NOTE:
- income from Future Fund (earnings) noted in fwd estimates
- nothing for NBN. [but millions of subs]
Search:
http://www.budget.gov.au/search.asp?searchString=NBN&Submit=Submit
Statement of Expectations. [Equity Agreement]
08-Apr-2014
within the constraints of a public equity capital limit of $29.5 billion speciļ¬ed in its funding agreement with the Commonwealth…
[Equity Funding Agreement]
Strategic Review, NBN Co
December 2013
Final Report
pg 12.
The Revised Outlook assumes the existing Equity Funding Agreement between NBN Co and its shareholders remains in place and all funding beyond $30.4 billion would be funded by debt.
NBN Co Half-Year Report as at 31 December 2014
About NBN Co
NBN Co Limited is a company owned by the Commonwealth of Australia ….
Established in 2009, NBN Co is a Government Business Enterprise (GBE) incorporated under the Corporations Act 2001 and under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
No confusion in the business & board about its being a separate entity from the Government.
Statement of Changes in Equity p22
pg 12:
Key Financial Data ($m) — as at
| 31 Dec 2014 | 30 June 2014 | 30 June 2013 | |
| Total assets | 10,936 | 9,468 | 5,519 |
| Contributed equity | 10,395 | 8,418 | 5,228 |
The NBN Co Group generated an operating loss after tax for the six months to 31 December 2014 of $902 million.
It also generated telecommunications revenues of $64 million.
As at 31 December 2014 NBN Co had total assets of $10,936 million, an increase of $1,468 million driven by $1,433 million in capital expenditure on property, plant and equipment and intangibles,
and a net $240 million increase in assets acquired under finance lease (associated with the handover of network infrastructure from Telstra).
Note, the capital expenditure excludes assets acquired finance lease, developer contributions and government grants.
During the period the Company received Commonwealth Government equity injections of $1,977 million.
pg 16
Significant events subsequent to reporting date
On 30 January 2015, NBN Co received $380 million of Commonwealth equity funding.
Except for the item noted above, no other matter or circumstance has arisen since 31 December 2014 to the date of signing of this report.
pg 22
Statement of Changes in Equity
| Accumulated | Contributed | Other | Total equity | |
| losses | equity | reserves | ||
| $m | $m | $m | $m | |
| Balance at 30 June 2013 | (1,855) | 5,228 | 45 | 3,418 |
| Contributions of equity, | 3,190 | 3,190 | ||
| net of transaction costs | ||||
| Balance at 30 June 2014 | (3,499) | 8,418 | 5 | 4,924 |
| Contributions of equity, | 1,977 | 1,977 | ||
| net of transaction costs | ||||
| Balance at 31 December 2014 | (4,401) | 10,395 | 32 | 6,026 |
Statement of Financial Position
| 31 December 2014 | 30 June 2014 | |
| $m | $m | |
| Equity | ||
| Contributed equity 7 | 10,395 | 8,418 |
| Other reserves | 32 | 5 |
| Accumulated losses | (4,401) | (3,499) |
| Total equity | 6,026 | 4,924 |
pg 23
Statement of Cash Flows
| 31 December 2014 | 30 June 2014 | |
| $m | $m | |
| Cash flows from financing activities | ||
| Payment for finance leases and | (145) | (57) |
| right of use licences | ||
| Equity injection for ordinary shares | 1,977 | 1,250 |
| by the Commonwealth of Australia | ||
| Net cash provided financing activities | 1,832 | 1,193 |
pg 24
Notes to the Financial Statements
1. Summary of significant accounting policies
(a) Basis of preparation
NBN Co's current liabilities exceed its current assets by $184 million as at 31
December 2014. The financial report has been prepared on a going concern basis,
which contemplates the continuity of normal operations and the remaining available
equity funding of $19.1 billion at 31 December 2014 (Note 7). The financial
statements and the notes thereto have been prepared on the basis that NBN Co will
continue to operate in accordance with the policy directions provided by the
Commonwealth Government as set out in the Statement of Expectations issued on 8
April 2014.
