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  • News, Telecommunications - Written by on Wednesday, February 20, 2013 1:43 - 60 Comments

    AFR leaves crucial info out of NBN cost story

    news

    news The Financial Review newspaper has published a story claiming that the Federal Government’s National Broadband Network project won’t recover its costs by the year 2040, despite the fact that NBN Co explicitly stated in the same document reported by the AFR that there were several potential scenarios where it would recover the costs by that date.

    The story, published on the AFR’s website tonight, is entitled “NBN Co won’t recover costs by 2040, defends pricing”. The article is based on a letter sent by the government broadband company to the Australian Competition and Consumer Commission this week, in response to the regulator’s request for greater transparency with respect to NBN Co’s price controls and planned revenues.

    In the letter (available online in PDF format), NBN Co discusses in detail the timeline over which it expects to recoup what is termed the company’s Initial Cost Recovery Account (ICRA) — in other words, the figure which will be required to build and operate the NBN over its life until it can start to deliver a positive return on the government’s investment in the project. NBN Co is currently projecting that it will require about $30 billion worth of government investment over its life, with another $14 billion to be funded through debt arrangements.

    According to the letter NBN Co sent the ACCC, there are a number of scenarios regarding pricing of NBN Co’s services, and demand and uptake of those services over the two and a half decades until 2040, which will influence whether it will be able to reach its ICRA figure by that date.

    Under the first scenario, listed by NBN Co as the “base case assumptions” for its revenue model listed in its most recent Corporate Plan released in August 2012 (PDF), the company noted that the ICRA “would not be extinguished by 2039-40″.

    Similarly, under a scenario where NBN Co increased the prices to the maximum extent allowed by its operating agreement with the ACCC (generally by around the consumer price index to 1.5 percent per year), fewer people would be expected to subscribe to the NBN’s broadband services, and they would be expected to take up lower speeds and use less data, meaning that NBN Co would also not expect to meet its ICRA by 2040.

    However, in its article, the AFR only listed the first negative scenario. In fact, NBN Co’s letter to the ACCC contains two further positive scenarios under which NBN Co would expect to meet its ICRA by 2040.

    “If no demand response is factored into the maximum price scenario,” NBN Co wrote, “then a very different outcome emerges; that is, assuming that quantities demanded are the same as in the Corporate Plan, forecast revenue is much higher and this leads to the ICRA being extinguished some years before end of [NBN Co’s Special Access Undertaking or SAU] in 2039-40.”

    “Under a scenario in which prices are held flat in nominal terms (and again assuming that quantities are the same as in the Corporate Plan; that is, there is no adverse demand response from higher prices than those projected in the Corporate Plan), the ICRA is also forecast to be extinguished before 2039-40,” NBN Co added.

    The AFR mentioned neither of these two positive scenarios in its article.

    NBN Co noted that it was difficult to plan for either one of the four scenarios outlined in its letter to the ACCC; due to the long time frames (up to 30 years) involved in the forecasting process. “All that is described here are the implications for the ICRA should they occur,” the company said.

    However, there is currently significant reason to believe that NBN Co’s projections with respect to its revenue model and uptake of its network have been conservative, rather than optimistic, and that the company may recoup its costs sooner than initially expected.

    In May 2012, for example, in a Senate Estimates hearing, NBN Co chief executive Mike Quigley noted that NBN Co had prior to that point been predicting that in the early years of its fibre rollout, the majority (52%) of customers who signed up for its fibre services would have picked the entry level speed tier it’s offering — a 12Mbps service which is slower even than current theoretical ADSL2+ speeds. The remainder would be split largely between the next speed tranches of 25Mbps (17%) ad 50Mbps (23%), with only a small number (8%) taking the highest speed 100Mbps plans.

    However, Quigley told the Senate Committee at the time, when it came to the actual uptake experienced by NBN Co in the real world so far, this scheme had been somewhat inverted. “Overall, 38 percent of active services on our fibre network have been on the fastest speed tier, which is 100Mbps down,” he said. “Only 16 percent of the active services on our fibre network are for the entry-level speed tier of 12Mbps.” For the month of April, Quigley said, the trend was “even stronger”, with almost half of new customers signing up for the highest speed tier of 100Mbps. This trend, Quigley said, could lead to NBN Co eventually cutting its prices as it expected to recoup off its costs earlier than expected.

