Treasury docs show NBN worries evolve

Treasury docs show NBN worries evolve

Summary: While the Treasury did raise serious concerns about the financial risks posed by the National Broadband Network (NBN) two years ago, it seems that the government has gone a long way towards addressing those concerns in the intervening two years.

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While the Treasury did raise serious concerns about the financial risks posed by the National Broadband Network (NBN) two years ago, it seems that the government has gone a long way towards addressing those concerns in the intervening two years.

On Friday, the Department of Treasury published a series of documents relating to competition policy and market structure aspects of the $35.9 billion NBN project dating back to 2009, following a Freedom of Information request from Fairfax.

In charge of the nation's coffers, the Treasury was concerned by the then-$42 billion project announced in April 2009, stating its views in a policy implementation report from May 2009 (PDF):

"Considerable financial risks to the Commonwealth remain, including uncertainty over the likely extent of private sector involvement. However, from a competition policy perspective, the government's announcement provides an excellent opportunity to address longstanding problems in the sector — the risk is that this opportunity is wasted or compromised.

This warning of "considerable" risks is repeated over a number of subsequent reports in 2009 and early 2010, until the release of the Implementation Study in May last year. After the study, another implementation report (PDF) showed that the Treasury was still concerned about private funding, although the risks were no longer "considerable", and were related in particular to whether the planned deal between Telstra, the government and NBN Co would go ahead.

The Implementation Study has identified that private sector involvement in NBN Co is unlikely until at least five years after the roll out is completed. Financial risks for the Commonwealth remain, in particular due to uncertainty regarding a deal with Telstra and likely take-up of NBN Co's services.

Reports for the rest of 2010 continued to highlight the uncertainty surrounding a definitive agreement with Telstra as one of the key risks for the project. By February 2011 (PDF), however, this risk was no longer addressed, with the Treasury focusing on the cost to roll out the NBN.

Financial risks to the Commonwealth remain, in particular, if the cost of the roll out exceeds NBN Co's estimates.

The evolving outlook of the Treasury reflects the evolving state of the network. A number of key pieces of legislation have been passed since 2009, including competition and consumer safeguards legislation and the NBN companies Bill, aimed at preventing cherry picking by fibre providers, which could have made achieving a return on investment for the network unviable. Alongside these changes, the roll-out of the network progressed in mainland and Tasmanian sites. Definitive agreements were also reached, with Telstra and Optus to ensure that their customers are migrated onto the NBN, as the telcos' copper and hybrid fibre-coaxial networks are shut down over the next ten years.

While the Treasury will likely perceive factors of the NBN as being a risk until the entire network is rolled out, paid off and privatised, factors that may have caused alarm for the department two years ago are not the same risks that the network faces today. And rather than being a worrying sign that the NBN is doomed, the changing nature of the concerns show that a number of the Treasury's issues have been addressed. The downgrading of risks from being "considerable" to just risks, and the Telstra concerns disappearing, show that problems can be eased or worked around. The replacement of these risks with considerations about cost blowouts is also heartening, since such a statement could be in the risk assessment of any major project, particularly one of the scale of the NBN.

Topics: Government, Broadband, Government AU, NBN

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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  • "Financial risks to the Commonwealth remain, in particular, if the cost of the roll out exceeds NBN Co's estimates."


    With a project dreampt up by a Labor government that couldn't manage the budget of a pizza shop, never mind a country, I'd say that a significant cost blowout is inevitable. As usual, after the economy has been trashed by years of Labor incompetence, a Liberal government will get voted in to clean up the mess. In the mean time, let's just keep borrowing so we can keep spending. At least the red headed clown that runs McDonald's has some business sense. Wish we could say the same for Julia.
    m35oz
    • "With a project dreampt up by a Labor government blah blah blah I'd say that a significant blah blah blah piffle piffle waffle"

      I'd say you dont know what you are talking about and your knowledge of Australian politics is embarrassing, have you been reading Andrew Bolts blog? (You know the one written by a simpleton for simpletons) Also exactly how many different names are you using on ZDnet?
      Hubert Cumberdale
    • Or the Liberals could have built something in the first place. But they didn't. No data infrastructure, no skills increase, no hospitals. The Liberals had there chance and they did nothing.
      AdamF75
    • M35Oz - Just to correct something - a lot of us came up with the NBN concept - it is the concept that has been trashed by the current government into an expensive way to possibly win votes - paid for by all the country. It is really only for the areas that labour wants to win votes - urban areas.

      What I would find far more interesting is a report on the countries bottom line. Are we encouraging intelectual property development in Australia or just importing everything, are we developing industry, are we creating proper skills or some short term honey pot to draw in school leavers as highly paid ditch diggers. Unfortunately not seeing many ticks as far as the economy is concerned.
      rossyduck-7085b
  • LOL, the far right have returned!
    Rizz-cd230
  • Thankyou Hubert Cumberdale your retorts and spoons have always entertained me!
    JoshuaDavid
  • I see ZDNet is still the domain of the 'let's shoot the messenger nothing else to say' trolling comedy act of Rizz and HC.

    Delimiter discussion quality went up 100% when Rizz was banned.
    advocate-d95d7
    • Exactly what did m35oz have to say? It really had nothing to do with the topic in question so my response was perfectly appropriate. Are you seriously crying foul on this one? Wow, you really are even more delusional than I originally thought.

      As for Delimiter I noticed you dodging the questions again, whats wrong? bit too tough?
      Hubert Cumberdale
  • LOL, the far right have returned!
    swayaminfotech
  • No matter how carefully the NBN could be planned out (regardless of how carefully it currently is planned out, or if the care factor is non-existent), there's always going to be a budget screw-up.

    Liberal or Labor, regardless of whose idea end up getting adopted, somewhere along the line they're both quite capable of wasting sacks of cash, and then asking the public for more money to dig them out of their financial black holes.

    As for the NBN itself, even if it ends up costing $45-50 billion, you can't tell me that the future possibilities (i.e. the inevitable ways that people are going to exploit the NBN to make money) are not at least reasonable enough to justify the initial cost. The Australian economy could probably make that back in a year or two (again, depending on how smart we are).
    dmh_paul