At its results presentation today, the National Broadband Network Company/nbn/whatever they're calling it today revealed an increase in how much it's going to cost to get the national fast-fibre network built.
The company announced that instead of $41 billion, the network will now cost between $46 billion and $56 billion to build. NBN Co is taking into account changes in the technology and potential delays in deployment over the next few years.
Despite the cost blowout, the Government's equity cap will remain in place. The equity cap was set forth in the May Federal Budget, and means that NBN Co will have to seek private funding to fund part of the roll-out after the government decided to stem the cash flow from the funding tap.
The Federal Budget confirmed that the government will cap its investment in the NBN at $29.5 billion, with the remainder required to complete the network set to be funded by the private sector. Think banks and other funding sources.
That means that the NBN Co will be going cap-in-hand to get more cash
Start searching behind those couch cushions, folks.
Unsurprisingly, Communications Minister Malcolm Turnbull is framing the project's cost increase not as a "blowout", but as an accurate reflection of the project's cost following a dodgy Labor rollout plan.
Speaking at a press conference today, Turnbull said (emphasis added):
Under the Labor Party, neither the [NBN] company nor the Government knew how much [the build] would cost or how long it would take. That's why it was extraordinarily crazy to give this project to a startup owned by the Government. The worst type of structure to do this would be a brand new company put together on the spot owned by Government. If you want to mitigate the risks [of a big infrastructure build], it would be done by a big telco that had been around for a long time.
The fact is we can't turn the clock back and these gentlemen and their colleagues have done a fantastic job on turning [NBN Co] around. The confidence I have as the Minister...is that I'm confident the numbers I have now are right. We know what [the NBN] actually costs, we know the risk factors. This is the biggest, most complex and most financially risky project. There are so many variables that can make a billion dollar difference.
I'm confident the management has a very good handle on the numbers and on the way forward.
So rather than a blowout in cost, Turnbull is saying that the new cost of the National Broadband Network comes from having books that weren't hurriedly put together by stakeholders on the other side of the Parliament.
As to why the numbers were so wrong in 2013, [NBN Co] was a startup business done at a great rush. That's one of the reasons why it was unwise to do it in that way. I'm not pointing fingers of blame but there was a lot of inaccurate financial information as at 2013. it took [NBN's new CFO] quite a while to get a good handle on it.