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Debate in Australia rages over whether the current Labor Government plan to spend $37 billion on a National Broadband Network (NBN) is the best use of the Government resources. The ruling Labor party on the advice of their experts won the 2010 election under the mantra: Do it once, do it right, do it with fibre. The NBN will roll fibre to the home (FTTH) to 93% of Australian homes, and all towns with more than 1,000 premises, and supply wireless or satellite to the rest.
House prices as a ratio of household income are at historic highs in Australia. Some people suggest that this is causing a housing bubble, analogous to the United States. Others suggest this ratio is no longer relevant, because other factors have changed.
The Australian Housing Affordability Fund is a Labor Government initiative to invest up to $512 million over 5 years to lower the cost of building new homes. The Fund's focus is on proposals that improve the supply of new housing and make housing more affordable for first-time homeowners.
There is intense debate as to whether Australia has a housing bubble. Metrics such as the historically high ratio of house prices to household income, which were indicative of the U.S. housing bubble, suggest a bubble. However, counterclaims suggest that this ratio reflects a permanent shift in the desires of Australian householders, or that a genuine lack of supply is here to stay. In addition, the cause of such a bubble is itself debated.
Since the world stock market crash of 2008, there was debate as to whether Australia would have a recession or merely a dampening of growth. A recession is a period of economic decline, sometimes defined as two or more consecutive quarters of negative GDP growth.
Masayoshi Son
It's a waste; it's a stupid solution. Without using taxpayers' money you can get 21st-century infrastructure. [He claimed that his solution, recently put to Prime Minister Naoto Kan and several members of his cabinet, would deliver basic fibre connections for just 1150 yen ($15) a month, far cheaper than what is envisaged under the NBN.]
Intel Corporation
It’s now time to move beyond debate... the NBN has the potential to deliver significant long term benefits to consumers and small businesses alike.
Microsoft Corporation
This infrastructure will be critical in the years ahead and essential for reducing costs in health and education service delivery. It will also contribute to overcoming the tyranny of distance that exists in rural and regional Australia.
Google Inc
[The study] makes a “strong case” for the NBN... super-fast Internet access will open up a world of opportunities for Australians and be the greatest enabler of innovation and entrepreneurship that businesses could wish for.
Stephen Conroy
NBN Co and Optus [agreed to] decommission its Hybrid Fibre Coaxial (HFC) cable network and migrate customers to the National Broadband Network (NBN). This agreement is proof that the NBN is recognised by Australia’s major telecommunications companies as the future of industry. The announcements today that both Telstra and Optus, which combined represent over 60 per cent of the retail broadband connection market ... demonstrate that the NBN is welcomed by the majority of the industry.
Kevin Rudd
The NBN will enable: "Every person and business in Australia, no-matter where they are located, will have access to affordable, fast broadband at their fingertips." THe NBN will "help drive Australia's productivity, improve education and health service delivery and connect our big  cities and regional centres... [and] to stimulate jobs in the short-term and pay a dividend to the Australian people through enhanced productivity and innovation in the long-term. "
Mike Quigley
"We've taken considerable time to reach today's [Telstra] agreement. But it has been worth the wait. It means we can build the NBN more cost effectively and with less disruption and greater certainty than had we duplicated Telstra's existing infrastructure. "This deal will bring about the efficient delivery of a standardised national broadband platform which will foster innovation in applications and services. Unquestionably it will be of lasting benefit to Australia."
Malcolm Turnbull
...far from supporting Stephen Conroy’s recklessly costly and needlessly risky $50 billion national broadband network, Korea’s recent broadband experience throws into question some of the key assumptions underpinning the NBN. ... [a] better approach might be to conduct a real-world assessment of how much fixed-line bandwidth households will actually need at various points in time and how to most cost-effectively provide it.
Chris Richardson
The Government knows how ugly things are. None of this is a surprise to them. ... The glory days of big budget surpluses are over, and the feds are now staring down the barrel of deficits as far as the eye can see. [editors note: Chris Richardson is the director of Access Economics]

New Comments

$37 billion / 20 million people (the population size) = $2k per person

Australia just does not have the population for economies of scale, and as big business lobbies for service pricing, they get to charge Australians a lot for very little (relatively).

Never mind that the tax payers paid to create the phone company and which was then sold off. Did the tax payers get that money back. No. Now they are trying to do the same thing again.

Only private enterprise will be the true winner.

1 Point       areff2000       18 Jun 2011     Is a National Broadband Network for Australia good value at $37 billion? Mostly Agree
I suggest three problems the NBN addresses:
1. High per Gb prices, compared to overseas
2. Capped Gb per month, compared to overseas
3. Price per month measured taking incomes and currency into account (ie affordability)

0 Points       ABCDiamond       11 Nov 2009     Is reduced affordability causing a housing bubble in Australia? Disagree
There is no doubt that Australian property prices in general have been rising faster than incomes, but what few people have commented on is the increasing sizes of houses, and the increasing 'opulence' of many of these properties. Opulence is exaggerating, but I think most will follow my meaning.

In 1990 a standard first home was 3 bed, 1 bath and 1 garage.
In 2009 a standard first home tends to be 4/5 bed, 2/3 bathrooms and a double garage, with all the trimmings, media room etc...

The Australian national average house floor size has changed over the years as follows:

From 149.7 sm in 1984/85 to 253.1 sm in 2008/09.

Just comparing on personal note, I bought a brand new first home buyers house in Sydney West for $110,000 in 1990.
In 2009 it has an asking price of $379,000...

That sounds like a big jump, but it actually works out at an average annual increase of 6.75% per year.

Now compare that increase to wages. Using the following ABS figures for full time male average wages between 1990 and 2009:
$1353.00 May-2009
$ 635.70 May-1990
This shows an annual growth in wages of 4.05%.

Looking at it in this way, the real increase in value of this specific property is only 2.7% per year.

However, how much is the average First home that MOST people want ? My guess, looking at all the new homes being built for First Home buyers these days, is MUCH higher than $379,000.

0 Points       ABCDiamond       11 Nov 2009     Is there a housing bubble in Australia? Disagree
I tend to feel that the comment "counterclaims suggest that this ratio reflects a permanent shift in the desires of Australian householders" may be quite accurate.

If you look at property prices more inland, rather than within an hour of the beaches etc., there appears to be a different pricing structure.

People that want the "location, location, location" as they say, seem prepared to pay what is being asked for such property.

Those that don't need, or want that, go further out and pay less.

It does appear though that the majority appear prepared to pay high prices for the locations they want.

0 Points       Malcolm G       01 Feb 2009     Will Australia enter a recession before 2010? Agree
Australia is feeling the recession now in early 2009.

0 Points       Benja       26 Jan 2009     Will Australia enter a recession before 2010? General Comment
7 months ago Chris Richardson, a respected economist, was mocking others for "huffing and puffing" about an upcoming recession. Now he's saying it's no surprise to anyone (well, so long as they weren't LISTENING TO HIM).

New Editorial Comments

1 Point       Benja       09 Jul 2011     Is a National Broadband Network for Australia good value at $37 billion? Editorial Comment
We need more answers on the "Disagree" side (currently there is only a single quote).

Australia Question Index

Is a National Broadband Network for Australia good value at $37 billion?
Is there a housing bubble in Australia?
Is reduced affordability causing a housing bubble in Australia?
Do Australia's land and housing regulations choke supply?
Will Australia enter a recession before 2010?
Will Australia's Housing Affordability Fund work?
Should Australia apologize to the Australian Aborigines for the stolen generations?