The government seems unsure if the NBN can raise necessary funds from private sector

THE NBN has received its final allocation of public funding, and the government seems unsure about where the rest will come from.

The NBN will need to raise around $20 billion from the private sector to complete the rollout.

PUBLIC funds allocated for the country’s broadband infrastructure are fast running out.

Contained in the 2016/17 Budget released Tuesday night was the final allocation of the $29.5 billion of taxpayer money set aside by the Coalition to build the National Broadband Network.

Prior to the 2013 Federal Election, then opposition communications spokesman Malcolm Turnbull promised a cheaper version to that offered by Labor at the time by predominantly relying on the technologically inferior fibre to the node technology (FTTN) and Telstra’s established copper network.

Last night’s Budget contained $8.8 billion in funding for the project which represents the final chunk of that $29.5 billion of tax payer money.

As per the Coalition’s original plan, any additional funding will need to come from investors in the private sector. However the amount needed to be raised could prove to be more difficult than initially thought.

Cost blowouts on a project of this magnitude are pretty much inevitable and the company has seen higher than expected costs arise from issues with Telstra’s copper network and the use of hybrid fiber-coaxial cables owned by Telstra and Optus.

NBN Co. says their multi technology mix (or “technologically agnostic approach” as it likes to say) allows for greater freedom when carrying out the rollout, and thus greater control over the company’s budget sheets.

But even still, when dealing with rural Australia the company often does not know exactly what to expect until it turns up to inspect an area prior to instillation, providing further potential for cost blowout.

“We have not driven every street, we have not examined every power access and we haven’t looked at the economics behind (each site) for every detail approved that exists across the country,” NBN chief executive Bill Morrow told a group of reporters during an NBN hosted field trip in March.

According to the Budget, a further sum of between $16.5 billion and $26.5 billion is needed to complete the rollout.

The government says NBN Co. is currently in preparation to begin the debt raising process but it’s tough to know exactly how the market will respond at this point. In any case, the Coalition has a back up plan.

“In the event that NBN is initially unable to raise the necessary debt on acceptable terms, interim funding support may be required,” the Budget states.

“Were it required, additional government financial support for NBN would have implications for the fiscal position, for example by increasing assets and liabilities on the balance sheet and, depending on the nature of support, could have positive or negative impacts on the underlying cash balance.”

Given the already contentious nature of the current project, if the government does have to dip back into the public coffers for further funding, such an outcome could see money diverted from other publicly funded projects. An outcome that would likely prove unpopular with voters.