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Blog, Telecommunications - Written by Renai LeMay on Monday, August 6, 2012 10:21 - 86 Comments
NBN budget doesn’t include interest, says Turnbull
blog We’re not really sure how the Federal Government could have overlooked this minor detail (or even whether it actually has), but Shadow Communications Minister Malcolm Turnbull has publicly claimed that there’s an error in the National Broadband Network budgeting, due to Labor not counting the cost of interest on debt or equity required to fund the NBN. The Financial Review reports (we recommend you click here for the full article):
“The federal government has been accused of hiding the true cost of the $36 billion national broadband network by excluding billions of dollars in extra financing charges.”
To be honest, we feel Turnbull’s claim is a little dubious; after all, if there truly was a $10 billion budgeting black hole with respect to the NBN, wouldn’t the dozens (hundreds?) of analyses done on the project over the past few years have caught it by now? I guess we’ll see further discussion on this issue when NBN Co’s latest corporate plan is reduced; currently expected in the middle of this week.
Update: Turnbull’s office has issued the following statement this afternoon:
Every single dollar spent on Labor’s National Broadband Network is borrowed money, as today’s front page article in the Australian Financial Review points out.
So when the Gillard Government claims the NBN will cost ‘only’ $37 billion to build (or that NBN Co needs funding of ‘only’ $41 billion before it becomes financially self-sufficient in 2021) it is not telling taxpayers the whole truth.
Neither figure includes the cost of interest payments on all of the funds borrowed for the NBN. Accounting for interest payments adds $10 billion to the price tag for Labor’s NBN (assuming a borrowing cost of 5 per cent, the average Commonwealth Government ten-year bond yield). This is before taking account of the construction delays and higher costs that have plagued the project so far.
Comparing the true overall costs of Labor’s NBN against its projected returns suggests it is simply not credible to claim it is viable in commercial terms. Yet for the past three years this is how Senator Conroy has excused keeping most of its expense off the Budget.
The updated NBN Corporate Plan due this week must set out all expenses associated with the financing of the NBN, including the cost of interest payments on Government ‘equity’. Unless it does, Senator Conroy has no right to claim this project will deliver an economic return.
After almost five years in power, the Government’s broadband policy is a catastrophe. Barely 15,000 households have connected to the NBN (with fewer than half on its much vaunted fibre) and many Australians will not receive it for a decade or more. Meanwhile NBN Co’s own Corporate Plan states that monthly charges per customer will double over the next decade.
The Coalition’s alternative broadband policy will be financially responsible, and deliver fast broadband to all Australians more affordably and sooner.
Image credit: Office of Malcolm Turnbull
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This was first raised by the CEOs of the Alliance for Affordable Broadband many many months ago in an open letter to Mike Quigley questioning NBNco’s financial projections.
Not surprisingly, Quigley never responded to the embarrassing questions.
Let’s stack up the difference between the projected $36 billion, plus (say worst case) ten billion in interest – versus the $50 billion already claimed by the Coalition as the actual cost.
One set of rubbery claims, versus another set of rubbery claims. Both of which miss the point.
Even if it is $36 billion plus interest – even if it is $50 billion – it’s still worth the investment.
If they were borrowing the full amount for the entire 10 years then $10 billion would be believable, but they’re not fully funding it from day 1.
How long is it projected to take for the NBN to make the 7% return on the investment? This is a question I’ve often wondered but never seen reported. Once it makes it’s 7% return it will lower the interest on other borrowing ;)
so wait.
without the 10 billion black hole the project comes to 36 billion.
ie. less than the touted 50 billion that the coalition claim it will cost.
with the 10 billion black hole the project come to 46 billion.
ie. still less than the touted 50 billion that the coalition claim it will cost.
No “black hole” talk, please! Seriously! Going to have to knock that one on the head, pronto.
Conroy needs to come out with one of his baseball bat swinging performances to put this one to sleep. No, truly. It’s dumb dumb dumb – and Conroy is one of the few effective Ministers who can play the tough politics necessary.
