Labor's NBN: The Great Job-Creator?

It is no surprise that the evidence of the effect of the NBN on employment directly contradicts Labor's propaganda, writes Milton Von Smith

It is bad enough that Labor's National Broadband Network promises to be the largest, most economically wasteful white elephant in the nation's history. 

And it is bad enough that with just over a week to go until the polls, Australian taxpayers have still not been told how much it will cost them, or by how much the costs will exceed the benefits.  

Forget about all of the other arguments about costings in this campaign.  The ALP's failure to submit the multi-billion dollar NBN to Treasury and Finance for costing scrutiny is the greatest fiscal scandal in this nation's history. 

As if all of this wasn't bad enough: now we are told that the NBN will be some kind of great gigantic job creation machine.

Indeed, without it, Julia Gillard claims, we'll experience what former US Presidential candidate Ross Perot referred to as the "giant sucking sound" of jobs moving overseas. 

As Gillard said today:

"Without this technology we will fall behind.  It’s the same as saying we will export jobs to Singapore, to Korea, to Japan." 

What the?  Is there anything that Gillard won't say to try to get elected? 

With such outrageous claims being made about the NBN, you would think that the media would do at least a bit of simple fact checking. 

For example, if Gillard is right and the NBN is such a great job-creating machine, might it not be reasonable to expect that in the State where it has first been rolled out - Tasmania - would have experienced massive increases in employment and reductions in unemployment since the rollout began? 

Think again. 

The NBN began to be rolled out in Tasmania in March this year.  Let's see what the official data says about employment and unemployment growth in Tasmania since March. 

Surely the NBN has led to massive job creation in Tasmania since March, right? 

Wrong. 

Today's Labor Force data from the Australian Bureau of Statistics shows that contrary to what you would expect if Labor's claims about the NBN were true, employment has fallen in Tasmania since the rollout of the NBN began. 

Total employment (in original terms) in Tasmania was 237,046 people in March, and 236,119 people in July.

Tasmania is the only Australian State which experienced a fall in employment since March.  

Let me repeat that: since the NBN began its rollout in Tasmania, it is the only State in Australia to have lost jobs. 

Furthermore, Tasmania's unemployment rate (again, in original terms) has increased rapidly since March, from 5.6 per cent to 6.1 per cent. 

For Australia as a whole over the same period, the unemployment rate (in original terms) has fallen from 5.7 per cent to 5.0 per cent.  

Let me repeat that: since the NBN began its rollout in Tasmania, it is the only State in Australia  where unemployment has risen. 

The chart below tells the story. 

Now, I do not claim that Tasmania's apparent labour market woes are due to the NBN rollout.  There could be dozens of other explanations. 

But the evidence to date certainly does not support Gillard's ridiculous claims. 

On the other hand, what else should voters expect?  They already know that evidence matters little to Gillard.  If it did, the colossal waste that is the NBN would never have been announced in the first place. 

Comments

[Robert Candelori]

1.

Putting aside the enormous waste of money that the NBN represents, the argument in this article is silly. If there is to be any effect on jobs and economic growth, there is a necessary time lag. A mere five or six months is hardly enough time.

[Milton Von Smith]

2.

But the government has said nothing about lags. They have argued that employment would immediately be boosted as a result of construction of the NBN. Construction began in Tasmania six months ago. So where is the employment effect?

[Vikas Nayak]

3.

I dont think you'll see an employment increase in tasmanaia, or a lot of places in the country without strong service based economies. I support infrastructure development initiatives in general (like the NBN) on the grounds that over the long term they decrease costs of production and contribute more growth than the cost of the project, but the NBN doesn't just create jobs in area's not reliant on communications infrastructure (at least not without a long lag time for someone to come in and utilise it).

What the NBN will do, quite effectively (as long as city prices continue to increase), is make service delivery viable in regional centers vs centralizing everything in the major cities.

But having reviewed some of the NBN documentation on their website, a key component of wastage that the liberals could debate on to reduce the $43 billion cost comes from the installation of 2 lines of fiber to each property to make homes "duplex ready". Obviously this doubles the cost of the project on delivery to homes. Theres a lot of waste one could remove from the NBN, but even telstra is getting on side to accepting the NBNco as the way to "move forward", especially since they would be able to drop that pesky "Regional Service Provision" mandate.

[Georgina]

4.

No plans or costings for EVERY home to have access to the NBN have been set out. I would like to know how much it is going to cost for small business, the ordinary consumer and families to hook up to this government scheme. The monthly cost at the moment for Optus, Telstra etc. is about as much as the ordinary family can pay. It might be alright for big business but not for small business or the ordinary consumer. I can see this being a white elephant, with only half the service, which has been provided for every home at a cost, being used and no other cheaper alternative for families, small business and those on fixed incomes.

[Andy]

5.

Ultra-fast broadband will be slow on overseas links
Jump on the net in the congested evening and hit a US website with your ostensibly high-speed cable or ADSL2+ internet connection and it's likely to choke down to a fraction of the advertised peak speed.
An ISP's contention ratio determines how many users share a connection.
If 50 local users share a 100Mbps link to the US and they are all online at once, their connection speed drops to about 2Mbps.

