On ABC radio this morning I described to the minister that the NBN business plan as the scariest business plan that I had ever seen. It is impossible to go into detail as we were not supplied with many facts, the actual business model from which to test the assumptions let alone a cost benefit analysis.
The first major issue is the length of time for the investment to reach a return of 7.0% is 30 years. Business models normally have a three-year period for projections and then years 4-5 are purely estimates to give a longer view. The NBN estimates that after 10 years build Capex will $35.9 billion, Opex another $21.8 billion for a total of $57.7 billion and with revenue of only $20.9 billion it will be $36.9 billion in the red. Even on the most optimistic of assumptions the plan does not expect the NBN to become EBIT positive for 10 years until 2020 and most of the return has to be made in the latter part of the 30 years.