Shadow Communications Minister Malcolm Turnbull has indicated that a coalition government may let current National Broadband Network (NBN) contracts run their course, rather than face a multibillion-dollar termination payout bill.
The 2012-13 Federal Budget papers revealed on Tuesday that as of 31 March 2012, the government is liable to pay out $1.8 billion in compensation to companies that NBN Co has signed contracts with to construct its $35.9 billion broadband network.
As the 2013 election draws closer, Turnbull has indicated that a coalition government would look to scale back the roll-out to a fibre-to-the-node (FttN) network in a number of locations. This would be instead of fibre to the home, which he believes would allow the roll-out to be completed cheaper and faster. If this policy was to change immediately, Turnbull would need to either exit or renegotiate a number of the contracts with the construction companies rolling out the fibre.
But speaking to journalists today, at a post-budget luncheon in Sydney, Turnbull said that the Coalition would honour the current contracts that the Labor government has signed, provided it is more cost effective to do so.
"We're not about breaking contracts, even if they've been entered into unwisely. Where contractual commitments have been made, the Commonwealth has to honour them," he said. "If there are termination provisions in some contracts, I suppose that's something you could look at, if it made more sense to terminate something than to continue with it. But really, I don't anticipate that happening."
Turnbull said the government has made a lot of decisions about the NBN that the Coalition wouldn't have made, but he said that the Coalition can't "unmake" those decisions.
The current set of construction contracts for the fibre portion of the NBN are due to expire in mid-2013. NBN Co will negotiate these contracts soon, which will take the contracts out to expire in 2015. This isn't a concern to Turnbull, who indicated that in many places, the Coalition will continue with a fibre-to-the-premises network.
"What it's all about is about completing the NBN faster, cheaper and consequently doing it in a way that will make it more affordable to customers," he said.
"We're not ruling out fibre to the premises, either. There will be areas where fibre to the premises makes a lot of sense — where copper has deteriorated or is more costly to maintain. You take a rational approach with what is more cost effective."