Budget 2011: Turnbull slams off-book NBN

Budget 2011: Turnbull slams off-book NBN

Summary: Shadow Communications Minister Malcolm Turnbull has labelled the Federal Government's continued approach of keeping the cost of building its flagship National Broadband Network project off the annual budget books a "charade", in the wake of early take-up figures of the network's services which the Coalition views as being less than expected.

TOPICS: NBN, Broadband

Shadow Communications Minister Malcolm Turnbull has labelled the Federal Government's continued approach of keeping the cost of building its flagship National Broadband Network project off the annual budget books a "charade", in the wake of early take-up figures of the network's services which the Coalition views as being less than expected.

In the budget papers released on Tuesday night, the government provided further detail about how it would inject equity funding into the NBN project, allocating $18.2 billion to NBN Co over the proceeding years up until the 2014/15 financial year. The payments are instalments towards the government's total equity contribution to the NBN, which is expected to be $27.5 billion.

However, in a statement released last night as part of the Coalition's budget response, Turnbull said the government had continued its "charade" in the budget papers of "keeping the entire cost of this needlessly expensive, excessively risky, anti-competitive project off the books".

The government, Turnbull said, assumed the NBN could be kept off-budget because it would generate a commercial return, making the NBN worth not less than the cost of its initial investment.

"But eight months after the first sites were turned on in Tasmania, expectations of strong early revenues are looking overly optimistic," the member for Wentworth said, claiming that only 11 per cent of households in Tasmania who had access to the NBN had signed up for services so far; less than the predictions that 58 per cent of households would sign up by 2014/15.

"The lacklustre performance metrics for the NBN so far bode ill for taxpayers," Turnbull added. "The claim that the government's equity costs are limited to $27.5 billion (excluding $16 billion to be paid to Telstra) with the balance funded in debt is a very spurious one. There is no prospect of NBN being able to borrow on a no-recourse to the government basis and so the NBN's indebtedness will be just another category of government debt. All of the NBN risk is with the government."

Other budget measures

Also in the budget was the revelation that the Federal Government would not proceed with a funding program that has seen Australian internet service providers provided with grants to offer internet filtering options to customers; driven by a lack of interest in the project. The project proved less than popular in its first year — with just $200,000 of available funds of $9.8 million being used in the past 12 months.

Turnbull said the funding cut sent a signal that Communications Minister Stephen Conroy had realised that relying on the internet industry and parents taking responsibility was a more effective way to make online activities safe than wholesale censorship of Australia's internet, as Labor's controversial mandatory internet filter policy proposes.

The MP also somewhat reinforced coalition criticism of the $308.8 million allocated in the budget to fund digital set-top boxes for pensioners and the disabled as part of the government's ongoing efforts to switch Australia over to digital television.

Prime Minister Julia Gillard staunchly defended the program yesterday, claiming that for some, the pending switch-off of analog television had the potential to remove "perhaps the only companion in their lives".

"The Coalition understands the cost of living pressures on all Australian households, and so supports any cost-effective assistance measures provided to Australians to switch to digital-only television," Turnbull said. "However, there are serious concerns over Labor's ability to roll out this program and accredit installation specialists, given the government's woeful previous record of administration with pink batts, green loans and school halls."

Topics: NBN, Broadband

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  • With the amount of damage Labor has done with the financials of NBN Co, we can only hope Malcolm can see through his previous government fault in not dealing with the Big T and literally ask them to take back NBN Co and the access network (at little cost).

    It will be a huge drain for the government to run and operate this business, with the ever draining backwards financials that will only cripple them should they get back into power.

    Only time will tell, but if they want to run back in the black, this will need to be done.
    • Clearly you dont know what you are talking about and I dont know who you expect will believe what you write.
      Hubert Cumberdale
  • What BS...Theguy

    Show us these damaged NBN financials...!

    Better still, show us those wonderful [sic] figures about $40k salary and buying a Ferrari AGAIN...LOL!
  • I think it is reasonable to be concerned about the ability of this government to roll out set top boxes. With NBN Co I think we need to trust that the right people have been hired and paid to ensure the financial accounting is correct. May not like the figures but they should be accurate.
    Knowledge Expert
  • Rizz,

    Show us your return!

