The Coalition has saved Labor’s bacon.
Had it wanted, it could have shut down or sold NBN Co after the election, crystallising a loss on the billions spent so far.
The loss would have moved the billions on to the main part of the budget. It would have weighed down Wayne Swan’s deficit and been tagged as “Conroy’s Folly” or “Labor’s Broadband Black hole”.
While Wayne Swan has been cutting spending everywhere the eye can see to bring the budget closer to surplus, he hasn’t been cutting it on the NBN because it couldn’t be seen.
His predecessor Peter Costello takes the credit.
Annoyed at the budget fiddles of the Hawke and Keating governments that counted as regular income money made from selling parts of Qantas and the Commonwealth Bank, he started calculating a so-called “underlying budget balance” that didn’t include income from from selling financial assets. A variant of it has become the measure of surplus or deficit most widely quoted.
It also excludes from the underlying calculation the money spent acquiring financial assets.
Labor has been able to claim that that’s what it’s doing when it spends on the NBN - acquiring a financial asset.
But it is only able to keep claiming that if NBN Co looks like a financial asset. Always line-ball, its financial projections were pushed right to the edge by the Competition and Consumer Commission last week which made it agree to limit the price increases of its regular products to the consumer price index minus 1.5 per cent, all the way out to 2040. It is to keep reviewing the pricing structure to make sure the cap isn’t being evaded.
"If they invest efficiently, if demand broadly goes up as they expect, they will make their commercial rate of return," Commission chairman Rod Sims said. "If circumstances turn out otherwise, the price caps might bite, and they will not."
As should have been expected during a mining construction boom, NBN Co has been finding it hard to get the workers it needs to run new lines into almost every house in the country.
It’s been looking less and less like a financial asset as each month passes.
The Coalition’s plan removes the need. It’s thrown it a lifeline.
In today's Age
. 2012. Build the NBN if you must, but please don't destroy working assets
. 2011. NBNCo - don't say you weren't warned.
. 2007: Revealed, Labor's $30 billion broadband furphy