Ref: http://www.theaustralian.com.au/national-affairs/ultra-fast-broadband-will-be-slow-on-overseas-links/story-fn59niix-1225904654804

[Benjamin Bankruptcy]

6.

I'm uncertain about the broad band package however i'm certain it's a better spend then the ridiculous "stimulous package". Anyone who has ACTUALLY read Keynes will understand that he didn't mean JUST GIVE PEOPLE MONEY! he meant government projects like a NBN or improving the ports or subway systems for Bris, Melb and Syd rather than dropping money into the retail sector. Money would still have dropped into the retail sector just via the people who were on the projects and there would have been a flow on effect.

[Grantley]

7.

This sounds a lot like common sense:

http://www.theaustralian.com.au/business/opinion/patchwork-broadband-network-is-cover-enough/story-e6frg9if-1225905083807

[Graham]

8.

Andy the thing is that it is easier to upgrade backbones down the track than it is to implement nationwide infrastructure so you can take advantage of that upgrade when it happens. The former is expensive but nowhere near as logistically challenging or labor intensive as the latter.

Without laying the infrastructure TO THE HOMES, any future upgrades to bandwidth connecting us to the US or elsewhere is ABSOLUTELY USELESS. Again, the NBN will have to be laid some time down the track, if we don't do it now. It is inevitable. What isn't inevitable is whether it happens with the aim of reaching as much of the country as possible, or whether it happens bit by bit through private investment, resulting in a hodge podge of technologies and lagging us behind the rest of the developed world.

Stop reaching for excuses to oppose something simply because it comes from a political football team you don't barrack for.

[.]

9.

Internode were doing 100 Mbit FTTH for half of the average cost of the NBN before the NBN was announced.

The NBN is a political stunt that will be out of date when it is completed. Remote areas will be sped up a maximum of three times. Over ten years. It is highly questionable that the private sector wouldn't get this sort of latency and bandwidth gain over this time.

"resulting in a hodge podge of technologies "

That would be terrible wouldn't it Ivan? We should all drive the same tractor!

It isn't the network that matters, it is the interface connectors that matter.

[Graham]

10.

>>Internode were doing 100 Mbit FTTH for half of the average cost of the NBN before the NBN was announced.

To a very select few areas, yeah.

>>The NBN is a political stunt that will be out of date when it is completed.

What are you basing this prediction on? Because it shows a complete lack of understanding of the technology we are dealing with.

>>Over ten years. It is highly questionable that the private sector wouldn't get this sort of latency and bandwidth gain over this time.

Um, the private sector has practically abandoned "remote areas" since broadband first arrived in this country. That's part of the problem.

>>It isn't the network that matters, it is the interface connectors that matter.

Wrong. It is both.

[.]

11.

Graham...it will take ten years to get that kind of service and you then attack the private sector for being "selective". Newflash. The NBN so far is selective and has been tested in Tasmania where networks are easy to build and operate. Remote areas need not apply for the 100 Mbit Gillard system. Yoiu're chancing that satellite etc won't be 2-3 times faster in 10 years?

This stuff of course costs the taxpayer nothing, and costs subscribers 1/3 to 1.2 of the NBN.

[Graham]

12.

>>Yoiu're chancing that satellite etc won't be 2-3 times faster in 10 years?

The differences between satellite and to the home fibre optics are ones of fundamental physics. At this stage, as far as I know, solving the problematic latency issues with satellite broadband is not even on the horizon. But sure, satellite will still be the only option for some remote areas.

So, to use an anlogy I used in another post, we can wait around for jetpacks, or we can build roads.

Also Andy, here is an interesting forum post from someone who directly addresses the concern you raised regarding backhaul:

http://forums.whirlpool.net.au/forum-replies.cfm?t=1511009

[.]

13.

"The differences between satellite and to the home fibre optics are ones of fundamental physics. At this stage, as far as I know, solving the problematic latency issues with satellite broadband is not even on the horizon. But sure, satellite will still be the only option for some remote areas."

So you're basically not making a point at all and conceding that this is nothing more than a stunt for remote areas.

According to the wiki page, satellite broadband can get up to 1 Gbit/10Mbps download/upload anyway.

On the other hand, the firbre was being done cheaper in the private sector before the stunt was announced.

[Graham]

14.

>>So you're basically not making a point at all and conceding that this is nothing more than a stunt for remote areas.

You don't seem to understand exactly what the NBN is doing. Why don't you go read up on it? Of course it's not a stunt. The NBN is planning to extend fibre coverage to as much of the country as is logistically possible. To areas that currently have terrible infrastructure and therefore terrible speeds. To all others areas wireless or satellite.

>>According to the wiki page, satellite broadband can get up to 1 Gbit/10Mbps download/upload anyway.