    Spell it out for us if so good...
  • Ok I'll resubmit/do YOUR Ferrari sums again...

    Theguy, for someone who claims fiscal prudence, you have a real problem understanding maths!

    Lets do YOUR "don't stack up" - NBN/Ferrari sums together...

    You compare Australia spending (rounded) $30B - $3B p.a x 10 years - for the NBN, when government revenue is $3000B ($3T) - $300B p.a x 10 years - (Revenue $294.4B actual '09/'10 & forecast $321.8B '10/'11 - so let's agree on $300B p.a.).

    So the NBN will therefore cost 1% of revenue.

    A new 2011 Ferrari 458 Italia DCT is $670 000!

    So if this Ferrari cost is (like the NBN) just 1% of revenue... Australia building the NBN, would be like someone buying a Ferrari who is on a $67m pay packet, not a $40k pay packet...!

    • Oh very good how does the NBN stack up against a hot dog?
      Knowledge Expert
  • Well deperado, if you had have been with us, you would have noticed that Theguy was the one making the Ferrari analogy... I simply did the maths (for those of you who are obviously unable to count)!

    Perhaps ask your FUD clone, Theguy (as the hotdog analogy would be just as pertinent... I agree) and when he foolishly puts a figure on the hotdog too, I will again embarrass those figures, him (and of course you, which goes without saying)!

    Keep trying tiger...!
    • oh well if we are testing the 3 r's check the spelling of "desperado"
      Knowledge Expert
    • Oh cool we are doing fast foods now... btw RS did you know that before hotdogs there were no hotdogs?
      Hubert Cumberdale
      • LOL...HC

        Gee the big question for the FUDsters now then is ... before roads were there hotdogs?

        Better not confuse them by then asking, or conversely, before hotdogs were there roads? Their poor little heads might explode!
      • No its Rizz, not RS, Fizz, Tizz or Fizzel, maybe fibretech!
        Knowledge Expert
        • I'm whoever you want me to be...(as I said I will play with you and humour you, out of charity - I'm that sorta guy!)...

          But inevitably, I am the one who highlighted you, your lies, your multiple undeclared posting names Doubt (most apt) and Visionary (laughable) hence your fervent, unsuccessful desperation to try to pin the same low act on me...LOL.

          And, it's now most apparent that I am indeed the one who has reduced you to mere, drooling troll...!

          So much for your earlier comments "not interested and intelligent debate"...LOL!

          See ya tomorrow tiger...!
  • Rizz,

    If you can't get the analogy of the Ferrari (make it a boat, or even a house), then you've got Buckley of understanding the NBN.

    Those calculations, are the same the Labor party probable used on the back of the place card for the NBN. The bottom line is a return of 6-7% should send the alarm bells ringing (obviously not for you are you don't care). A high risk project of this magnitude should give back around 14%.

    First payback in 2034 (an absolute joke). Thirdly the true cost of the NBN is not $47 billion, but arond $80-$100 billion (done by the incumbent who owns the access network and the best fibre network around Australia - done before NBN came about), so if the cost stays the same (which is won't) return will have to be lower.

    You are wrong (as usual) on all accounts, but that does not matter for you, as long as you can 'shoot from the hip' and pray something ends up hitting the target (by the way, which hasn't so far)....
  • You say dumb things as you did re: Ferrari, and they come back to bite you...and...you still haven't learned...LOL. Now you stupidly want to change it to a boat or a house...

    The sums showed that the NBN is (approx.) 1% of revenue... do you get it?

    So it doesn't matter what you change the Ferrari to, the direct comparison will always be a constant 1% and therefore affordable.

    To make it clearer and to use your $40K/Ferrari analogy again, it's like that person on $40K buying a $400 Ferrari...!

    So what do you do, now proven wrong (or simply unable to count)? You claim the build costs to $100B (eh Dr. Evil?)...LOL

    BTW - what is the return on the $50B worth of roads Abbott alluded to building instead of the NBN...and what year will they have paid for themselves... well???