In 1991, the government developed the Intra Government Communications Network (ICON) as a temporary fix for the Department of Foreign Affairs linking two of its buildings in the capital. Over time, the system grew to link 88 government agencies and 400 buildings in the Canberra area through 150,000 fibre kilometres.
This strategic asset, which provides low-cost high-volume bandwidth, is a secure point-to-point fibre connection between buildings in Canberra. Current estimates indicate the network carries up to 2 terabits per second over its pathways.
In 1997, Peter Costello, as part of his obscene $72 billion fire sale of our assets, investigated outsourcing the communications network but could not make a business case stack up.
A typical commercial carrier’s quote for just the first year to link two government buildings 80 metres apart with high-speed services was $120,000. ICON could do the same for less than $45,000 and no further payments.
Former public servants who worked in the 1990s on developing ICON said they were astonished at how much cheaper the technology could be supplied by keeping the work within the Australian Public Service.
The Department of Finance’s own website states that ICON provides “significant cost-saving solutions compared to commercial carriers.”
So why would Mathias Cormann go through the same pointless exercise of considering outsourcing again?
In February last year, the Minister appointed accounting giant KPMG as business adviser and King & Wood Mallesons as legal advisers for a study on a possible sale of ICON.
As part of the “smaller government” reforms aimed at eliminating waste and duplication in the public sector, Senator Cormann said “In addition to considering options for the future management, operations and ownership of Intra Government Communications Network, the scoping study will assess the likely sale environment for this business operation. The advisers will provide independent advice to allow the government to make fully informed decisions on the optimal method and timing of any sale or change to governance arrangements.”
According to Government security guidelines the “protected” security classification of ICON means its compromise “could be expected to cause damage to the national interest, organisations or individuals”.
Dimension Data, a South African firm which is a wholly-owned subsidiary of Nippon Telegraph and Telephone (NTT), made a $400 million pitch directly to Finance Minister Mathias Cormann. The company already operates a secure network in the Department of Defence.
But by November, Cormann had changed his tune, issuing a statement saying “The scoping study found that ICON provides significant value to the Government as a strategic asset and is highly valued by Government agencies for its low-cost and high-volume bandwidth. ICON could also potentially play a central role in enabling broader whole-of-government technology solutions in the future, such as cloud-based services.”
To excuse this expensive waste of time, Cormann said “We were not going into this process with a desperation to sell. We went into this process with a commitment to ensure that the way this network is currently managed is still the most appropriate way.”
This whole debacle exemplifies the short-term wasteful thinking of Coalition governments.
The public service has been effectively neutered. Department heads with proven expertise and vast experience are replaced with political appointments while public servants are sacked in their thousands. Those that remain are threatened with punitive action should they express views critical of the government. Their advice is not sought as private consulting firms are paid enormous sums and provided with very narrow specific terms of reference to give the required answers.
We have Treasury, the Department of Finance, the Parliamentary Budget Office, the Productivity Commission, the RBA, the ATO and legal battalions to advise us but instead, we go to the big four or the various industry groups for “independent” advice. We appoint temporary hand-picked commissioners/consultants who are paid enormous amounts of money to express their own opinions.
Previous studies are ignored, their recommendations forgotten, their goals abandoned, as we reinvent the wheel over and over and over.
Why must the rest of the country endure a substandard broadband when everyone knows the huge productivity gains to be had by universal access to the same speeds our politicians enjoy? Why did Howard block Telstra’s 2005 bid to start laying fibre? Why is Turnbull continuing his sabotage?
Why are we handing over aspects of our security to foreign companies?
Why are we selling our air and sea ports?
Why are we selling profitable businesses that would provide ongoing revenue to the government?
Why are we privatising government agencies, invariably leading to higher costs, a deterioration of services, and job losses?
Why are we selling government buildings and then leasing them back again?
Why are we contracting out jobs to middlemen when the public service could do them cheaper and more efficiently?
The overriding goals are “small government” and “no debt”. The reasons for, and consequences of, these goals are never made clear. They are goals without a purpose and represent false economies.
So is it stupidity or cupidity… or is that just conservative politics?
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