NBN cancellation liability rises to AU$2.3 billion

Australian taxpayers would be liable to pay out AU$2.3 billion in compensation if the contracts associated with the NBN were cancelled.
Written by Josh Taylor, Contributor

The Australian Department of Broadband, Communications and the Digital Economy (DBCDE) has flagged that the cancellation of the contracts surrounding the National Broadband Network (NBN) roll-out would cost taxpayers AU$2.3 billion.

The department's annual report (PDF) revealed that the government's liability for the AU$37.4 billion NBN increased by AU$500 million between March 31, 2012, and June 30, 2012, from AU$1.8 billion to AU$2.3 billion.

The liability covers a range of NBN Co's contracts, including the AU$11 billion deal with Telstra to migrate customers over to the NBN, which accounts for AU$210 million of the liability.

The AU$800 million deal with Optus is not included as part of the liability, because the company has yet to start migrating customers from its hybrid-fibre coaxial (HFC) network onto the NBN.

As the 2013 federal election draws closer, Shadow Communications Minister Malcolm Turnbull has said that the Coalition would likely honour much of the existing contracts that NBN Co has in place, including the contracts for the construction of the satellite and fixed-wireless service. Turnbull has been reluctant to price his own policy, in part because he is not clear on the extent to which a coalition government would be stuck with NBN Co's existing contracts.

"Our policy will be costed in the sense that we can provide very hard, reliable estimates of the relative cost of our approach, but we are not in a position to provide an alternative, if you like, to the NBN Co's corporate plan, because we simply don't access the contractual information," he said last month.

"We don't know the extent to which they have made commitments, or the terms on which those commitments are made."

The government is looking to exempt the newly formed Parliamentary Budget Office from Freedom of Information requests, which would allow parliamentary parties to have their policies costed without the risk of the information about that policy being revealed to the public.

Administered expenses by the department increased in 2011-12 to AU$537.8 million, due to payments to Telstra as part of the deal worth AU$421.5 million. The Commonwealth's investment in NBN Co stands at AU$965.5 million as of June 30, according to the report.

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