Costings claim $900m coalition NBN hole

Costings claim $900m coalition NBN hole

Summary: Treasury has said that the Coalition will save $900 million less than it thinks over the next four years by vowing to cancel Labor's $43 billion National Broadband Network project.

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Treasury has said that the Coalition will save $900 million less than it thinks over the next four years by vowing to cancel Labor's $43 billion National Broadband Network project.

The Coalition had calculated a $2.4 billion saving over four years (PDF) if it cancelled the National Broadband Network.

However, Treasury analysis of the impact of that policy (PDF), released yesterday to the independent MPs and media, calculated the saving at $1.5 billion, which was described as a $900 million hole.

Opposition finance spokesperson Andrew Robb told ABC Radio that the difference related to the interest rate, with the Coalition basing its calculation on a 5.5 per cent average of the long-term bond rate over the past six months.

"We said what do you use and they said 'We are not telling you'," he said.

However, Treasury subsequently acknowledged a calculation rate of 4.9 per cent based on a weighted average of other rates that they declined to disclose.

"In the end we agreed to disagree," he said.

"It's not an error of costings. There is a difference of opinion when you go through the projects that they had identified. We stand by our costings."

Labor's document (PDF) didn't contain any mention of the NBN at all. Prime Minister Julia Gillard had said on Friday that although Opposition Leader Tony Abbott had sought access to a full costing of the NBN, the full NBN costings were disclosed in the Pre-Election Fiscal Outlook (PEFO) prepared by Treasury.

"If he seeks to have a briefing from Treasury and Finance for a more detailed assessment of those budget figures then, of course, that will be made available to him," Gillard said.

The PEFO document, available online, repeats the government's line during the last Federal Budget that allocation had been made for the NBN in the Contingency Reserve, which is an allowance held principally to reflect "anticipated events that cannot be assigned to individual programs" during the budget preparation process.

During the budget process the amount Labor expected to hold in the Contingency Reserve for the NBN wasn't disclosed. In the PEFO it was; $13.6 billion worth of future equity investments over three years to the 2013/2014 financial year.

Various other tidbits of funding related to the NBN were also disclosed in the PEFO. For example, the cost of establishing a universal service obligation company to maintain services in the bush was laid out, at a total of $100 million in 2012 and 2013, and $100 million a year ongoing from that point. Up to $100 million was also allocated to the cost of retraining Telstra staff under the carrier's agreement with NBN Co.

In addition, the PEFO also states that the government made a provision in the last budget of $18.3 billion over the forward estimated (including $18.1 billion of equity) for the roll-out of the NBN, based on the recommendations of the NBN Implementation Study.

However, the PEFO also notes that the exact timing and amount of NBN funding, including the Telstra deal, will be determined as part of the government's as of yet unreleased response to the implementation study and also the final Telstra agreement.

The exact funding allocation for the NBN has been a matter of some contention even without the involvement of both sides of politics in the election.

For example, several weeks ago the Federal Parliamentary Library released its own analysis of the NBN funding to date, noting the total expected funding costs of the NBN did not match the identified funding allocation in the last budget, partly because of the ongoing nature of the NBN project.

Topics: Government, Broadband, Government AU, NBN

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5 comments
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  • And what about the all up $7b-$11b hole discovered in the coalitions costings!

    No wonder they desperately tried to suppress at all costs...
    RS-ef540
  • That pales into insignificance when compared with this statement from the above article.

    "However, the PEFO also notes that the exact timing and amount of NBN funding, including the Telstra deal, will be determined as part of the government's as of yet unreleased response to the implementation study and also the final Telstra agreement."

    We STILL don't know what the NBN cost is going to be, it's a bottomless pit, no wonder ISP's love the NBN, no risk, constantly topped up by the taxpayer forever, no payback period, no ROI worries and I bet ISP's will STILL queue up at the ACCC complaining because it 'ain't cheap enough!'.
    advocate-d95d7
  • advocate, electioneering costings are akin to p!sing in the wind but a politically initiated resources tax for the sole purpose of balancing its budget is something else.

    http://www.businessspectator.com.au/bs.nsf/Article/Independents-meet-with-Andrew-Forrest-pd20100902-8W743?OpenDocument&src=hp16
    Vasso Massonic
  • The initial NBN/FTTP announcement, clearly said ..."will spend up to $43B over 8 years to build the NBN”. Do you understand what that means?

    Then the McKinsey/KPMG report came out forecasting the government’s investment will likely "peak at $26B". Do you understand what that means?

    Or… like the Word Bank/OECD research/findings, I suppose YOU know better than McKinsey and KPMG too? Wow...

    RS-ef540
  • The consultants report also said that Conroy's estimates were within $200m of their estimates. That's around 0.5% error.... with so many variables, different blackspots, numbers of premises, no technology or vendors chosen... one wonders how he could have got it so right. Then again, I guess when you get paid $5000 a page for a report , they know which side their bread is buttered.... and it was a great way to give a hint of governance.
    FiberLover