It’s a n00b fallacy to assume that every dollar going out the door is treated the same – as though it’s all “capital cost”. NO!
yeah i know it’s not actually a budget black hole.
my point was more about the fact that even with this so called black hole the project still comes in at less than what the coalition keeps claiming is the true cost.
The question is, do most of these gov project costings have interest factored in or are we just picking and choosing here to reflect our viewpoint?
$50 bn includes $12 bn Telstra & Optus competition buyout (excl. $10 bn missing interest).
What? The $36 billion includes the payments to Telstra and Optus! Where do you and the coalition get this $50 billion from?
@Dave
No, it doesn’t I believe. Read the Corporate Plan- there isn’t listed any payments to Telstra/Optus and the total budget is $36 Billion without them.
It is part of OPEX over the 8 years of migration.
Ah, my mistake. Found this which explains where the $50 billion figure comes from: http://nbnmyths.wordpress.com/.
@Dave
Indeed, nbnmyths is an excellent site mostly. However, that is a little misleading too- not the entire $11 Billion (+$800 Million for Optus now) is to be paid over the lifetime of the NBN. There’s $4 Billion to Telstra + $800 Million to Optus to be paid over the 8 years of migration from end of next year until 2021. So $4.8 Billion total extra will have to be removed from NBN revenue or met by government or private equity- most likely private.
So total borrowings are likely to be about $41 Billion, not $36 Billion. But, the government borrowed $27 Billion is not likely to change- the extra will be found from private equity, especially with the likely upgraded forecast for revenue from the new Corporate Plan lowering debt risk :)
Err Jimbob, and the CitiGroup $16.9B estimation for the Coalition’s lesser FttN plan did NOT include payments to Telstra either…so?
Hang on – not an accountant, but I thought this had been dealt with ages ago.
Isn’t this the old capex vs opex issue? The $36 billion is the capex, but interest (and rents on premises, operating staff wages, rent paid to Telstra on pit-and-pipe infrastructure) is all opex. And opex is, of course, to be taken against income to determine an operating profit/loss.
I mean, I know there are more complexities and finer points – but since Malcolm Turnbull is oversimplifying things greatly, isn’t a fair response just as simple?
Oh, and don’t the tables on p134 and graphs on p141 of the 2010 Corporate Plan include all this anyway???
Really need someone who can interpret fiscal stuff and balance sheets to pass the final word on this. But it looks to me as though everything has long been laid out in the 2010 plan. No “black hole” nonsense! No “hidden figures” garbage!
Indeed Gwyntaglaw. IF Malcolm is insisting this interest be included in the budget….he is automatically admitting the CAPEX of the NBN shouldn’t be.
Because the mainstream public don’t understand that, he can make wild claims like this, be given credence and then walk away looking fresh as a daisy, while the government and NBNCo. are splattered with mud.
I’m getting tired of this attitude of politicising no matter the cost.
Exactly. Thankfully, the NBN isn’t going to be the first time in history that the interest on borrowings is expected to be paid up-front.
And therein, you have perhaps highlighted the problem Karl..
IF Labor (and I dread to call it the Labor NBN as opposed to the NBN) can pull it off… and I can see no reason with the likes of Quigley running the show they can’t, then this will be a real feather in Labor’s hat.
National, cutting edge infrastructure to make Australia competitive and not simply reliant upon mining (apparently back in the 50′s/60′s it was agriculture/sheep’s back we rode upon not so much mining, so I’m told) and with borrowings fully repaid!!!
No I’m afraid the political damage this would cause to the opposition is unacceptable and it’s far more important to avoid that, than to prepare Australia’s (yes OUR) futures :-(
At the end of the day, the entire project is funded by debt.
But Labor is saying, initially we will borrow $27 bn on your behalf since nobody will lend to you. Don’t worry about the interest servicing cost of the $27 bn, we will just roll that into total interest costs of the govt budget deficit but you will have to pay us back later.