pg 30
7. Contributed Equity
a) Movements in ordinary share capital
--- NBN Group ---
| Date | Details | Number of Shares | Issue price | Value of Shares |
| 30 Jun 2014 | Opening Balance | 8,418,445,092 | $1 | 8,418,445,092 |
| 29 Jul 2014 | Equity injection | 440,000,000 | $1 | 440,000,000 |
| 29 Aug 2014 | Equity injection | 317,000,000 | $1 | 317,000,000 |
| 30 Sep 2014 | Equity injection | 240,000,000 | $1 | 240,000,000 |
| 31 Oct 2014 | Equity injection | 240,000,000 | $1 | 240,000,000 |
| 28 Nov 2014 | Equity injection | 490,000,000 | $1 | 490,000,000 |
| 23 Dec 2014 | Equity injection | 250,000,000 | $1 | 250,000,000 |
| Total consolidated contributed | 10,395,445,092 | $1 | 10,395,445,092 | |
| equity at 31 December 2014 |
b) Capital risk management
The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide benefits for other stakeholders and to maintain an optimal capital structure.
c) Equity Funding
On 22 June 2011, the Commonwealth and NBN Co entered into an Equity Funding Agreement, whereby the Commonwealth provided assurances to the Company in relation to the provision of equity funding until 30 June 2021 unless terminated earlier. The Commonwealth has committed to provide funding sufficient to meet the forecast expenditure of the Company in the 2014-2017 Corporate Plan. In March 2014, this agreement was amended and the equity funding cap was set at $29.5 billion.
To the extent that the Commonwealth has provided for equity funding in forward budget estimates, NBN Co has recorded this as expected equity funding in the Schedule of Commitments. As at 31 December 2014 a total of $10.4 billion had been made available to the Company. Based on a cap of $29.5 billion, the expected future equity funding to the Company as at 31 December 2014 was $19.1 billion.
Under the Equity Funding Agreement, the Commonwealth has also committed to meet the termination and other costs of NBN Co in the event the project is terminated or significantly reduced in scope.
Refer to Note 13 Events Occurring After the Reporting Period.
pg 31
8. Commitments
a) Commitments receivable
The value of commitments receivable has been determined in accordance with the equity funding agreement as disclosed in Note 7.
| 31 December 2014 | 30 June 2014 | |
| $m | $m | |
| Commitments receivable | ||
| Equity receivable | 19,105 | 21,082 |
| Total commitments receivable | 19,105 | 21,082 |
pg 36
11. Related Party Transactions
a) Transactions with related parties
The following transactions occurred with related parties:
| 31 December 2014 | 30 June 2014 | |
| $m | $m | |
| Equity injections | ||
| Equity injected by the | 1,977,000,000 | 1,250,000,000 |
| Commonwealth of Australia into | ||
| NBN Co Limited (Refer to Note 7) |
pg 38
13. Events Occurring After the Reporting Period
On 30 January 2015, NBN Co received $380 million of Commonwealth equity funding.
Except for the item noted above, no other matter or circumstance has arisen since 31 December 2014 to the date of signing of this report.
Parliamentary Library, Research Branch
May 2013
Backgrounders
Budget Review 2013–14 Index
National Broadband Network (NBN)
Matthew L. James
Administration
The project is managed by the NBN Co Limited (NBN Co), a government-owned entity which is classed as a government business enterprise (GBE).
The NBN Companies Act provides that the Australian Government will retain full ownership of NBN Co until the national broadband network rollout is complete.[4]
These arrangements are further elaborated upon in the NBN Co's Statement of Corporate Intent, which was tabled in Parliament on 9 October 2012.[5]
NBN Co is expected to generate money for the government in the future, so the funds given to it now are viewed as an investment in terms of the Budget, and the money spent does not fall within the budget accounts. Rather, as a GBE, the NBN Co produces its own annual reports in much the same way as Australia Post.[6]
Funding
The initial expected NBN funding arrangements were outlined in a Statement of Expectations, dated 17 December 2010, provided to NBN by the two responsible ministers:
The Government will enter into an equity agreement with NBN Co for the rollout period with equity funding based on the expected $27.5 billion funding requirement advised by NBN Co. This agreement will be reviewed annually.
