Anthony Albanese’s $2.4bn fibre boost to NBN

Anthony Albanese will pump $2.4bn into NBN Co over four years, as major employers warn the government to rein in budget blowouts and stop leaning on the ‘inefficient’ tax system.

Prime Minister Anthony Albanese says ‘this is the NBN Australians voted for and it is the NBN my government is ­delivering’. Picture: Getty Images

Anthony Albanese will pump $2.4bn into NBN Co over four years to support his election promise to deliver full-fibre access for 1.5 million premises, as the ­nation’s biggest employers warn the government to rein in budget blowouts and stop leaning on the “inefficient” tax system.

The equity investment in next Tuesday’s budget bolsters the government-owned enterprise, established by Kevin Rudd in 2009, amid rising competition from internet providers offering 4G and 5G fixed wireless services.

The Prime Minister, who on Wednesday announced a 20 per cent equity stake in the $3.8bn Marinus Link electricity connector between Tasmania and Victoria, said: “This is the NBN Australians voted for and it is the NBN my government is ­delivering”.

Labor’s costings blueprint, released before the May 21 election, did not detail any investment over the forward estimates to boost fibre and fast-track the NBN but included a caveat: “financing mechanism to be developed in consultation with NBN Co”.

Treasurer Jim Chalmers. Picture: Gary Ramage

A Labor fact sheet released after Mr Albanese announced the NBN policy in November last year did not say how it would pay for the expansion but that funds would come from a “combination of commonwealth loans, free cash flows and equity if determined ­appropriate”.

When the Rudd government established NBN Co, it originally planned for it to connect fibre to 93 per cent of premises by 2021 at a projected cost of $43bn.

Before the 2013 election, then opposition leader Tony Abbott promised to deliver the program for $29.5bn by using more copper cables in the network. After several blowouts, project costs were last year estimated at $57bn.

NBN Co, which banked $5.1bn in revenue and slashed net losses to $1.5bn in the last financial year, recently warned about “alternative infrastructure competition including wireless substitution (5G) and competitive mass-­market offerings for business and residential customers”.

A Frontier Economics report released in July, prepared for NBN Co, flagged that competitive pressures were significant. Telstra last year reported it had about 1.6 million 5G devices connected to its network, up from 201,000 the previous year.

“We (have) highlighted that the threat of 4G/5G fixed wireless services has moved from the theoretical to the actual, and that three of NBN Co’s largest fixed-line customers are capable of ­supplying 4G/5G fixed wireless services and would appear to have strong incentives to do so given the higher contribution margins earned on retail mobile compared to retail fixed services,” the report said.

“NBN Co also competes with alternative fixed networks. Our first report highlighted TPG’s ­superfast broadband services, ­offered at rates competitive with NBN-based retail plans whilst delivering comparable speeds.”

As Jim Chalmers confronts blowouts in the National Disability Insurance Scheme, health, defence and aged care budgets as well as higher unemployment and interest rates next year, leading business groups on Wednesday urged the Treasurer to focus on disciplined spending.

Business Council of Australia chief executive Jennifer Westacott, a key figure at Mr Albanese’s jobs summit last month, writing in The Australian, said: “We cannot endlessly lean on bracket creep and booming export commodity prices to do the hard work of spending restraint and discipline. Focusing the budget strategy over the next five to 10 years on the three priorities we’ve outlined – growing the economy, fiscal discipline and expenditure reform – remains the most effective way of shoring up funding for services.

“This is about controlling purposeful spending, not indiscriminate cuts.”

In its pre-budget submission, the BCA cautioned against bringing forward the $5.4bn childcare subsidy changes or offering short-term cost-of-living measures that could push up inflation and lead to higher interest rates by inflaming “tensions between fiscal and monetary policy”.

The Albanese government’s NBN investment will upgrade services to more than 1.1 million premises by 2025, with a focus on outer-suburban and regional areas. Accenture research commissioned by NBN Co says the economic impact of the additional fibre-to-premises connections could “generate a GDP uplift of up to $20bn by 2030”.

Mr Albanese and Communications Minister Michelle Rowland said the upgrade would “deliver a faster and more reliable NBN to more families, communities and businesses, and allow more Australians to take advantage of an increasingly digital global economy”.

“The construction and installation phase of the expanded fibre roll out will support an additional $2.6bn in economic activity through to 2026,” they said.

Mr Albanese – who on Thursday will visit Albany in Western Australia where 10,000 homeowners will gain access to full-fibre connection – said: “I want to bring Australians together and we’re doing that by better connecting neighbourhoods and communities.”

NBN Co chief executive Stephen Rue said fibre was “inherently more capable of delivering faster upload and download speeds”, “generally more reliable” than copper connections and reduced maintenance and operating costs.

Business leaders on Wednesday rejected public calls to scrap or cap stage three tax cuts for middle-to-high income earners, impose a windfall tax on resources companies and introduce ad hoc tax hikes that would shatter investor confidence.

Ms Westacott said at a time when businesses need to “power on all cylinders”, Australia’s ­ability to compete for investment, ­innovation and talent is “heavily weighed down by an inefficient tax system delivering revenue that is volatile and difficult to ­predict”.

“We are also burdened by a fiscal gap that needs to close to cap public debt and control interest costs. We need to release the handbrakes on growth through renewed micro-economic reform, and to prosper all Australians need a more competitive tax system that drives innovation, hiring and higher wages,” she wrote.