ALP rejects $5bn NBN funding gap claim

The Australian Labor Party (ALP) has described a Department of Parliamentary Services document outlining a $5.558 billion funding gap for the National Broadband Network (NBN) as "inaccurate" and "misleading".

In a background note released yesterday titled "Identified National Broadband Network funding sources and allocation" (PDF), department economist Brian Dalzell said that according to the Federal Government budget papers to the end of July this year "the total expected funding costs of the NBN, while uncertain, do not match the identified funding allocation in the budget measures".

Dalzell's report states that funding from the Building Australia Fund, the contingency reserve account, issue of Commonwealth Government securities and the proposed future issue of NBN-specific Aussie Infrastructure Bonds adds up to a total allocation of $16.842 billion to the end of 2013/14. Dalzell notes this is approximately $5.558 billion short of the recommended $22.4 billion of funding for the first five years of the NBN project outlined in the implementation study released in May this year.

The ALP told ZDNet Australia in a statement that the government had made full provisions of funding for the NBN in the budget based on the recommendations of the implementation study and said that Dalzell's findings contained "serious errors" in including the 2009/10 financial year in its calculations.

"It says that the government has only provisioned for $16.8 billion when the government has provisioned for $18.3 billion based on the recommendations of the NBN Implementation Study," the ALP said. "And it assumes that the first year referred to in the implementation study should be 2009/10 when only very preliminary work was taken in that year and the implementation study was released towards the end of that year."

"That is why the government has provisioned for its investment in the budget for four years ($18.3 billion) starting 2010/11 instead of five years ($22.4 billion) starting 2009/10."

The report noted that the government was expecting to make equity injections of $18.1 billion by 2013/14, but states that this amount is still $1.258 billion lower than the funding recommended for the first five years of the program in the implementation study.

Dalzell noted that the government will have to find and allocate an extra $26.158 billion to meet the $43 billion originally outlined as the expected cost of the NBN, whether from its funds or external sources. Both the government and NBN Co have indicated that the costs of the NBN were expected to run much lower than the original estimates of $43 billion.

To date, the government has only provided $312 million of the allocated funding to NBN Co.

Opposition Leader Tony Abbott yesterday described the NBN as a "white elephant". The Coalition plans to scrap the NBN and sell off its completed parts in favour of a $7 billion mix of technologies including fibre, wireless and optimisation of existing copper networks should it win office on 21 August.