news The Opposition has blamed the up to $15 billion National Broadband Network funding blow-out revealed this morning on “poor decisions” and “wrong assumptions” made by Communications Minister Malcolm Turnbull during his stewardship of the project, as the war of words between the major parties on the issue ramps up.
This morning the NBN company released its latest corporate plan. The document reveals up to 550,000 less Australian premises would receive the full Fibre to the Premises rollout than had been previously been planned under the Coalition’s Multi-Technology Mix, with the project’s funding requirement also blowing out by between $5 billion and $15 billion.
In a press conference this afternoon associated with the release of the plan, Communications Minister Malcolm Turnbull said the new management of the NBN company had achieved a “formidable turnaround” in the company’s fortunes, stating that its chief executive Bill Morrow and his team had “done a remarkable job in getting this project on track”.
The company’s new cost estimates — including the multi-billion-dollar funding blowout — were based on the fact that the NBN company now knew more about deploying high-speed broadband than “anyone else” in Australia. “All of that information and experience,” the Minister said, had led to its revised funding estimates.
When the Coalition took over the NBN, the Minister said, the NBN company’s cost accounting systems were “frankly, so poor”, that they did not know how much it was costing to connect premises with fibre.
However, in a statement in response this afternoon, Shadow Communications Minister Jason Clare said the fault lay with Minister Turnbull and not with Labor.
“After doubling the size of the deficit, the Abbott Government has now nearly doubled the cost of their second rate NBN,” Clare said.
“The cost of the Coalition’s second rate NBN started out at $29.5 billion in April 2013, it blew out to $41 billion in December 2013, increased again to $42 billion in August 2014 and today it was announced that it will now cost up to $56 billion.”
“The financial return to taxpayers from the Coalition’s second rate NBN has also crashed. In December 2013, we were assured the rate of return would be up to 5.3 per cent. Today we learn it will be 3.5 per cent at best. The NBN is rolling out slower than Malcolm Turnbull promised, and it is more expensive than he promised.”
“Malcolm Turnbull has no-one else to blame for this cost blowout. It has happened because he has made poor decisions and made the wrong assumptions.” The Shadow Communications Minister listed a number of poor assumptions he said Minister Turnbull had made, as follows:
“In less than two years under Tony Abbott, Joe Hockey and Malcolm Turnbull,” Clare concluded, “the deficit has gone up, debt has gone up, unemployment has gone up and now the cost of the NBN has gone up for the third time. They have doubled the deficit and almost doubled the cost of the NBN. Australians are now paying the price for Tony Abbott and Malcolm Turnbull’s mistakes. Australians will now pay much, much more for much, much less.”
Image credit: Parliamentary Broadcasting
He hasn’t blamed Aliens yet?
Maybe next conference.
I guess one LNP supporter will be happy with this monumental stuff up by Malcolm Turnbull… By the way, has anyone seen Scott Morrison today?
Scott Morrison today?
He was there for all to see live on http://www.a-pac.tv/ being interviewed by a radio journo (2UE or 2GB) shortly after the NBN presser today and looking and sounding very chirpy and cheery.
Really glad to see Clare come out strong on this issue. Hopefully Labor will come to the next election with a more sensible (than the MTM) NBN policy.
Only taken him 2 years….
Stopping and starting a project of this magnitude every few years is not a smart thing to do. If it wasn’t stopped when the Noalition took over, it’d be further on. Stopping it again is just going to delay it further, though I personally would probably suggest removing the cable from the plan, but that’s probably not going to be happening.
Personally I don’t mind. He timed it perfectly w/ this one…
You can keep ranting on and on about how NBN under Coalition has failed dramatically but with MSM still pretty much sweet to the current government you will find 90% of the time it would be ignored or treated as hot air.
It has more impact when you give the other person more rope and when its closer to an election. And what rope did the Coalition give indeed for this hanging =P
Uncy Rupe now letting Noise Ltd loose:
http://www.news.com.au/technology/online/how-the-government-has-let-us-down-with-the-nbn/story-fnjwncel-1227498257089
Surprisingly good article and pretty scathing of TurnBull and NBN Co under his tenure!
Pretty accurate summation from Clare, if TurnBull hadnt been so hell bent on giving Telstra even more money for their obsolete copper networks we’d prolly have about 2 million premises on FTTP by now!
Does anyone out there understand the finances.
Am I right in thinking that the 3.5% ROI means that they will not be able to cover the 4% Government investment rate. Or does that amount already take the repayments into account?