    In October, NBN Co’s then head of product development and industry relations Jim Hassell revealed that the proportion of NBN customers signing up for 100Mbps speeds had grown even higher over the past several months. “What we have seen is that the top tier – the 100Mbps service – has attracted 44 percent of services,” said Hassell.

    In Quigley’s most recent appearance in a Senate Estimates hearing last week, the NBN Co chief executive again emphasised that take-up of the NBN’s fibre, in the early stage zones where it has been rolled out, was higher than similar deployments internationally.

    “For those [fibre-serving area modules] where we have now been in service for more than 12 months or more, take-up is about 25 per cent, and in some locations it is above 50 per cent,” Quigley said. “The average overall across brownfields is currently about 17 per cent. As we add more footprint over the coming months, that percentage will obviously drop until we activate more customers. This is a very high take-up rate on any international comparison.”

    Communications Minister Stephen Conroy — the minister responsible for the NBN project — has repeatedly criticised the AFR over the past year for what he has claimed to be inaccuracies in the newspaper’s reporting of the project. And in a doorstop press conference last week, the Senator continued his attack on the AFR, referring to an article the newspaper had written regarding delays in NBN Co’s fibre rollout caused by contractor Syntheo.

    “… hysterical headlines like you wrote about how we were suddenly missing our targets, frankly the reporting of it was a joke,” Conroy told an AFR reporter at the press conference. “What you’ve got was a reduction from the cutover number back to the corporate plan. We are on target to meet the corporate plan. And just writing down the bottom one line after all the rest of the paragraphs is frankly poor journalism. We are on track to meet the corporate plan, no matter how much heavy breathing you or the Financial Review wants to do.”

    Delimiter will publish any response the AFR issues to this article as a right of reply.

    opinion/analysis
    Look, I’m not sure why the AFR excluded several positive NBN cost recovery scenarios from its article tonight, but the fact is that it did. NBN Co’s letter to the ACCC about its cost recovery out to 2040 contains four scenarios; two where it doesn’t recoup its costs by 2040 and two where it does. It’s there in black and white. The AFR’s article about the letter only contains one scenario.

    When you also consider that most of the evidence so far is that uptake of the NBN is better than the company has been predicting, the argument that the company won’t make its cost recovery targets on time starts to look very weak indeed.

    There’s also this unusual statement in the AFR’s article: “NBN Co must recover its costs and deliver a financial return to the government so that Federal funding for the massive project is treated as an investment, rather than an expense on the budget.”

    I’m not an accountant, but I suspect this statement to be inaccurate. If the Government’s investment in NBN Co is fully recouped and NBN Co returns that investment plus a little more, I suspect that extra money on top will be treated as a capital gain — like stock market shares whose value has increased. If the Government’s investment in NBN Co is not fully recouped (and it’s hard to imagine a scenario where this would occur over the long term), then the amount by which NBN Co falls short will be treated as a capital loss — like stock market shares whose value has decreased.

    But there should be no case in which the entirety of the Government’s investment in NBN Co will be treated as an expense. The Government’s investment in NBN Co is akin to the Government lending NBN Co money, and as that money will not be written off (even in the worst case it will mostly be paid back), the whole amount cannot be added to the Government’s profit and loss statement as an expense. It’s just not possible. To do so would be an accounting nonsense.

    I suspect that what will eventually be added to the Government’s balance statement (not its profit and loss statement — there is a huge difference!) is the book value of NBN Co as a company, of which the Government will remain the 100 percent owner. How do the maths here add up? As Communications Minister Stephen Conroy has repeatedly pointed out, it is not the Government which will ultimately pay for the NBN, but Australian consumers and business — the actual users of the network. In this sense, the construction of the NBN represents a situation in which the Government essentially ends up with a huge extra asset on its books — but paid for by the Australian consumer, not out of the taxpayers’ coffers.

