Labor NBN should have had cost-benefit analysis: Productivity Commission

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Labor NBN should have had cost-benefit analysis: Productivity Commission

Taxpayers now face higher costs, report claims.

The former Labor Government should have conducted a cost-benefit analysis on its version of the national broadband network, the Productivity Commission said in its draft report on national infrastructure released today.

Treasurer Joe Hockey tasked the Productivity Commission with reviewing the costs, funding and decision-making involved in building national infrastructure late last year.

In its draft report released today, it highlighted the national broadband network as one example of a project resulting in costly outcomes arising from a lack of a cost-benefit analysis.

It said the former Labor Government’s decision to bypass a “thorough analysis of its costs and benefits” had provided such an outcome for taxpayers. 

"Rather than conduct a cost-benefit analysis of the project, the Government commissioned an implementation study ... which was a detailed examination of the NBN project,” it said in the report.

“The study was concerned with how best to implement the Government's stated policy objectives, but did not evaluate those objectives."

It said the former Government had opted to focus on the implementation of its favoured fibre-to-the-premise technology over weighing up other viable options. 

"It also appears that detailed analysis of the project was focused, from a relatively early stage, on how best to implement the Government’s policy objectives, rather than considering the merits of different options."

The draft report said the Labor Government's decision to forego a cost-benefit analysis had resulted in the project running over time and over budget, as found in Communications Minister Malcolm Turnbull’s 2013 strategic review of the NBN.

The Government and the wider public would have benefitted from the transparency involved in making a cost-benefit analysis public, the report said.

Since its election to power in September 2013, the Coalition Government has so far chalked up six reviews into the project, most recently to study the advice the Labor Government received for two years prior to the release of its implementation study in 2010.

Communications Minister Malcolm Turnbull has also undertaken a cost-benefit analysis into the NBN and its surrounding regulatory environment, to be made public in June.

The implementation study was used as evidence by the former Labor Government that its $43 million FTTP NBN was the correct approach to take and would pay for itself once complete.

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