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Section 22

1 September 2010

•	The joint Treasury and Finance paper Budget Impact of Coalition Policies was provided to the Independents and Mr Abbott.

•	This paper included a reduction of $900 million over four years to expected public debt interest (PDI) savings from reversing the Government’s policy to build the National Broadband Network (NBN).

–	This amount is the difference between the NBN saving identified in The
Coalition’s Plan for Real Action for Australia’s Future statement
($2.436 billion over four years) and the costing that Treasury and Finance prepared.

–	Treasury in consultation with Finance calculated the PDI savings arising from the Coalition’s policy not to proceed with the NBN. The saving was
$1.536 billion over the forward estimates (see Attachment B).

–	Consistent with the Costing Election Commitments 2010 Guidelines (released by the Finance and Treasury Secretaries on 11 June 2010), rates and assumptions used in the Pre-Election Fiscal and Economic Outlook (PEFO) were used in the costing. That is, the NBN equity profile and yields included in PEFO were used as the starting point for the costing.

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Section 22

2.	Opposition policy – 31 August 2010 costing

•	Amended NBN profile used – $1,692m of the $2,400m in BAF funding + $15,900 in non‐BAF funding

•	Economic Statement/PEFO yields (average rate of 4.9 per cent)

•	This costing of $1,536 million was the basis of the $900 million reduction in the Opposition’s save of $2,436 million.

NBN Estimates and PDI - 31 August 2010

($m)	2008-09 	2009-10	2010-11 	2011-12 	2012-13 	2013-14	Total	
Total NBN equity unwound		1,992	4,500	6,400	4,700	17,592	
1. BAF funds to be returned or not distributed
2. Non-BAF profile	0	0
0	0	1,692	0	0	0
300	4,500	6,400	4,700	1,692
15,900	
			
3. PDI save on BAF funds to be returned or not distributed1	0	0	41	86	90	94	311	
4. PDI save on total non-BAF profile (UCB)	0	0	7	127	400	691	1,225	

Total PDI saving (UCB)	
0 	0	
48 	213 	490 	785	
1,536	

Section 22

1 The PDI has been calculated only on the 2010-11 funds no longer required from the BAF or that would be returned from NBN Co. This is es tim ated by
Finance to be $1,692 million.

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