Hockey says Govt spending $70bn on NBN

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news Treasurer Joe Hockey has stated that the Government is spending about $70 billion building its version of the National Broadband Network, in comments which appear to run contrary to existing estimates about the Government’s investment in the project.

On Friday the Treasurer spoke at the Council of Small Businesses of Australia’s National Small Business Summit in Sydney. After giving a wide-ranging speech which included discussion of the impact of digital disruption on the Australian economy, Hockey was asked about frustrations that small business had about access to broadband.

“We don’t have coverage, we don’t have good service,” said one audience member, according to the transcript available online. “As soon as I speak to people who are even slightly regional … people complain about the internet. Where are we at, seriously, in terms of enabling this digital disruption, for business efficiency from the internet?”

Hockey responded: “Well, as you know, we inherited a National Broadband Network that had some massive structural problems. The Minister for Communications, Malcolm Turnbull, has engaged in complete upheaval at the NBN, which is now delivering an NBN that’s been rolled out much faster, and more effectively than it was. There’s still much work to be done. I’m not for a second suggesting there isn’t.

But, I’m confident, I mean we’re spending in the vicinity of $70 billion. It is by far, the largest infrastructure project in Australia. We are rolling that out, and as I heard the Chief Executive say yesterday it’s on track, but, obviously, we need to do everything we can to roll it out faster and more effectively.”

However, it appears as though the $70 billion NBN pricetag quoted by Hockey is directly at odds with existing Government estimates for investment in the infrastructure.

The April 2014 Statement of Expectations letter (PDF) sent to nbn by Communications Minister Malcolm Turnbull and Minister for Finance, Senator Mathias Cormann, states that the Government’s public equity capital limit investment in the company would be $29.5 billion. This figure is repeated in nbn’s latest corporate plan released in November 2014. nbn also has the ability to raise debt from the private markets, although this amount is not expected to push the company’s spending requirements close to $70 billion.

Hockey has previously estimated that construction of the nbn could cost as much as $100 billion. In an interview with ABC Radio’s AM program in October 2012, for example, the then-Shadow Treasurer said: “There is not one contractor in Australia that believes the Government is going to roll out its National Broadband Network for $32 billion. Expectations are as high as $60 billion, $70 billion or even $100 billion for the National Broadband Network.”

In the COSBOA speech last week, Hockey also raised the possibility of continued action to fairly tax multinationals providing digital goods and services to Australians. Companies such as Microsoft and Amazon are currently billing Australian customers from locations such as Singapore, avoiding paying GST in Australia or significant levels of corporate tax.

“We are obviously also focussed on the impact of GST on digital products and services, provided by Australians in competition with international providers,” said Hockey.” Under new arrangements, anomalies will be removed and Australia’s taxation system will take another step into the future. Our application of GST to imported digital products is potentially going to go further following discussions with the State Treasurers in mid-August.”

“We’ve now found a way to ensure that those providing goods from overseas, into Australia, do not get any advantage out of the tax free threshold. This is hugely important for small business. How do I say to a book seller in Lane Cove, that they have obligations to pay tax, but Amazon selling the same book from overseas doesn’t. It’s unsustainable. It’s been hard to plug but it’s got to come to an end.”

“It is also the case that multinationals have to pay their fair share of tax in Australia. And on Budget night I announced an initiative where 30 companies in particular are not able to engage in behaviour that ensures they don’t pay their fair share of tax. Lower, simpler and fairer taxes, but that has to apply to everyone.”

opinion/analysis
What are we to make of Joe Hockey’s claim that the Government is spending about $70 billion on the National Broadband Network? Well, there are only two possibilities here.

With the greatest of respect, we submit that the Treasurer may not have looked at the most recent financial details with respect to nbn’s operations, and may be working based on the basis that previous claims made by the Coalition with respect to nbn are still current, and that they were correct in the first place.

The alternative is that the Treasurer does know what he is talking about, and that he is privy to cost information with regard to the NBN that the public is not. I note that the Government has not yet released nbn’s most recent corporate plan, and that this may contain updated cost estimates about the project.

I would welcome some certainty from the Government on this issue.

Image credit: Parliamentary Broadcasting

24 COMMENTS

  1. Yeah renai
    It’s hard to say if it’s a brain fart think there figures for FTTP are for MTM or if it’s the real figures the MTM is going to cost which wouldn’t be a surprise.

  2. It has to be the first one, surely. The ALP would be mad to ignore the NBN any longer.

    • I saw that as well, but I checked the transcript, and that’s what it says. Not quite sure what it should be, but I’ve chopped that bit of the quote and inserted a “…” as it looks like there was a transcription error etc.

