Coalition missteps on NBN budget savings


news The Federal Opposition has again incorrectly alleged that it could save money by cutting the Labor Federal Government’s multi-billion dollar National Broadband Network project, despite financial projections which show the project is likely to make the Government billions.

The NBN is not listed in the Federal Budget as an expense because it is technically a government investment and will consequently not divert money away from other projects. This accounting technique has been verified by economists from the Parliamentary Library of Australia as an “internationally accepted accounting standard”.

In addition, in the long term, NBN Co’s projections show the network is slated to make a return of between 5.3 percent and 8.8 percent on the up to $44.6 billion that will be invested in the network — meaning it will return an amount ranging from $1.93 billion to $3.92 billion, as well as delivering Australia a fibre optic telecommunications network to replace Telstra’s aging copper infrastructure.

In an interview with ABC News 24 on Monday, Shadow Finance Minister Andrew Robb was questioned by presenter Lyndal Curtis on the Coalition’s ongoing claim that cutting the NBN would save money.
“On the question of spending NBN savings on easing traffic congestions, that’s a saving you then couldn’t book as a saving if you accept, which the Government doesn’t, that the NBN is effectively on the books. Is that promise, spending some of the money that you were counting on to save?” Curtis asked Robb.

Robb replied that the NBN was “borrowing money” — “$50 billion they’re going to borrow in the end, $37 billion we know for sure but it looks like another $50 billion”. “That’s got to come from somewhere. That’s money that could have been invested somewhere else, in a more productive outcome and whether it’s government money or private money, it is money that could be spent on things that would have far greater productivity improvement and we could be having an NBN at much lower cost,” Robb said.

“We could get the best of both worlds but the bottom line is that that money, it’s a combination of private and public. It’s money that is being very inefficiently invested. That money could be going to other purposes and government policy can help that happen but not necessarily always with government putting taxpayers’ money into the mix.”

However, it is believed that Robb’s statement that the money could have been spent on other matters is technically incorrect.

The NBN funding will not divert money from the Federal Budget, as it does not appear on the budget as an expense. And with the project expected to make money in the long term, cancelling it would mean the Government would not make the expected positive return on the project, meaning those extra funds would not be available in the long term for other projects. Ratings agency Standard & Poor’s reaffirmed Australia’s AAA credit rating in September 2011, meaning it is not likely that the Government will have problems using debt to fund the NBN.

Separately yesterday, Robb demanded in a statement that Finance Minister Penny Wong “stop distancing herself from the NBN” and take a more active oversight role on a project which Robb claimed threatened “to be a massive drain on government finances”.

Robb has written to Wong in her role as shareholder minister for the NBN (Communications Minister Stephen Conroy is the other NBN shareholder minister), stating that the project needed heightened vigilance and accountability.

Robb called on Senator Wong to release monthly financial statements for NBN Co in her name. “In addition to updates regarding key financial activities, including equity injections, these statements should also provide updates in relation to contracts awarded, other acquisitions and expenses as well as staffing levels,” Robb said.

Robb said it had been reported that NBN Co had already awarded contracts worth more than $7 billion, but the public had “heard nothing from the Finance Minister about whether these decisions will present value for money to taxpayers”.

“What ‘red flag’ mechanisms are in place to alert Penny Wong to potential NBN Co activities that may not present best value outcomes and what veto authority does the shareholder minister have over decisions that are at odds with the interests of taxpayers?” Robb asked. “Penny Wong has tried to distance herself from the NBN which could prove to be the nation’s biggest white elephant, when she should be all over it. She has an obligation to become more actively involved and sharpen her clear oversight role,” he said.

So far, there has been no indication that NBN Co has blown its budget or had financial impropriety within its operations. The organisation reports regularly to the Federal Government, is subject to Freedom of Information laws, and also regularly answers questions from Labor, Coalition, Greens and independent parliamentarians through a series of parliamentary committees devoted to overseeing the project. The Federal Auditor-General also has the power to investigate NBN Co if it deems it necessary.

Wong, according to AAP, responded to Robb’s statement by stating that Robb’s assertion that there was no information, accountability or transparency was “simply unfounded”, with the Finance Minister to reply to Robb’s letter “in due course”.

Image credit: Office of Andrew Robb


  1. Sweet – I didn’t realise there was no such thing as opportunity cost for this project, but now that it has been explained that it is simply not in the Federal budget, it all makes sense!

    • I totally agree with your point about opportunity cost, and he didn’t say wrong things.