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    1. Tinman_au
      Posted 20/02/2013 at 3:19 am | Permalink |

      The AFR has gone down hill in it’s coverage of a lot of things, but as their editor in chief was one of the longest serving editors at The Australian, it’s no wonder they are heading in similar directions (both subs and content)…

      It’s “a good thing” for news outlets like Delimiter though, I doubt they will ever figure out the link between poor content and dropping subs though, much like the other “dead tree” MSM press…

      • Stephen
        Posted 20/02/2013 at 10:17 am | Permalink |

        Well the Quality:Circulation ratio is a direct inverse linear one, that’s far too subtle for any economist.
        They need a bunch of introduced forcings and data ‘cleansing’ with all the validity of phlogiston before they have faith in anything ;-)

      • Abel Adamski
        Posted 20/02/2013 at 1:12 pm | Permalink |

        Actually has one question the worth of their reporting and evaluation of all Financial and Investment matters.

    2. Karl
      Posted 20/02/2013 at 4:40 am | Permalink |

      “There’s also this unusual statement in the AFR’s article: “NBN Co must recover its costs and deliver a financial return to the government so that Federal funding for the massive project is treated as an investment, rather than an expense on the budget.”

      I’m not an accountant, but I suspect this statement to be inaccurate.”

      It absolutely is. I know you know of this document, but as a reminder anyway this is where the facts are:
      http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2011-2012/NBNBudgetStatements#_Toc314147473

    3. Karl
      Posted 20/02/2013 at 5:00 am | Permalink |

      NBN Co started an official letter with Dear Firstname? That’s fantastic :D I would never dream of starting a letter of such importance with any less than Dear Mr Lastname.

    4. quink
      Posted 20/02/2013 at 6:58 am | Permalink |

      And another mistake:

      > NBN Co rejects these arguments. It has promised to freeze prices for the first five years of operation and limit later increases to below the inflation rate.

      1.5% below the CPI, not “below the inflation rate”.

      • quink
        Posted 20/02/2013 at 6:59 am | Permalink |

        Whoops, make that “Below 1.5% below the CPI, not ‘below the inflation rate’.”

      • AJ
        Posted 20/02/2013 at 11:05 am | Permalink |

        The writer of the article just commented to me on twitter
        “yep but the 2 scenarios where it does recover ICRA depends on nominal prices rising, or staying flat, with no impact on demand”
        “NBN expects prices to fall in both real and nominal terms”

        So basically the price will drop for users this is good news for consumers if it does not drop NBN make there money back and the article is wrong so there are 2 potential positives and one negative.

    5. Paul Thompson
      Posted 20/02/2013 at 8:18 am | Permalink |

      I once considered using the AFR as toilet paper. However, I suspected it would deposit more than it removed.

    6. AJ
      Posted 20/02/2013 at 9:31 am | Permalink |

      There is another issue lets say they still have $5 billion to pay the asset which is the NBN would be worth a lot Telstra sold for $50 billion so to make that up they could simply sell NBNco and make a massive profit yet this is ignored.

      A FttN network on the other hand would be worth next to nothing

    7. GongGav
      Posted 20/02/2013 at 9:34 am | Permalink |

      The investment will always stay an investment, regardless of whether it returns a profit or not. If it DOESNT return a profit, at some point the loss will be written off as a bad debt, and at that point the amount written off (and only the amount written off) becomes a budget cost.

      Basically, if the project costs $40b, and they recover $35b by 2040 through the users, then decide to accept the extra $5b as a loss and pay out any remaining bonds, then only that $5b is a budget expense.

      AFR is trying to make out that if this happens the entire $40b would be a budget expense when it wont be.

      FYI, thats something I can see happening at some point in the future. Just pay out any remaining liability to get it off the books once and for all. It will be fiscally responsible to do so at some point where the accounting costs arent justified. But that wont be for a long time yet.

      • Posted 20/02/2013 at 10:20 am | Permalink |

        I agree they should write off some of the debt, but not to write off bad debt, instead to allow NBNCo to drop prices of access further.

