Coalition NBN won't be costed

Coalition NBN won't be costed

Summary: Shadow Communications Minister Malcolm Turnbull has confirmed that unlike most other Coalition policies, the alternative NBN policy won't be costed through the Parliamentary Budget Office.

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Shadow Communications Minister Malcolm Turnbull has said that a mutual agreement between the newly established Parliamentary Budget Office (PBO) and the Coalition that the PBO lacks the expertise to cost the Coalition's alternative National Broadband Network (NBN) policy will mean that it will go to the September federal election uncosted.

The shadow minister made the comments on Twitter today, as first reported by Delimiter. The Coalition has claimed that its policy, which will see 71 percent of premises receive NBN services over a fibre-to-the-node network rather than fibre to the premises, will cost AU$29.5 billion, with the aim of ensuring that all Australians can get download speeds of at least 50Mbps by 2019.

As Australia heads to the ballot box on September 7, the opposition is now beginning to have a number of its alternative policies costed by the PBO. However, as Turnbull stated on Twitter, the Coalition's NBN policy has been deemed too complex for the office to verify that the estimates for the cost of its network would be accurate.

The PBO was established in July 2012 to provide to the parliament independent and non-partisan analysis of policy, and to lay out the potential financial implications of proposed policies for any side of politics. It was designed to allow the parties to float policy ideas privately before going public with any official plans. As such, unlike the majority of other government departments, the entire agency is exempt from Freedom of Information laws.

The department received approximately AU$6 million in funding in last year's Budget, and AU$4.5 million in additional funding in this year's Budget to "enhance the Parliamentary Budget Office's fiscal policy analysis and costing capabilities, and to produce post-election assessments of election commitments".

The Coalition does not currently have the option of using other government agencies to test its policy's costings. Turnbull also noted that the Productivity Commission cannot cost the policy, because it can only accept instructions from the government of the day.

Shadow Treasurer Joe Hockey said earlier this week that the Coalition's hands are tied in getting any other policies costed by the Treasury, because the government amended the Charter of Budget Honesty to state that the opposition party could use either Treasury or the PBO to cost policies.

"It was the government that amended the Charter of Budget Honesty to say that you could either use the Treasury or the Parliamentary Budget Office," he said. "We have been using the Parliamentary Budget Office."

The Coalition has come under fire for not releasing its policy costings broadly. Finance Minister Penny Wong said today that with the Pre-Election Fiscal Outlook (PEFO) document now released, it is time for the Coalition to reveal its costings.

"It may bore Mr Hockey to have to keep hiding his cuts, but Australians deserve to know how the Liberals would pay for their promises," she said.

"The release of the PEFO earlier this week means Tony Abbott and Joe Hockey have no excuses left to keep their cuts secret. The Liberals have spent months trying to dodge scrutiny, but with the election less than four weeks away, Australians deserve to know their plans."

Regardless of whether the NBN policy is costed before the election, it is unlikely that it would have an impact on the budget bottom line for the Coalition, because the party backflipped on earlier complaints about the NBN accounting method currently used by the Labor government, and has since agreed to keep the NBN off-budget.

Topics: NBN, Government, Government AU

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

13 comments
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  • Same old

    Both parties desperate to hide the potential costs to taxpayers. We're being treated like fools; govt borrowing and spending billions on our behalf for very little.

    It'll take generations to pay off these follies.
    Richard Flude
  • @Richard

    It's infrastructure though, and retains its value, whether you sell it or keep it. Vastly unlike social security expenditure which is a hungry mouth that will be back tomorrow for more.
    meski.oz@...
    • Infrastructure doesn't always retain its value

      You can end up with something that's worth far less than its cost.

      NBNCo has committed over $10b so far. The value of the infrastructure built is a small fraction of that spend.

      Look to the Sydney-Melbourne rail upgrade undertaken by Labor. Billions spent, the quality of infrastructure poorer after the upgrade than before (committee services canceled, trains now slower than before).
      Richard Flude
    • SS Expenditure

      welfare monster hungry for your tax dollars says: "just hope you never have an accident causing permanent disability or experience long term unemployment or get old with a failed super investment or i make you be eating your words".
      Daniel Ruben
  • uncosted?

    if the PBO is unable to cost Abbotts NBN, how can his own party? What expertise do they have that a specialist group doesn't. It's all smoke and no mirrors to me.
    tonye56
    • The Midas Touch

      What's all the fuss about?
      Murdoch informs me that Abbott's FTTN version has the ability to transform all that corroded last-mile copper into gold (for him) & it will only cost us eleventy billion extra in the process.
      Sultanabran-
    • The Midas Touch