The expenditure figure of $27.5 billion has now risen to an expected investment of $30.4 billion by the Commonwealth Government, for the total $37.4 billion investment, as recorded in the current 2013–14 Budget:
$21.4 billion in equity funding to the NBN Co over the Budget and forward years. These are further instalments of the $30.4 billion equity commitment of the Australian Government, starting at $5.1 billion in 2013-14, peaking at $6.3 billion in 2014-15, before reducing to $5.3 billion in 2015-16, then $4.7 billion in 2016-17.[8]
Over the past year, the equity allowed was $2.6 billion, rather than the previous estimate of $5.8 billion.[10] For the year ahead, the equity is $5.1 billion rather than $6.6 billion.
The Minister attributes the lower equity expenditure to a slower network rollout than expected:
However, the Opposition maintains that equity deferments give rise to increased interest expenditures as the government still pays interest on the funds injected into NBN.[13]
Rollout
The network is to be constructed over a decade and construction began with a trial rollout in Tasmania in July 2010.
As the election approaches, a key difference between the parties appears to be their preferred approach to the rollout of the NBN.
Over the near future, a keen watch will be kept on progress with deployment of the NBN and actual take-up rates by new customers. Once the NBN is fully operational, it can be sold and the government could recoup some or all of its costs:
NBN Co must remain in full Commonwealth ownership until the Communications Minister declares that the National Broadband Network is built and fully operational. A sale of NBN Co can only occur after a Productivity Commission inquiry into the NBN regulatory framework has been considered by a Parliamentary Joint Committee.[16]
[6]. Australian Government, Portfolio budget statements 2013–14: budget related paper no.1.3: Broadband Communications and the Digital Economy Portfolio, (Overview version), Commonwealth of Australia, Canberra, 2013, p. 3, accessed 15 May 2013.
[7]. P Wong (Minister for Finance and Deregulation) and S Conroy (Minister for Broadband Communications and the Digital Economy), Statement of expectations, Commonwealth of Australia, Canberra, 17 December 2010, accessed 8 May 2013.
[8]. Portfolio budget statements 2013–14: Broadband Communications and the Digital Economy Portfolio, op. cit., p. 6; NBN Co, Corporate Plan 2012-2015, 6 August 2012, accessed 16 May 2013.
[9]. Portfolio Budget Statements 2012–13: Broadband Communications and the Digital Economy Portfolio, op. cit., p. 6
[10]. Ibid; on p. 25 the PBS section: ‘Program 1.1 Broadband and Communications Infrastructure’, contribution notes that equity funding of only $2.6 billion was given to NBN Co in 2012-13.
[11]. Portfolio budget statements 2013–14: Broadband Communications and the Digital Economy Portfolio, p. 37; accessed 16 May 2013.
[12]. S Conroy (Minister for Broadband Communications and the Digital Economy), Turnbull tells more lies about the NBN, media release, Canberra, 16 May 2013, accessed 16 May 2013.
[13]. J McDuling, ‘Conroy rejects NBN cutback claims’, Australian Financial Review, 16 May 2013, accessed 16 May 2013.
[14]. NBN Co, ‘When do I get it?’, NBN Co website, accessed 16 May 2013.
[15]. Liberal Party of Australia (LPA), ‘Fast. Affordable. Sooner. The Coalition’s plan for a better NBN’, LPA website, accessed 16 May 2013.
[16]. NBN Co, ‘Regulation and legislation‘, NBN Co website, accessed 16 May 2013.
BUDGET 2015-16
Budget 2015 - Overview - Connecting Australians
Connecting Australians
The Government is delivering on its commitment to build infrastructure to support economic growth, create jobs and link businesses to markets
The Government is delivering the National Broadband Network faster and at less cost to taxpayers. Since September 2013, the NBN has more than tripled the number of homes and businesses that receive a service.
More than 413,000 premises are now connected, with an anticipated 3.1 million homes and businesses to have the NBN in place or under construction by September 2016.
