How The Coalition Could Pay For A Complete Fibre-To-The-Premises NBN

The Coalition proposal for a fibre-to-the-node National Broadband Network (NBN) is projected to cost $30 billion — a figure that's lower than the currently active Labor version because it doesn't require a connection to every home. It's an approach that's cheaper but develops a less-comprehensive infrastructure that might require expensive upgrading later. The irony is that there's a fairly straightforward way within its existing policies that the Coalition could come up with the extra funds.

picture from Shutterstock

This thought struck me the other day when I was watching TV news and saw a clip of Tony Abbott repeating one of the central planks of current Coalition policy: that while it is committed to removing the current emissions trading scheme ("carbon tax" in the popular but inaccurate parlance), it is not going to remove the compensation which is being paid to lower-income households, largely via changes to the tax system, to compensate for higher costs arising from that scheme.

Logically, this makes no sense. If consumers are as badly off as those opposed to the ETS have argued, they should see immediate reductions in their expenditures if the scheme is repealed, and hence shouldn't need the extra compensation. As such, a government committed to improving infrastructure might look to deploy those funds in other areas. One way to do it would be to spend more on the NBN, using those funds to continue with a fibre-to-the-premises approach instead.

From a financial point of view, the key question here is obviously: would that change provide enough money to make a difference? The numbers would suggest yes.

As this year's budget papers explain, the compensation for ETS-driven price increases came from a number of sources:

From 1 July 2012, all taxpayers with income up to $80,000 received an income tax cut, with most receiving at least $300 a year, and up to 1 million people no longer needing to lodge a tax return. Overall, nine out of ten households will receive assistance through a combination of tax cuts and increased payments. Importantly, this assistance will remain in place.

How much did that assistance cost? I couldn't find a single figure, but we can get a glimpse elsewhere in the budget papers, which offer this note about the tax cuts for 2012-2013:

All taxpayers with incomes up to $80,000 received a tax cut in 2012-13, with around 60 per cent of taxpayers getting a tax cut of at least $300.

In 2010-2011 (the last year for which ATO official numbers are available), there were 12,380,320 taxpayers in Australia. If we assume 60 per cent of them received a $300 tax cut in that year, that gives us $2.2 billion which would be available if compensation wasn't being pursued. And that's very much a lowball figure — it doesn't account for people with higher levels of return, or for other forms of compensation being paid.

Even that conservative figure would give us an extra $6.5 billion to spend on the NBN in the three years to when the Coalition NBN is said to be completed (2016). That takes the potential spend almost exactly to the $37 billion budget for the current NBN. (The Coalition consistently claims the actual cost of the current NBN will be higher, but its own cost figures aren't tested either, so I'm sticking with the budgeted figures for both.)

So there you have it: an easy way to bridge the gap between one NBN plan and the other. Do I think this will happen? Not for a minute. Supporters of the scheme might well argue that the speed of delivery matters as much of the cost, and that sticking to FTTN is the right way to strike the balance between. Or they might suggest that the funds should be kept for improving education or building roads or for health funding rather than broadband.

But there's a simpler impediment anyway. Removing tax concessions is not a vote-winning exercise, and both sides of politics are far more concerned with being re-elected right now than with anything else. That's why the inconsistency is in place, and I expect it to remain. However, it's a reminder that there is always more than one way to spend money in your budget, and that some decisions save money in the short term but may cost more in the long run.


Comments

    problem is that if coalition wins, just on principle, will do fibre to the node. Otherwise, it will look like they are sticking to a Labour idea.

      What they'll presumably do is put a stop on new contracts being signed and then start an investigation into their options and finances required for each. While the investigation continues, the NBN will continue rolling out on the existing contracts.

      My hope is that after the fuss of new government dies down, they'll say there's been so much capital expenditure already invested that it's cheaper long-term to just continue. They'll blame labour a lot, make some fairly superficial changes (maybe cut back on some areas, maybe add some new rollout in marginal seats, maybe fiddle with the rollout times so they can say they're completing labours projects twice as fast as labour could, etc).

      I might be dreaming, but I hope the chance at guiding a huge national project like that to completion - when the hardest work has already been done - would tempt even Tony Abbott.

        NBN is the australia wide MyKI system. We needed MyKi (victoria's public transport ticketing system) as its better than the previous ticket base system, but those implementing/designing it screwed it up, labour got slammed for blowing billions on something that not implemented and doesn't work. Liberals came into power promising to dump the system, but it turned out that they have spent so much on it already and the rollout has already began so it was cheaper to continue, and now we have myki pretty much running (quite poorly since it was designed pretty badly). I expect the same thing to happen in NBN case since they are currently both very similar (and hopefully works well).