Not ROI, IRR. See strategic review p107 for explanation.
“Annual cash flows include operating earnings (broadly revenues minus costs), minus tax payments for the year; cash spent on capital expenditure in the year; and any changes in working capital. It does not include any cost or earnings relating to interest, or any accounting cost for depreciation or amortisation.”
IRR heavily dependent on predicted costs and revenues. The history of govt projects shows costs likely to be above projections (as we’ve seen in every corporate plan), revenue less.
Labor’s FTTP plan, revised down to 2.5% in the strategic review would now be negative. Maybe Renai could ask Clare to comment.
The substance of the article is however correct, the coalition is responsible for the cost blowouts. They bough into Labor/Greens policy folly.
“They bough into Labor/Greens policy folly.”
Um, no they didn’t. They did not follow what the ALP had put forward at all.
They took what the ALP created in a certain, uniform and stable offering, and fired all the people that knew what they were doing with it. And now we wonder why there are cost blowouts?
@Richard by ignoring the fact that the strategic review is a fraudulent work of fiction, you discredit your own arguments.
A negative IRR isn’t a real issue for a regulated business like the NBN. It can just keep on hiking prices to hit the revenue targe which increases the more it spends on the copper.
Probably starting from July 2016 when the next pricing review with the ACCC happens, there will be an increase in the ACV and CVC pricing to get the ROI back over 6% like it’s allowed to.
It can only be cpi-1.5% but that’s still 1% or so, year after year.
Everyone will be paying for the fraudband with higher ISP charges and smaller quota’s.
Demand for internet is not inelastic.
Increasing AVC and CVC in real dollars is against policy directives. CPI increase not close to approaching published nor predicted costs.
As I said before, bean counters who do their own so called CBA and (as bean counters do) simply ignore the B, can always twist the figures to suit which ever argument said bean counter wishes, as we clearly see here daily.
… and still awaiting answers to my two questions please.
Since depreciated (to no worth) infrastructure is a base for bean counters to suggest FTTN is a better bean counter outcome than FTTP, “should Australia ever build any new infrastructure in the future at all”? And also, since the copper wires are still good enough (according to bean counters) “why weren’t the iron wires good enough”?
I’m @rizz As bean counters we prepare CBAs, universally accepted in our profession as a valuable tool. We always attempt to capture the ‘B’.
“depreciated (to no worth) infrastructure”
I’m assuming you’re using depreciation in it’s accounting usage. It’s incorrect to assume a depreciated asset has no worth or value.
Globally trillions of dollars of investment decisions are made annually using the very tools described to assess their value or commercial viability. Many rejected because of their poor value. In business we’re always looking to capture the maximum return on scarce funding.
The history of cables is indeed fascinating. The preference for iron wires was replaced with copper for a number of reason including material and insulation improvements. It should be noted iron cables are still used today in some applications; but not extra low voltage. Silver and gold are better conductors but its cost (and other factors) outweighs such advantage for cables.
For the same reason fibre is used today for new deployments, copper overtime replaced iron cabling. Significantly they didn’t lay a parallel copper network.
@Richard I’ve been in the ICT industry for over 20 years and Bean Counters like you have been responsible for the lion’s share of bad ICT decision making. You lot are a scourge on our industry and time and time again see us as a cost centre. ICT enables business to be more productive and more efficient year after year but you lot totally ignore that without every service we provide you would still be adding up numbers with piles of small rocks!
I’ve never seen a CBA accurately predict the outcome for a major infrastructure project…that’s probably why Turnbull ignored his own CBA and went ahead and did what he felt like doing prior to it even being finished.
Richard,
You are pushing shit uphill with every comment that you make.
Stop. Please stop, FFS.
Sorry Richard, but unfortunately you don’t appear able to remove your politics from your comments. Feel free to point me in the direction of the source material, but I don’t trust you to provide a balanced and reasoned analysis.
Unfortunately he’s not capable of looking at the big picture and is quite happy sticking to his IPA/Lib/Murdoch supplied script. I’m not going to bother trying to debate him anymore, especially as he keeps parroting from fraudulent documents written by mates with a pre-determined outcome. Ironically that pre-determined outcome has now been shown to be a total fabrication and slower to roll-out, more expensive to operate and roll-out and provides worse outcomes for all bar Telstra shareholders.