      What's all the fuss about?
      Murdoch informs me that Abbott's FTTN version has the ability to transform all that corroded last-mile copper into gold (for him) & it will only cost us eleventy billion extra in the process.
      Sultanabran-
  • Trust

    How can I be expected to trust a plan that is put forward by the coalition the cost of which they refuse to release even thought as a layman I can see the impact of the long term cost which will impact this country in a multitude of ways that their plan does not even detail. This is what this election is all about, TRUST AND TRANSPARENCY, Where one side appears a bit murky the other side is a black wall. How can I take this potential LNP government on trust without them giving me some hard facts and detail that I can analyse so that I can form my own opinion. Then NBN is but one factor, the scary stuff is all the rest that voters are expected to take on trust from these right wing tools.
    BoomerMMW
  • Yardsticks

    From a physical build perspective, and comparing to other project we are working on in other parts of the world full FttP should be in the region of $500 - $700 per connected premises, but very dependent on the scale. This includes planning, submissions to local authorities. Given the scale of the NBN Co project they should be hitting below $500, even given the higher labour costs. Unfortunately the NBN Co planning crowd are not the most innovative and from what I have seen we are probably way over that. I just hope they take it from Conroy's/ Quiglies pension and not my grand-childrens taxes. The scary thing is fiber is only guaranteed for a max of 20 years and not expected even by NBN Co to last for longer than 50years.
    Rossyduck
    • Interesting costins.

      To try and compare this project to any other in the world is a bad idea. Especially in terms of costings per household. Most of the other countries that have gone full FttP are much more densely populated countries. Countries where the majority of the population live in cities and these cities are located close to each other. Australia is one of the least densely populated countries in the world.

      Because of this even just linking up capital cities with single fibre lines is very expensive. This puts up the price per person figure making ours look much more expensive than other countries (which it should be).

      Also don't ever trust the "gauranteed life" figures for cabling of this kind. Firstly fibre is inherently more durable than copper. It is made of more stable materials that dont corrode as easily as copper. Of all the last mile solutions you can bet that fibre will be the most durable. WiFi has hardware that gets outdated. Satellites dont last more than 10 or 15 years before they fail or fall out of orbit and copper will corrode quicker. Fibre doesn't corrode as fast and new technologies coming out for it will enable increasingly inferior cable to transmit increasingly greater speeds. On top of this life is extended by maintenance. The 50 years quoted is most likely the life expected before maintanence costs become a serious issue. (which they are already exorbitant for copper)
      Darren.Bennett
      • Typical fibre lifetime is 60yrs

        The fibre performances degrades overtime but this is accommodated by the hardware.

        However issues with non-reduncdancy are a problem and why NBNCo move to reduce it to save money a big risk.

        Fibre is not always the most durable last mile; depends on your application/demand.

        AT&T has reported negligible difference in per premises maintenance cost re FTTN & FTTH.

        The population density of a country is irrelevant; the density of the markets covered that's important.

        Currently NBNCo is well over $2.7k per premises passed; note these are the easy ones. Costs are increasing.

        Copper maintenance costs aren't "exorbitant"; they're costs are easily managed in the revenue models of teleco around the world.
        Richard Flude
        • Not the most durable last mile

          I suppose if you were a ship out at see a fibre optic cable would be a little pointless. :)

          Copper maintanance costs at the moment are between 700 million - 1 billion a year. That isn't exorbitant? I would love to have an income like large enough to allow me to burn that much.

          Sorry. I forgot that thousands of kilometres of extra cabling to service less people spread over a larger area isn't more expensive. I forgot how your market economics makes it disappear.

          And tell me. How much has the AUSTRALIAN telcos, not your beloved overseas ones, budgeted for upgrading our network. Any money at all? The last time the telco companies tried doing any sort of upgrade worth wasting money on, market economics due competing infrastructure in this country forced them to stop after reaching a woefully small number of people. That was with HFC, which would still be inferior to the current network plans.
          Darren.Bennett
          • Darren

            Exorbitant isnt the magnitude cost alone, but must include the revenue generated. The CAN is a huge network.

            The most expensive component (cost -revenue) of the CAN (regional areas) is retained under the NBNCo model.

            Again AT&T hasn't seen a large reduction in their real-world costs between the two models. If you have different evidence I'm happy to hear it.

            HFC was pushed out to support the pay TV model. Rightly it was stopped at around 2m homes; all the costs could justify. Even now a large number of MDUs remain unconnected. Unsurprisingly this proves my point, undermines yours.

            NBNCo costs must be paid back; nothing in their current performance indicates they're close to achieving their claimed IRR. Beset by rollout problems their revenue predictions are way off.
            Richard Flude