National Broadband Network has no business case yet: adviser

The chief adviser for the Federal Government’s $43 billion National Broadband Network, Colin Lyons, admitted yesterday at a Senate committee that no businesses case has yet been made for the network.

“The Government has never said to my knowledge that a comprehensive business case had been completed before it made the announcement [in April],” he said, when asked whether he had been asked to give advice to the Government about private finance for the NBN.

The troubles continued when it was revealed that the finance management arm of the Federal Government has not been consulted on plans to raise billions of dollars in bonds to fund the network.

“The [Australian Office of Financial Management] has had no contact so far with the implementation study and has received no information on the likely structure and form of Australian Infrastructure B or on the possible timing of their issuance,” AOFM chief executive Neil Hyden said in a letter submitted to the inquiry.

“No provision has been made at this stage for the inclusion of AIBs in the AOFM’s issuance plans,” he said.

Daniel Blair, an analyst for Southern Cross Equities, said the NBN was not financially viable due to “limited demand” for the high-speed network.

Additionally, Southern Cross Equities said in a formal submission that the NBN “raises more questions than answers”, and argued the project should be focussed on rural areas where high-speed broadband is not currently available.

But Lyons countered that it was “not inconceivable” that the network, which will be 51% owned by the Government’s National Broadband Network Company, will be able to compete with other providers’ infrastructure, including Telstra’s.

He also said the implementation study will examine “the cost of the network and the types of services it will deliver…demand for those services…all those business and commercial issues and the best ways to attract private investment will all be looked at as the best way of implementing the Government’s commitment”.

“It will certainly be independent, objective advice that will inform the Government. It’s not necessarily people saying what the Government wants to hear, it will be independent and the reputation of the department will rest on that.”

Blair said it would be in April or May 2010 “before we see any clarity around the implementation study”.