New warnings of NBN cost blow-out

Stuart Corner
Monday, 28 November 2011 08:56

IT Policy - Government Tech Policy

The organisation engaged by the government to review NBN Co's corporate plan reportedly told the government that NBN Co capex would total $50.8b by 2028, as opposed to NBN Co's estimate of $35.9b by 2020.

The claim is made in the Australian newspaper on the basis of it having obtained, under Freedom of Information, the full report - albeit heavily redacted - to the government on the commercial viability of the project.

Following the release by NBN Co of its corporate plan in December 2010 the Government engaged investment bankers Greenhill Caliburn (now headed by former ACCC chairman Graeme Samuel) to review the plan and provide a commercial assessment, identifying and analysing the plan's key assumptions and potential risks.

The government released an executive summary of the Greenhill Caliburn report in February 2011 with communications minister Stephen Conroy saying: "The Greenhill Caliburn report confirms NBN Co's key assumptions underlying revenue and cost projections which provide the Government with a reasonable basis on which to make commercial decisions about the NBN."

The government however refused to release the full report on the grounds that "the complete document deals with sensitive, commercial-in-confidence material."

According to the Australian the report "reveals that $50.6bn in capex would have been spent on the network by 2028." This, it says "is dramatically higher than the $35.9bn in capital costs to build the project by December 2020 that is usually cited by Labor. The heavily redacted document also shows the extent of the criticism of the NBN's pricing model, which includes a fee based on the amount of data carried through the network."

CONTINUED