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Policy

Australia plots $31bn broadband network

By Robin Hicks | 7 April 2009

The Australian government is to build a A$43bn ($31bn) national broadband network, the country’s largest infrastructure project, after abandoning a A$4.7bn tender process that it said failed to offer value for money.

The surprise policy switch came as Canberra was due to name the winner of the tender process among three competing consortiums. Kevin Rudd, the country’s Prime Minister, promised to have the network built when he campaigned as leader of the Labour opposition to win the 2007 election.

Rudd said the planned “fibre-to-the-home” network would create 25,000 jobs a year during its construction, and 37,000 during its peak build period.

“It is the most ambitions, far-reaching and long term nation building infrastructure project ever undertaken by an Australian government,” Mr Rudd said.

“Like the building of the Snowy Hydro [electric power station], the building of the Sydney Harbour Bridge, this is an historic act of nation building,” he said.

A new company, majority owned by the government, will invest up to A$43bn over eight years to build and operate the super-fast broadband network.

The government will use A$4.7bn already set aside under its Building Australia fund for the project and will raise additional finance by selling “Aussie Infrastructure Bonds” to retail and institutional investors

Canberra said it would sell down its interest in the new company within five years after the network was largely built and operational.

It said that all telecoms companies, including Telstra, Australia’s dominant provider that had been shut out of the tender process for failing to make a detailed submission, would take part in the project.

“We wish to do this in partnership with the private sector,” Mr Rudd said. “The government proposes that it would … welcome private sector participation up to 49 per cent.

“It also indicated that once this National Broadband Network Corporation is up and running for a period of five years, we would then sell it,’ he added.

The rollout will begin in Tasmania as early as June or July.

The ambitious plan will connect 90 per cent of homes to the network with speeds of up to 100 megabits per second, which Mr Rudd said was 100 times faster than what many homes had now.

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