      He did however beggar the question. He explained opportunity cost, not how the coalition would change their budget as a result of cancelling the NBN.

      The question is how would the NBN change the budget, not how is the NBN going to divert funds from Private (and government) Investment. (ultimately what he was saying).

  2. Given Tony Abbott and Joe Hockey seem to be completely inept at their jobs while they’ve been ministers in the howard government, I find it unlikely that Andrew Robb would be any better than Penny Wong at overseeing the NBN.

    That said, Penny Wong doesnt inspire any confidence in me that she has any idea of what she’s doing. Why isnt she all over the NBN. She should be with Conroy leading the charge, not sitting around pretending it will go away. In most of the media conferences shes been with where the PM and Conroy have been present, she almost looks like she doesnt want to hear it or doesnt want to be there.

    Some internal disputes about NBN maybe?

  3. Andrew Robb is 100% correct. glad to see the Liberals holding the Government to account on these very important issues surrounding the NBN.

    Just because Labor claims the NBN is a “profit-making, commercial” project and therefore books it as an “investment” does not mean it is. the whole political motive behind moving it off the books in the first place was to avoid accounting for it on the Budget and performing a mandatory cost benefit analysis. but, i guess it is convenient to forget these things.

    to be sure, given this policy assumption, the accounting technique is correct and is also a completely trivial observation. but the Liberals are allowed to challenge and dispute this policy assumption because this assumption is neither proven fact, nor reality. to the contrary, Malcolm Turnbull has published oodles of commentary which completely undermine NBNco’s business case.

    but, i guess in the warped world of NBN supporters, the Opposition is not allowed to challenge the opinion of the sitting Administration, and all of the forecasts and projections coming out of NBNco HQ are on par with Nostradamus.

  4. Actually, there’s a much simpler way of pointing out the error in your logic:

    The NBN is accounted for as an investment because Labor has adopted a policy assumption that it will be a profitable, commercial project, i.e. the chain of logic is:

    Policy assumption —–determines—-> Method of accounting

    You’ve completely turned it on its head and argued that because Labor has booked the NBN as an investment, the Liberals cannot adopt an alternative policy view that the NBN is a loss-making, uncommercial project.

    You’ve inverted the chain of logic thus:

    Method of accounting —-determines—> NBN’s commerciality

    So, you’ve somehow managed to transform a policy assumption about an unknown future into incontrovertible proof of NBN’s commerciality.

    see how silly that is?

    • It’s not a policy assumption.

      If a Government forms a GBE, and the GBE estimates that it will produce a 7% RoI, and the Government funds it with equity injections, then the accounting method has already been determined.

      The opinions about the profitability of the GBE of any member of parliament or the general public are irrelevant. it’s an investment. Yes, investments can fail, but if the risk was zero then it wouldn’t be an investment.

      The problem here is that many Coalition politicians are incorrectly treating it as if it is automatically a 100% loss since some risk exists. Even if it suffers major losses overall (say, 10%) that will still work out cheaper than the Coalition’s alternative policy (going by independent estimates – Turnbull doesn’t have the faintest idea what his policy will cost) which does not provide any direct revenue at all.

      • It’s not a policy assumption. If a Government forms a GBE, and the GBE estimates that it will produce a 7% RoI,

        it is a policy assumption. after having been hired to run a GBE that is explicitly setup to be an independent, “commercial” entity, do you seriously think Mike Quigley would submit a business plan saying that the NBN will not make a positive return after all?

        Mike Quigley was hired by the Shareholder Ministers, Senators Conroy and Wong to execute Labor’s political project. NBNco is basically a back office of DBCDE. everything they say is necessarily a complete regurgitation of the Labor Government’s policy assumptions.

        the accounting method has already been determined

        the accounting policy does not mean squat, because the accounting policy is simply a book-keeping consequence of the Labor policy assumption that the NBN project is financially viable.

        this is why auditors can challenge the accounting methods employed by company accountants if they believe certain capitalised costs are not likely to be recovered and refuse to sign off on the accounts.

        in the same way, the Liberals are entitled to challenge Labor’s policy assumptions about the commerciality of the NBN.

        The opinions about the profitability of the GBE of any member of parliament or the general public are irrelevant.

        the Liberals are not allowed to form a different opinion about the commerciality of a Labor political project? what are Opposition parties for? what’s the point of representative democracy?

        it’s an investment.

        that is the ALP’s policy position on the commerciality of 93% FTTP. that is not the Liberal Party’s policy stance. and yes, they are allowed to have a differing policy stance.

        the problem here is that many Coalition politicians are incorrectly treating it as if it is automatically a 100% loss since some risk exists.

        when did any Liberal politician ever specifically say the NBN assets will have to be written down by 100%?