        • GongGav
          Posted 20/02/2013 at 10:36 am | Permalink |

          Thats actually an option I hadnt considered. What happens in 5 to 10 years when everything is back to normal, and we’re looking at surplus situations?

          Will the Govt have the option of using any surplus to reduce the NBN loans, and hence reduce the interest, etc and get the project cost neutral faster? I cant see why they wouldnt.

          That WOULD put some of the cost on budget, but totally voluntarily. It could also be an option for either party to use as an enticer – consider putting $1b on budget every year to reduce outstanding amounts. $1b ON budget wouldnt be a big expesnse, and have it as a totally floating option that could come and go if/when budgetting got tight (or tighter).

          Obviously wouldnt really be an option at the moment, but you never know what next year (or the year after) will bring.

    8. andyrob
      Posted 20/02/2013 at 9:47 am | Permalink |

      Renai, will you be putting a complaint in to the powers that be?? I think that deserves one

      • andyrob
        Posted 20/02/2013 at 9:54 am | Permalink |

        I just reaks of sensationalist reporting how the majority of MSM do not allow comments.

        Idiots!!

      • Bpat
        Posted 20/02/2013 at 9:59 am | Permalink |

        +1

        • Paul Grenfell
          Posted 20/02/2013 at 10:28 am | Permalink |

          +1

      • Posted 20/02/2013 at 11:35 am | Permalink |

        seriously,
        at some point in time, they have to become accountable. these media outlets, and the coalition party;

        slan·der/ˈslændər/ Show Spelled [slan-der]
        noun
        1. defamation; calumny: rumors full of slander.
        2. a malicious, false, and defamatory statement or report: a slander against his good name.

        for the last 24 months, even longer. i havent seen or heard anything remotely true, that has come from faifax media or from the liberal party, with regards to the NBN. it is a Joke, it is defametory and it should be against the Law.

        what can we do about it apart from joining whirlpool?

    9. the lone gunmen
      Posted 20/02/2013 at 9:48 am | Permalink |

      Of course the NBN must be right! Even though a basic cost/benefit analysis was never undertaken. NBN Co hardly has a good record for getting things right, like the roll out timetable for example.

      My money in on the Fin Rev over NBN or Delimiter, when it comes to figures.

    10. Diachronic
      Posted 20/02/2013 at 10:06 am | Permalink |

      Thanks for a very informative article Renai, presenting an example of FUD in action in the mainstream press. The AFR unfortunately appears to be following in the footsteps of the experts in NBN FUD, namely News Ltd publications. Selective reporting (and under-reporting) is something that often never gets a spotlight shone on it and it is refreshing that at least someone is prepared to say “Hey, wait a sec!” to such a glaring example as this one.

      The FUD train continues unfortunately.

      Busy year ahead! :-)

      I just hope that somehow enough Australians wake up to the true vision and inherent value of the NBN project. If we manage to yet again shoot ourselves in the foot on the doorstep of achieving something this important we will truly rue the day.

      PS…I will never forgive you Malcolm Turnbull….what a disappointment.

      • Abel Adamski
        Posted 21/02/2013 at 12:34 am | Permalink |

        Malcolm maybe, he does have a website and a blog where comments are welcome even comments diametrically opposed to his statements . ( as long as no more than 1 or 2 links )

        I would point the proverbial laser at the LNP leadership (if that title is appropriate) team

    11. JakeC
      Posted 20/02/2013 at 10:08 am | Permalink |

      Well, glad I do not waste my time reading the AFR, what a load of rubbish.

    12. AJ
      Posted 20/02/2013 at 10:16 am | Permalink |

      I also noticed how there are no figures in the article just they may not recover costs in 2040 there are 2 questions
      If they don’t recover costs by 2040 when will they?
      How much of a shortfall will there be?

      Yet neither of these questions are answered at all there are no numbers to back up what they say for a Tabloid called the Financial anything you would think an article would be formed from more than just hand waving and hyperbole.

    13. djos
      Posted 20/02/2013 at 10:17 am | Permalink |

      and here’s a good perspective on the politics of the AFR’s bias:

      http://www.independentaustralia.net/2013/politics/fairfaxs-anti-government-bias-is-as-clear-as-day/

    14. Markie
      Posted 20/02/2013 at 10:42 am | Permalink |

      Tsk, tsk, lies by omission. Shame on you FTR.

