Report: Where to find the NBN's missing billions

The Federal Parliamentary Library has released a 'background note' in attempt to shed some light on how a re-elected ALP Government would fund its commitments to the National Broadband Network (NBN).

The note, prepared by Brian Dalzell - a researcher in the Library's economics section - found that funding that had been allocated to the build of the NBN in budget measures did not match the total anticipated cost for building the network.

This, Dalzell noted, was primarily because "full funding allocation for the NBN has been and will continue to be an ongoing process."

The background note - written as an objective statement of fact - noted that so far, the ALP Government has allocated $2.942 billion from the Building Australia Fund until 2013/14 and $300 million from the sale of Commonwealth Government Securities (CGS) to institutional investors (aka Aussie Infrastructure Bonds) for the same period.

But in July, the author of the report discovered a far larger slice of funding for the NBN: a $13.6 billion sum the Gillard Government set aside for the three years to 2013/14 in its 'contingency reserve'.

The contingency reserve was a "temporary allowance" used by the Government to "reflect anticipated events that [could] not be assigned to individual programs in the preparation of the Australian Government's budget estimates."

Subsequently, this funding pool was not typically offered the same level of media scrutiny as funding released as part of the budget papers.

Gaps

The report noted that including the contingency reserve, the total amount allocated to the NBN until 2013/14 was $16.842 billion - still $5 billion shy of the $22.4 billion the authors of the NBN Implementation Study recommended the Government spend in the first five years of the network build.

The numbers also raised questions as to how the ALP Government would come up with enough funding in the years following 2013/14.

"If the realised build cost for the entire NBN were $43 billion, the Government must allocate/determine an additional $26.158 billion of funding from available sources," the report said.

Elsewhere, the report noted the Government had promised to provide $18.1 billion in equity to the NBN in the five years to 2013/14. To date, equity payments to NBN Co (as revealed by NBN Co chief Mike Quigley) totalled only $312 million, the author found.

In accounting terms, the report directly correlated any Government equity injections in NBN Co with an increase in Government debt.

"An increase in debt (liabilities) or a decrease in cash (financial assets) and a subsequent equity injection in NBN Co acts to increase net debt on the Government balance sheet while net worth and net financial worth remain unchanged," the report said.

Timing

The timing of the release of the report was sure to raise eyebrows. The question of the cost of networking Australia has taken centre stage in the Federal Election campaign.

Dalzell conceded in the study that the "expected costs and funding allocations have been a contentious political issue."

The Parliamentary Library was responsible for providing "high quality information, analysis and advice" to Senators and members of the House of Representatives that was both "timely" and "impartial".

The Economics Section of the Parliamentary Library was unable to disclose which Senators or other members of parliament had requested the analysis released today.

But iTnews understood that the Library's charter did not prevent its researchers from tackling contentious issues, as long as the issue was considered of broad importance to multiple political parties.

All papers were subject to a quality control process, according to the Library, which included final approval from the assistant secretary of the library's research branch.