It's also ridiculously expensive. Telstra satellite users pay $500 a month for 800kbps down and 4 GB a month. Secondly you don't seem to understand what latency is.

[Vikas Nayak]

15.

800 ms static latency for sattelite communications.

If all you do is transfer HTTP packets or can afford 1 second of latency, Satellite is fine.

There is no single telecommunications solution for customers, but the NBN IS NOT A TELCO, its a infrastructure provider. When you get services, you still buy it off telstra/optus/whoever...their lines will be provided by the NBNco instead of Telstra.

Basically, the cheaper option is obviously to break up Telstra's vertical integration monopoly which creates a private monopoly with obvious conflict of interest, however, the labor plan seems to be taking into account what businesses want and increasing the service levels out to the bush.

Its true that Sydney and Melbourne could have completely private grids, but it'd be hard to convince government to drop legislation forcing regional provision (at a private sector loss) and give the finger to everywhere outside of Sydney and Melbourne for the sake of FTTH.

[.]

16.

"It's also ridiculously expensive. Telstra satellite users pay $500 a month for 800kbps down and 4 GB a month. "

That's slightly up on NBN average costs. That's hardly representaitve of average plan speeds. $150 pm can get get you something like early ADSL 2 - anywhere.

You think it can't get 6 times faster (and much cheaper, it is already cheaper than the NBN) over ten years?

[Graham]

17.

>>That's slightly up on NBN average costs.

How do you work that out? The NBN is about laying permanent infrastructure, not monthly subscription fees.

>>$150 pm can get get you something like early ADSL 2 - anywhere.

No it can't.

http://apcmag.com/govt_releases_broadband_coverage_map.htm

Like the image says...see those white bits? That's where there's no ADSL2+ coverage.

>>You think it can't get 6 times faster (and much cheaper, it is already cheaper than the NBN) over ten years?

I think copper wiring is fast becoming redundant and any investment in infrastructure should look to the long term future, not just the short term.

[.]

18.

"The NBN is about laying permanent infrastructure, not monthly subscription fees."

So we don't cost long term projects?

Apparently so!

http://www.theaustralian.com.au/national-affairs/report-trumpets-benefits-of-nbn/story-fn59niix-1225907026775

"Access Economics found that a high-speed broadband network would return a benefit of between $750 million and $4 billion per annum from telehealth, but their conclusion was based on the premise that the NBN would be built in July 2010."

"No it can't."

Yes. It. Can. 4 Mbps isn't "early ADSL 2"???

Your views on satellite technology are so 2009.

http://www.nytimes.com/2010/08/16/technology/16satellite.html?_r=4&th;&emc;=th

http://www.electronista.com/articles/10/08/16/wimax.2.finalizing.soon.with.100mbps.speeds/#ixzz0wzgwGcBk

" Intel's upcoming WiMAX 2 standard should be much faster than the existing standard in practice, the WiMAX Forum's marketing lead Declan Byrne said this weekend. Existing WiMAX often tops at just 3-6Mbps according to estimates from Clear and Sprint, but the new 802.16m version should provide average speeds over 100Mbps, Byrne told Computerworld. Range would be the same as it would use the same frequencies, such as the 2.5GHz band in the US.

The standard should be ratified in November and could be in commercial use as soon as 2012. Clear and Sprint are the most likely to use it as they share one of the largest WiMAX networks on the planet."

Two years until wireless is as fast as the NBN. Ten years until the NBN is complete.

[Vikas Nayak]

19.

That article on WiMAX is deceptive. The average speed today is 54mbps on WiMAX with a delivery speed of 3-6 mbps. Getting it to 100mbps average just means the delivery speed will double, but WiMAX pretty much tops up at that speed, unless you allocate more bandwidth.

Also 802.16 is a WMAN standard which means it relies on a fiber base network. The NBN is complementary to WiMAX, not a competing technology.

The great thing about the NBN, is that once its in place, we dont need to invest in the base infrastructure of this country, at least, not until we overcome certain physical restrictions (the speed of light, and frequency spectrum limitation of 60GhZ). Just replacing GPON switches for XPON switches gives the fibre network a deliver speed from 100 mbps to 1 gbps or more.

[Graham]

20.

Vikas is right, the NBN plan is complimentary to wireless technologies. WiMAX 2 is an untested technology, and even if it does deliver on the hype there will still be reduced latency when compared to wired access.

. - if that even is your real name - fibre hasn't simply been decided on as an excuse to spend a lot of money. It's widely seen as the most future proof technology, precisely because of its enormous potential for future scope in terms of speeds, and also because of the QUALITY of connection. Wireless and satellite technologies simply do not compare. Whether or not they ever will is pure conjecture but looks doubtful.

You're simply opposing this because the Government is involved.

[.]

21.

"fibre hasn't simply been decided on as an excuse to spend a lot of money."

I'm afraid it is. It has a positive return when you assume it gets built in an instant. Conroy won't realease the business plans.

"You're simply opposing this because the Government is involved."

Conroy has censored any utilitarian criticism. He forced my hand. The rotten bastard.