Monday, August 16, 2010

Australia - Shortfall of AUD 5.6 billion in funding for national broadband plan

[itwire] A Parliamentary Library publication has revealed a $5.6b shortfall between funds earmarked by the Labor Government for the first five years of NBN rollout (to June 2014) and the $22.4b expenditure recommendations of the implementation study.

The funding shortfall is revealed in a Parliamentary Library "Background Note" issued today 16 August. Its stated aim is "to inform the reader as to the identified Government funding allocation for the NBN relative to estimated or expected costs of the project, based on all publicly available information at the time of writing."

It also raises the issue of a lack of any cost benefit analysis, saying: "The importance of costs within the economic context is that they are directly linked to any consideration of net benefit," but immediately qualifies this by observing that a government simply has to find the money. "In the political context, the expected Government funding costs of the NBN must eventually be incorporated into the budget process."

The Government had not formally responded to the implementation study when Parliament was dissolved but it did discuss NBN funding in and appendix ('Statement of Risks") its Pre-election Economic and Fiscal Outlook (PEFO), released in July.

This document states: "The Government made provision in the 2010-11 Budget of $18.3b over the forward estimates (including $18.1b in equity) for the roll-out of the NBN based on the recommendations of the NBN Implementation Study."

However it then canvasses the possibility of additional expenditure under the eventual agreement with Telstra, saying: "The exact timing and quantum of Government funding for the NBN, including payments by the Government and NBN Co in relation to the agreement with Telstra on the rollout of the NBN, will be determined in the Government's response to the Implementation Study and costs could arise as part of settlement of the Definitive Agreements between NBN Co and Telstra."

$5.6b NBN funding shortfall revealed
see also Identified National Broadband Network (NBN) funding sources and allocations
and Pre-election Economic and Fiscal Outlook (PEFO)

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