Sunday May 26 , 2019
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Update to Proposed NBN Policy Changes

The following is the latest advice from the Department of Communication as well as our interpretation and commentary.

"Charges for in-estate infrastructure will continue to apply to new developments accepted by NBN Co from 1 March 2015 . However , because of notification requirements, these charges would only be connected from the second half of the year."

"In the light of feedback, charges for backhaul and end-user connection will come into effect from 1 July 2015 to provide the development and communications sectors with more time to adjust.  A number of other transitional arrangements in relation to backhaul will also be put in place."

*        Our understanding is that where a developer has a Master Developer Agreement (MDA) in place and applications for particular stages have been accepted by NBNCo before 1 March 2015, NBNCo will not be charging the developer the $600.00 per Single Dwelling Unit and $400.00 per Multiple Dwelling Unit (Duplex / Unit / Apartment).  Where there is no acceptance for the stage, NBNCo will be charging $600.00 per Single Dwelling Unit and $400.00 per Multiple Dwelling Unit (Duplex / Unit / Apartment).

*        There is still going to be some form of payment required for backhaul (bringing trunk cabling to site for the first stage where it is not already available).  The cost of backhaul can be very large and will depend upon the distance to the existing trunk services location and the number of lots in the project.  The current proposal is for the developer to pay 50 % of the cost of the works, up to a cost of $1000.00 per lot and then all of the cost where the cost exceeds $1000.00 per lot and there is no upper limit!  We suspect that the only changes likely to occur are that there may be some arrangements to accommodate the first developer to be recompensed should later developers use infrastructure provided by the first developer.

*        The implementation of backhaul costs and the implementation of end user charges (resident to pay $300.00 per residence) has been delayed until 1 July 2015.

We consider that the charges should rightly be called the "new home owners tax" as it does not apply to existing properties and will affect every new home and unit to be built.

There are also still issues that need to be resolve regarding this new tax:
*        Definition is still required regarding exactly how the backhaul costs will be attributed, i.e. for a 50 lot stage on a 500 lot project is the lot count based on 50 lots or 500 lots as that makes a large difference to the way costs are apportioned.

*        How "First Mover Disadvantage" is addressed with respect to backhaul as at present the first developer to carry out work in an area attracts all the cost, but subsequent developers can take advantage that trunk services already exist, this will give rise to developers delaying their project to avoid paying the full cost of backhaul.

*        Even if all elements identified in the policy proceed, the issue of developers funding the construction of a network and then having NBN Co charge residents on the basis that NBN Co built the network needs to be addressed as at present it is double dipping. NBNCo e regulated by a section of the ACCC that approves how much they are able to charge and this includes an amount based on the approved regulatory asset base multiplied by a percentage set by the ACCC.  The developer contributions (building pit and pipe, paying backhaul costs and paying $600 per lot costs) must be removed from the NBNCo regulatory asset base to avoid NBNCo receiving assets free of charge from the developer, receiving contributions from developers and then charging for use of their network on the assumption that NBNCo has to pay the full capital cost.

The Department of Communications have still to publish their final policy which means that you can still do something to prevent this damaging new cost/tax (whatever you would like to call it).

Act now, act strongly and act politically.

This is a policy position, it is already covered in legislation that NBNCo are able to charge, but the government's policy expectation to NBNCo is that they won't charge, i.e this is just a policy change and you can still affect it.

*         Email Malcolm Turnbull directly, get his email address from the Australian Government Parliament House web site.  Make him aware of the impact.

*         Make an appointment with your local House of Representatives and warn them of the damage that will occur to the development industry at this  very fragile time.

*         Contact Queensland Senators and make them aware.
*         Make it personal, do not rely on Property Council and UDIAQ to do all the lobbying for you, after all it will affect you a lot more than it will affect them, so you have a vested interest to act.

*         DO IT NOW, the longer it takes to reverse this policy change, the harder it will be.