Australia - Regulator has questioned the need for a cost-benefit analysis of the NBN, arguing govts should decide on visionary projects

[the australian] THE competition regulator has questioned the need for a cost-benefit analysis for the $43 billion National Broadband Network.

Australian Competition & Consumer Commission chairman Graeme Samuel said it was the proper role of governments to spend money on visionary projects for the future.

And it would be impossible to measure the flow-on social and economic benefits of a high-speed internet network over the next two or three decades, he said.

"It is this crystal ball gazing that can't be done, and ultimately with these things that's where government steps in because the private sector won't do the crystal ball gazing," Mr Samuel told The Australian yesterday.

"That's where the government steps in to provide the vision."

Mr Samuel's view puts him at odds with opposition communications spokesman Malcolm Turnbull and business leaders, including Westpac chief executive Gail Kelly, Business Council of Australia president Graham Bradley and Future Fund chairman David Murray, who say a cost-benefit analysis is required.

Mr Samuel's comments came as NBN Co chief executive Mike Quigley dismissed concerns that internal rewiring of homes was required for consumers to access the new fibre optic network.

"In Tasmania, very few - about 3 per cent - of the customers who have now been connected have decided to do anything about their internal wiring," Mr Quigley told a telecommunications conference in Melbourne.

He said Telstra should not be forced to continue operating its copper network for customers who refused to be connected to the new fibre network, and confirmed NBN Co would cover the cost of people accessing basic phone services through the network.

Mr Quigley is conducting a business case that would take into account costs, cash flows and the project's ability to turn a profit.

But Mr Samuel said the more complicated task of carrying out a cost-benefit analysis of the social benefits of the NBN and its implications in unprofitable rural and regional areas of the country was practically impossible.

"I don't think people are right or wrong in seeking a cost-benefit analysis. I just think they have confused a private cost-benefit analysis, which is the business case, with the social cost-benefit analysis, which is the one government has to step in with its vision."

But Mr Murray said no government should spend taxpayers' money without having some idea about priorities and the value of the project to the community.

"In a world where growth has been reduced by the global financial crisis, and reduced going forward, and governments are in deficit, it becomes even more important to prioritise spending towards those things that will have the greatest economic benefit," he said.

"That way you will get the employment now and the benefit later. But if there's no benefit later, then you take on a structural deficit problem."

Mr Bradley said a cost-benefit analysis would cover not just financial returns, but broader social returns on the project and productivity gains in areas such as health and education.

"What the BCA has proposed is that the Productivity Commission should look at the benefits. They would be in a position to put broad economics around the payback to the community, in terms of productivity savings and so on - that's the kind of expertise you need to bring to things."

Mr Turnbull repeated his position that the NBN would represent a "tax paid by broadband customers to finance the folly of the Labor government".

Mr Quigley said NBN Co had never assumed there would be an opt-in or opt out model on the network that would drive take-up.

Low forecast take-up rates have forced the Tasmanian government to use an "opt-out" model where homes and businesses are automatically connected to the service unless they refuse.

"We are building, and we will deal with what the circumstances are in particularly states," Mr Quigley said. "It's up to state governments if they want to implement something. This is not something we have assumed."

Competition chief rejects cost-benefit analysis