Taxpayers may be called on for more help in completing UFB network

Thursday 5th December 2013

Completing the national ultra-fast broadband network rollout could yet require more taxpayer funding, despite Communications Minister Amy Adams's insistence there should be a deal possible to get the project back on track within its current $1.35 billion funding.

Speaking to journalists at Parliament, Adams said she believed there were a number of options for shoring up the "sizable shortfall" identified in a report by Ernst & Young Australia in Chorus's ability to fund its portion of the government-assisted UFB rollout.

"There are changes within that fiscal envelope that won't affect the timing (of the rollout)," said Adams. That includes "timing of payments, structuring of payments, some of the specifics of the build requirements that don't affect service provision or the timeframe."

However, she would not rule out the possibility that the exhaustion of all such avenues, the government's agent in the UFB build, Crown Fibre Holdings, could come looking for a top-up from government coffers.

"At this stage, our expectation is the CFH will work through a solution within those parameters," said Adams. "If something changes, they can back to us and we can address that at that time, but that's not my expectation."

Adams would not be drawn on telecommunication infrastructure company Chorus's options for meeting the majority of the shortfall, which appear to include raising new capital or foregoing dividends.

"We asked Ernst & Young to give advice about the steps they (Chorus) can and should be looking at to address that gap. I'm optimistic they will be able to meet all of that themselves."

Adams took the opportunity to take a poke at the "Axe the Copper Tax" campaign, which successfully closed off the political option for the government to legislate to over-rule the Commerce Commission decision to slash the price copper-based broadband services, which lies at the heart of Chorus's difficulties in completing the UFB build.

Acknowledging that the campaign had "won" the argument, Adams invited the telecom retailers who had quietly backed the campaign, including Vodafone, to admit they would not pass on the decreased price of copper broadband to consumers.

BusinessDesk.co.nz

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