The costs of building Australia’s largest infrastructure project, the national broadband network, could rise by as much as $15bn according to a new corporate plan released on Monday.
The communications minister, Malcolm Turnbull, acknowledged the forecast costs associated with the project had risen as he released the new corporate plan of the NBN Co – the company overseeing the rollout.
But he contended this was not the result of any “blowout”.
“The truth is that at the time of the strategic review the company did not accurately know what its true costs were, and inadequate financial information naturally impacted on its ability to make reliable forecasts,” Turnbull said in a blog post about the new corporate plan.
When a previous strategic review had estimated a peak funding requirement of $41bn for the NBN, he said, “it was explicitly recognised by both the company and the government that more detailed work would be required to develop a reliable corporate plan”.
But Labor flatly rejected Turnbull’s characterisation of events.
Its communications spokesman, Jason Clare, said the Abbott government had now nearly doubled the costs of its “second-rate NBN”.
“The NBN is rolling out slower than Malcolm Turnbull promised and it is more expensive than he promised,” Clare said in a statement issued on Monday.
“Malcolm Turnbull has no one else to blame for this cost blowout. It has happened because he has made poor decisions and made the wrong assumptions.”
The cost of building the NBN has now risen from a forecast $41bn to between $46bn and $56bn, and probably close to $49bn, according to the new corporate plan.
The Abbott government has committed $29.5bn to the network’s construction. The NBNCo will consequently have to raise $26.5bn from 2017.
“If you look within this year, we will have spent $21bn of allocated equity towards NBN,” chief executive Bill Morrow said.
“By the end of next year, we will just cross over the $29.5bn. This is when we need to bring in external funding. That funding, we are looking at right now, today, will have to be addressed in 2017.”
Morrow said the company was targeting a “reasonable” cost of $49bn, with the $46bn to $56bn range including $4.6bn for contingencies.
He said the NBN had exceeded its targets in the 2014-15 financial year, with the number of active users and serviceable premises having doubled to 486,000 and 1.2m respectively.
Revenue also more than doubled to $161m, from $60m.
Turnbull said he was confident in the NBN management. “For the first time in the NBN’s history, all of us can have real confidence in the numbers being presented,” he said.