        • Michael you need to look at the facts. I have already posted a direct response to your initial comment that addresses this.

          Your right the coalition can form whatever opinions and policies they feel like. However it is fact they have a 100% customer base and its fact that they are charging for those customers. Therefore you can question the commerciality of it all you like but it still remains a fact that it will be bring in a commercial return. Therefore it has a mandatory accounting method as proved by external sources. End of story.

          • However it is fact they have a 100% customer base and its fact that they are charging for those customers. Therefore you can question the commerciality of it all you like but it still remains a fact that it will be bring in a commercial return.


            revenue = # of users x ARPU

            the Telstra/Optus deal only guarantees the first part of that equation.

            secondly, as Malcolm pointed out, NBNco has a substantially higher capital base than Telstra’s CAN ($40bln+ peak funding requirement vs $17bln ACCC valuation). so, the required ARPU (second part of the equation) will have to be substantially higher than what Telstra is currently earning.

            but, we know NBNco is currently artificially pricing wholesale fibre access at similar to copper ADSL pricing.

          • Michael, instead of simply regurgitating Liberal party policy and Malcolm’s rhetoric parrot-fashion, why don’t you explain (as they won’t) in your own words why you believe the Liberal party’s broadband policy is superior.

            You could explain the cost, cost of further upgrades in the future, the savings in comparison to the current NBN, how to deal with Telstra (since you suggest compensation won’t be necessary)and how to run FTTN without giving Telstra an unfair advantage, ROI for taxpayers, speed, rural coverage, cost to consumers, the whole kit and caboodle?

          • “Michael, instead of simply regurgitating Liberal party policy and Malcolm’s rhetoric parrot-fashion, why don’t you explain (as they won’t) in your own words why you believe the Liberal party’s broadband policy is superior.

            You could explain the cost, cost of further upgrades in the future, the savings in comparison to the current NBN, how to deal with Telstra (since you suggest compensation won’t be necessary)and how to run FTTN without giving Telstra an unfair advantage, ROI for taxpayers, speed, rural coverage, cost to consumers, the whole kit and caboodle?”

            Because Michael (alias Alain) can’t as there isn’t a Coalition broadband policy to speak of. If the Liberals win the next election they will most likely defer any major broadband advances to the distant future, citing world economic doom and gloom. And having to get a massive Government surplus first as the be all/must get/have priority over everything else.

            This opposition (to the cows come home or death which ever comes first) is I’m afraid nothing more than simple basic political ideology. Nothing more, nothing less. It’s got nothing to do with what’s best for Australia in the medium to long term, it’s all about killing off the NBN as soon as possible (2013) and that’s why the Liberal’s don’t/will not ever have a solid future proof broadband policy in any great detail because political ideology prevents the Liberals from doing this. It’s not in their DNA to build anything of substance period.

            Libs don’t build, they hoard revenue for the rainy days that never come and concentrate on bribes/handouts to selected pensioner groups/targeted tax cuts at election times to get re-elected.

          • “the Telstra/Optus deal only guarantees the first part of that equation.”

            No. All of the other ISPs’ customers will also be transferred eventually onto the NBN as the copper network is shut down.

            “NBNco has a substantially higher capital base than Telstra’s CAN ($40bln+ peak funding requirement vs $17bln ACCC valuation). so, the required ARPU (second part of the equation) will have to be substantially higher than what Telstra is currently earning.”

            No. Telstra’s high ARPUs are not comparable, as it is not revenue-limited as NBN Co is. Telstra’s whole aim is to make as much money for its shareholders as possible. NBN Co’s is not — it can weather much lower ARPUs.

            Your comment is invalid.

          • No. All of the other ISPs’ customers will also be transferred eventually onto the NBN as the copper network is shut down.

            yes, both Telstra and Optus will completely exit the fixed-line infrastructure wholesale business.

            NBNco needs to earn a certain level of revenue (in terms of dollars). that revenue is determined by:

            1. the number of subscribers

            2. how much each subscriber spends

            the customer migration deal with both Telstra and Optus guarantees that NBNco will have 100% of the fixed-line wholesale market. however, this, by itself, is insufficient to guarantee that NBNco will achieve the level of revenue that it requires because how much each customer spends is a completely separate variable.

            in order words, revenue generation is not just how many customers you have, it’s also how many dollars your customers are spending.