  3. Isn’t $70 billion the number Malcolm was talking about for the fiber-based NBN based on the strategic review ? Maybe they’ve switched back to a FTTP rollout but just haven’t told anyone yet…

  4. Sure, 40 Billion to build FTTN and another 40 Billion to build FTTH.

    Most would suggest that 40 + 40 = 80, but then, we are tech-heads…

  5. I’d say the explanation is pretty straightforward. Joe Hockey barely understands his OWN portfolio let alone the portfolio of another minister. And normally I’d be prepared to let him off the hook… except that this is a multi BILLION dollar infrastructure project. As Hockey himself acknowledges, it’s the largest infrastructure project in Australia. Which really makes it completely inexcusable for the Treasurer to not be across some of the most BASIC details.

    I really wonder why people bother turning up to these sorts of events, when a perfectly reasonable question gets answered with tired, political slogans and buzzwords. Claiming that they are “now delivering an NBN that’s been rolled out much faster, and more effectively than it was.” is just flat-out bollocks when we are fast approach the SECOND YEAR of a Coalition government, and do not have a single HFC or FTTN household, outside of trials.

  6. I can not express how happy i am that Renai LeMay is back. The IT world has and needs your Voice, someone has to stand up as the opposition to this Mad government.

  7. No Hockey got it wrong again, that’s how much Bronwyn Chopper Bishop will spend on helicopters. But don’t worry a 50% increase in GST will fix it.

  8. I think it’s just become the norm for this government (if not all politicians) to say whatever each particular group wants to hear, at any given time. For example…

    A small business crowd will be told $70B (as it was here) is being spent on the NBN… And I’m guessing the spiel would have been something like… because we are an open for business government, who have your best interests at heart, we are spending $70B to fully provide you with the cutting edge technologies and tools you and your businesses need to flourish.

    Whereas a crowd of Telco and ISP execs would probably be told $30B… because as an open for business government, we have your best interests at heart and certainly want to implement the groundwork to assist you and your businesses to flourish. Of course in doing so we are spending $30B, to assist you without overstepping and impeding upon your free market rights, with governmental bureaucracy.

  9. Wasn’t the latest NBN Corporate Plan provided to government a little after that least budget?

    Imagine if there was a switch to Scenario 4? Let alone Scenario 2.

  10. “I would welcome some certainty from the Government on this issue”… fat chance with this pack of paid lobbyists…

  11. Taxing the money transaction instead of the product or service makes overseas purchases easy to tax. Make the banks do the collecting and let companies provide goods and services.

  12. Gah! I wish they’d stop pushing the GST and multinationals argument, they’re pointless.

    Looking at GST, on 1 million Netflix accounts, thats around $1m a month in GST, or $12m a year. Whats the cost of collecting that? With GST collecting something like $60b a year, $12m more is a petty drop in the ocean, and that extra cost wont be insignificant.

    There are reasons they had an import limit of $1000, and its simply the cost of enforcement. It’ll be fine if companies comply, but those that dont are going to cost far more than what the return will be.

    As for multinationals, my example is with an iPad.

    Without going over all the numbers, in the end (at an educated guess) there is about $200 in revenue ultimately being washed through Ireland. For detail, it costs ~$300 to make an iPad air, and after adding the manufacturer markup, and taking GST off the import into Australia, theres the difference between $350 and $550 (thats the educated guess) thats causing the problem.

    Assuming they find a solution, who gets that $200 to tax? The product is made in China, they have a claim on it. The head office is in the USA, they also have a claim on it. Its sold here, we have a claim as well.

    Who wins that argument?

  13. the real cost of the Nbn is more than they want us to know I recon 150thou in repairs to phonelines and gas and pipes.

    they way the repair bills are going to be charged to that company NBN CO there will be no new network because there will be no money left. but abbott and turn bell don’t want the people to know about this stuff up. me and a lot od business plus agl customers had no gas for well over 16 hrs . and there is more damage to come.

    also ask nbn co about Telstra billing them for all the damage while drilling and has to rewire everywhere they have drilled also according to Telstra nbn will be a fail before they even turn it on because the copper and fibre have drop out problems

  14. So Turnbull was a little confused about which version of the NBN he was quoting that $90 Billion for.
    Seems the all fibre version would have been not only faster but far cheaper?

  15. Either it’s one of the biggest gaffes of the year (the federal treasurer in office for 2 years quoting the wrong figure for THE major infrastructure project in Australia at a high-profile public forum is a very bad look), or it’s actually going to cost $70 billion, in which case the Australian people are victims in the biggest swindle of the modern era and it’s been perpetrated by their own government. The least that this party would deserve is to be out of office for a very long time.

    The high cost of Labor’s NBN was THE major selling point of the Coalition’s NBN. All of the talk for several years about “gold-plated, Rolls-Royce” networks is now what the current government is building?

    They deserve no mercy.

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