The Great NBN Cost Benefit Analysis furphy
The trendy demand for a cost-benefit analysis on Everything and the NBN is really getting beyond the pale. Cost-benefit analysis on large-scale government projects projected for operation decades ahead is about as useful as trying to crochet a fishing net to catch whales: it’s simply not up to it as a tool. It’s a tool for business enterprise that might work in the short term for some people. It’s just not appropriate for large-scale, long term government projects and policies.
Ask yourself why you would want to ask a collection of economists who:
- can’t see a GFC coming;
- can’t predict the interest rates for the next year or 2 years hence; or
- can’t tell us the cost of fuel or minerals over the next decade;
to give us a sensible projection of what might happen in 10 or 20 years in the development of communications and the internet, with all of the national and international implications taken account of ?
Government projects of this kind needn’t be a complete stab in the dark, but politicians are kidding you and maybe themselves if they think cost benefit analysis is the glowing Answer from on High.
And if you’re not sure about that, just have a look at some of the remarks which Access Economics made about the prospects for cost benefit analysis of the NBN in the area of tele-health:
“There does not appear to be sufficient data to estimate the benefits of online training for rural / remote medical professionals. “
“There have been well over a thousand studies conducted of telehealth. Unfortunately, very few have been conducted from an economic perspective, with quantitative data on costs and benefits. Fewer still contain health related quality of life results that would enable the cost effectiveness of telehealth to be compared to standard interventions. ”
“…..there are no uniform methodologies or guidelines to conduct standardised economic evaluations in tele-medicine. “
“Absence of quality data and appropriate measures undermines the quality and reliability of economic evaluation.”
—- “Financial and externality impacts of high-speed broadband for telehealth” — Report by Access Economics Pty Limited for Department of Broadband, Communications and the Digital Economy, June 2010
Go a step further, and simply put yourself back in say, 1995. Then tell me confidently you would have predicted the use of the internet by billions of people using pocket and now, watch-sized mobile phones with computing capacity 10 to 100 times the biggest PCs in existence in 1995. Tell me what the benefits of that would prove to be, based on what was known in 1995. Tell me the volumes of data required for it to operate. Tell me the implications for international trade and intellectual exchange. That’s what you’ll put in your Cost Benefit Analysis, of course.
Then tell me why you aren’t in control of the biggest company in the world, because if you knew all the answers, you’d be the only person on the planet to know them.
Except of course, for Malcolm Turnbull. Malcolm presumably knew we wouldn’t need all that stuff because no one was actually asking for it at the time. That’s the central thesis of his grand NBN Cost Benefit Analysis. He says no-one’s asking for stuff. Just movies. Funny thing is, the mobile phones came, anyway, even though people didn’t ask for billions of them in 1995.