Budget: NBN cancellation would cost nearly $2 billion

Budget: NBN cancellation would cost nearly $2 billion

Photo: Kainet/Flickr (Creative Commons)

BUDGET 2012: The budget has revealed the cost of cancelling the $36 billion National Broadband Network would see a $1.8 billion black hole –  something that the Coalition needs to accommodate in its budgets if it does go through and scrap the entire project.

This stems from an agreement between NBN Co and the Australian Government that sees the government “in the event of a termination of the NBN roll out, to provide sufficient funds to NBN Co to meet its direct costs arising from the termination.”

“As of 31 March 2012, NBN Co’s termination liabilities were estimated at $1.8 billion,” according to budget papers.

As well, the Government could owe Telstra up to $500 million if the NBN is cancelled. This comes after an $11 billion agreement with the telco that gave it access to its infrastructure – including its ducts, pipes and exchanges – and a deal to migrate its customers over to the NBN. Currently, the budget says that this is at $209 million.

The Coalition have said that they would renegotiate the deal to scale it back to a fibre-to-the-node network, as opposed to the fibre-to-the-home it is being built as. The difference is that the current system will put a fibre connection to your home, as opposed to the fibre-to-the-node where it will simply create a fibre network with the exchanges, then the standard copper wire from your nearest exchange to your home.

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