Balancing community benefit with cost
Healthcare and roads are frequently evaluated based on financial models of questionable accuracy. A few examples:
- A preventative treatment (e.g. vaccine, diabetes monitoring) is evaluated based on cost versus the reduction in cost of future treatment
- Surgery for soft tissue injuries is evaluated on the cost of surgery now, versus potential that the body with help from physiotherapy will heal itself.
- Part of the decision set for road funding is economic contribution (e.g. If a new freeway saves a truck driver 10 minutes and the truck driver uses the road 6 times a day, then the improvement in productivity means one extra delivery a day)
- Roads can also be funded based on reducing the cost of accidents to communities (e.g. replacing level crossings for trains).
Labor chose to put the NBN off-budget, that it should deliver a 7% ROI and that once the risky build was complete that privatisation should occur. For the NBN to be subsidised by the government community benefit would need to be shown. Labor promoted the NBN as delivering community benefits in areas such as health and education.
The NBNCo Corporate Plan (2010) guidelines for required speeds for tele-medicine and remote education at 100Mbps and preferrably 1Gbps. In the same plan Labor estimated that today 30% would meet that criteria. The reality is 14% and falling. 70% takeup * 14% on 100Mbps = 10% who received the promised benefits.
Now when you consider that this 14% are on the most expensive plans, I consider it reasonable to label this as middle-class welfare and delivering little benefit to the disadvantaged. This means that the NBN should deliver a subsidy and the government should limit it's exposure to providing funding at a discount to the commercial rate. To change this, the NBN financial model requires restructuring to deliver community benefits to the disadvantaged.