Somehow I’m not surprised Turnbull want’s to blame someone else for his mistakes. We all predicted this mess years ago but they were so sure they could get their gimped version done quicker and cheaper. Little to nothing to show for all the ill-informed ranting and misleading raving in opposition. Their apologists still to this day defending the mess they endorsed by voting for these clowns.
Also welcome to the debate Jason Clare! :-)
Australia must be the laughing stock of the world with these clowns in charge. Years down the line, when we truly become the banana republic we are destined to be, I hope people will own up and say who voted for whom (and based on what policies)
People didn’t vote for this (or the LNP) so much as they voted Labor out. The fact that most people knew (and continue to know) nothing about policies and remained wholly ignorant of the LNP’s demonstrated track record of blatant deception and outright lies only exacerbated the stupidity. The sad reality is that if Labor win the next election that will be more a kneejerk voter backlash against a government they dislike (and likewise if the LNP win it will be more a reaction AGAINST Labor) rather than a better informed, rational electorate that suddenly starts making reasoned decisions based on facts, evidence and track record.
Those people that I know voted Lib’s actually did vote for this (like a former employer) they believed the entirety of what Turnbull was selling. The whole why should I pay for everyone to have a rolls royce.
A few others have voted 1 party their entire lives and is a family tradition (I’m assuming both sides have those though).
I just grit my teeth and shake my head at this mob of incompetents,who take a wonderful idea like the nbn and stuff it up.
Well done Jason Clare ,you sock it to em.
@Richard
“For the same reason fibre is used today for new deployments, copper overtime replaced iron cabling. Significantly they didn’t lay a parallel copper network.”
The difference Richard is that the iron and copper were nominally delivering the same voice services.
Whereas the parallel build of FTTP over the copper CAN are not equivalent in terms of capability and what services they can deliver. It is a mistake to think they are.
@cameron I haven’t claimed they’re equivalent. Not what rizz was asking either and what I responded to.
It’s telling that so much of the strategic review berates predecessors and past performance. It glosses over its own rewriting of performance yet dwells on previous times targets and budgets have been restated.
All the corporate buzzwords are there, but to this old IT buzzard, this report fails the sniff test.
So our area. one of the oldest in the subburb won’t be getting NBN for another …. . 10 Years
as previously told by a telstra worker. in the meantime we have to use a unreliable internet service that drops out alot especially when raining and if someone wants to watch a video everyone stops what they’re doing on uses their mobile phone 4G . which by the way is ALOT faster than the home internet.
meanwhile all of the upscale area’s have ADSL2 or Cable and it’s stable and nice and fast . but we can’t get either of them.
FUBAR…we are a laughing stock, that the govt had to step in in the first place to have this project underway and take the whole thing on themselves. Other markets offered their telcos (who are experts in their field) incentives to do this, and native competition did the rest.
It’s really no shock that we have seen cost blowouts … That’s what happens when governments (and that is regardless of LNP or ALP) try to enter markets they have no understanding of.
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
That is all.
“Faster, sooner cheaper!” they repeat. “Fully costed, ready to go. Minimum 25Mbps to 100% of Australia in 2016.”
Obvious lies were obvious. Then of course when everything has fallen apart blame it on the opposition.
Cowardly, craven criminals. There needs to be an inquisition.
Wow, even Paul Budde has had enuf and is using the word “Lies” to describe TurnBull’s BS.
http://www.buddeblog.com.au/frompaulsdesk/the-nbn-more-lies-leading-us-from-bad-to-worse/
The NBN – more lies leading us from bad to worse
I am sure that I am just as frustrated as most Australians – especially as month after month, year after, it becomes clearer that what I, along with others, have been saying since 2011 that a cheaper and faster NBN as the Coalition Government is trying to install by retrofitting aging copper networks is not delivering on those promises.
First of all the minister promised a quick six-month turnaround for the policy change, but now, two years later, apart from pilots, none of the so-called multi-mix technology (basically a retrofit of the old copper and coax cables) has eventuated. Now the government has also admitted that this retrofit might cost up to $15bn more than expected.
It becomes clear that this government didn’t have a clue about its proposed ‘cheaper and faster option’ it was nothing more than political rhetoric.
The problem with the government is no-one has any intention of facing up to what they are doing wrong. It is always easier to blame others or even the dog for eating their homework. Rather than looking at what they do themselves. The time for all of them to stop blaming the other guy was when they took office. Enough is enough!
I can hear it now “It’s Labor’s fault”
Malcolm Turnbull will blame anyone or anything apart from himself or the Coalition.
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