NBN Co will no longer attempt to recover at least $31 billion that tax payers invested into building the national broadband network.
In a new draft pricing proposal lodged yesterday with the ACCC — a revised version of the NBN’s Special Access Undertaking — NBN explained that rather than attempt to recover the full $44 billion, it would aim to recoup just $12.5 billion.
This massive change to its Initial Cost Recovery Amount (ICRA) isn’t a write-down that will tank the value of the company, and therefore impact the Federal Budget, NBN Co. stresses.
Rather, it’s a ploy to allow “lower wholesale prices in future” without the need to bake the debt recovery into consumer pricing.
The previous SAU was based on the presumption the NBN would have to recover costs and run at a profit, and caused outrage as it outlines steep pricing cuts deemed necessary to run at a profit by 2040.
“[ICRA] is a recognised regulatory concept that reflects NBN’s un-recovered costs to date,” an NBN spokesman said.
“Limiting drawdown of the ICRA is not a write-down, and NBN Co has no plans for a write-down or impairment.”
These changes were prompted after the new government introduced a major new broadband policy in August, under which they will run the NBN as a public, government-owned utility, rather than a moneymaking scheme.
“At the core of the Albanese government’s priorities are the long-term interests of Australian consumers. This means affordable prices and a quality, resilient network,” Communications Minister Michelle Rowland said.
Rowland said NBN’s Special Access Undertaking proposal was initially based on a view to privatisation, which is no longer relevant.
“The government has stated that it will retain NBN Co in public ownership for the foreseeable future, expand full-fibre access to more homes and businesses and to ensure the NBN delivers for consumers and facilitates productivity,” Rowland said.
Rowland also flagged in August that any variation to the SAU should “facilitate a focus on a forward-looking regulatory model for the business.”
The $51 billion scheme is currently $35 billion in the red, compounding at 6 per cent a year.
Dropping $31 billion from those losses will ease the burden of operating at a profit.