STATEMENT 3 (continued)
Fiscal outlook
Budget aggregates
Table 5: Australian Government general government sector budget aggregates
| 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 | 2017‑18 | 2018‑19 | Total | |
| $m | $m | $m | $m | $m | $m | $m | |
| Net Future Fund earnings | 2.3 | 3.4 | 3.3 | 3.4 | 3.7 | 4.0 | 17.8 |
Headline cash balance estimates
The headline cash balance consists of the underlying cash balance, net cash flows from investments in financial assets for policy purposes
(for example, the equity funding of NBN Co), and net Future Fund earnings.
Table 9 provides further detail of differences between the underlying and headline cash balance estimates of the Australian Government general government sector.
The headline cash balance for 2015‑16 is estimated to be a deficit of $44.8 billion, compared with a deficit of $41.9 billion at 2014‑15 MYEFO. Over the four years to 2018‑19, the headline cash deficit is projected to decline by $27.4 billion to $17.3 billion in 2018‑19.
Table 9: Details of the Australian Government general government sector items between the underlying and headline cash balance estimates
| 2014‑15 | 2015‑16 | 2016‑17 | 2017‑18 | 2018‑19 | Total | |
| $m | $m | $m | $m | $m | $m | |
| NBN investment | ‑4,917 | ‑7,839 | ‑8,326 | 0 | 0 | ‑21,082 |
STATEMENT 6 (continued)
Debt Statement
[NBN equity payments: $7.8B]
Of the $37.7 billion of the capital budget,
around $17.8 billion relates to specific purpose payments to the states and territories for capital purposes and
the portion of General Revenue Assistance that is estimated to fund capital spending by the states and territories.
Equity payments to NBN Co comprise around 21 per cent of the capital budget and
purchases of defence capital (for example, defence weapons and aircraft) comprises around 22 per cent.
Other capital purchases such as software facilities upgrades make up around 10 per cent of the capital budget.
Funding for the Infrastructure Growth Package is reflected in payments to states and territories for capital spending (for amounts paid to states and territories) and other capital loans, grants and subsidies (for amounts paid to local governments).
Budget Paper #1: STATEMENT 6 (continued)
The Australian Government's major assets and liabilities
National Broadband Network
The National Broadband Network (NBN) will deliver fast, affordable broadband to all Australians. The Government has instructed NBN Co Limited to complete the NBN using a multi‑technology mix (including fibre‑to‑the‑premises, fibre‑to‑the‑node, hybrid‑fibre coaxial cable, and wireless and satellite technologies), to ensure the NBN is delivered as soon as possible and at least cost to taxpayers.
On 14 December 2015, the Government announced that is has successfully renegotiated the Definitive Agreements with Telstra and Optus. These agreements secure access to existing fixed‑line infrastructure that could be used to rollout the NBN faster and at lower cost.
In the 2015‑16 Budget, $2.6 billion in equity payments for NBN Co have been brought forward to 2015‑16 and 2016‑17 from 2017‑18. This is to reflect the launch and scale of new network technologies. The Government's equity contributions are capped at $29.5 billion.
Budget 2015 - Budget Paper No. 1 - Statement 8: Contingent liabilities - unquantifiable
Communications
NBN Co Limited — Board Members' Insolvency Indemnity
The Australian Government has provided each Director of NBN Co with an indemnity against liability as a result of the Government failing to meet its funding obligations to NBN Co.
The liabilities covered by this indemnity would be no greater than those covered by the NBN Co Equity Agreement,
with the exception of any legal expenses incurred by individual Directors arising from this indemnity. Directors are also indemnified in relation to claims arising out of their involvement in the negotiation and entry by NBN Co into the Financial Heads of Agreement with Telstra.
Budget 2015 - Budget Paper No. 1 - Statement 8: Contingent liabilities and assets
Table 2: Summary of contingent liabilities and contingent assets in the Statement of Risks since the 2013‑14 Budget, 2013 PEFO and the 2013‑14 MYEFO(a)
| Significant but remote contingencies | Status | Category(b)(c)(d) |
| Communications | ||
| NBN Co Limited — Equity Agreement | Modified | Guarantee |
Contingent liabilities — unquantifiable
| Communications | ||
| NBN Co Limited — Board Members' Insolvency Indemnity | Modified | Indemnity |
Budget 2015 - Budget Paper No. 1 - Statement 8: Significant but remote contingencies
Significant but remote contingencies
Communications
NBN Co Limited — Equity Agreement
The Australian Government has entered into an Equity Funding Agreement with NBN Co Limited (NBN Co).
