What Costs Taxpayers More: The NBN Or The Australian Olympic Team?

One of the perpetual arguments against the National Broadband Network (NBN) is that it’s too expensive, and that the money could be better spent on roads. Following a less than stellar performance at the 2012 London Olympic Games, similar claims of waste are now being thrown at the Australian Institute of Sport (AIS). We thought we’d compare the two projects and see what costs more: Australia’s elite athlete training programs or the National Broadband Network?

We recognise that comparing spending between programs is never as clear-cut as it sounds, as we’ve discussed previously, but for argument’s sake and for a bit of fun, we thought we’d give it a bash. For this comparison we’ll be looking at the operating expenditure of the National Broadband Network Company (NBN Co) and Australia’s government-funded elite athlete training programs, which is what we pay to operate them on an ongoing basis (not one-off capital expenses, which are almost impossible to measure for sport and which are handled quite differently in accounting terms for the NBN).

Olympic Spending

Calculating precisely much each gold medal costs taxpayers is almost impossible, considering the various grants, investment programs and funding drives from various government and non-government stakeholders involved. We decided that the best way to compare the cost of the National Broadband Network against the cost of the Australian Olympic effort would be to examine the operating expenditure of the Australian Sports Commission.

The Australian Sports Commission (ASC) is a government agency that provides monetary support to organisations like the Australian Institute of Sport — responsible for training elite athletes — and funding programs that will get more Australians interested in sport.

ASC’s budgetary projections for budget 2011-12 see those goals broken down into two programs: a program for building sport in Australia (Program 1.1) and a program geared towards training elite athletes for international success (Program 2.1).

Here’s the breakdown from the Federal Government’s budget estimates on how much the ASC spends on training elite athletes to send to the Olympics.

As we can see, the program for training elite athletes has the same budget allocated to it each year for the next five years at a total cost of $781 million per annum. We have to remember that this number is just for the training of athletes. The costs are higher when we factor in things like actually sending them to the Olympic games, for example. This is the figure we’re working off for this comparison; the actual total would be higher.

Let’s now take a look at the NBN.

NBN Spending

NBN Co breaks down its operating expenditure forecast into two categories: direct operating expenditure and other expenditure.

Direct expenditure accounts for the money NBN Co spends on network deployment, including the use of Telstra exchanges, migration payments to Optus for its HFC network and the cost of increased usage of Telstra’s dark fibre network.

Other, or indirect expenses include the cost of staff, administration, the cost of providing payphone connectivity around Australia, the cost of implementing backhaul links and IT systems administration.

Here is what NBN Co’s operating expenditure looks like through to 2040:

As we can see, the cost of the NBN is set to ramp up over the next decade or so as the network roll-out activity increases.

So, Which Costs More: The NBN Or The Olympics?

Based on our maths, it’s easy to see that the National Broadband Network costs far more than it does to train elite athletes to run fast, jump high or swim far in the long term.

The operating expenditure of NBN Co will this year be $260 million cheaper than training the nation’s elite athletes, but as time progresses, the NBN will gradually become more and more expensive.

Next year the NBN will become $312 million more expensive than the elite athlete training programs, $396 million in FY2014 and a whopping $2.122 billion more expensive in FY2015.

Both projects have copped a fair bit of flak for not giving us the return we expected, whether that’s the take-up rate and roll-out speed for the National Broadband Network or the medal tally for Australia’s Olympic team compared to the Beijing games. In both cases, the flak misses the point is that these projects — the training of elite athletes and the deployment of an elite network — are a government investment in the future of this country.

As much as I dislike sport, I can see the merits of having high-flying Olympians competing on the world stage, both for Australia’s identity globally and for kids locally who want to get into sport. In the same vein, the NBN is about putting us on the world map for super-fast broadband, and it’s about giving kids and adults alike the tools to get into information intensive futures, like science, research or engineering. Perhaps we should stop bitching about both of them. That’s a capital idea.