Sunday, December 09, 2012

National Boondoggle Network rollout proving to be a costly failure

IN April 2009, the Rudd-Gillard government announced its plans to build the National Broadband Network.  The fibre-optic network is supposed to pass 12.2 million premises around Australia by 2021.

More than three years later, as at June 30, 2012, it had passed just 38,914 - less than one third of 1 per cent towards the finish line.

Yet NBN Co's corporate plan, issued in December 2010, promised to pass 317,000 premises by June 30, 2012. Another comparison: in 1994, Telstra announced it would build a national hybrid fibre coax network. By June 1997, three years on, the network passed 2.1 million homes.

NBN is doing equally badly on the number of services being delivered. There were 3867 fibre services in operation as at June 30, 2012; the corporate plan promised 137,000.

More recent disclosures at estimates hearings in October show little improvement. One component of the fibre rollout, brownfields, had risen from 29,000 in June to 32,295 and fibre services in operation were at 6400.

Broadband Minister Stephen Conroy and NBN Co have tried every trick in the book to disguise the poor performance. They abandoned the original corporate plan and issued a new one in August this year. The goal of 317,000 premises passed by June this year was changed to 39,000.

The goals for later years also dropped sharply. Originally the network was to pass 1.27 million premises by June 30 next year; that has fallen to 341,000.

Next, they made comparisons as difficult as possible. The original corporate plan gave target numbers for five different categories of premises: three types of fibre, wireless and satellite. The new plan, and the 2011-12 annual report released recently, now gives numbers for two types of fibre and a merged number for wireless and satellite.

Third, they tried to shift attention away from hard numbers by introducing a new statistic: premises where there is construction commenced or completed. NBN Co's March 2012 media release promised that by 2015 "construction of the fibre optic component of the network will be under way or completed in areas containing 3.5 million premises".

This statistic - which is not used by private sector telecommunications companies such as Telstra and Optus - is meaningless. They count a home as having construction commenced from the moment a contract instruction is issued to the contractor.

But several further steps are required, including the Telstra commencement notice and the final contract instruction. On average, it will be 12 months before the work is completed. A fourth trick is to quote total subscriber numbers across fibre, wireless and satellite.

At the October estimates hearing, NBN Co said it had 24,000 customers. But of these, 17,000 were on satellite - and more than half of them were customers of an existing government program, dating back to Howard government days, to subsidise satellite broadband in rural and remote areas.

The rollout is chewing up taxpayers' money at an alarming rate. By June 30 this year, $2.832 billion of taxpayers' money had been put into NBN as equity; of that more than $900 million had vapourised in three years of accumulated losses. (In 2011-12 alone, NBN Co lost $520m.)

Total equity contributions - entirely taxpayer funded - are projected to reach $30.4bn by 2021. This is almost $3bn more than the Rudd-Gillard government had previously disclosed.

NBN Co is splashing around money with abandon. It pays extremely generous salaries. Average remuneration cost per head was $172,000 in 2011-12, more than 50 per cent higher than the comparable figure at Telstra.

Yet it has barely any customers and barely any revenue. It earned less than $2m from providing telecommunications services in 2011-12.

As we have seen with the home insulation program, the school halls program and many others, the Rudd-Gillard government is hopeless at program delivery and financial management.

We are seeing the same pattern with the NBN. Anyone who wants to see Australia's broadband infrastructure upgraded in an efficient, cost-effective manner should be very alarmed.


Students drop old uniforms to conform to political correctness

SCHOOLS are abandoning skirts and tunics for girls in favour of unisex shorts and skorts as part of an overhaul of the traditional student uniform.

The Parents and Citizens Association claims the move is being driven by Gen X and Y parents who want to remove gender bias from the playground.

The Department of Education claims the change is due to teachers wanting girls to be able to play freely in the playground.

However, not all parents are happy with the proposed new look with the many wanting schools to retain a uniform for girls.

