20-January-2011
Portfolio Media Releases
Penny Wong’s absurd denials that the billions to be borrowed for the NBN will not affect the budget bottom line and could not be redirected to flood recovery efforts demonstrate that she is disingenuous, out of her depth or both.
For the benefit of the new Finance Minister here are the facts about the NBN.
Question: Where will Penny Wong get the at least $27.5 billion that the NBN Co requires in government equity?
Answer: She will have to borrow it.
Question: Is the money interest free?
Answer: Of course it’s not. Treasury conservatively assumed an interest rate of 4.9 per cent.
Question: Do the interest repayments hit the Budget bottom line?
Answer: They certainly do and could amount up to $2.4 billion alone by 2013-14.
Question: Do these borrowings add to the Commonwealth’s debt burden?
Answer: Yes, they do.
Question: Could the money she will borrow for the NBN be redirected to assist the flood reconstruction effort?
Answer: Of course it could. And if it was via public/private partnerships it would remain off budget.
Question: Could the government reschedule the NBN construction timetable?
Answer: Yes. In the same way it has brought forward plans to build NBN satellites by five years in response to political pressure.
Question: Will the NBN generate income over time to taxpayers?
Answer: Nobody knows, because the government refuses to subject it to a cost-benefit analysis.
Media Contact: Cameron Hill on 0408 239 521.