The appointment of hard-Right economic warrior and Crikey favourite Henry Ergas to Communictions Minister Malcolm Turnbull’s “expert panel” to assess the costs and benefits of Turnbull’s “copper magic” NBN-lite gives us a chance to revisit some of Henry’s greatest hits.
As those with memories longer than five minutes will recall, Ergas, who has been a serial NBN critic, has had his ups and downs. In 2004 in this judgment, the Australian Competition Tribunal slammed his performance as an “expert” in a case involving Qantas. According to the tribunal, Henry and another witness “appeared reluctant to respond to questions whose answers might have been adverse to the case put by the party calling them”. Worse still:
“On some occasions, the presiding member asked the experts whether they could answer the question put to them and asked them not to give a long explanation, but to no avail. Such an attitude and conduct of an expert witness leads to a conclusion of partiality and an inability to express an objective expert opinion upon which reliance can be placed.”
Still, that didn’t cramp Ergas’ style, and nor should it have. Now he and Turnbull go way back — while shadow treasurer Turnbull in 2008 appointed Ergas to run a “root and branch” tax review (without first consulting his leader, Brendan Nelson) which, alas, never saw the light of day after Turnbull knocked Nelson off as leader. We think Ergas’s tax recommendations — said to be short on political prudence and long on economic efficiency — would actually have been worth exploring, and might even be better than those that the government’s forthcoming tax inquiry will come up with, but anyway.
Then there was Henry’s firm Concept Economics, which gathered together the talents of some of the most right-wing economists in Australia. It went belly-up in 2009. But at least Ergas was consistent: he railed against the Rudd government’s efforts to stimulate the economy even as his own firm went under.
Still, forget about all that – what about the NBN? In 2009, Egars and friends prepared an analysis of the NBN, predicting it would cost $133 a month to connect metropolitan customers and $380 a month to connect non-metro customers, “averaging out at around $170 nationally”.
Currently, iiNet and Internode offer NBN deals starting at $49.95 a month. Optus starts at $65 a month, Telstra at $73 a month, somewhat less than the cost predicted by Henry and co.
Why the disparity? Well when we first pointed it out, Ergas immediately wrote to us to complain that, far from him being wrong, it was the government’s fault — the actual costs were being skewed by the fact that the NBN was going for an uneconomic rate of return. We asked Ergas at the time if he stood by his original prediction, but he never replied. Now he gets a chance to explain how he was right all along.