However, when properly assessing total NBN project cost, esp. in terms of impact on consumer broadband charges, these interest costs are as real and relevant as interest on NBNco direct borrowings.
Classic case of Labor creative accounting to hide true cost of NBN.
@Jim bob
Not true- read my comment below yours. The interest SHOULD be included in the budget as overall interest on Commonwealth Securities, as all other bond interest is. But if that is the case, the CAPEX from the NBN SHOULD NOT be on budget and there IS no “creative accounting.” Hence the calls from the Coalition about the NBN being off-budget when it shouldn’t, if they are going to say the NBN interest must be put on budget, should cease, because they have admitted then that the interest is OPEX and therefore the CAPEX of the NBN should NOT be on-budget.
You cannot have your critical cake on the NBN CAPEX AND eat the interest too. Malcolm knows this, but most people don’t understand so he can get a “one up” in the media.
Rubbish.
Interest costs which are capitalised during the years when NBNco’s total funding requirement is growing are not an “operating expense”.
@Jimbob
Call them “Financing” if you like, they’re still included in either CAPEX, as “Financing for CAPEX” in which case they’re simply more borrowed money if the revenue can’t cover it, likely sourced from private equity, which would be pointless as it’s interest on borrowed money anyway. Or they’re “financing costs for operating capability” in which case it’s OPEX.
Any which way, the interest has ALREADY been including in the budget under CGS interest. READ the article- Penny Wong states that quite clearly.
Thank you Jimbob…
Now please tell the rest of your rabble the NBN is NOT funded by taxpayers.
:-)
Far out Malcolm, you really are getting dirty in your attempt to undermine this aren’t you?
This was dealt with months ago- the total interest isn’t $10 Billion, it’s closer to $5 billion, as, for a start, not all $36 Billion is being borrowed AND it’s being borrowed at LESS than 4% interest. About $30 Billion is being borrowed through bonds I believe. And the rest is borrowed over 5 years. It’s even in the bloody article he’s quoted in!:
Using an interest rate of 3 per cent, which is closer to current government borrowing rates, the interest costs fall to $5 billion.
Secondly, this money, as someone has already mentioned is OPEX not CAPEX. It should not be treated as additional to the construction cost of the NBN. If anything, it SHOULD actually be included on the budget, as Turnbull says. However, if that is the case, then Turnbull needs to come forward and admit that if Interest DOES belong on budget then the CAPEX of the NBN does not. Which he won’t do.
Seriously Malcolm, you’re going to be getting a few bewildered Tweets from me and an email too. You’re grasping at anything to try and poke holes while still staunchly refusing to provide more policy details….
I think it’s OK to argue that the NBN should be included in the budget on the one hand, but if it’s not going to be then the interest at least should be. So I don’t really have a problem with Malcolm’s argument here.
(that is to say, I don’t actually think it’s OK to argue that the NBN should be on-budget, since it’s pretty clear that the standard practise would be to keep it off, I just mean I don’t have a problem with Malcolm arguing it both ways here).
However, I’m with Renai here in that I find it hard to believe that something like this could really have been missed. With the Coalition’s overt lies about the NBN, I’m not about to give them the benefit of the doubt here.
Wierd claim. The business plan has “including interest” plastered on virtually every projection and includes interest costs in it’s expenses.
His point would have some credence if he, you know, had actually costed his own solution. You know the one that will cost $X to buy off Telstra, $Y to build, will need $Z subsidies….
I can’t help but read the article and think of Austin Powers “1 million dollars!” scene.
But yes it’s still early days (from his blog post) hopefully Quiges will reply soon.
More FUD from Turnbull it seems that he has come up with this new you beaut accounting system. The way it works is;
1 You borrow money to invest in a new company – say about $27 billion at around 3%pa and it is listed in your balance sheet as an asset, (the investment) and a liability, (the borrowings) you may also show the future interest liability as a contingency.
2. The interest that you are liable to pay on this borrowing is included in your budgets for future years.
3. The same interest that is in your budget must also be included in the budget of the new company.
I think that the name of this new system is going to be called double dipping bookkeeping and is sure to be a winner with unscrupulous politicians and other scam artists.
