The NBN: Everything you need to know

Everything you need to know about the National Broadband Network

The biggest argument against the NBN revolves around the network's cost to build.There is a common misconception that the network is being funded by taxpayers dollars, and is therefore costing the general public a lot of money. It's not.To fund NBN Co, the federal government borrows money and gives that money to NBN Co to construct the network. The idea is that once the network starts operating and selling its wholesale network, it can begin to pay back the government with money from its customers. In other words, it works almost exactly like a regular business loan from a bank, except with much bigger numbers. The NBN Co will be owned outright by the government before 2034.

NBN Cable

Build cost

The other myth that continually flies around arguments about the NBN is the cost of building the network. While the Liberal party is more than happy to throw around the predicted cost of $90 billion, the truth is that the cost of the network has never come close to that figure.

The capital cost of building the ALP NBN was predicted to be $37.4 billion. Of that amount, only $26 billion needs to be raised, as once the network reaches critical mass, the network will start making enough money to cover the cost of completing the rollout itself.

The Coalition requires $29.5 billion dollars of which $20.4 billion will be capital expenditure and the NBN Co will begin repaying the loan in 2021 when construction is complete. The NBN Co expects to own the NBN outright by 2034.

The biggest argument against the NBN from the federal opposition revolves around the network's cost to build.

However, in almost every case, the information delivered by the liberal party is either being misrepresented or misconstrued. Whether that's done intentionally for political gain or mistakenly through a fundamental lack of understanding about the economics of the network is irrelevant.

The biggest source of confusion seems to be the idea that the network is being funded by taxpayers dollars, and is therefore costing the general public a lot of money. It's not.

To fund NBNCo, the federal government borrows money and gives that money to NBNCo to construct the network. The idea is that once the network starts operating and selling its wholesale network, it can begin to pay back the government with money from its customers.

In other words, it works almost exactly like a regular business loan from a bank, except with much bigger numbers.

The opposition spent a lot of time arguing against the fact that the NBN isn't classified as an expense as part of the federal budget. But the government's accounting decision was justified by a research note from the Parliamentary Library of Australia, which explained that "Australia has adopted internationally accepted accounting standards, and these are applied in the budget treatment of the NBN."