A survey of schools by The Sunday Telegraph has found scores of schools preparing to adopt a unisex uniform in the next two years, with some having already made the changeover.

The majority are state public schools, with independent and Catholic schools sticking with the traditional attire.

Parents of students at Winston Hills Public School are being asked to comment on the proposed new look, which the school plans to make mandatory by 2014.

The proposed new uniform to be worn during the warmer months features a polo shirt and shorts for both sexes.

Sussex Inlet Public School on the south coast has also gone unisex with girls wearing culottes and skorts while Kanwal Public School and Wyong Public School are also offering alternate uniforms. The shift was being driven by parents who wanted to remove gender bias from the classroom P and C regional spokeswoman Sharryn Brownlee said.

"It is an incredibly divisive issue. Some parents still believe little girls should look like little girls," she said.


Queensland too broke for NDIS deal: Newman

Queensland Premier Campbell Newman believes it will be at least two more years before his state can afford to pay its share of the National Disability Insurance Scheme (NDIS).

New South Wales yesterday became the first state to sign up to the full rollout of the scheme from 2018, in a deal that will involve the Commonwealth and NSW each contributing about $3 billion a year.

Arriving at Parliament House ahead of today's meeting between Prime Minister Julia Gillard and other state leaders, Mr Newman said he was "totally committed" to the NDIS but just does not have enough money at the moment.

"The problem for Queensland is that we don't have the money that the other states have - we were left a total financial disaster by Labor," Mr Newman told reporters.

"In about two years time, we believe we'll have far more financial leeway and we're prepared to put more money on the table.

"I'm ready at any time to do a deal with the Commonwealth on the NDIS, but it's got to be on terms that are practical to Queensland - terms that are practical in a financial sense."

In announcing yesterday's funding deal with NSW, Ms Gillard said it would act as a benchmark for other states, and noted that Queensland's current level of disability funding per capita was the lowest in the country.

The agreement with New South Wales is in addition to plans for five launch sites across the country, which are due to start mid-next year.

Ms Gillard hopes to finalise agreements for those sites at today's Council of Australian Governments (COAG) meeting in Canberra.
Power plans


Gillard says still on track for surplus

Prime Minister Julia Gillard insists the Government is determined to deliver a budget surplus this year, despite lower than expected economic growth figures this week.

The Financial Review newspaper has reported that Labor could be prepared to ditch its promised surplus if economic growth falls below its long-term trend.

The paper says senior Government sources have pointed to the multiple statements from Government ministers that link the surplus to stronger levels of economic growth.

On Wednesday, the national accounts figures showed the economy grew by just 0.5 per cent during the September quarter, which was lower than what economists were expecting.

Ms Gillard says while there are pressures on the economy, the fundamentals remain healthy.

"Mining [is] still strong, but the prices we are getting for our mineral exports have come down a bit. Other sections of the economy are feeling pressure, particularly from the high Australian dollar," Ms Gillard told ABC local radio.

"Even with these pressures - commodity prices coming off, high Aussie dollar - our economy's fundamentals are still strong.

"Our last economic update had us at trend growth, and that's why the last economic update had us with a surplus.  "We are still determined to deliver the surplus."

The Government forecast a surplus of $1.1 billion for 2012-13 in its most recent budget update released in October, which was down from the $1.5 billion predicted in May.

Since then, it has emerged that the mining tax did not raise any revenue in its first three months of operation.

Following the release of the national accounts figures on Wednesday, Treasurer Wayne Swan conceded that falling government revenue would make it harder to deliver the surplus.

However he said the Government still remained committed to its promise.

"As I've said before, we'll always ensure our budget is appropriate for the economy and jobs and these figures don't change our consistent approach," Mr Swan said on Wednesday.

Shadow Treasurer Joe Hockey believes the Government is "crab walking" away from its surplus promise, saying there would need to be a "miracle recovery" for the economy to grow at 3 per cent this year.

Ms Gillard is meeting state and territory leaders in Canberra today at a Council of Australian Governments (COAG) meeting.


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