NBN assumptions independently tested

Department of Finance and Deregulation braces for draft report into NBN assumptions

The Department of Finance and Deregulation is expected to receive today draft results from an independent review into NBN Co’s business plan.

The report, carried out by consulting firm Greenhill Caliburn, will test “key assumptions” used in the development of NBN Co’s business plan, including capital and operational expenditure; and constraints in both technologies and the telecommunications market which might affect the National Broadband Network (NBN) rollout.

Finance Minister, Senator Penny Wong, said the report was part of a “diligent and responsible approach to implementing the NBN”.

“We are ensuring that the government has access to the necessary technical expertise," she told The Australian.

Shadow communications minister, Malcolm Turnbull, questioned the use of external consultants to consider the business plan.

"I’m really quite intrigued why the Department of Finance, which we assume is full of skilled economists and financially trained people, has to hire someone to read a business plan for them," Turnbull told media this week. "This is a report that has been written for the Government and I thought we had a big department there in Finance, and indeed in Treasury, that were more than capable of reading this material and understanding it for themselves.

"We’ve got a report that the Prime Minister hasn’t read, that the Deputy Prime Minister and Treasurer hasn’t read, and the Department of Finance doesn’t have the courage to read by itself. And yet this is a document that the Government won’t publish to the public in respect to a $43 billion project they say has to be started and legislated for immediately."

The 30-year business plan is slated for release in December - after Parliament has risen for 2010.

The Greens and independent senator, Nick Xenophon, this week turned down offers of a confidential briefing on the plan from NBN Co chief executive, Mike Quigley, over a seven-year non-disclosure agreement.

Family First senator, Steve Fielding, was one of few to accept the briefing under an amended two-week confidentiality clause.

Critics and analysts have long called for an examination of the confidential assumptions which were also used in the 500-page NBN Implementation Study from McKinsey & Company and KPMG.

In a Senate selection committee hearing held in June, economic consultants Dr Henry Ergas and Dr Mark Harrison labelled some of the implementation study’s conclusions highly optimistic. They proposed public access to the financial assumptions contained in the study could yield a cost-benefit analysis in just three days.

The emergence of the report coincides with an announcement this week from Infrastructure Minister, Anthony Albanese, that the government would implement a parliamentary inquiry into the social and economic benefits of the NBN.

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