Another $150 million? Is Govt burning through broadband cash?

Labour is calling for an immediate inquiry into the “flailing $300 million rural broadband initiative”, before companies and consumers are forced to pick up the tab for the new $150 million broadband tax.

That’s the damning view of Labour’s ICT spokesperson Clare Curran, who claims that like the opposition party, “rural New Zealanders and InternetNZ have expressed strong concerns that the Rural Broadband Initiative (RBI) isn’t delivering quality internet and has connected very few households.”

Curran’s claims follow news that an extra $150 million is being pumped into a $300 million government rural broadband scheme, despite Government officials admitting they “have no idea how many have people have been connected” so far.

According to Curran, MBIE officials have conducted no analysis into it, with the rural broadband initiative looking increasingly like another example of “wasteful government spending.”

“Spending a total of $450 million with no data to measure its success or failure is waste, pure and simple,” Curran says.

“The new spending comes from a levy on telco companies which will be passed onto consumers. It’s a broadband tax with no guarantee of results.

“We were told that legislation will soon be passed to extend the Telecommunications Development Levy to progress the second RBI scheme. We were also told there was no quantifiable evidence that this extension would improve internet connectivity.”

Echoing Curran’s concerns, Internet NZ’s Policy director Andrew Cushen told the select committee that the industry needs to know whether the first rural broadband scheme is delivering before it commits to the second.

“The state of rural broadband is a looming headache for the government and another example of its regional neglect,” Curran adds.

“Rural New Zealanders are beginning to realise they are badly served. Hundreds of communities are putting up with substandard services. The question has to be, will another $150 million be spent with such poor management and accountability and no idea of whether it had delivered?”

Going forward, Curran believes lessons from the first stage of the RBI must be taken into account before more money is spent.

“It’s simply reckless for the Government to pump another $150 million into the scheme in the form of a broadband tax imposed on internet providers that will be passed on to consumers without evaluating the success of the initial $400 million scheme,” Curran claims.

“There is widespread industry concern about the extension of the levy as expressed by the Telecommunications Carriers Forum.

“One major provider has already announced a price increase citing upward pressure on their future costs and with a decision to pass that cost through to its broadband and on-account mobile customers.

“Rural communities have sent petitions to parliament expressing dissatisfaction with their broadband. It’s time for an inquiry before we throw more good money after bad.”