.
Interest cost from the NBN are costed in the budget, the Coalition has admitted as much by counting the interest savings from cancelling the NBN in it’s costings
From the Coalitions costing at the last election – page 6 – Summary of interest savings – NBN discontinued
http://www.scribd.com/doc/36050742/Coaltiion-Costings-Document-August-18-2010
@Mark
1- LOL!!!! Those costings, that were found to have an $11 BILLION hole in them?…..and destroyed the reputation of a decent accounting firm because they had to keep quiet about it??
2- Look at the interest savings for the forward estimates on the NBN….all of $2 Billion……hardly the “half the cost” the Coalition are promising their plan to be….
Interest costs from funding the Govt’s equity position (which is effectively borrowing on NBNco’s behalf) have to be accounted somewhere. Labor has put it in the Budget.
However, in terms of appreciating the total cost of the NBN, all interest costs across the entire capital structure must be included, and not just NBNco’s direct borrowings..
@JimBob
However, in terms of appreciating the total cost of the NBN, all interest costs across the entire capital structure must be included, and not just NBNco’s direct borrowings..
Perhaps you’d care to work this out? I’d like to see you account for the plummet in total likely asset worth of the NBN as a completed entity in 2022 (estimated at around $40 Billion) compared to the Coalition’s BNBN (bastardised NBN), estimated at a couple of billion even THOUGH nearly $15 billion will have been “spent” by then.
Then let’s see how those “interest costs” add up compared to “actual costs” between the 2 plans….
Q. Is there ever going to be an end to the contrived fucking BS, in relation to NBN idiotic FUD…
A. NO
Q. Is there ever going to be an end to the contrived fucking BS, in relation to NBN idiotic FUD…
Computer says no …
LOL…
For a completely biased Labor stooge at one article and an equally biased Coalition stooges at the next article.. you are ok Renai…
;-)
Magic 8 ball says…
Try again.
+1
How is it “dubious” that the government has to pay interest on bonds? It’s actually common sense.
Using the equity funding take up pattern in the 2010 corporate plan and a bond interest rate of 3%, I make that about $8bn in ‘interest’ by the time the NBNCo starts paying dividends to the government (2022). We’ll be able to do another calculation when we see the new corporate plan.
This interest has nothing whatsoever to do with the NBNCo and will not (and should not) appear in it’s corporate plan. How the government comes up with the $27.5bn is of no concern to the NBNCo.
What it means is that the government will have ~$35.5bn of bonds to cover a $27.5bn equity stake in the NBNCo. Whether that affects the way the investment is treated in the budget is a question Turnbull should have asked 18 months ago.
Suppose the govt were to increase the equity proportion of total project financing. As a result, more of the interest capitalisation would be shifted off NBNco’s balance sheet onto the taxpayer. NBNco’s peak funding requirement would also be lower. Does that mean the NBN has now become “cheaper”?
Of course, not. This is why looking at NBNco’s peak funding requirement alone gives a misleading impression of the true cost of the NBN. You must also factor in how the project is financed and how much interest capitalisation has been arbitrarily shifted off NBNco’s balance sheet.
The underlying cost of the NBN is invariant to financing mix.
Exactly, so why later down do you say access charges would rise if the interest was moved from and operating expense to capital? The total cost is the same therefore the access charges to pay that cost.
> How is it “dubious” that the government has to pay interest on bonds?
Straw man.
“Shadow Communications Minister Malcolm Turnbull has publicly claimed that there’s an error in the National Broadband Network budgeting, due to Labor not counting the cost of interest on debt or equity required to fund the NBN.”
That is incorrect.
Malcolm is not claiming an “error in NBN budgeting” in this particular respect. The interest costs of financing the first $27bn of capital outlays is “counted” in the budget forward estimates.
However, it is not reflected in NBNco’s own “projected funding requirements”, which means looking at the latter set of figures alone will not give a true impression of the real cost of the NBN.