The Agreement formalises the Australian Government's intention to provide equity to fund the roll‑out of the National Broadband Network,
with such funding being conditional on the annual appropriation processes. In addition, it commits the Australian Government,
in the event of a termination of the National Broadband Network roll‑out,
to provide sufficient funds to NBN Co to meet its direct costs arising from that termination.
Although the NBN Co Equity Funding Agreement will terminate in 2019,
the Commonwealth's obligations to meet NBN Co's direct costs arising from termination of the roll‑out will continue
As at 28 February 2015, NBN Co's termination liabilities were estimated at $7.3 billion.
Telstra Financial Guarantee
The Australian Government has provided a guarantee to Telstra in respect of NBN Co's financial obligations to Telstra under the original Definitive Agreements.
The Agreements were amended on 14 December 2014 and further agreements were entered into at that time, which will also be covered by the guarantee.
The amendments and new agreements will not take effect until the conditions precedent within the agreements are satisfied, which is expected to occur in June 2015.
The liabilities under the agreements between Telstra and NBN Co arise progressively during the roll‑out of the multi‑technology mix National Broadband Network as infrastructure is accessed and subscribers to Telstra's existing network are disconnected.
As at 28 February 2015, NBN Co had generated liabilities covered by the guarantee estimated at $3.7 billion.
The guarantee will terminate when NBN Co achieves specified credit ratings for a period of two continuous years and either:
• the company is capitalised by the Commonwealth to the agreed amount; or
• the Communications Minister declares, under the National Broadband Network Companies Act 2011, that, in his or her opinion, the National Broadband Network should be treated as built and fully operational.
Budget 2015 - Budget Paper No. 1 - Statement 9: AASB 1049 History and conceptual framework
Purchases of non‑financial assets: $11.408B
Table 9: Australian Government total non‑financial corporations sector cash flow statement(a)
Statement 9
Public non-financial corporations [in PDF] Public financial corporations [in HTML]

Communications Portfolio
Australian Postal Corporation, NBN Co Ltd
3 The net operating balance includes consumption of non-financial assets because depreciation is an expense. Depreciation also forms part of net capital investment, which (in the calculation of fiscal balance) offsets the inclusion of depreciation in the net operating balance.
5 The underlying cash balance treats the acquisition and disposal of non-financial assets in the same manner regardless of whether they occur by purchase/sale or finance lease —acquisitions reduce the underlying cash balance and disposals increase the underlying cash balance. However, finance leases do not generate cash flows at the time of acquisition or disposal equivalent to the value of the asset. As such, net acquisitions of assets under finance leases are not shown in the body of the cash flow statement but are reported as a supplementary item for the calculation of the underlying cash balance.
STATEMENT 10: HISTORICAL AUSTRALIAN GOVERNMENT DATA
This statement reports historical data for the Australian Government fiscal aggregates across the general government, public non-financial corporations and non-financial public sectors.
Table 7: Australian Government general government sector revenue, expenses, net capital investment and fiscal balance(a)
net capital investment
| $m | % GDP | |
| 2007-08 | 2,593 | 0.2% |
| 2008-09 | 4,064 | 0.3% |
| 2009-10 | 6,433 | 0.5% |
| 2010-11 | 5,297 | 0.4% |
| 2011-12 | 4,850 | 0.3% |
| 2012-13 | 987 | 0.1% |
| 2013-14 | 3,850 | 0.2% |
| 2014-15(e) | 3,138 | 0.2% |
| 2015-16(e) | 3,854 | 0.2% |
| 2016-17(e) | 4,198 | 0.2% |
| 2017-18(p) | 3,598 | 0.2% |
| 2018-19(p) | 5,090 | 0.3% |
Table 10: Australian Government cash receipts, payments and surplus by institutional sector ($m)(a)
Public non-financial corporations
| Receipts | Payments | Cash surplus | |
| 2014-15(e) | 10,821 | 15,634 | -4,814 |
| 2015-16(e) | 11,097 | 19,124 | -8,026 |
| 2016-17(e) | na | na | na |
Table 11: Australian Government accrual revenue, expenses and fiscal balance by institutional sector ($m)(a)
Fiscal Balance(b)
| 2014-15(e) | -$4,613 |
| 2015-16(e) | -$8,543 |
(b) Fiscal balance is equal to revenue less expenses less net capital investment. Net capital investment is not shown in this table.
