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Author's Opinion

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Tuesday, 17 August 2010 17:14

ALP still has not said where NBN funds will come from

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The ALP has been quick to dismiss the Parliamentary Library's attempt to identify sources of NBN funding as being 'full of serious errors," but it has failed to shed any light on sources of NBN funding, as the Library sought to do.

My article yesterday on the supposed $5.6b NBN funding shortfall, identified by a Parliamentary Library background note produced a swift rebuttal from the ALP,  which was picked up by numerous media outlets.

The ALP claimed that the Library's note was "misleading" and contained "some serious errors." The ALP said: "There is no gap in funding for NBN. We have made full and proper provision for investment in NBN as recommended by the NBN Implementation Study."

However it seems to me that the ALP's response did nothing to refute the claims made by Brian Dalzell, author of the note, in fulfilling its core objective, namely: "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."

Dalzell then went on to list "The potential sources from which the Government can obtain funding to then allocate to the NBN" and to identify "the funding allocation to the NBN [as] derived from summation of all identified allocations."

These he listed, saying: "the total identified NBN funding allocation as at 30 June 2010, for the period 2008-09 through 2013-14, is $16.84b, comprising actual and estimated future funding allocations from the [Building Australia Fund] ($2.942b), contingency reserve allocations ($13.6b), and the Government's planned debt issuance via [Commonwealth Guaranteed Securities] (approximately $300m thus far)."

He then pointed out that this fell short of the $18.3b budget provision claimed in the Pre-election Economic and Fiscal Outlook (PEFO), released in July, which said: "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."

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He further went on to claim that this $18.3b did not match the implementation study recommendations which called for $22.4b in years one to five. His note said years one to five meant 2009-10 to 2013-14, but I could not correlate this with the corresponding information in the Implementation Study, which talked simply of years one to five.

So, here I would agree with the ALP, which claimed: "It does not make sense to treat anything other than 2010-11 as year one. Very little activity occurred in 2009-10 as indicated by the Library's own figure that by the end of 2009-10 only about $300m had been invested in NBN Co."

However the ALP's response does nothing to refute or correct the Library's identification of the allocated sources of funding for the NBN. It simply references a $4.7b allocation in the 2010 Budget Papers, and repeats the $18.3b figure from the PEFO, saying: "We have made full and proper provision for investment in NBN as recommended by the NBN Implementation Study. This has been confirmed by the Secretaries of Treasury and Finance in the Independently prepared PEFO."

But neither the Budget papers nor the PEFO identify where all of that money is coming from. That is what Dalzell sought to do, but he was able to find only $16.842b.

If the ALP really wants to refute his findings it should spell out at least the source of the $1.458b, being the difference between this $16.842b and the $18.1b NBN equity figure contained in the PEFO.

I have asked Stephen Conroy's office for clarification and/or further information but have received no response so far.

 

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