The interest costs incurred in the forward estimates relate directly to building the NBN and should be taken into account when talking about the cost of the NBN.
That’s all Malcolm is saying. He’s 100% bang on the money in his criticism.
So, when you build a house you include the interest you pay over the next 30 years in the price? No? OK.
Should we go a step further and say the cost of the plans are expensive because they are purchases with after tax income and before tax that would be 30-40% higher? No?
Total housing project development cost = cost of land + construction cost + holding costs (interest capitalisation)
Even when Google acquires more vacant land to build data centres with the tons of idle cash sitting on its balance sheet, there’s still a holding cost.
So, if you build an investment property, you don’t claim your interest as an expense like everyone else?
You work out the interest for the entire period of the loan from day one, even if you don’t borrow it, then you ignore any paydown? Does the tax department let you depreciate this imaginary capital expenditure?
Maybe you do, but then that practice is being looked into carefully by the ATO
”Any loan arrangement that incorporates features that would effectively give rise to the capitalisation of interest on an investment loan while the loan repayments are used to pay down the principal of a private loan is now under the spotlight,”
Read more: http://www.theage.com.au/business/property/alarm-as-taxman-takes-interest-20120424-1xjbv.html#ixzz22kXPwHww
@ Jimbob
The Government funding for the NBN is equity (shareholders funds) so the $27b is not a cost for the NBN Co and will be recorded as equity in the NBN accounts as it should be.
If this wasn’t the case the Government could never sell the NBN because they would have no equity (ownership) they could flog off.
The cost of servicing the money for the Government’s investment in the NBN is a cost to the Government to make the investment, it is not a cost to the NBN.Co.
What Mr. Turnbull is trying to say is that if I borrow money to invest in a new BHP mining company then the interest I pay to borrow that money should be counted as part of the cost of the new mining company setup and running cost. To put it simply the interest I pay is part of my cost to invest and has nothing what so ever to do with the accounting of the new mining company. The NBN Co is no different.
As I said earlier double dipping bookkeeping.
Not quite.
If BHP invests in a new mining joint venture with Mitsubishi, the cost of the project is not just servicing the debt carried by the joint venture, but also the “holding costs” associated with the equity contribution of the JV partners.
Haven’t you heard of separation of proprietors finances from the entities finances? It is one of the first things taught in basic bookkeeping.
The cost of buying the equity in a project is the responsibility of the individual proprietors. It isn’t the the projects responsibility.
The joint venture couldn’t give a fig about how or where or at what cost the proprietors got the capital for the joint venture. The proprietors costs, “holding” or otherwise, is of no concern to the joint venture, all it is concerned with is the joint ventures return on investment and being able to pay dividends.
If the partners don’t consider the dividends are high enough that is a problem for the investors and how they did their sums before they made the investment. Using your example it is possible that Mitsubishi consider that their investment is great and BHP consider it a bad investment because of their particular cost to make the investment.
When looking at the joint venture and its success or failure all you are looking at is the joint venture not what is happening to the partners because of costs etc. in investing in the joint venture.
In the case of the NBN it can only be judged on its success or failure in building and operating the network. What decisions the Government has made about investing in NBN Co and the associated cost to the Government is the Governments responsibility and is separate from the NBN Co.
Basic bookkeeping principles dictate that the interest to be paid by the Government to get the money so they can invest in the NBN Co can’t be attributed to the NBN costs.
Got any other expense items you think should to added to the price? How about maintance for the next 30-40 years? Is it only expenses that should be added? If expenses are added why not income? Or does it only work by added OPEX items to CAPEX because it makes it look more expensive?
Capitalised interest =/ operating expense
It is their choice if it should be capitalised. There are good reasons they don’t. The exact loan amounts and periods and rate of payback is not a fixed constant. It would be very hard to know what the amount would be to capitalise it.
Hey everyone, an update — Turnbull’s office has issued the following statement this afternoon:
Every single dollar spent on Labor’s National Broadband Network is borrowed money, as today’s front page article in the Australian Financial Review points out.
