Labor has requested the auditor-general scrutinise NBN’s corporate plan in the wake of an S&P analysis of the National Broadband Network that argued a write-down of the network “appears inevitable”.
The S&P RatingsDirect article said that NBN’s forecast of a 73 to 75 per cent take-up rate will be “hard to achieve without a step-change to its wholesale pricing model”.
“Any shortfall in NBN Co.'s revenue target raises the prospect of a writedown and additional government funding to support the company, potentially in the form of debt relief or direct subsidies,” the article stated.
“S&P’s assessment highlights the potential and significant risk to taxpayers as a consequence of a potential write-down, an outcome that regrettably looks increasingly likely,” said letter to Auditor-General Gran Hehir from shadow communications minister Michelle Rowland and shadow finance minister Jim Chalmers.
The Labor MPs requested that the Australian National Audit Office examine the internal NBN processes for reviewing and updating assumptions that impact the long-term economics of the organisation’s corporate plan, and whether the key financial assumptions underpinning the long-term assumptions in the latest NBN corporate plan “reflect the best information available, including the internal market insights, risk assessments and analysis available to NBNCo and informed market analysts.”
The pair said the audit should look at NBN’s projected revenue growth forecasts out to 2040, NBN’s assumptions about take-up rates out to 2040 in light of wireless competition, operating cost assumptions, as well as how key assumptions that affect the company’s long-term financial forecasts have changed since NBN’s 2016 corporate plan.
Rowland said that the “multi-technology mix” approach of the government “has sold Australia short”. The MTM approach “costs more to maintain, generates less revenue and is more exposed to wireless competition,” she said.
“The Liberals are exposing the budget and taxpayers to significant risk through a potential write-down of the NBN, an outcome that many in the industry consider increasingly likely,” Chalmers said.
Finance minister Senator Mathias Cormann has argued there is basis for writing down the government’s investment in the NBN.
“The proposition that somehow the government should be making an arbitrary, political decision to write down the value of NBN or any other investment in a government business enterprise is false,” Cormann said earlier this week in response to the S&P analysis.