            No. Telstra’s high ARPUs are not comparable, as it is not revenue-limited as NBN Co is. Telstra’s whole aim is to make as much money for its shareholders as possible. NBN Co’s is not — it can weather much lower ARPUs.

            the returns on Telstra’s CAN and NBNco’s FAN are both regulated by the ACCC.

            there are two fundamental inputs in determining access pricing:

            1. capital base

            we know that the ACCC has valued Telstra’s CAN at $17bln. by comparison, NBNco has estimated the direct capital cost of the NBN at $36bln. so, even disregarding the Telstra payments, the NBNco’s capital base is easily more than twice Telstra’s.

            2. the regulated return (WACC)

            see pg. 11 of Report on WACC component of NBN Co’s Special Access Undertaking


            in its SAU submission, NBNco is proposing a WACC risk premium of 350bps above the current risk-free of 516bps, i.e. a WACC of 8.66%

            by comparison, the regulated WACC risk premium for Telstra has averaged 343bps since 2000. for the period 2011-14, after factoring in the risk-free of 516bps, the current regulated WACC for Telstra is 8.54%

            although the regulated returns for NBNco and Telstra are similar, NBNco will require a proportionately higher level of revenue than Telstra because its capital base is more than twice as big.

            this idea that Telstra is gouging as much money as possible from its customers is completely absurd if you recognise the fact that the returns on Telstra’s CAN have been strictly regulated by the ACCC for over a decade.

          • Hey everyone, this is the text of an email I just sent ‘Michael’:


            hey mate,

            I’m sorry, but you’re not engaging usefully with the argument about NBN pricing on Delimiter.

            Your comments follow a standard pattern of behaviour established by other commenters in the past. When challenged, you raise ever-more complex arguments in massive lengthy posts which become impossible for others to refute. This just antagonises everyone. You never cede ground — you just shift the argument sideways.

            I’m allocating you a one week ban.

            When you come back, I recommend you make your arguments easier to understand. I certainly can’t understand them, and I follow this shit every day.


            Editor + Publisher, Delimiter

          • Thanks Renai…
            I do appreciate a Liberal response and a good debate, but he was just completely obfuscating the facts with buzz words…:)
            I hope he comes back next week with a more communicative framework for his posts, because he is obviously quite intelligent and can be elequent in his debate (though informative, not so much so far…)

          • I read this thread because of interest. As others have said he makes some intelligent point. Loose an argument, so ban. Very lame, first time I ever see in a blog.

          • What you call good points Grace, I refer to as politically motivated, bloody-mindedness.

            Nobody can claim that every single thing Turnbull and the Coalition says and does is always right, while also claiming the complete opposite of the government and then expected to be taken seriously.

          • No offence mate, really …

            But I’ll shoot you down here in one statement:

            I LIVE in an area where price gouging is the ONLY thing that is done by Telstra. Many in this country do. I respect that you have an opinion, and while you do provide some excellent… albeit complex counter arguements, what I dont respect is that you fail to understand why the project was started – The benefit of all. If you are going to tell me that Telstra doesnt price gouge – you are wrong. My local exchange has no competitors equipment. They are consistently blocked from access. Telstra is consistently forcing people everyday in my area and many others like it to OVERPAY. We are forced to have landlines we dont need, we are forced to choose between a telstra deal and a telstra wholesale one. Anyone not on the exchange may be in the Velocity estate, where they are consistently forced to sign a deal with minimum charges of over 60.00

            I understand that you have an opinion and thats great – but I challenge anyone (not necessarily michael) to prove Telstra doesnt do this and why it should continue. I would love to see this explained to me. Why should we pay more for a service that isnt competitive, just to meet the bottom line?

            What I ask of you michael (after you return from your ban?) is that you refute my arguement. I’ll certainly wait for your reply – as I’m sure many here who read Renai’s pieces will. I have made my point before to renai and some of the others previously, that 93% equal coverage is needed because it stops problems like this.

            And for Renai, thank you – If I may make a suggestion for a piece soon – Cover the problems with people not being able to achieve ADSL at all, or even get a phone line. Cover these and compare the NBN Co solution to what the Coalitions empty plan promises – Im sure you will have the country’s attention.

  5. We pay for the NBN with our taxes and then we pay for it again through charges. Which one is it, a white elephant or a cash cow?