Budget Paper No. 2, Budget Measures 2015-16
ensures that the Budget Papers provide comprehensive information on all Government decisions that involve changes to its revenue, expense and investing activities since the Mid-Year Economic and Fiscal Outlook 2014-15.
Capital measures are defined as those measures that affect net capital investment, defined as the change in non-financial assets. Capital measures that fall outside of this definition, such as equity injections or loans used for purposes other than investment in non-financial assets, are shown as having a zero impact on the fiscal balance.
Main pages: Agency Resourcing and Planned Performance
http://www.communications.gov.au/about_us/budget
http://www.communications.gov.au/about_us/budget/2015-16_budget_communications_portfolio
Department of Communications
Entity resources and planned performance
(d) The expenses above do not include the equity funding to be provided to nbn over the period 2014-15 to 2018-19, which is as follows:
| 2014-15 Estimated actual $b | 4.9 |
| 2015-16 Budget $b | 7.8 |
| 2016-17 Forward Estimate $b | 8.3 |
| 2017-18 Forward Estimate $b | 0.0 |
| 2018-19 Forward Estimate $b | 0.0 |
pg 22
[Portfolio Budget Statements]
Portfolio Budget Statements 2015-16 Budget Related Paper No. 1.3
Communications Portfolio
Budget Initiatives and Explanations of Appropriations Specified by Outcomes and Programmes by Entity
http://www.communications.gov.au/__data/assets/pdf_file/0008/244952/2015-16_Dept_of_Comms_PBS.PDF
• nbn co limited (nbn) – nbn is a Government Business Enterprise, wholly owned by the Australian Government. It is planning, rolling out and operating Australia’s new broadband network/infrastructure, which will provide access to high speed broadband to all Australians.
Australia Post and nbn do not appear in the 2015-16 Portfolio Budget Statements as they are not part of the general government sector.
EXPANDING DIGITAL INFRASTRUCTURE
• Strategic advice and policy leadership to achieve the Government’s plan for Australia’s new broadband network, including advice on implementation of the initiative and support for the Minister for Communications in his role as Shareholder Minister of nbn.
• Working with nbn and industry to ensure consumers and small business receive useful information about the rollout of Australia’s new broadband network.
PROMOTING EFFICIENT COMMUNICATIONS MARKETS
• Implementation and monitoring of, and improvements to, the regulatory framework for Australia’s new broadband network, including regulations applying to nbn operations and Telstra’s Structural Separation and Migration Plan.
Chart 4: Recurrent and capital spending as a proportion of the Budget in 2015‑16
 |
| Recurrent and capital spending as a proportion of the Budget in 2015‑16 |
Budget 2015 - Overview - Connecting Australians
 |
| Budget 2015 - Overview - Connecting Australians |
The diagram illustrates that up to 3.1 million premises are expected have either a connection to the National Broadband Network, or be under construction, by September 2016.
It has a map of Australia with the infrastructure spending allocated to each state as well as the number of premises in each state with a connection to the National Broadband Network, or be under construction, by September 2016.
The numbers are as follows:
| State | Infrastructure Spending | NBN Premises (with a connection or under construction by September 2016) |
| QLD | $13.4b | 575,200 |
| NSW | $15b | 917,000 |
| ACT | $0.3b | 98,800 |
| VIC | $7.6b | 639,500 |
| Tas | $1b | 171,100 |
| SA | $2b | 253,400 |
| WA | $5.2b | 388,300 |
| NT | $0.6b | 43,500 |
A text box is shown below the diagram stating: The Government has a $50 billion package to 2020 for transport infrastructure to improve road and rail linkages in every state. This includes a $3 billion commitment to East West Link.
National Broadband Network construction underway by September 2016.
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