Early signs of NBN cost overruns: Oakeshott

Questions of whether to sell off the NBN or keep it as a public asset also need to be resolved, Joint Committee on the National Broadband Network chair and independent MP, Robert Oakeshott

The Joint Committee on the National Broadband Network has warned that NBN Co may be showing early signs of cost-blowouts and delays, with timeframe slippage and higher than expected operating expenditure recorded during the last six months.

Read more National Broadband Network-related news.

In the committee’s latest report (PDF), chair and independent MP, Robert Oakeshott, said that compared to the NBN Co Corporate Plan, a lower than expected capital expenditure and higher than expected operating expenditure result had been observed.

“This could be an early warning that it is costing more to do less, when compared to the expected results in the NBN Co Corporate Plan, even though the committee has at this stage accepted the argument from NBN Co that other reasons are behind this,” the report reads.

“The committee will watch this capex/opex combination closely, as value for money to taxpayers is the critical key performance indicator in turning this good concept into an even better reality for all.“

Oakeshott said that compared to the NBN Co Corporate Plan, timeframe slippage has also occurred due to the number of unresolved issues between the Australian Competition and Consumer Commission (ACCC) and various stakeholders.

“The competition and consumer 'rules of the game' remain unresolved at the time of writing,” the report reads. “Certainty for markets, investors and consumers demands greater attention from Government to resolve outstanding regulatory matters, so there are no further schedule slippages.”

Despite the need to ensure that regulatory issues do not cause delays, the coming year holds great potential, such that 2012 could become the year of the NBN, Oakeshott said.

“The move from test sites to broader rollout will engage more people, and will see more retail engagement, and more innovative strategies and products introduced into Australia as a consequence,” he said.

“Regional and rural Australia will now, finally, have the opportunity through the next steps of interim satellite, wireless and FTTP to be better engaged in the Australian economy and services."

Oakeshott said in the coming six months the government will need to work to clarify the options – privatising or keeping it as a public asset — need to be resolved.

“If the current model is a public sector 'build-own-operate' project, then questions still remain as to where, when and how a 'transfer' to the private sector is going to occur, if it is going to occur at all,” the report reads.

“Of course, if the majority parliamentary view is not to sell it, and indeed to keep it as a public asset returning an annual dividend to the taxpayer, then this change in the final policy position also needs to be made explicit for legislative reasons, and a debate about this deserves to occur soon.”

In September, the Joint Commitee said in its Review of the Rollout of the NBN First Report that NBN Co and the Federal Government must do more to keep Australians and the telecommunications industry more informed on the progress of the National Broadband Network (NBN) and its consequence, the Joint Committee on the NBN has concluded.

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Tags NBNnbn conational broadband networkRob Oakeshott

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