    • Incorrect. That is what the Coalition wants you to believe.

      You pay for it once with your monthly fees.

      • —-You pay for it once with your monthly fees.

        Exactly. The NBN is borrowing money and this money will be paid back through monthly service fees that users pay. Not a single tax dollar is being put aside for the NBN, this is left to be spent on Roads and whatever else both sides of governments waste money on.

      • “That is what the Coalition wants you to believe”

        Exactly correct…it is called Fear, Uncertainty, and Doubt, and it was a policy that comes from IBM marketing in the 60s…it is also the policy that Tony Abbott used quite effectively in the last election.

    • We’ve been through how the NBN is funded many times and general revenue taxation isn’t the answer.

      But for those who simply can’t accept that, let me ask.

      When Tony builds his roads with your tax money, will you also then complain that you pay twice (or more than twice) because you then need to buy a car, as well as pay rego and insurance?

  6. Michael and Troq you are both missing a very basic premises. The NBN is making money it charges customers and it has a guaranteed customer base because of the Optus/Telstra Deals. Therefore it is going to be bringing in money and it is an investment no matter which way you look at it.

    The question is how much money it brings in. Even if it brings in billions (yes billions) less than predicted it could still turn some profit for the government. This is because it is projected to make a 7% ROI if it makes a .000001% ROI it has still made money.

    Therefore it has a specific type of accounting standard that is needing to be used because it is what it is (an investment) regardless of how you want to view it, facts are facts.

    Furthermore Governments like Australia have good credit ratings and therefore virtual unlimitied funding available for projects that are investments therefore it doesn’t draw money away from investment in roads etc (which are an expense) because the funding is coming out of a different bucket of money.

  7. Same old bias reporting by Delimiter on the NBN. Why not just admit you want the NBN at any price? Heck you are happy to have it without a simple cost benefit analysis.

    • Hardly bias. Bias would be going against the facts. Until the coalition can make a real argument that the NBN isn’t an investment you have to go which what the current facts. Turnball wrote two pages on why it would be more expensive than ADSL2. Really it isn’t like Renai isn’t open to ideas and change. He has changed his mind on many things that I have noted. He was very keen on the opposition NBN scheme, until 8 months went by and they couldn’t flesh it out or answer even simple questions about it.
      Many people who support they NBN MAY like the opposition plan, but they aren’t stupid enough to not smell a rat. The opposition plan is starting to sound like the Harbour Bridge Malcom wanted to flog us in his article.

    • Lone gunmen, it is actually Malcolm Turnbull who wants NO NBN at any price.

      He claims he is prepared to directly spend more to build power-hungry fibre-to-copper cabinets on every suburban block than the $12 billion cost of laying optical fibre to premises.

      Once built, his FTTN cabinets would need to deliver using Telstra copper from pavement to home, and Telstra has already specified $15-20 billion as its price to allow this. He also expects to “upgrade” them to FTTP within a decade! That is, in the timeframe the NBN is already building the future proof fibre (and yes, even Malclm T has agreed the fibre is future proof, as well as supplying ubiquitous W-Fi coverage).

      This makes his position laughable, because both the coalition and Labor have as policy to deliver wireless and satellite services outside their respective FTTN/FTTP footprint areas.

      So the point of difference is fibre now vs copper now and fibre later, and of course the funding model. Lined up like this, Malcolm Turnbull is on a hiding to nothing, but he will exit politics for lucrative private roles after 2013 anyway, unless of course he finds himself as leader and eligible for a bigger pension, in which case God help us.

      The coalition should adopt the NBN on technical and economic grounds, at a stroke depriving Labor of its sole popular policy. But unless it does so swifty and totally, the electorate will doubt its intention to ever deliver it.

    • If you only want a “simple” cost-benefit analysis, then rejoice, for here it is (cf. millions of articles and blog posts over the past two years).

      The cost – $43 billion, borrowed for the construction and repaid from wholesale revenue – has been exhaustively debated for years. The benefits both direct and indirect, quantifiable and intangible, have been aired ad nauseum, and even a conservative back-of-envelope calculation shows economic benefits of more than its $4 billion annual construction cost over the ten years. Faster upstream bandwidth for cheap and reliable offsite backup and two-way video use are only the beginning.

      Its benefits would justify its’ construction even if on-budget, but this infrastructure is self-funding as well, after which it becomes a revenue source in perpetuity and actually pays for other budget expenditure.

    • Maybe the Howard government should have done a costs benefits analysis before they sold telstra and failed to separate wholesale from retail and then we would be arguing about this crap in the first place.

