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Robb: NBN case has $900m hole

Robb: NBN case has $900m hole

Problem lies around the bond rate figure used in calculations

The coalition claims to have found a $900 million black hole in the government's National Broadband Network (NBN) business case.

A 36-page summary released on Wednesday projected the NBN would deliver an annual return greater than the long-term government bond rate.

Opposition finance spokesperson, Andrew Robb, said the NBN summary had unwittingly exposed a $900 million budget black hole over four years.

The latest assertion revisits a dispute the coalition had with Treasury in early September, when it released the costings of opposition policies as both sides vied to form government in a hung parliament.

Back then, Treasury found a $900 million black hole in the coalition's costings.

The coalition argued it had used a 5.5 per cent average long-term bond rate figure, over the past six months, to calculate it could save $2.4 billion over four years by cancelling the NBN.

But Mr Robb said Treasury had used the much lower bond rate of 4.9 per cent to arrive at a figure of $1.5 billion, based on interest payments on an $18 billion government debt over four years.

An article in the Australian Financial Review, to be published on Friday, reports the NBN Co used the 10-year bond rate of 5.4 per cent to calculate interest payments on debt.

This is also the annual rate of return the NBN Co summary anticipated the project would deliver to the government.

Mr Robb said that if the NBN Co figures are right, the government would be paying $900 million more than anticipated in interest on NBN debt.

He called on the Finance Minister, Penny Wong, to explain if this would affect Labor's plan to restore the budget to surplus by 2013.

"If they've made convenient assumptions, what other assumptions have they made to minimise expenses," Mr Robb said.

"If the NBN Co is correct, we have a $900 million black hole."

The coalition's assertion may be complicated by the lower overall cost of the NBN.

The summary revealed that overall capital expenditure would come in at $35.7 billion - $7 billion less than the original figure of $43 billion.

The 400-page business case, to be released in December, could possibly show a lower government debt level in the first four years of the rollout, which may dispute the coalition's black hole assertion.


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