So when the Gillard Government claims the NBN will cost ‘only’ $37 billion to build (or that NBN Co needs funding of ‘only’ $41 billion before it becomes financially self-sufficient in 2021) it is not telling taxpayers the whole truth.
Neither figure includes the cost of interest payments on all of the funds borrowed for the NBN.
Accounting for interest payments adds $10 billion to the price tag for Labor’s NBN (assuming a borrowing cost of 5 per cent, the average Commonwealth Government ten-year bond yield).
This is before taking account of the construction delays and higher costs that have plagued the project so far.
Comparing the true overall costs of Labor’s NBN against its projected returns suggests it is simply not credible to claim it is viable in commercial terms. Yet for the past three years this is how Senator Conroy has excused keeping most of its expense off the Budget.
The updated NBN Corporate Plan due this week must set out all expenses associated with the financing of the NBN, including the cost of interest payments on Government ‘equity’. Unless it does, Senator Conroy has no right to claim this project will deliver an economic return.
After almost five years in power, the Government’s broadband policy is a catastrophe. Barely 15,000 households have connected to the NBN (with fewer than half on its much vaunted fibre) and many Australians will not receive it for a decade or more.
Meanwhile NBN Co’s own Corporate Plan states that monthly charges per customer will double over the next decade.
The Coalition’s alternative broadband policy will be financially responsible, and deliver fast broadband to all Australians more affordably and sooner.
How cute. Turnbull describes his broadband policy as “financially responsible” and “fast”. I wonder when he will reveal exactly what the plan entails besides the irrational crusade to stop the rollout of fibre.
btw just noticed this brown nugget from Turnbull:
“and many Australians will not receive it for a decade or more.”
According to the coalition clowns fibre is not needed so why would it matter if they are not receiving it for “a decade or more”. Ok, great, so they recognise the need for faster speeds but believe the speeds we end up getting on their FttN patchwork are just the right amount and there is a desperate need for those “exact” speeds right now but there is not a need for the speeds fibre will allow now OR in the future and oh my what a coincidence that the speeds Turnbull thinks we need are the speeds FttN are capable of providing (not that we even know what they are yet, just that it’s good enough and you should be happy with what ever you get now and well beyond 2021) This is like buying a pair of shoes that are too small and then cutting up your feet to fit the shoe rather than buy the right size of shoes to begin with.
Accounting for interest payments adds $10 billion to the price tag for Labor’s NBN (assuming a borrowing cost of 5 per cent
No, it would only add up to that were the entire amount borrowed from day 1 and not paid down AT ALL over the life of the loan- which is NOT the case. The money is being borrowed over 5 years AND will begin to be paid back by 2023. Also, the current government bond rate is 3.5% and analysts predict it will go DOWN not up.
This is before taking account of the construction delays and higher costs that have plagued the project so far.
Irrelevant- the borrowing costs have not yet started.
Comparing the true overall costs of Labor’s NBN against its projected returns suggests it is simply not credible to claim it is viable in commercial terms.
You’re absolutely right Mr. Turnbull. It is NOT viable commercially- Which is why THE GOVERNMENT HAS TO DO IT. Are you suggesting this COULD be done some way commercially? No, I don’t think you are, you are using tricks and disguises to hide your agenda. The NBN is NOT a commercial venture. It WILL pay itself back IF allowed to go to completion- the fact that it may take an extra 3 or 4 years to do so is irrelevant- it will still have a net cost of $0.
The updated NBN Corporate Plan due this week must set out all expenses associated with the financing of the NBN, including the cost of interest payments on Government ‘equity’.
No, NBNCo. do NOT pay these interest costs as part of their construction. They are funded by the government and the government pay the interest- it is shown in the forward estimates. You cannot charge interest twice.
After almost five years in power, the Government’s broadband policy is a catastrophe.
As compared to the Coalition Policy which does not exist in any corporeal form….
Meanwhile NBN Co’s own Corporate Plan states that monthly charges per customer will double over the next decade.
