James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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NBN mess risks widening the gap between the Coalition and SMEs

Published 13 December 2013 09:37, Updated 16 December 2013 08:44

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NBN mess risks widening the gap between the Coalition and SMEs

Malcolm Turnbull: “The beginning of the era of truth on broadband.” Photo: Glenn Hunt

The National Broadband Network is in a horrible mess – and whether communications minister Malcolm Turnbull likes it or not, everyone must carry some of the blame.

Turnbull declared yesterday that the review marked “the beginning of the era of truth on broadband, and the beginning of an era where we will have facts to work with; objective analysis instead of political spin”. But the truth about this project is damning of both Labor and the Coalition.

That the network is badly behind schedule and behind budget is testament to Labor’s struggles with the project.

That the Coalition’s plan to build the network quicker and cheaper was shown to have been underpriced by around $11.5 billion, and that just 43 per cent of Australians will get access to the 25 megabits per second promised before the election, shows the Coalition won’t find it much easier to get this mess under control.

Indeed, the NBN is getting ready to go back to the start. We’ll have a review of regulation around the NBN, we’ll get a new cost-benefit analysis and we’ll change the corporate governance of NBN Co and attempt to change the culture.

And after that’s done? The NBN Co will develop a new corporate plan and renegotiate contracts with Telstra, Optus, vendors and contractors. Essentially, the whole thing will be redesigned, four-and-a-half years after it was cooked up by Kevin Rudd and Stephen Conroy.

Turnbull says Labor’s plan would have cost $73 billion – well up on the $44 billion it claimed (Labor disputes this) and well above the $41 billion that the Coalition’s plan will now cost.

But as AFR technology editor Paul Smith asks in this terrific piece, what will we get for that? A state-of-the-art, future proofing fibre-to-the-premises network? Or a hotchpotch of different technologies that won’t deliver the Holy Grail of 100 megabits per second until 2019?

It’s the latter, of course – which makes you wonder whether cheaper really equals better value for money.

The SME community would agree with Turnbull that the strategic review is a key turning point. But for entrepreneurs, it could be the point where they turn further away from the Coalition.

SME owners are desperate for the NBN. To them, it’s not just some political football to be kicked around – it’s perhaps the most important piece of infrastructure that will be rolled out in their lifetimes. They see, everyday, how it could change their business. They understand that it will create business opportunities they are yet to see.

Yes, the costs must be managed. But by the same token, the SME community don’t want to see this skimped on. They want the government to do it right and to see it as a long term, game-changing investment.

Turnbull has a lot of work to do to convince the SME community that they are really going to get a great network for $44 billion. Not good, great.

Tony Abbott also needs to watch the SME community’s reaction to this closely; the first months of his government won’t exactly have thrilled entrepreneurs.

The NBN is a mess. The Gonski education changes have become a mess. Arguably the carbon tax repeal is a mess – not only is Abbott struggling to make headway, but there is a good argument to be made that many in the SME community have adjusted their businesses to the tax and don’t see it as a major issue. And removing the mining tax won’t exactly be cheered by SMEs either, given the instant asset writeoff tax break is tied to it.

These are early days for the Abbott government, but the SME community wants decisive, positive action. Let’s hope 2014 delivers some.

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