THE government was warned by Treasury that the national broadband network would expose taxpayers to ''considerable financial risks'' only weeks after the ambitious high-speed internet plan was unveiled.
Previously secret documents, made public yesterday, also reveal Treasury told the government it would have to consider shielding the $36 billion network from private-sector rivals to help make it viable.
Internal reports released in response to a freedom of information request said Treasury officials had warned of the risks weeks after it was announced by the then prime minister, Kevin Rudd, in 2009.
''Considerable financial risks to the Commonwealth remain, including uncertainty over the likely extent of private sector involvement,'' a policy implementation report dated May 29, 2009, says. In early April 2009, Mr Rudd had unveiled the network as the ''largest nation building infrastructure project in Australian history''.
With Treasury's ''red book'' prepared for the incoming Gillard government also flagging ''significant risks'' in the NBN, yesterday's documents show the department has held concerns since it was conceived.
Against these concerns, however, Treasury also said the project could benefit consumers by breaking Telstra's stranglehold in the market.
''From a competition policy perspective, the government's announcement provides an excellent opportunity to address longstanding problems in the sector - the risk is that this opportunity is wasted or compromised,'' the report also said.
A separate minute to the Treasurer, Wayne Swan, also said the government faced an ''important policy choice'' over how much to shield the taxpayer-funded NBN Co from private-sector competitors.
The minute, from December 2009, said a key consideration would be the ''extent to which NBN Co receives some temporary protection from competition during the network build phase to help underpin its viability''.
Since then, telecommunications firms have protested against ''anti-cherry-picking'' laws that stop potential rivals to the NBN from building their own network in the most commercially viable inner-city areas.
The minute also suggests ''promoting infrastructure-based competition'' as a policy goal once the network has been built - but critics now say this goal has been abandoned.
The opposition communications spokesman, Malcolm Turnbull, seized on the apparent shift in policy as proof the project was ''developed on the run''.
''Just two years ago, Treasury was still working under the assumption that it should be a policy priority to 'promote infrastructure-based competition' after the NBN was built,'' Mr Turnbull said.
''But that has now been stamped out entirely, thereby overturning several generations of microeconomic reform and returning us to a time when governments used their power to prevent the private sector from competing with government-owned businesses.''
A spokesman for Mr Swan said the commercial viability of the NBN was proven in its business case and the government had worked closely with the competition watchdog.
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