Article Categories: Portfolio Media Releases, The Economy, Funding
The Gillard Government’s NBN Co has unwittingly exposed a $900 million black hole in Labor’s budget through the 36-page Business Case Summary released by the Prime Minister.
Shadow Minister for Finance, Andrew Robb, said the long-term bond rate used by NBN Co in its business case is 5.4 per cent.
“This reflects the rate used by the Coalition in costing its election interest savings measure related to not borrowing $18 billion over the forward estimates for the NBN.
“In costing the Coalition’s policy following the election, Treasury used a bond rate of just 4.9 per cent and consequently we were fitted up with a supposed $900 million black hole.
“This was a flawed assumption, as demonstrated by the NBN Co business case. Therefore, it is Labor that has a $900 million hole in its budget,” Mr Robb said.
The Coalition used the average of the last six months of the 10 year bond rate – 5.5 per cent – on the advice of various market experts in the infrastructure financial sector.
“We got fitted up with a supposed black hole on the very basis of Treasury’s flawed assumption of 4.9 per cent. Not only does this confirm that the long-term bond rate we applied was a superior assumption than that used by Treasury to undermine our costing, but it also means Penny Wong has a serious problem.
“Instead of myth-making about the Coalition, Penny Wong needs to come out today and explain how she is going to fill the $900 million black hole Labor has due to the application of an obviously flawed assumption, in relation to the appropriate long-term bond rate,” Mr Robb said.
“This embarrassment for the government poses the question of how many other assumptions were made in the budget by Treasury to minimise expenses and maximise revenue in order to deliver a surplus in 2012-13.
“As we have said on many occasions, Labor’s budget is a house of cards,” Mr Robb said.
Media Contact: Cameron Hill on 0408 239 521
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