  8. I love it how this writer words his argument, the government dont count it as an expense well then you cant save any money from scrapping it….
    I’m not anti-NBN, I live in Tarneit and cant wait for the NBN, but I think you need to read past the spin.. if NBN costs 40 billion, and the Coalition policy costs less, well then the Coalition has saved money, regardless of whatever spin you put on it, its as simple and easy as that

    • There is a great deal of difference between spending money on and expense and spending on an asset. For example buying a house is buying an asset, you total worth remains the same. In fact over time the house can appreciate or earn you income. Pay the same amount on an expense and the money is gone, your net worth has decline.
      You not understanding the difference doesn’t make it “its as simple and easy as that”. It just makes you ignorant of being wrong.

    • Funny, it is normally a bad thing to borrow for government expenditure, but this is because much of it is with ROI.

      It is quite different when you have a constuction project where the risk of it not generating massive revenues is nil.

      Every household and business consumes telecommunications, usually comprising a telephone line and a broadband service, plus Pay TV for many where this is available.

      Because the NBN will deliver currently bought services for less, and far more for slightly more outlay, it will be universally adopted, and will scale up as data demand continues its meteoric rise.

      In my view, wholeale revenues will repay the construction cost without the lunacy of selling off the fibre, but even its detractors agree that it will have revenues in the range forecast, thereby making the funding model free of risk that taxpayers migt ever need to bail it out.

  9. Considering no loan institution wanted to touch this project with a barge pole, this article is pure garbage

    • “Considering no loan institution wanted to touch this project with a barge pole, this article is pure garbage”
      Hey, that’s some interesting information. I hadn’t seen that. Have you got a link to sources? What loan institutions did they approach? Do they have a copy of the responses?

      • Bill Gates felt sorry for Australian broadband and donated the NBN money?
        Or Conroy found 43 billion slipped down the side of his couch one morning.

  10. Would it be better if governments moved to double entry accounting? This would probably avoid highly theoretical debates such as this. Funds spent on assets which have a life beyond a particular accounting period are then treated properly wether they generate visible revenue (e.g., NBN) or not (e.g., roads).

    Double entry accounting principles have been developed over centuries and are good enough for the corporate world.

  11. I think we can safely assume the Coalition knows full well that they can’t just divert the equity injection cash flow from NBN Co to roads or anything else. They won’t admit this, of course, but that’s beside the point – they only have to convince people that a dollar spent on the NBN should be a dollar spent on a pothole somewhere instead. No matter that it’s fiscal gobbledigook.

    The true question, which the Coalition has no attempt to really answer, is what an incoming Coalition government would do in late 2013 with the NBN as it exists up to that point in time.

    What the NBN will look like in late 2013:
    – over 1 million premises passed by fibre, with substantial planning or work underway for around 400,000 other premises
    – around 400,000-500,000 end user customers, and rising
    – advanced construction of fixed wireless to cover 4% of the total 7% non-fibred premises
    – advanced work towards construction and preparation for launch of satellites to cover the final 3% (signing of contracts announced today)
    – construction rate ramped up to approximately 4000 premises per day – rapidly approaching the 6000 premises per day at peak construction, to be maintained over the next six years

    What the Coalition has promised to do:
    – “stop” the NBN rollout (no specifics)
    – divert NBN funding to other “worthy” projects like roads
    – conduct a full Productivity Commission review, including a cost-benefit analysis (timeframe: ?)
    – keep fibre rollout for greenfields developments (ie no return to copper for new developments)
    – plan for a mix of technologies (ie “whatever’s there”) including FTTN, FTTP, HFC, wireless, ADSL and satellite
    – do something in the field of structural separation (“CAN Co”?) – no specifics about how the negotiations with Telstra are expected to proceed (except for “pretty much Telstra’s way”)

    What the Coalition will really do (if elected in late 2013):
    – retain satellite and fixed wireless construction contracts
    – enter into negotiations with Telstra and Optus to sell off NBN Co as a going concern, with subsidies (whether in the form of tax breaks, no-compete clauses or whatever)
    – tender for FTTN in cities & major centres where no rollout or preparation by NBN Co has taken place
    – scale back plans for regional areas – emphasis on wireless broadband extending beyond its existing footprint

    I believe that any potential buyer (with the exception of Telstra) would probably want the rollout to continue and remain an ongoing rolling operation – this is a significantly reduced risk for a new operator if the rollout is already progressing at an efficient rate. On the other hand, Telstra would want to continue rolling out fibre (in profitable areas) using its own resources.

