Quote:
Originally Posted by Bassnut
According to wikipeadia, there are 7 million odd dwellings in Australia and the NBN all up will cost $44 billion. Generously assuming 90% of householders pay tax, thats $5657 per tax paying house hold  .
Really, do you think its worth THAT much over other priorities 
Are you happy to pay that much?. |
Hi Fred,
The construction of the NBN uses an equity funding model.
Initially a loan from the government (for example, $2.6 billion in 2012-13, $5.1 billion
in 2013-14 and so on) and later private equity.
Governments can source cash for equity funding in various ways, but one
common way is by the issue of bonds.
For example, they might issue AAA rated bonds at, say, 4.1% which institutional
and personal investors buy. They use the cash raised to invest in NBN and
as NBN begins to generate revenue, it pays back the loan plus, say, 7.1%.
Plus the government (i.e. the Australian people) then still retains ownership of NBN Co.
This is a totally different model to where you use taxation revenue to build,
say, a hospital.
Assuming public hospitals aren't about to start charging patients, public hospitals
don't generate income. So you wouldn't use an equity funding model to build
a hospital, unless in rare circumstances where you might need to build one
quickly, say during wartime.
Say tomorrow there was a knock on the door of the house up the street.
The owner opens the door and an NBN rep says that for zero dollars to the owner
they can get fiber to the home. In the short term, the funding for the parts
and labour to make that connection came from equity funding. For example,
an institutional investor bought a bond from the government. In the longer
term, it was paid for by the subscribers to the network. So even if the owner
never made use of the connection themselves, it would not have cost them
anything in taxation.
Perhaps counterintuitive to some, the owner up the street can actually end up
better off tax-wise over time because of the increased economic activity
and efficiencies that the NBN brings about.
Data usage on networks globally have been growing exponentially. The world isn't
about to slow down its thirst for bandwidth any time soon. With improvements
in bandwidth come new services, increased economic activity and additional
tax revenue as wealth is generated. The additional tax revenue then helps reduce
the tax burden for our owner up the street for the construction of, say, hospitals.
Just to put things into perspective again, in the ten years the government might
provide $36 billion in equity funding for the NBN - that is, they get the money
back, plus interest, plus still own the company - we will have spent as taxpayers
$1.2
trillion on health.
So incredibly massive are our tax expenditures on health, social welfare, etc.
that we need to ensure a strong economy in order to continue to supply funds for
them. As an example, whereas the mining sector currently accounts for about
10% of GDP, the services sector accounts for a whopping 70% and employs
four out of five Australians. We are effectively a "services" country. Things such
as banking and insurance, telecommunications and travel. Lo and behold, many
of these service activities mesh with the digital economy and so the NBN is
exactly the type of infrastructure the nation needs to invest in.
I mean reeeaallly....?
