Paying for Australia’s Future Broadband

A lot has been made in the Australian media about the cost of the NBN. The Liberal party wants to implement a cheaper solution – albeit one that is less future proofed, and may end up costing more when all is said and done (in the way a clunker is cheaper to buy initially). Actually, NBN Co isn’t actually spending taxpayer money on goods (like what happens when the country buys a fighter jet), but is instead borrowing money using Australia’s credit rating that it intends to pay back in full, with profit (typical of a business). But lets ignore the differentiation between buying goods and investing in money-generating businesses for a moment, and look at just the money being outlaid today. The NBN is projected to cost $37.4 billion1.

The government has raised $48.1 billion dollars to date from the sale of 89.1% of Telstra2. It still holds a 10.9% stake valued at $6.6 billion3. That’s $54.6 billion in total value to the government from the capital sale of Telstra.

From the money made from the sale of Telstra, the government can build one and a half NBNs. The good news is we only need one.

So let me ask: is it reasonable to invest two thirds of the money raised in selling last century’s telecommunications network to build this century’s? An investment, that is projected to pay itself back several times over, both through direct revenue and indirectly through taxation on economic growth that it will facilitate.

Plus, maybe we can sell it off in a hundred years and raise money for the next network. Why again do the Liberals want to build a FTTN clunker?

  1. source []
  2. T1 raised $14.2 billion (source), T2 $16 billion (source), T3 $15.5 billion (source) and the future fund sold a further $2.4 billion (source []
  3. it has 1.3156 billion shares (2 billion “approximately two billion shares in Telstra remaining after this sale process” less 684.4 million) remaining values at 5.08 a share as of today []

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