up to $43 billion with little or no support analysis," the council said.

"This announcement of a major project without supporting analysis unfortunately also frequently occurs with state government projects.

"Many projects are announced by [state] governments as proceeding without a pre-feasibility study having been done; this could be occurring with as many as 50 percent of [state] government project announcements," the council claimed.

The council said infrastructure spending decisions in state government departments were often a response to a "crisis without appropriate feasibility assessment or planning work being done."

It urged the Federal Government not to fall into the same trap with the NBN.

"The problem with this sort of decision-making is two-fold: first, is the money committed to the NBN being spent on a project where the benefits outweigh the costs? And second, is it being spent on the best program possible?" the council said.

"The money committed to the NBN has a high opportunity cost in terms of other priorities it could be spent on. There is, of course, no shortage of good ideas or projects or programs on which $43 billion could be spent."

The implementation study should also include a more detailed assessment of the "wider productivity benefits arising from the NBN rollout."

The council urged the Government "to keep an open mind" should the implementation study contradict previous policy announcements and timelines. It also urged the study results be made public.

In a statement, Shadow Communications Minister Nick Minchin claimed that "Labor's refusal to conduct a cost-benefit analysis is simply indefensible and is symbolic of its utter recklessness with billions of taxpayers' dollars."

Minchin has called for a cost-benefit analysis on a number of occasions as part of his participation in the NBN Senate Select Committee.

He brought the same line of enquiry to question time in the Senate today, provoking Communications Minister Stephen Conroy to "welcome the BCA's report as an important contribution to the debate on infrastructure in this country - an issue which was almost completely ignored during the previous government's eleven and a half years in office.

"I also note that in the BCA's report today it recommends that the government use the NBN implementation study to assess and settle the way forward with the NBN," Conroy said.

Apart from a cost-benefit analysis, the council also voiced a number of other concerns, including the potential conflict of interest in the Government being "both the promoter and owner of the network".

It said the Government needed "to look carefully at the future of the existing copper-based networks as part of the wholesale broadband mix.

"Should people have the choice between paying a higher price for faster, fibre-based broadband, or a lower price for slower ADSL via the existing copper network?" the council said.