NBN write-down would not impact Budget surplus: Cormann

Finance Minister labels a potential NBN write-down as a political decision.

Finance minister believes NBN write-down would not impact Budget surplus Finance Minister labels a potential NBN write-down as a political decision.

Australian Finance Minister Mathias Cormann has said a potential write-down of the National Broadband Network (NBN) would not hit the Budget bottom line.

"A write-down would not impact surplus goal. NBN equity investment was classified as such when it was made," Cormann tweeted on Monday morning.

"A write-down would not cause retrospective re-classification into a grant."

Cormann added that a write-down is the responsibility of the NBN board, and such action would shift the cost on taxpayers instead of customers.

"Those pushing for a political decision to write-down the value of NBN to facilitate lower prices and higher margins for other businesses are arguing that the taxpayer rather than customers should carry more of the cost burden of services provided by NBN and accessed by NBN customers," Cormann said.

The Finance Minister, who is a stakeholder minister of NBN alongside the Communications Minister Mitch Fifield, followed a similar line of argument to comments made by NBN chair Ziggy Switkowski in October.

"The ability to properly value this asset is probably not going to be available to us until the 2020s," Switkowski said at the time. "Yes, I can rule out a write-down -- this is my personal view.

"I think considerations and evaluations of NBN will await the business moving into a normal conventional mode, which will happen when we finish the building in 2020, we complete the conversion of all households and businesses in 2021, we turn cashflow positive, we look forward, and then whoever is going to make a judgment will make it then."

In a speech made last week, ACCC chair Rod Sims said the value of NBN should be ignored, in preference for how to make use of it.

"We must ignore those who worry about the value of assets that are sunk, and focus on how the NBN can best contribute to Australia," Sims said.

"A key NBN issue is entry level pricing. If the 12/1 service is priced the same as the old equivalent ADSL service then, we can be assured that those who want a better NBN service are prepared to pay for it, because they otherwise have the backstop of getting pre-NBN speeds and pricing."

NBN CEO Stephen Rue said in February that those calling for a write-down just want a wholesale price cut.

"When people say there should be a write-down, I don't think that is what they are really calling for. Essentially, they are calling for the wholesale price to fall dramatically," NBN CEO Stephen Rue told the Joint Standing Committee looking into the business case for the NBN.

"Calls for a large wholesale price cut puts at risk the long-term viability of the company ... without that, I truly believe you put at risk the digital future of the country, and all the benefits that flow."

Telstra and NBN are currently pointing to each other as the source of high broadband wholesale prices in Australia.

Last week, Telstra CEO Andy Penn said it was unprofitable for retailers to resell NBN at the current prices.

"An industry where wholesale prices result in zero margins for the downstream retail providers is unsustainable," Penn said.

"It will result in higher retail prices, reduced competition and retail providers looking for ways to bypass the NBN altogether -- which is bad for customers and bad for the industry."

Rue returned serve the next day, describing the wholesale price debate as "the industry gnashing about NBN Co's pricing model".

"Let's not forget that the sum of all NBN Co payments to Telstra was around AU$2 billion this year," Rue said.

"Our Corporate Plan points to a continuing payment to Telstra for access to ducts, dark fibre and facilities of AU$1 billion annually from FY21, representing 20% of forecast revenues, and continuing for decades after the build is completed.

"This has an obvious impact on wholesale prices."

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