      It’ll be interesting to see if this floats, because if it does there’ll be ample ammo to sink it – which in a way will show up the FTR to be the lying lot they are…

    15. Posted 20/02/2013 at 11:24 am | Permalink |

      I do wonder whether anyone will forward this issue to the Australia Press Council in a formal complaint against the AFR’s report, or even Media Watch. It seems like a pretty clear-cut case where the newspaper just got this wrong.

      • AJ
        Posted 20/02/2013 at 11:27 am | Permalink |

        Media Watch don’t care anymore they are more interested in papers publishing false things from the AP or Reuters without doing more research than anything NBN

      • GongGav
        Posted 20/02/2013 at 11:31 am | Permalink |

        They arent factually incorrect, they are just factually incomplete, so the best you might hope for is a retraction/correction.

        Which will no doubt be buried somewhere around page 35.

        • Trevor
          Posted 20/02/2013 at 1:17 pm | Permalink |

          But the ARE, Gav – their reporting on the ramifications for missing the payback target for the entire project to be considered a cost is a blatant attempt to undermine one of the most fundamental arguments for the NBN by deliberately confusing and misleading the public. Think about it – as soon as you convince someone that the NBN is a 40b on- budget cost to the tax payer, suddenly there is a good argument for shifting those funds to areas where it is more urgently needed (ie whatever is immediately obvious to Joe Public in his immediate vicinity). This sort of nonsense should absolutely be prohibited in law and policed diligently – press who publish stories so obviously misleading and detrimental to the public interest should be shut down IMHO.

          • GongGav
            Posted 20/02/2013 at 1:50 pm | Permalink |

            Dont get me wrong, I fully agree that the article is clearly FUD, and seems to intend to be nothing else, but there is nothing wrong with the facts they state. There IS a scenario where NBN costs become budget costs.

            And this is the problem. Because they only concentrate on one part of the release, and get that single part right, they cant be taken to task by the Australian Press Council. Any complaint would need to see if any of the facts posted were wrong, and the finding would be that they werent.

            Morals done come into it, and whats left out doesnt come into it. You could only complain that they were wrong, and you’d lose that argument.

            WE know its FUD, THEY know its FUD, but the general readership wouldnt. And thats all the anti-NBN/pro-Liberal crowd cares about – convincing the voters to vote Liberal.

        • Karl
          Posted 20/02/2013 at 1:45 pm | Permalink |

          They are factually incorrect on the budget treatment issue. The press council also has specific requirements regarding the headline which I’m pretty sure the article doesn’t meet.

    16. Chris
      Posted 20/02/2013 at 11:39 am | Permalink |

      The NBN will inevitably return a profit, even if it takes 50 years to recover the costs.

      Then there’s the likelihood of the NBN being sold off by a future government, which should comfortably cover any outstanding debt.

      Why is it that the NBN has to pay for itself to be seen as and investment, yet other public infrasructure (such as roads) does not?

    17. Gene W
      Posted 20/02/2013 at 12:18 pm | Permalink |

      My boss at work has trouble believing that:

      a) The Coalition would claim to have a policy without having done their “homework”
      b) The media would mislead the public about issues with the NBN

      Where does this strange faith in the media come from?

      • Tinman_au
        Posted 20/02/2013 at 12:59 pm | Permalink |

        The same place as their faith in the LNP.

        I too wonder why people supposedly interested in “facts” like alain, gunmen, et al, consistently ignore the facts when it comes to the LNP and NBNCo…on the one hand there is an actual project in full progress with and actual business plan that shows they will pay us back, and on the other hand, there’s a party with “aspirations” of “policy” that change on a daily basis.

        It comes down to one of two things really, they are either so blinded by ideology that they are basically no better than a religious zealot basing their world-view on “faith”, or they are paid astroturfers with an agenda.

        • Trevor
          Posted 20/02/2013 at 1:09 pm | Permalink |

          It’s called shilling. We know it goes on – why are people still surprised by this?

