Base coalition NBN would cost AU$15B

Shadow Communications Minister Malcolm Turnbull has said that his NBN policy would cost AU$15 billion, if NBN Co didn't already have contracts in place.
Written by Josh Taylor, Contributor

If the Coalition wasn't stuck with existing National Broadband Network (NBN) contracts, its network would only cost AU$15 billion, according to Shadow Communications Minister Malcolm Turnbull.

Stephen Conroy and Malcolm Turnbull (Screenshot by Josh Taylor/ZDNet)

Turnbull made the comments during a debate with his government counterpart, Communications Minister Stephen Conroy, on ABC1's Lateline last night.

The government's peak capital investment for the NBN is set to be AU$37.4 billion, which will be paid off over the life of the project, with a 7.1 percent return rate. As the 2013 election draws closer, pressure is mounting on Turnbull to reveal the full details of his policy. Turnbull last night said that if NBN Co had not already locked in construction contracts and other deals, his plan would only cost AU$15 billion.

"If you were starting from scratch without any of their existing contracts, we know it would cost about AU$15 billion to do the whole job. So a third or less of what the NBN Co is saying it will cost," he said.

"What we don't know — is because the NBN Co has not been transparent about it — is how many contracts they've entered into which have locked in, wasteful commitments, over investment which we may well be stuck with."

Turnbull has previously said that a coalition government would honour the existing contracts if it wins office in 2013, but would likely scale back the network in many places from a fibre-to-the-premises (FttP) network to a fibre-to-the-node (FttN) network. The last government estimate put the cost of cancelling NBN contracts at AU$2.3 billion.

The AU$15 billion estimate is closer to the figure that Citi released last year, pricing the Coalition's NBN at AU$16.7 billion. Turnbull rejected this costing, saying that Citi had not consulted with his office prior to the publication of the report.

Conroy rejected the AU$15 billion figure, stating that it did not account for the cost of securing the use of Telstra's copper network between the node and the premises.

"The big unknown is that Malcolm [Turnbull] quotes this third figure from an Alcatel-Lucent study, which said if you were the incumbent, it would be the third of the cost," he said.

Turnbull said his own policy could not be fully costed, because he does not have full access to the details of the contracts with NBN Co.

"We're not in a position to present a corporate plan along the lines you have, because we don't have access to your data. You give us full access to the NBN Co's financials and we will deliver that," he told Conroy.

"But the NBN Co has a sort of financial transparency regime modelled on the Kremlin. It's a defensive organisation, it puts out bodgie numbers like that 758,000 thing to conceal the fact that this is a failure."

Turnbull again argued that NBN Co using the term "construction commenced or premises passed" for marking milestones for the progress of the rollout is misleading, and that it is more accurate to state the number of active services on the NBN.

Earlier this week, Conroy said that there are 7,000 active fibre services on the NBN. He last night revised this figure to 8,500. Including the fixed-wireless and satellite customers, NBN Co has a total of 30,000 active services on its network.

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