NBN sending contractors broke: Turnbull

Summary:Australia's Shadow Minister for Communications Malcolm Turnbull has accused the federal government's NBN plan of sending its contractors broke, missing its targets and blowing out the budget.

Shadow Communications Minister Malcolm Turnbull has asserted that Labor's plan for the National Broadband Network (NBN) is sending the contractors building it broke.

"There are contractors that are literally going broke or are on the verge of going broke. Sub-contractors cannot make ends meet; people cannot do work for a sustained period at a loss. Service Stream — it's one of the biggest contractors — its listing is suspended on the stock exchange," he said in an interview with Sky News.

Turnbull did concede that contractors had been "a bit optimistic" in their tendering for the NBN rollout.

"They are saying the volume of work is much reduced from what they were promised — so they have never been able to get the economies of scale. And also they acknowledge that they did take on work at the outset that was barely profitable, or not profitable in their view, in the hope that they would make it up on variations.

"And that hasn't happened."

In March, Service Stream's joint venture with Lend Lease, Syntheo, pulled out of the NBN construction in the Northern Territory, causing further delays in its rollout.

Service Stream called a trading halt in June while it addressed the issues with Syntheo, which continued to struggle with meeting its NBN construction targets .

Earlier this month, Syntheo was reported to have made a substantial material loss in the 2013 financial year.

At the NBN switch-on in Brunswick, Victoria, yesterday, Australian Deputy Prime Minister and Minister for Communications Anthony Albanese denied these claims, saying the NBN is hitting its targets in terms of budget and rollout schedule.

While NBN Co did reach its targets for June, those targets were ambiguous , as the company included in its numbers premises passed that are as yet unable to connect to the NBN.

The deputy prime minister dismissed concerns over the government's disputes with contractors about payments, saying, "What we have had with the NBN is ... disputes over, between contractors and sub-contractors ... If you get someone to come to do the smallest infrastructure bit of work in your home, guess what? They'll always ask for more, and that is the way the system works," he said.

He added that Labor's NBN would freely deliver FttP to 93 percent of Australia.

"Now that is a lie. It's not free," Turnbull said in response. "If you want to have a service on Labor's NBN or our NBN or anyone's telecom network, you're going to have to have an account with somebody. Telstra or Optus or whoever. So that is outrageously false and terribly misleading."

Albanese today repeated the government's accusation that the Coalition's NBN model would cost customers up to AU$5,000 to connect the fibre from the node to their premises, jumping on Turnbull's concession that "a charge of some thousands of dollars" would exist under a Coalition FttN connection.

"I can only give you the example from the UK the cost of getting fibre on demand is around £1,500, which I think would work out at around AU$3,000. So it is not AU$5,000," Turnbull said.

NBN Co CEO replacement

In regards to looking for a replacement for former NBN Co CEO Mike Quigley , who flagged his upcoming retirement two weeks ago, Albanese said that the government is in no hurry.

"I have seen no impediment towards decisions being made," he said. "That is a decision for the board. Politics should not get in the way of this project."

Albanese took up the communications portfolio last month, after Stephen Conroy resigned following the re-election of Prime Minister Kevin Rudd.

Earlier this month, Albanese admitted that he is "no Bill Gates" and not a "tech head". As such, he has three ministers to assist him: Regional Communications Minister Sharon Bird, Parliamentary Secretary for Broadband Ed Husic, and Minister Assisting for the Digital Economy Kate Lundy.

Husic told ZDNet last week, "The four of us can get out and about. People who are on the NBN or are familiar with the issues, they get it, they get the value, but the challenge for us is to get more and more people on board."

Topics: NBN, Government : AU

About

Corinne is sub-editor across all CBS Interactive sites, and joined the company after completing her degrees in Communications and Law, and undertaking a string of internships in law and journalism. Corinne is also a journalist for ZDNet.

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