          You are right, though, I shouldn’t jump to conclusions – they COULD simply be both extremely biassed AND stupid.

          • Tinman_au
            Posted 20/02/2013 at 1:32 pm | Permalink |

            I’m not surprised at it, I just wonder how they get away with the tactic of “hey, look at me, I’m so intelligent I can pick apart intricate details of the financials of the opposite party but I base my stance for my side on pure blind ideological faith”.

            The LNP have no policy. They have aspirations of having a policy one day, more than likely after the election…

    18. Michael
      Posted 20/02/2013 at 12:36 pm | Permalink |

      Nbnco have to make a return above the bond rate to be classed as an investment. A drift down by a few percent does turn it into a cost. The rest of the article is correct, afr clearly being misleading here.

      • Posted 20/02/2013 at 12:44 pm | Permalink |

        “Nbnco have to make a return above the bond rate to be classed as an investment. A drift down by a few percent does turn it into a cost.”

        Evidence? Do you have any?

        • Tinman_au
          Posted 20/02/2013 at 1:20 pm | Permalink |

          I’m not really sure what Michael is trying to get at, whether it’s a cost or benefit over all, it can still be an investment (unless he’s using the definition of “Money that is invested with an expectation of profit” for investment, and not the “The commitment of something other than money (time, energy, or effort) to a project with the expectation of some worthwhile result” one).

          As far as I can see though, even during a global downturn NBNCo’s figures are looking OK?

        • Tinman_au
          Posted 20/02/2013 at 1:46 pm | Permalink |

          Actually, I think I see where now, in the context of the AFR piece:

          AFR: “NBN Co must recover its costs and deliver a financial return to the government so that federal funding for the massive project is treated as an investment, rather than an expense on the budget. ”

          He (and AFR) have made the same old factual error that has been pointed out many, many times, the NBN is not “on the budget”…

      • GongGav
        Posted 20/02/2013 at 1:10 pm | Permalink |

        Read what I wrote above. If, at some point in the future, the Government of the day decides to write off whatever is owed at the time, that writeoff becomes a budget cost. But only then, and only for the amount written off. It doesnt have to be bad debt to write off either, just a financial decision to turn the cost into a public cost rather than an investment cost.

        So, lets say NBN Co falls a few billion short (Say, $5b) some 25 years from now, and the GotD decides not to wait any longer for profits from the NBN wholesale prices to pay that amount back. Its only that ($5b) amount that is a cost.

        Thats pretty much the worst case situation here. Versus Liberals $12.5b as their best case situation. Plus copper maintenance costs, costs to Telstra to buy/lease the copper itself, and so forth and so forth.

        So it seems the AFR is saying is that even in the Labor worst case scenario, its still costing the public less than the Liberals best case scenario with weaker technology.

        • Abel Adamski
          Posted 20/02/2013 at 1:18 pm | Permalink |

          +100

      • Karl
        Posted 20/02/2013 at 1:54 pm | Permalink |

        As I have already linked it but you seem incapable of either reading other comments or clicking links before spouting off, here is the proof that you are completely wrong.

        “To sum, accounting treatment does not depend on the realised rate of return of NBN Co, or whether that rate falls below a benchmark. In addition, the accounting treatment does not depend on whether the government intends to sell NBN Co in future. The sale, funding, operation and all payments stemming from these activities, are accounted for in the budget statements as per normal accounting procedures.”
        source: http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2011-2012/NBNBudgetStatements#_Toc314147473

      • seven_tech
        Posted 20/02/2013 at 3:25 pm | Permalink |

        @Michael

        There is no evidence NBNCo. must make a return above the bond rate. Even the scenario of NBNCo. only making $1 more than it cost to fund the equity (plus the interest on the equity funding) would mean it is still an investment.

        And as Renai says, if it DOESN’T makes this (which I also cannot find current evidence for, as current rends suggest tier takeup will continue to rise beyond what NBNCo. have predicted in the CP) it can be written off as capital loss and any cash made form the eventual privitisation o fNBNCo. will cover the difference.