    The end result will be characterised by the following:
    – multiple tiers of access cost across different technologies, platforms and providers (in direct opposition to the equal wholesale access under NBN Co)
    – multiple tiers of technology, with fibre in densely populated urban areas, some HFC and FTTN and upgraded ADSL2+ in outer suburban areas and major regional centres, and fixed wireless and spotty ADSL2+ in smaller regional centres
    – monopoly ownership and access for the “premium” product of fibre, with limited open access provisions for HFC and FTTN (via Telstra’s cut of the copper portion) and true open access limited to ADSL only

    In other words, a frigging mess that largely resembles the shambles we have now, but with some nipping and tucking around the edges. Mostly though, it will entrench private ownership and access for fibre-level technologies, with a reduction in effective competition for most customers. Yes: there will be competition over the crappy end of the scale, but fibre will command a premium (see: Telstra’s South Brisbane exchange).

    • “What the Coalition will really do (if elected in late 2013)”

      I think you’re missing one point that is crucial here…even a pause in the NBN would have grave consequences for the Coalition. As stated in the article, because it’s an investment it is not part of the budget. However, if that investment is stopped (or even suspended for a day), then according to accounting practices in Australia it stops being an investment and must immediately go on the books as an expense for the budget.
      The upshot is that any slowing or stoppage of the NBN by the Coalition would in effect cause their budget to take on all of the retroactive expense from the first day of the NBN. This would be a HUGE black hole for the Coalation, and rather than building more roads, they would have far fewer roads they could build (and forget about that tax break for the next election).

      • They won’t pause it.

        They will keep funding it as long as a “review” takes, and sell it off as soon as the review ends. (perhaps telling NBNCo to do cheaper things, or ask for less money during the review period).

        It won’t ever hit the budget until they make a profit/loss from the sale.

        • “It won’t ever hit the budget until they make a profit/loss from the sale.”

          I highly doubt that…remember that both the Senate and the ACCC must approve any sale…
          Can you think of any company (or group of companies) that those two bodies would approve the sale to?
          Also, as soon as they begin the process in the lower house (as laid out at,
          the accounting change kicks in…
          Lastly, if they attempt to float the company (like Telstra), the process kicks in then as well. That’s most likely the reason for the long wait (7 years) on attaining outside funding via Labors plan…they need to wait until the NBN is on a more profitable basis to avoid the expense in the budget.

      • That may be so but it won’t stop the Coalition from doing it and then blaming Labor for all the money that was wasted and say “See, we were right all along”.

        • Quite true, unfortunately. Why pay the price of honesty, when dishonesty comes much cheaper?

          The question is (1) just how bloody-minded the Coalition are willing to be, and (2) how quickly they will follow the orders of their corporate paymasters. I predict Telstra bargaining with a very strong hand to take over select parts of the NBN for an updated version of the “regulatory holiday” that was proposed and soundly rejected 5 years ago. And bye-bye open access.

        • “That may be so but it won’t stop the Coalition from doing it and then blaming Labor for all the money that was wasted and say “See, we were right all along”.”

          But at the end of the day, all political parties NEED that money to fulfill any of their promises. To say that because Labor built the NBN they are rendered 100% ineffectual won’t cut it at the following election…and it would be far too easy for Labor to prove that the only problem was that the Coalition was just too stupid to govern.

  12. It’s nice for some more accurate media coverage unfortunetly the web is not the best place for this discussion it is the TV, Newspaper and Radio which this needs to be in as this is where the average australian is going to be looking for news.

    The government has done one thing wrong and that is extremely poor advertising & media announcements for the nbn.

    The Newspapers are biast against just about everything labour does as they are for the people unlike liberal who do not care about the average australia they prefer business. believeing if you look after business the business will look after the employees thus the average australian which is the wrong approach.

    If a business goes unchecked they will by all means necessary rip off anyone and everyone they can as they are only interested in there profits.

    The fibre network is costing a lot yes.

    however think of it this way most roads need fixing or replacing every 5-10 years at significant expense with no reduction in traffic only more.

    The nbn is here to help aleviate only if companies use it to there advantage and have staff work at home or cheaper remote offices.

    The biggest thing is Fibre is going to last us around 100 Years or more matching or beating Copper technology for life span. Thus it is a better investment.
    Yes we could implement FTTN however there would be problems with copper still, backhaul to the fttn nodes\cabinetes, unpleasentness of them being there, more power requirements and also more expensive to maintain.

