back to article Australian government never asked nbn™ to apply for private loans

When nbn™, the entity building and operating Australia's national broadband network (NBN), announced it had secured a loan for AU$19.5bn from Australia's government, it looked like the network-builder had failed to convince lenders it was a decent customer. The reality is a little different: minister for Finance Mathias …

  1. Adam 1

    > loan made on cost grounds, not due to concerns about the business model

    Colour me shocked. How convenient. The question isn't about whether someone somewhere would lend them the money at 15%pa or whatever. The question is why the market would put a large premium on those loans. Hint: the project has suffered from the Not Invented Here syndrome with stupid meddling just so there was a way to throw a waste and mismanagement angle at the political foes. Whilst the original plan was hardly perfect, it at least would have left us with a cheap to maintain cheap to upgrade natural monopoly that unlike the mistakes made when privatising Telstra did not result in a vertically integrated entity with a self interest in making their competitors' network access difficult. When something is perceived to have higher risk, the interest rate must be higher to attract capital. It's the same reason that payday loans have ridiculous interest rates and government bonds have low interest rates.

  2. rsole

    Is the NBN backed by the government?

    Surely the NBN was always likely to be able to borrow the money from the Federal Government at a lower rate than privately.

    If so, why make a fuss about it.

  3. StephenH

    The Aust Govt could have borrowed at 1.8%pa over ten years back in January, now it's 2.7%. Perhaps they should have done this sooner.

    http://www.brisbanetimes.com.au/business/the-economy/infrastructure-opportunity-knocked--canberra-wasnt-home-still-isnt-20161122-gsuqva.html

  4. bep

    Hmmm

    Well, if the government is lending the money to NBN at 'market rates', then they should be exactly the same rates that NBN could get borrowing directly from the market. But it is obvious that the market considers the current 'model' of the NBN a bad risk. So the conclusion is that the government can't be, and is not, lending the money to NBN at market rates (i.e. the government may be borrowing the money and market rates for the government, but it is not lending the money to the NBN at market rates for the NBN).

    The problem is that the government is supposed to be trying to reduce the national debt. The NBN borrowing the money direct and recouping it when the network is sold would keep it 'off the books'. Instead the government has now taken on billions of dollars more debt - so not a good outcome.

  5. FrancisYoung

    Yet another concession by Malcolm Turnbull that Labor got the project right under Senator Conroy, whose plan was always to fund the build from government bond issues, and repay with interest from the high wholesale revenues obtained from the 93% fibre to premises infrastructure.

    The only element Mr Turnbull has failed to adopt is laying the optimal technology to attract higher revenue from about a third of all end users in every suburb, which is how it repays the loans. Inferior FTTN gets substantially less revenue, despite having higher operating and maintenance costs, and similar costs to deploy.

    Build FTTP, Mr Turnbull, and stop lying about its cost.

  6. TuffGuy

    The Real Truth

    The real truth is that Turnbull's $70 billion lemon will be worth only about $30 billion when it is finished. No self respecting company is going to invest in a lemon requiring a massive upgrade as soon as it is finished. Also no self respecting company would even want their name associated with NBN and Turnbull and be held out to public ridicule.

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