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.”
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