In the realm of bad economic policy and bad spending decisions from the Albanese government, the recent announcement to spend further billions of taxpayer’s monies to ‘finish the NBN’ should rank high on the idiocy scale. Right up there with school halls, pink batts, and cash for clunkers.

Early in the new year, in a joint statement from Prime Minister Anthony Albanese, Finance Minister Katy Gallagher, and Communications Minister Michelle Rowland, it was announced that the Commonwealth would fund the upgrade of the NBN to the tune of an additional $3 billion equity injection. To this, NBN Co would add a further $800 million to upgrade internet connections for 622,000 homes. Not to connect, but to upgrade. To replace existing copper cables with fibre optic cables.

As is evident with the state of fiscal affairs in Australia, it seems that arithmetic is not a strong skill of this government. $3.8 billion for 622,000 homes equates to an average cost of $6,100 per connection upgrade. An inordinate amount of money for a small marginal benefit.

Given the patchy quality of the NBN, it is conceivable that these 622,000 homes have poor quality internet. But given also the alternatives available, this taxpayer spend is grossly irresponsible, yet consistent with Albanese government practice.

Justifying this insane waste of taxpayer money, Rowland claimed that, ‘Families and businesses need high-speed internet at an affordable price, and the Albanese government will deliver that as we build Australia’s future’. Given that government delivery and affordable price is an oxymoron, NBN customers and taxpayers should not hold their breath for affordable high-speed NBN internet.

Alternatives to the NBN already exist, equivalent and superior alternatives, begging the question of why such a spend and why now.

This additional $3 billion will be one of those off-budget items masking the true extent of this government’s profligacy. And using the Keynesian logic that has permeated Treasury, the thinking will likely be that it is a necessary spend to ensure Australia does not suffer a recession.

The very same logic and thinking that has been propagated by Nobel Laureate Paul Krugman who suggested that the US government should fake an alien invasion to justify a fiscal stimulus.

In addition to the 5G cellular internet options available, Starlink satellite internet options are already available in Australia.  Telstra and Optus have even established strategic collaborations with Starlink to provide services to their customers bypassing the NBN network.

On the horizon also is a competitor satellite internet service which would help push down the costs of Starlink’s offering. Amazon is pursuing Project Kuiper to deploy its own network of low earth orbit satellites which too would provide high-speed internet. Starlink-connected mobile phones are already available and Kuiper phones will likely follow.

A business case for this NBN spend does not exist. For the $6,100 per household this government-underwritten ‘upgrade’ will cost, a Starlink kit could be provided to every one of the 622,000 households with more than 5 years of service included at no charge. Much longer if subscribers paid an appropriate fee.

The reality is that the NBN, the brainchild of Kevin Rudd and Stephen Conroy, has been a giant pustulating carbuncle on the Australian economy since announced, weighing both on the budget and on productivity. Not to be forgotten is that the NBN was completed by a Coalition government under the watchful oversight of (then) communications minister Malcolm Turnbull.

This latest $3 billion of taxpayer monies to be provided to NBN Co is on top of the $31.9 billion already provided.  And assuming a Commonwealth borrowing rate of 4 percent, that translates into a $1.4 billion annual interest expense borne by the budget. That is $1.4 billion annually that cannot be spent on other priorities such as national defence or national security. That is also $1.4 billion that cannot be used to pay down debt or to provide tax cuts.

Not to be forgotten, NBN Co has also accumulated $27 billion of its own debt, which too is incurring interest payments that are passed on to consumers in their service charges. This debt is implicitly if not explicitly guaranteed by taxpayers.

Separate to interest budget payments, in 2024, NBN Co made a $1.4 billion loss. In 2023, a $1.1 billion loss. Accumulated losses over the life of NBN Co total $35 billion, more than the $31.9 billion already provided by taxpayers. Even with this additional $3 billion injection, NBN Co will remain in negative equity.

Thus perhaps there is another issue at play.

With a domestic, government owned telecommunications infrastructure provider, the government can tap into private communications data. Seemingly forgotten are the Abbott government metadata retention laws passed in 2015 which require telecommunications and internet service providers to retain customer metadata for law enforcement and national security purposes.

These metadata laws have been used and abused for purposes well beyond a national security rationale. This includes by local councils to pursue rubbish dumping, pet registration and parking infractions. And by state governments to track toll fraud and to enforce traffic violations.

If Australians were able to use the services of non-Australian service providers such as Starlink or Amazon, the ability of the government to spy on its citizens would be significantly curtailed. God forbid councils being unable to enforce pet registrations and state government unable to prosecute toll fraud.

The notion that government infrastructure projects must be preserved at any cost must be challenged. The NBN has become a financial black hole that drains resources from other pressing national priorities.  Instead of continuing to throw good money after bad, the logical alternative needs to be pursued.

With competitive offerings already present, rather than injecting even more dumb money into NBN Co, the Commonwealth should promptly sell the NBN to recover whatever capital it can to pay down debt. The new owners could then respond to current and emerging competition through innovation and efficiency rather than taxpayer handouts. This is the only way Australians can get a superior and better priced internet offering.