The roots of the NBN’s $31.5 billion write-off last year can be found in a fractious past when successive governments tried to fix Australia’s communication systems.
On a spring afternoon in Canberra, a youngish communications minister announced an ambitious infrastructure project that would “bring major benefits to millions of Australians”. The government would create a state-of-the-art national network to meet the country’s “burgeoning demand for communications services”.
This account may seem familiar, especially coming amid a renewed burst of energy in Australia’s perpetual debate about broadband politics after. Yet it refers not to the Rudd government’s announcement of the NBN in 2009, but to the Fraser government’s decision to establish the National Communications Satellite System and Aussat in 1979, 30 years before. The youngish communications minister in question was Liberal MP Tony Staley, not Labor’s Stephen Conroy.
But there was a mismatch of perspectives between Staley and Telecom’s managing director, Jack Curtis. Staley’s presumption that Telecom would comply with his wishes sat uncomfortably with Curtis’ legitimate focus on Telecom’s own strategic priorities, which did not include a new domestic satellite system, as well as a degree of institutional hubris that led Telecom to mishandle the politics.
By the latter half of 1989, Aussat’s accumulated losses were more than $118 million. As its once bullish managing director, Graham Gosewinckel, conceded, “Blind Freddy can see we need a capital injection”. Beazley informed cabinet that without an “immediate capital injection” of $100 million, Aussat’s bankers would disclose its financial situation and likely render it “unable to meet its obligation[s]”. Hawke came to the meeting with advice that Aussat’s equity base was “grossly inadequate”. Treasurer Paul Keating had advice from his senior adviser Ken Henry that if a $100 million payment to Aussat was “the first micro reform decision taken by this government, we might as well pack our bags now”.
With remarkable irony given the catalytic role Aussat’s financial plight had played in stampeding the government’s second-wave reforms, the government also assumed direct responsibility for the company’s $798 million debt. Optus paid $804 million, barely more than the quantum of Aussat’s debts. The politically explosive potential of this simple calculation was anticipated in government circles and there was some surprise when it did not face detailed questions about it.A decade later, cheaper, faster broadband services started becoming more available and market demand began expanding beyond business and boffins.
One outcome, however, was the fortuitous availability of competing broadband models for new Labor leader Kevin Rudd. One might consider the Rudd government’s 2009 NBN policy Whitlamesque in its audacity, but a closer parallel is the Fraser government’s establishment of Aussat.
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