Treasury warns over costings for the NBN

TREASURY has warned cabinet it needs to give "very careful consideration" to the National Broadband Network's implementation study over coming months.

Federal Communications Minister Stephen Conroy (right) and NBN chief executive Mike Quigley. Picture: Ray Strange

TREASURY has warned cabinet it needs to give "very careful consideration" to the National Broadband Network's implementation study over coming months.

The department argued that the project carried significant risks to the national balance sheet.

The advice to cabinet, originally suppressed when Treasury's incoming brief to the government was released under Freedom of Information laws in September, was revealed yesterday.

The release of the advice comes after the Department of Communications and Broadband revealed in its brief to the government that the company overseeing the rollout of the NBN disagreed with the McKinsey-KPMG implementation study over recommendations relating to the design of the high-speed broadband network and the nature of the prices and products NBN Co would offer to customers.

Treasury has identified the $43 billion NBN as carrying significant risks relating to competition and efficiency in telecommunications and related markets, which could have an impact on the public balance sheet.

It said the government's response to the NBN implementation study would set the parameters for outcomes in these areas for decades to come.

"It therefore warrants very careful consideration by cabinet in coming months," the Treasury brief said.

Meanwhile, a proposed joint venture between the federal and Tasmanian governments to roll out the network has been scrapped. The move prompted claims the $43bn project was in chaos.

Under the now defunct plan, existing optic fibre owned by the Tasmanian government energy company, Aurora Energy, was to be transferred to the joint venture company, NBN Co Tasmania, in exchange for shares in the joint venture. NBN Co has now decided to enter a deal with Aurora to pay for use of that existing optic fibre.

In other new Treasury material released yesterday after an internal review, it advised the government to examine how better to target about $2.8bn a year in Commonwealth Rent Assistance.

It urges the government to examine whether the $1.2bn National Affordable Housing Agreement should include a per-dwelling funding basis to deliver greater equality.

The Treasury briefing also includes a warning to the government that the failure to pass the planned means testing of the 30 per cent private health insurance rebate could add to the "structural pressures on the budget position in the medium term".

The key implementation issue for the health and hospitals reform program was identified as getting Western Australia to sign up to the deal "and in particular the dedication of the GST".

Treasury is also planning a cabinet submission on Julia Gillard's population strategy.

It also highlighted the importance of China and India to Australia's economy, telling the government to ensure that China was not singled out. "Advancing Australia's economic engagement with India is critical for similar reasons," the brief said.