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2016-05-18

budget 2016

Budget 2016: government NBN funding winds down...

Direct government equity injections into the NBN will come to an end with the $8.8 billion allocation in this year’s federal budget.  In line with the projections in the nbn 2016 Corporate Plan, new sources of funding will have to be found by mid- 2017. 

It has always been the policy of both major political parties that the NBN be funded by a mixture of debt and equity, with the Coalition’s NBN policy capping government equity at $29.5 billion – slightly higher than the $27.5 billion figure under Labor. 

The budget papers confirm that nbn may need to raise nearly as much again – between $16.6 billion and $26.5 billion – to complete the build. 

The question facing government will be whether such funds will be forthcoming, given the uncertain finances of the project.

 It is widely expected that some form of government guarantee will have to underpin the debt raising if it is to be successful. Meanwhile the budget flags the possible need to provide further interim funding for the project should the debt raising exercise not proceed smoothly. 

2017 is shaping up as a year when the financial challenges facing the NBN project – as opposed to the technological and logistic ones – will take centre stage. Those challenges will present a major –and no doubt unwelcome – test of whichever party takes office after the coming election.

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