Federal Budget 2016 - No shifts in NBN approach

In the 2014-15 budget, the Abbott government capped investment in the National Broadband Network (NBN) by limiting its aggregate investment in the NBN to $29.5 billion, falling short of the original forecast of $44.1 billion.

In that year, the budget forecasts included outlays of $7.84 billion in the last fiscal year and $8.33 billion in the next financial year. This will force nbn co. to seek to alternative methods of financing through private equity or debt financing to meet the future operational and capital expenditure required to complete the network’s roll-out.

The company’s corporate plan outlines a $12 billion debt financing (downgraded to $9 billion in its 2016 plan) initiative, along with its forecast revenue, to finance its $57 billion roll-out cost.

The company’s revenue has consistently fallen behind initial projections; the 2016 plan outlines a cumulative revenue of only A$3 billion over the 2015-18 period. This has only been exacerbated by further delays in the roll-out. Not connecting more customers leads to a failure to generate a steady stream of revenue.

The 2016-17 budget reconfirms the government’s capped investment, with $8.83 billion as the last tranche of funding to flow to nbn co. during 2016-17. This is a further affirmation of the Turnbull government’s repeated claims that the NBN roll-out is going according to plan and will be cheaper and faster to deploy, not withstanding the latest leaks highlighting roll-out delays.

Repeated reviews of the NBN agenda by the two major parties have resulted in delays and uncertainty in funding commitments to get the project completed.

Connectivity is increasingly becoming a key enabler for the new data-driven and networked economy. Yet the budget is completely silent on the changes required to keep the NBN delivering its original promise and timely completion. Labor has also been very quiet about its commitment to broadband.

Australia needs a re-commitment to broadband and internet connectivity. We require bipartisan support to ensure the NBN delivers the promise without any delays and the taxpayer investment returns a dividend to the nation through a potential market capitalisation of nbn co. post-2020.

This piece was first published May 3 2016 in The Conversation as part of the article Federal budget 2016: political experts react.