      I wouldn't be so sure. By the time of the following election (not this one, the next one) broadband infrastructure in australia will be woefully insufficient, given current rates of usage increase. If the libs go with their half arsed plan they'll take 100% of the blame for that (despite the fact that a lot of people wouldn't have been upgraded at that time under the Labor NBN). Labor will be able to use that to their advantage and by then it'll be a big issue (imagine bogan families not being able to stream 4 HD reality shows at the same time - the horror!).

      More likely the Libs will leave the program be, saying that changes will be too expensive, given the investments to date. They'll then be able to blame the low roll out and any small failings on Labor for years to come, even past the following election. In this way it's a gift that keeps on giving.

    The Coalition NBN is scheduled for completion in 2019, not 2016 as the article states. 2016 is just one milestone in the Coalition NBN plan (co-inciding with the end of Liberal's first term in office, should they be elected).

    For comparison, the Labor NBN's planned completion date is 2021.

    Last edited 02/07/13 3:33 pm

      The specific Coalition claim is this: "Under the Coalition's NBN all premises will have access to download speeds 25mbps to 100mbps by the end of 2016." That's not completion in terms of speed, but it is in terms of access, so it seemed a sensible basis for the comparison.

        You know, I'm totally going to quote either you or luke in a few minutes....

        Turnbull tells the Telegraph — his publication of choice this week — that the Coalition’s high-speed broadband network would deliver speeds of between 25Mbps and 50Mbps by 2016, increasing to 50Mbps and 100Mbps by the completion date in 2019.

        Aww yeah, totally quoted Luke all over your chest & face

        http://www.gizmodo.com.au/2013/04/coalition-broadband-policy-coming-today-heres-a-sneak-peek/

        Ok, it was the article a day or two before the coalition announced their full plan. So the info is a bit dated, But I'm going to read those coalition docs in full (finally) and get back to you. But I'm pretty sure the Libs have happily worded things to imply that completion is 2016, but they've only ever explicitly dated the completion as 2019.

        Last edited 04/07/13 6:24 pm

        The policy docs are here: http://www.liberal.org.au/fast-affordable-sooner-coalitions-plan-better-nbn

        I'm on the train now using my phone, so I've only read the 6-page summary document (first link on the page I linked above). Page 2 text summary, and page 3 easy-on-the-eyes table mae it official: 2019 completion

        They're sneaky buggers, right? (prerequisite for politics I suspect)

          I hope you noticed the quote I used was from the same document! If the claim is that "all" premises will have those speeds by 2016, that still strikes me as a sensible date to pick to finish that calculation.

          I hope you noticed the quote I used was from the same document! If the claim is that "all" premises will have those speeds by 2016, that still strikes me as a sensible date to pick to finish that calculation.

            I just wrote a long reply explaining why you're wrong.

            Then I realised exactly what it was you were trying to tell me.

            Then I re-read the document.

            Then I realised I'm wrong.

            Then I died a little inside

            Anyway, you're absolutely right: all premises will be connected to the NBN by 2016 with a certain minimum speed, and by 2019 that minimum speed will be upgraded. But like you, I'd consider 2016 the completion date.

            Thanks for taking the time to respond to me though, even if I am an idiot commenter :P

            Last edited 05/07/13 10:04 am

    I just hope my rollout doesn't get effected, it's slated to arrive in January, 2014.

    They can just let everyone keep their ETS compensation and those who want high speed access can use that to pay for it. Those who don't want high speed access can use their money for something else. Seems like a much more efficient deployment of resources than connecting everyone, whether they want it or not.

      It seems the opposite. Government investment now in doing it once and doing it right will be far less costly than the inevitable replacement of existing nationwide copper wire suburb by suburb, house by house. Because that replacement is exactly what is going to need to happen to even keep up with current speeds and demand now that copper has passed it's 30 year expected performance lifespan. It's degrading and far less reliable, and to ensure a next generation of digital health and business services an Australia-wide rollout with uniform minimums of fibre bandwidths will provide a futureproof base standard of internet service.

      It will accomodate more demand both from increasing customer bases and new technologies previously unviable. I'm excited to see what changes happen t the current health system over the next decade, the possibilities for Telehealth in medical assistance and monitoring for the elderly to reduce emergency service and hospital workload alone will be very interesting.

    This seems like bizarre logic.. "Hey, you're going to be saving some money over here.. So you can just use that money!"

    I'm sure glad you have nothing to do with our countries finances lol..

    Please Tony give us fiber to the node. It will be an upgrade for most of Australia. Later on fiber can join the premises to the node but for now get the backbone in place.

    When the populace votes labor in again, labor can start the pink batts to the premises I mean fiber to the premises again and it won't be finished any later than it would under the current glacial rollout.

    Why doesn't anyone realise that most (not all, but most) of the FTTP that NBN has is Telstra's existing velocity network and a few smaller networks. And where NBN maps show areas having NBN it actually means they have NBN or work will optimistically commence in 12 months. We need real time maps of actual connected premises to show how pathetic their project delivery skills are. Never going to happen!

Join the discussion!

Trending Stories Right Now