THAT is a LIE. Outright. The Corporate plan says no such thing. It says REVENUE will double- this will come about via increased uptake of higher tier plans- something that has ALREADY been shown to be happening. The prices each customer pays will not double inherently- how much they spend will be their choice, but, as most people pay more for broadband now than dialup, more people will pay for FASTER broadband in 10 years time than slower broadband. This is called supply and demand. I know you are well aware of it, having been part of OzEmail.
The Coalition’s alternative broadband policy will be financially responsible, and deliver fast broadband to all Australians more affordably and sooner.
The Coalition Policy is not costed, not analysed, not detailed and not even planned as a basic package. We, the Australian public have NO reason whatsoever, evidentially or otherwise, to trust the Coalition policy will be “more financially responsible”. On the contrary, from independent analyses it will be LESS so.
So MT has admitted it’s NOT taxpayer dollars… hallelujah.
The updated NBN Corporate Plan due this week must set out all expenses associated with the financing of the NBN,
It seems to me they’re only suggesting this so that they’d have something else to bitch about, not because there’s actually anything wrong with what the government is doing.
MT – “Every single dollar spent on Labor’s National Broadband Network is borrowed money…”
Great so once and for all the “myth of tax payer funded” has been admitted as lies by MT…
Next…!
Why is Turnbull linking interest payable on government bonds to the NBNCo’s corporate plan? This interest has nothing whatsoever to do with the NBNCo. The NBNCo doesn’t need to know or care where the government gets the $27.5bn. The NBNCo is not paying the interest directly. How does Turnbull think it should be shown in the NBNCo’s accounts? I think he’s confused.
+100
Something to do with this new fangled accounting system he has dreamed up perhaps>
Alternative heading for this article:
Turnbull exposes hidden $10bn NBN subsidy and explodes NBNco “self-funding” myth
Alternative to your claim… Jimbob (who sounds like ToshP300)
MT and his NBN circus find new bullshit to jump up and down about and still can’t legitimise their ridiculous double standards when they want to gift $b’s of non refundable taxpayer dollars to private enterprise.
@Jimbob
Just because you choose not to see other peoples arguments as relevant because they don’t fit your argument, doesn’t mean the premise of the article is inherently wrong.
Many people have explained- the interest IS noted in the government’s forward estimates on CSG’s. AND it will NOT be $10 Billion. IT will likely be MAXIMUM $7 Billion. It would only be $10 Billion if the entire loan were taken out next year and NOTHING paid down on it for 15 years. That is not the case.
For a start the interest is nowhere near that amount and it is covered already in the operating expenses. You suggest they add it to the CAPEX and pay it twice?
Yes… perpetual anti-NBN FUD dictates it so…NBNAccuracy.
Actuals are of no significance – FUD is the goal
;-)
When you you think about it, it’s actually quite laughably desperate, the change in the opposition’s tack…
Prior to this the argument was… the NBN is taxpayer funded – remember all the sheep bleating about their tax payer dollars LOL.. (which I argued against – because they can’t claim both off budget debt and on budget taxpayer)… now the opposition have done a complete 180 and the argument and is now… the NBN is debt funded… BUT LOOK AT THE INTEREST…
So which is tit MT… Debt or Taxpayer… you again want to have your cake and to eat it! Seems rich guys can do that…
:/
Statements like this are just pure garbage:
“Comparing the true overall costs of Labor’s NBN against its projected returns suggests it is simply not credible to claim it is viable in commercial terms. Yet for the past three years this is how Senator Conroy has excused keeping most of its expense off the Budget.”
Even if the interest was included in the cost and not in as a cost the end dollar figure is identical. Saying that if it were included suddenly it becomes a different proposition is a joke, the end result is exactly the same money is paid by NBNCo, call it capital interest of an interest expense.
So…
If hes arguing that theres a black hole of interest in the NBN budget, does that mean hes going by Internationally Accepted Accounting Standards to achieve this (as the current NBN is off budget due to these) or is he just making his own standards up again?
