The Federal Government has been dumping a ton of money into the National Broadband Network (NBN) but this investment has brought down the country’s net worth by $8.8 billion, according to the Parliamentary Budget Office (PBO).
The PBO has just released a report about how the NBN has impacted the country’s budget. So far, the Australian Government promised $29.5 billion in equity funding to NBNCo, the company overseeing the NBN rollout. So far the Government has provided $20 billion and, more recently, a $19.5 billion loan to finish the project.
“The provision of additional funding through a loan at an interest rate above the government’s cost of borrowing provides a partial offset to this annual cost,” the PBO said in its report.
The estimated total cost of the NBN is around $49 billion by 2020.
“The Government’s investment in NBNCo has resulted in a deterioration of around $8.8 billion in the Commonwealth’s net worth as at 30 June 2016,” according to PBO report. This was partially due to “the net impact of the accumulated losses and asset revaluations on NBN Co’s fair value”.
So how will this impact the Government’s budget in the future? There is a lot of uncertainty around that since the PBO can’t predict the final cost of the NBN:
“Until then the Commonwealth will continue to bear an annual cost associated with its financing of NBN Co. If the sale price of NBN Co is less than the Commonwealth’s cumulative cost of financing NBN Co, then the NBN would have an enduring cost to the budget.”
Yesterday, the Government revealed that it is looking to charge some telcos a levy for every fixed-line connection on the NBN. This cost is expected to be passed on to consumers.