Broadband Internet Australia – NBN Losses Could Hit $20 Billion

Posted on Mon 02/20/2017 by

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Bolt New 01By Andrew Bolt ~

Another Australian government disaster, and one which Prime Minister Malcolm Turnbull did more than just inherit.

Alan Kohler:

NBN-Co-LimitedIt turns out the NBN is a dud and will cost taxpayers a fortune in writedowns if, or rather when, it is sold. According to the NBN corporate plan … in 2020 revenue will be $5 billion and it will be still be bleeding $2.5bn a year cash.

Total equity from the government will be $29.5bn. Return on equity will never be more than 3 per cent. For a social enterprise funded by cheap sovereign debt that’s not OK, but a private buyer would need three or four times that return, which means the equity has to be brought down to a third of that level at most.

That means the NBN is only worth about $10bn, and at some point in the next few years the commonwealth will have to book a writedown of $20bn.

What’s more, the sooner the Turnbull government does this, the better to blame Labor; the more they wait, the more the ­Coalition owns the debacle.

Reader Peter of Bellevue Hill:

AB, it might be a bit late for the Libs to pass the buck back to Labor: recall that it was Turnbull who convinced Abbott to adopt an NBN policy. Turnbull now has full ownership of this scandalous misuse of taxpayer’s dollars.

As Kohler himself noted in April 2013:

“Turnbull’s great achievement [sic] over the past two and a half years has been to save the National Broadband Network…

“After Tony Abbott defeated Turnbull for the leadership by one vote in December 2009, destroying the NBN became one of the new Opposition Leader’s singsong [?] slogans… I don’t know how he did it, but Malcolm Turnbull has turned the Liberals under Tony Abbott into an NBN party.”

It is true that amid his inspired calls (eg, no to pricing carbon, yes to turning back irregular maritime arrivals), Abbott did make some dud calls during his first stint as Liberal leader. But did any cost taxpayers more than letting Turnbull talk him in to continuing to tip tens of billions into the gargantuan money pit that is the NBN?

It’s worth nothing, too, that Turnbull’s appalling call on the new submarine program might well turn out to be worse than his call on ‘saving’ the NBN.

As Christopher Joye noted in April 2016:

“With another bloated budget looming next week that could further undermine Australia’s AAA credit rating, it is opportune to reflect on the integrity of the Turnbull government’s bold decision to punt $50 billion on building 12 French submarine “concepts” that have yet to be designed, produced or proven in the water…

“(T)he Australian Strategic Policy Institute’s Mark Thomson highlights that the assumed ‘$50 billion spend comes from the Defence White Paper and only accounts for the design and construction costs – not many other very expensive variables including ongoing maintenance, armament, crewing and the costly combat system’.

“A conservative reckoning is that the subs’ total lifetime costs could be 50 per cent to 100 per cent of the upfront investment, making this the biggest public works program in Australian history. A veritable underwater NBN…

“(T)his could end up being the mother of all white elephants”

Between the NBN and the French subs, has a single PM been responsible for two greater ‘colossal destructions of taxpayer’s money’?

Andrew Bolt writes for the Herald Sun, Daily Telegraph, and The Advertiser and runs Australia’s most-read political blog. On week nights he hosts The Bolt Report on Sky News at 7pm and his Macquarie Radio show at 8pm with Steve Price.

Read more excellent articles from Andrew Bolt’s Blog . http://blogs.news.com.au/heraldsun/andrewbolt/

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