NBN Co under the Coalition

Malcolm Turnbull may not want to destroy the NBN but a Coalition win will mean some serious headaches for NBN Co.

Coalition leader Tony Abbott’s famous directive to his communications minister Malcolm Turnbull to ‘demolish the NBN’ seems a distant memory as we head into an election year. However, it would be naïve to think that the pugnacious leader of the opposition has had a complete change of heart on the NBN. So what will a Coalition victory mean for the project and NBN Co?

There is no denying the time and effort Turnbull has expended off late in softening the Coalition’s stance. The NBN isn’t going to be sent to the gallows, the fibre isn’t going to be ripped out of the ground and the apocalyptic bluster has been replaced by the “cheaper, sooner” mantra. This message may seem more palatable but is no less dangerous given that it could well straddle us with a decidedly second-best broadband option for some time to come.

Provided there is a change in Canberra in 2013, there is a good chance that the Coalition will press pause on NBN funding, while the economics of the project are presumably subjected to Joe Hockey’s fiscal calculations.

Some insight to the Coalition’s thinking was provided recently by Rob Burgess in Business Spectator.

The Coalition, to date, has said it will cut spending and deliver tax cuts if it wins power in 2013, and stop issuing so many Commonwealth government securities – Malcolm Turnbull's 'cheaper, sooner' broadband plan is just one example of how this will be done.

That gives voters a clear choice at the next election – a government running a 'tight' fiscal policy that raises only 22.1 per cent of GDP in taxes, but manages a highly geared, and probably not very efficient Australia Inc on the side ... or one that shuts down quite a bit of Australia Inc, and runs an even tighter fiscal policy.

It sounds like a no-brainer – surely we don't need to keep borrowing to build inefficient state-owned enterprises? And if we sack a few thousand public servants and use the money for tax cuts, won't that money be spent by the private sector on investment/consumption?”

So what will be the impact on NBN Co if the Coalition stops funding it relatively early in the build-out?

Here are a few points to ponder:

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