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Government Reforms To See Price Capping For NBN

Government Reforms To See Price Capping For NBNA policy paper released today by the government outlines the proposed reforms and the government’s response to 53 recommendations for regulatory changes proposed following the Vertigan review.

In announcing details of the plans, the government stated the move to price caps will ensure the price of the NBN cannot rise in either urban or regional areas, but will also allow NBN Co to respond to competition.

Under the reforms, NBN Co will charge developers upfront for part of its costs in new housing developments, which the government has stated “will allow private contractors and network operators to compete with NBN Co on a more level playing field”.

“Price caps will not lead to an increase in the wholesale access prices charged by NBN Co anywhere in Australia,” a joint media release issued by Communications Minister Malcolm Turnbull and Finance Minister Mathias Cormann stated.

“There will be scope for reductions in particular markets, however, where this arises from more competitive arrangements.  

“NBN Co charging for infrastructure in new developments would be consistent with charging for the provision of other infrastructure in new developments. It will foster competition, which will benefit developers and consumers by increasing choice and putting downward pressure on costs.”

The move has drawn criticism from shadow Communications Minister Jason Clare, who has described it as a $900 “NBN tax”, consisting of a new $300 NBN connection fee, while Clare stated developers will also be charged a new $600 deployment charge for homes which they can pass on to home buyers.

“This tax will hit those who can afford it the least – young families just starting out,” Clare stated via a media release. “The last thing new home buyers need is a new NBN tax.  

“This tax is also unfair. It means that if you buy an existing home you don’t have to pay anything extra for the NBN. Your taxes pay for it. But if you buy a new home, you have to pay for it twice.”

The government has additionally announced the Bureau of Communications Research will assess NBN Co’s internal cross-subsidies and recommend a model for replacing them with a “more competitively neutral contribution mechanism to fund the NBN in uncommercial areas”.

The government will also require NBN Co’s business units operating different technologies to have separate accounts and, subject to review, IT systems, which it stated will “ensure future governments have policy and financial flexibility”.