        In ANY possible scenario, NBNCo. can be treated as an investment.

        • Posted 22/02/2013 at 10:16 pm | Permalink |

          There is no evidence NBNCo. must make a return above the bond rate. Even the scenario of NBNCo. only making $1 more than it cost to fund the equity (plus the interest on the equity funding) would mean it is still an investment.

          Errr, interest on the borrowed money?

          Oh I get it, the Reserve Banks of the world will have driven interest to zero in the near future… hmmm, yeah I forgot about that.

          • seven_tech
            Posted 22/02/2013 at 10:37 pm | Permalink |

            @Tel

            Errr, interest on the borrowed money?

            Did you READ my comment??

            Even the scenario of NBNCo. only making $1 more than it cost to fund the equity (plus the interest on the equity funding)

            As long as NBNCo. cover the (approx.) $40 billion dollars the government ACTUALLY pays out to fund their $30.4 billion equity in NBNCo. it doesn’t need to make anymore to be considered an investment (if indeed it does at all)

    19. TechinBris
      Posted 20/02/2013 at 2:01 pm | Permalink |

      Well I see that even AFR have dipped into the bucket of sh!t that most of the Media is dipping into for their information, which is being built predominately on innuendo and gross misrepresentation of the facts.

      One of the reasons I love Delimiter is it hasn’t become Politicized like everything else and just calls the facts as they fall. If there is opinion, it is under the Opinion section and not Opinion thrust down your throat, complete with directive on what you must do to make sure you don’t misinterpret what they desire you to believe and do. Fine for Sheeple, but some people aren’t brain dead or comatose yet.

      Hats off to you Renai, you’re a rare thing these days, a real Journalist who researches and vets their information and keeps the opinion, as opinion. You may just save the once noble art from complete disrepute. Keep it up.

      Unfortunately there is little left in Oz for reading on Australian issues that hasn’t become some vested Interest’s mouthpiece, in their manufacturing the consent of a misinformed Public, to the fulfilling their dreams, complete with a compliant political landscape that they control.

    20. Lachlan
      Posted 20/02/2013 at 2:03 pm | Permalink |

      Every year in it’s financial statements, NBN co needs to make an imparement test under AASB 136 Imparement of Assets, and get that checked off by the Autior General, and whichever auditor it hires.
      The actual NBN policy is described in the2011-12 annual report Note 1(L) on page 70-71.

      Basically, this standard requires an estimate of the returns of an asset (eg the whole NBN) to get an estimate of it’s present value in use at a reasonable discount rate and then compare it against the book value of the asset. As long as the value in use is greater than cost, there is no problems. Otherwise a write down of the asset value is made to the book value of the asset.

      There are problems with this due to the NBN being still under construction, so the auditors would rely on the NBN corprate plan, and make comparisons of the projected and budgeted costs anre revenues against what the NBN has actually delivered. Thus far the plan is comming together, so no imprements have been made.

      The government has an even easier time of valuing the NBN, as it just relies on whats in the NBN’s annual report for imparement testing.
      The only time the NBN won’t be an investment is if the NBN is completely impared, but to alledge that would need some conclusive evidence (eg. construction costs blowing out compared to budget, below planned subscribers and ARPU, new technology to render fiber obsolete.) As the AFR article has no additional evidence concerning imprement, so their comment about the NBN being an investment is irrelavent and rather impunes the work of the Auditor General.

    21. Stephen H
      Posted 20/02/2013 at 7:30 pm | Permalink |

      I think most sensible people have stopped reading the Australian Financial Review – which is probably a bit disappointing for the editor of what is supposed to be a serious newspaper.

      As soon as you allow editorial independence to go, you lose all journalistic credibility and just throw your lot in with the tabloid rags.

      • Abel Adamski
        Posted 20/02/2013 at 9:57 pm | Permalink |

        It is unfortunate that both the AFR and Australian have descended to such depths.

        Sure they may have had a right wing bias, but then Fairfax, the ABC etc were a counterbalance all of which is representation of Public Viewpoints and beliefs, however the depths to which they have sunk is pitiful to observe and even Fairfax is being dragged on the same downhill slope




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