Mr Conroy realised that for the better part of a decade, Greece has provided sovereign backing to Hellenic Railways, a semi-government enterprise similar to NBN Co. This structure allowed the railway to borrow billions from accommodating foreigners, all the while not adding to the Government’s official debt numbers, despite the railway’s finances being so skewed that it paid three times as much on interest expenses than it collected in revenue.
During this decade, Greece had been able to use its “off balance sheet” rail system as a means to support employment. Between 2000 and 2008, the cost of the company’s payroll soared by 50 per cent even as overall personnel decreased by 30 per cent, with the average salary of a rail employee in 2008 being $78,000 per annum. This would keep telecommunications and building unions happy in Australia, Senator Conroy thought, after all it did in Greece.
In 2008 Hellenic Railways reported a loss of more than $1 billion, on sales of about $253 million. Of course, shaky finances are not uncommon among rail operators. Their prices are kept low as a matter of social policy, forcing the companies to become heavy state-backed borrowers to finance upkeep and expansion, perfect for a project such as the NBN.
Even so, the Greek railway is in a category by itself. According to an analysis, for Hellenic Railways to just break even, it would need to increase passenger traffic by a factor of 10, an outcome that seems unlikely. Greece has a well-developed road network, a relatively short distance separates its main cities. It is not uncommon that a journey by car to be significantly faster than the same route by rail. Outside of the main route between Athens and Thessaloniki, the network’s viability is questionable.
The similarities with the NBN became all too apparent to Senator Conroy, especially with issues such as uptake and commercial viability outside of major cities. So despite still being on holidays, Senator Conroy immediately called his staff and informed them that he had found in Hellenic Railways the perfect case study on which to model Australia’s NBN policy.
Since Senator Conroy’s Greek tour, Greece has suffered a sovereign debt crisis and avoided bankruptcy only through the intervention of the IMF and the EU. Hellenic Railways is now losing money at the rate of $3.8 million a day. As a condition of Greece’s financial rescue, the IMF and EU is demanding that a solution be found and are requiring that the debt of Hellenic Railways, as well as the off-balance-sheet obligations of other state-owned enterprises, be counted toward Greece’s official debt. Analysts estimate the total to be around $33.6 billion, a sum that would add another 11 percentage points to Greece’s current debt levels. Consultants have also advised Hellenic Railways to sack up to half the employees and shut down the majority of the railway’s routes in a bid to seek private investment.
In response to the leak from his ex-staffers, Senator Conroy said in an impromptu press statement:
“The Australian Government had learnt a lot from the Hellenic Railways case study including its mistakes.
Unlike Greece, Australia will regulate to prevent any competition from the existing or future infrastructure. NBN Co will buy and mothball the existing copper network and regulation will limit the availability of wireless broadband spectrum for competing technologies. If the Greeks had similarly closed down all roads, Hellenic Railways would have been an outright success.
We will also prevent any independent cost benefits analysis of the NBN. In Greece’s case, it was only after a newly elected government and the IMF and EU reviewed the Hellenic Railways obligations that it become apparent a problem existed.
Here at the Ministry for Broadband, Communications and the Digital Economy we are always reviewing best practice of other Governments, and are committed to improving on them. Indeed the inspiration for the proposed Australian internet censorship policy came to me whilst I was visiting China and tried to download some information on Tibet.”
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