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Can the NBN ‘save’ our cities?

September 9, 2010

http://www.onlineopinion.com.au/view.asp?article=10900&page=0

New England Independent Member of Parliament, Tony Windsor, has argued that the National Broadband Network could be a key driver of economic decentralization in the country. He has been quoted as saying: “If there’s been a piece of infrastructure (if it’s done correctly) that negates distance as being a disadvantage of living in country Australia, this is it …If we get the broadband system right it could revolutionise country living and solve some of the city-based problems.”

Could this be true? The author of this article thinks not. Canberra is used an example. That city has good transport and internet connections, high income and levels of human capital. Yet it remains relatively small, with a population of 352,000 and growing only relatively slowly compared to the major cities of Sydney and Melbourne.

Distance from major cities seems to be the major constraint to Canberra’s growth. This indicates the importance of large, dense cities. Such cities offer bigger markets, bigger supplies of specialized skilled labour and better social and cultural amenities.

The author concludes that: “the fact is that moving large quantities of data at high speed isn’t a key determinant of where most firms locate.” “So I can’t see the NBN having a major impact on the relative shares of population growth in regional centres and our two largest cities. But I do see it having a positive effect on life in the regions.”

1. In what ways is the NBN a long-term growth policy? In what ways might it be a macroeconomic stimulus policy?
2. “The NBN will simply redistribute economic growth in Australia, not increase it.” Critically evaluate this statement. Would the author agree with it?
3. How might the NBN fit into ‘endogenous growth theory”?
4. Which do you think is the greater benefit of the NBN: regional economic growth or regional quality-of-life improvements?

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