He isn’t just ignoring Internationally Accepted Accounting Standards he has made up a totally new accounting system.
Don’t say he finally found a use for Hockeynomics?
If the interest capitalisation on the equity financing component was reverted to NBNco as a direct project cost, either NBNco’s peak funding requirement or levied wholesale access charges (or both) would be much higher.
As things currently stand, there’s an implicit $10bn taxpayer subsidy for NBNco’s construction costs.
Implicit…LOL.
Now tell us about the actual $16.9B + implicit payments to Telstra, your champion, champions…!
@Jimbob
Nice try on the confusion. But apart from Alex’s point about the Coalition’s $17 Billion subsidies, why on Earth would the interest be transferred to NBNCo??
Rubbish, whether it is included in the expenses or funding requirements makes zero difference. The interested is already costed into the access charges.
As distinct from Malcolm’s own specific criticisms outlined above, here’s an entirely separate and independent take on the financial blackholes in Labor’s NBN:
http://www.ipera.net.au/Downloads/B5146CEF-340A-4C44-9933-E838306A4894-AAB%20Open%20Letter%20to%20NBN%20Co%20251110.pdf
Enjoy!
Anyways boys, l look forward to the next delimiter article calling Malcolm Turnbull (former Executive Chairman of Goldman Sachs Aust.) financially illiterate (or “confused”).
Good for a laugh at least! Ha-ha!
@Jimbob
I don’t believe anybody believes here that Turnbull is financially illiterate. Quite the opposite in fact, that’s half the problem. He’s trying to be clever and misleading the public.
Just because someone is “chairman” doesn’t make them inherently any better. Many chairnmen become such because they are very good at playing with numbers, not that I am suggesting Turbull ever did such. But the point remains, Malcolm is a good businessman. Politics is NOT business and he is treating it as such.
Thanks for stopping by with your inability to listen to other arguments against your ideology though. Anytime.
http://www.theaustralian.com.au/news/hih-score-settled-for-malcolm/story-e6frg6no-1111119117953
I got this from Menzies House :/
Already read it, they were using similar arguments to the ones MT made. Allowing double costing of interest and adding the Telstra payments in to bulk up the price.
They were also the group who a month or so earlier put together the paper outlining their alternative plan, where everyone was connected via 4G wireless. A few cans short of a six pack I think.
JimBob. You have a point, we need more highly qualified executives and management in our Government and think tanks, guess the people from Enron would be eminently qualified and would be a perfect fit
Even if the NBN doesn’t have interest counted, Turnbull won’t even tell us how much his plan will cost, with or without interest.
He can’t even reply to the questions from Delimiter it would seem.
I am not sure that there is an Coalition broadband policy of any substance.
He answers the questions he wants to answer, whether he was actually asked them or not.
+10
I wonder if my response to his diatribe appears or if so unedited?
Renai, Sorry to bring politics into this, but IMO for a good reason re the NBN
Interesting the subtle shift in tone on AFR and the Aust, plus Menzies House comes up with this, which is so easily countered by the fact that $4Bill has been accounted for this fact in forward evidence. But in the process exposing the consistent campaign of lies by Libs and Nats. Also Lib Policy areas are coming under scrutiny and being found wanting.
Since Fraser Howard trashed the Aust economy during the oil crisis by applying classic neo Liberal economic Policy, Hawke Keating having to rescue the economy and set it on a strong foundation. the media and conservatives have protected their Brand Value and ideology by ensuring they are not in power for Major Global economic Turmoil, let Labor carry the can for doing what has to be done. IMO the reason the media turned on Howard, they know more about Global issues than is made public.(remember Costello warning of the crash prior to the election)
If my suspicions are correct Labor could be re elected with Media Support, but be facing Massive economic and Fiscal challenges, in which case even the NBN could be placed under extreme challenge, even though it is so necessary for the Nation and it’s economic future. But then to change too much would put everything on budget and that could also be an issue, plus the impact on employment. Interesting times ahead, be prepared for all eventualities.