    The copper network is like our power network – Degrading rotting away because of lack of investment and upgrades in most areas.

    • The NBN will also allow small and medium businesses to more easily be located where their customers and employees are located as opposed to where the communications infrastructures is available.

  13. If roads is the example of alternative uses for NBN funds, we should be asking if more expenditure on roads is a good idea just because Tony does not like public transport.

    As to promoting the concept of the NBN before it is at your gate, this is a big waste of money. Many of the people receiving the message will have passed on by the time the fibre arrives. Those who don’t know what it is about already will not listen to the message above the other static that is around.

    The advertising industry (like Rupert Murdoch) have us all conned that they have more power than they really do. Is it not accepted wisdom that advertising reinforces opinions, it rarely changes them?

  14. Those who complain about the cost of the NBN should inform themselves by reading how each $1,500 air conditioner adds $7,000 to the $46 billion cost of upgrading the electricity over the next FIVE years.

    We don’t hear from Tony and Abbott about this. People used to live in houses which didn’t need air conditioning and were heated by gas and now they are pulling them down and replacing them with those that do and are not paying the full cost of providing services to them (and the rest of us).

      • I think you have totally missed Richard’s point. He is merely pointing out that whilst the “cost” of the NBN (one that will generate a return) is all over the MSM, the cost of increased electricity capacity is being lost. The NBN isn’t a bottomless pit, unlike many other areas of government expenditure.

        • Exactly. At the same time though an electricity company is not expected to be run at a loss and over time those upgrade costs will be negated (through access rates and usage charges).

          My concern with the NBN Vs the Liberal Lack of Information FTTN is that even if the opposition gets elected in 2013, once all the back and forth is out of the way with (possibly) broken NBN contracts, new contracts, negotiations with Telstra, ACCC and other parties, Malcolm’s network won’t be completed until about 2025.

          The issue then is we’ll have a brand new FTTN network that is already obsolete. $20 billion at a minimum down the drain without a positive outcome and another massive outlay for a fibre network which by the time it is completed in 2040 might also be obsolete.

      • That’s the longest bow I’ve ever seen drawn. In fact, being unpowered fibre, the NBN might draw less power.

        • What he is saying has nothing to do with NBN power usage. He is just saying that the money that needs to be spent over the next 5 years just to cover the increased use of airconditioning is around the same money spent on the NBN. It does put things into perspective.

  15. We can summarise really, thus:

    Malcolm’s policy doesn’t involve investment. It involves tax expenditure. It cannot, ever, return a profit to the government. Far from being cheaper, over time, it’s a sunk cost. Bye bye.

    It will — following patterns of every single other Coalition scheme to help bolster the industry — primarily end up funding Telstra to build out to area’s that it can then ‘rent’ to ISPs at inflated Zone based pricing.

    Further, the Liberal policy is stop gap, under-funded and primarily used to ‘show’ that an alternative scheme exists at a fraction of the price. Which is a half-truth at best.

    When challenged, Turnbull cannot and will not explain future growth plans, will not explain how long a FTTN deployment can be maintained for, cannot explain who will build it (presumably Telstra will, bringing the associated regulatory quagmire with it) or the costs of on-building to FTTH.

    Nor can he explain just how much tax will become a sunk cost.

    Frankly, that should disturb everyone, Labor, Liberal or other supporter alike.

    • +1 Brendan

      Most here simply want the best overall outcome, regardless of which party delivers it. We aren’t pro Labor or anti Liberal and you just summed up why, perfectly.

    • on an economic basis the sunk cost for no return is one of the great concerning factors about the Coalition policy – particularly when they are hollering to all who will listen ‘but Labor are so BAD at economic management!’. Projection, much?

    • I like to look at it this we MIGHT pay for NBN if it fail and even if it fail we still get to recover the captial value so cost might be 16ish billion, and we get national fibre. With the CLP plan we WILL pay for the solution cost might be 16is billion and we get a hodge podge of technologies. CLP is currently pointing at labour given money to private enterprises as abject failures(insulation and school halls, which both actually achieved their outcomes neither of which was to install insulation or build school halls) yet some how the CLP given billions to telcos is going to work forget the fact they will be managed by the exact same public service that has “failed” labor and “failed” the CLP before them. Seems to be setting up their own enterprise and giving a funding limit and commercial goals leaving the public service out as much as possible might actually get the best result.

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