Shadow Communications Minister Malcolm Turnbull has suggested that the 2012-13 Budget would actually blow out to a $12 billion deficit, if the National Broadband Network (NBN) was on the books.
In not proceeding with the planned 1 per cent company tax cut, downsizing the public sector workforce by 3000, reforming welfare and tax systems and making $5 billion in cuts to Department of Defence spending, the government is hoping to turn a $44.4 billion budget deficit in 2011-12 into a $1.5 billion surplus for 2012-13.
Despite making a number of cuts, the government is still pumping billions of dollars into NBN Co, as the project ramps up and rolls out fibre, fixed-wireless and — eventually — satellite broadband services across the country.
The government plans to invest $20.1 billion into the NBN over the next four years, but this funding is not included in the Budget's "bottom line". If the government was to include the NBN funding for next year on the Budget, it would end the government's hope of achieving a surplus, Turnbull said.
"The Budget would show an actual deficit of at least $12 billion," Turnbull said during question time today.
In response, Swan said he rejected the "slur".
"The truth is this: we are operating under a charter of budget[ary] honesty, developed by [the Coalition]. We are working with accounting standards that were developed by the previous government and we have accounted for the NBN in precisely the same way as bodies like Australia Post [has] been accounted for forever and a day, and were accounted for, by the previous government, in that way."
Parliamentary Library economic analyst Brian Dalzel has previously backed the government's approach to the NBN's accounting in the Budget. As the government is expecting a 7 per cent return on its investment in the NBN, it appears as an asset for the government, rather than an expense.
This methodology could cause headaches for Turnbull, if he becomes the communications minister after the next election. If the policy for the NBN was to change, and the 7 per cent return was no longer guaranteed, the NBN could become an expense on the Budget. In addition, the Coalition is already facing the prospect of having to pay out at least $1.8 billion, if it cancels the contracts NBN Co has already signed for construction of the $35.9 billion network.