Stephen Bartholomeusz got it right yesterday when he likened the Rudd-Conroy proposal to fund a broadband network by raiding the Future Fund to failed government policies picking winners.
As Paul Keating once said, when earlier governments picked winner industries, they expected an ample return for the investment in tariffs and subsidies they outlaid on behalf of taxpayers. The fact their selections almost invariably turned out to be dogs is ample evidence politicians and bureaucrats should not be let loose in the commercial world. Not only are the politicians over-enamoured by seemingly exciting new projects, they are incapable of spending prudently. They are under voter pressure to append loss-making features onto the investments. These include requiring a padding of workforces to pander to unions, and extending investments to areas where they become loss-making.
A Telstra scheme to use its shareholders' funds for a fibre-to-the-node system was to cost $3.1 billion. This has become, under the ALP's proposal, an $8 billion scheme, into which the Opposition plans to tip $4.7 billion from the Future Fund, which is designed to meet the Commonwealth's superannuation obligations.
Such a network in a fast-moving technological age is fraught with risks. Several other ways of delivering high-speed internet are under consideration, ranging from wireless to speculative proposals such as piping it through power lines. Alternative delivery systems can severely devalue a new network. So, do taxpayers want to back government decision-makers in such areas of high commercial uncertainty?
One danger is that a government telecommunications network would become a legislative monopoly that prevented new rival facilities, undermining industry's competitiveness.
Mr Rudd is building credentials as a big-spending interventionist with this scheme, following proposals to outbid John Howard in water and clean-coal policies and in appointing Socialist Left anti-capitalist Kim Carr as industry spokesman.
But the Government has created the potential for the intervention the ALP proposes. Communications Minister Helen Coonan and the Australian Competition and Consumer Commission have refused to allow Telstra to build a network, except on the basis that its management is handed over to the ACCC. No company would want this. And Senator Coonan is in denial that Australia has fallen behind in internet speeds.
Rapid adoption of telecommunications advances is essential to our competitiveness. But by requiring any company undertaking the risky business of building a network to accept that it will be defined as an "essential facility" subject to government control is a sure-fire way of ensuring it will never be built by the private sector but be sorely missed.
Peter Costello has accused the Opposition of economic irresponsibility, but the Government must share some blame. It has been in the thrall of a regulatory policy that seriously hinders the building of new infrastructure and it is within its power to correct this. To refuse to do so will make it inevitable that taxpayers again fund these facilities, with all the risks and inefficiencies that follow.
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