NBN rates too low for Syntheo: Turnbull

NBN rates too low for Syntheo: Turnbull

Summary: Shadow Communications Minister Malcolm Turnbull has said that Syntheo was forced to walk from the NBN project because its pay rates were too low.

TOPICS: NBN, Government

Shadow Communications Minister Malcolm Turnbull has said that the price NBN Co wanted to pay Syntheo to construct the fibre network in South Australia and Western Australia was not enough, but he has not promised that contractors will be paid more under his National Broadband Network (NBN) policy.

Late yesterday, NBN Co announced that it had reached a mutual agreement with joint Lend Lease and Service Stream construction company Syntheo to not renew contracts worth over AU$300 million to construct the fibre NBN in South Australia and Western Australia.

Syntheo had already pulled out of the Northern Territory earlier this year, handing back the construction work to NBN Co.

It came as stories have mounted over subcontractors that are working for construction partners being paid below the expected rate for the work, and, in some cases, not receiving payment on time.

Communications Minister Anthony Albanese said today that the end of the agreement between the two companies was "normal business practice", and that the NBN remains on schedule and in line with expected costs.

"Contracts come to an end, and when they come to an end, you get a new contractor," he reportedly said in Brisbane.

Turnbull told reporters in Sydney this afternoon, however, that it was a sign that contractors are not being paid enough.

"It shows that if you pay contractors at rates that do not enable them to make a margin, they're not going to work for you for very long," he said.

"You've got to pay contractors at the rate they will work for you. You can't propose rates that people can't make a living working for you, which is the experience they're having at the moment."

He said that the proposed pay rates show an "air of unreality" about the NBN.

"If this were a private company, the directors would have been all gone, the management would have been fired, and they would have had the auditors — if not the administrators — in, trying to clean up the mess," he said.

But Turnbull would not say whether under his policy proposal — which would see the majority of the fibre-to-the-premises network scaled back to a fibre-to-the-node network — contractors would be paid more.

"The approach we are proposing to take is involving much less civil works, so it doesn't involve digging holes in everyone's front garden, drilling holes in their walls, digging up every street," he said.

"It is much more economical in terms of labour and civil construction generally."

Turnbull also claimed that NBN Co has hired far fewer contractors than it initially expected. He said that in a "devastating admission" today, Albanese said there are only currently 4,500 contractors working on the NBN, whereas Turnbull said that NBN Co mentioned in the most recent estimates hearing that 7,500 contractors were expected to be working on the project by the end of June.

"There are 3,000 fewer people working for the NBN Co today than they thought was going to be working for it by June 30," he said. "That explains one of the causes for the NBN Co missing its targets, so many contractors walking off the job [and] not being able to make a margin, for subcontractors not being paid, and for the rollout schedule being so far behind."

The transcript from that estimates hearing, however, does not include any mention of the 7,500 contractors figure.

Syntheo joint owner Service Stream today came out of an extended trading halt and announced that as a result of the ongoing issues with Syntheo, the company expects to report an earnings loss of more than AU$30 million for the 2012-13 financial year in its fixed communications division.

Turnbull called the press conference today, taking issue with Prime Minister Kevin Rudd's claim that the Coalition's policy would see people disconnected from the NBN, and that connecting to Labor's NBN is free.

Turnbull said that connecting to the NBN will require customers to sign up to plans with an ISP under either policy, and said his policy would see the NBN completed faster.

"Kevin Rudd should be held to this, he must clarify that, he must apologise for misleading people, and he must start telling the truth."

Turnbull said he is keen to debate Albanese on the NBN during the election campaign, but said he has yet to hear back from the minister. Turnbull said Rudd could send any of the ministers in his Cabinet to debate him on the NBN.

Topics: NBN, Government


Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • Spoken like a true Labor minister...

    ""Contracts come to an end, and when they come to an end, you get a new contractor," he [Albo] reportedly said in Brisbane."

    with zero business experience to fall back on they've dreamed up a business reality that simply doesn't exist.

    NBNCo is a decade (plus) long project, contractors that have skilled up in this area aren't going to walk away, nor are others going to walk in and be productive from day one.

    How these signs, linked to in talkbacks, were abused or ignored;-)
    Richard Flude
    • Albor spotted drinking with Craig Thomson

      Labor and corruption go hand-in-hand.
      • oooh...

        clever play on words, labor and albo, I see what you did there...

        ... Oh, no, just a typo, forgot coalition shills don't get clever...
  • Confirmation

    "The Australian can reveal that NBN Co re-signed Silcar, its main construction partner in NSW and Victoria, on Monday afternoon, shortly before caretaker conventions came into effect.

    In rushing to put pen to paper, NBN Co had to accept demands from its construction partners to increase the value of its contract by about 20 per cent to cover rising labour costs and unanticipated cost increases in the work needed to lay fibre down streets."

    Average household connection estimated to have risen to $2730. Still "on schedule and budget";-)
    Richard Flude
    • Election date announced sept 4

      NBNCo rushes through contract hours before caretaker provisions kick in. Apologies for the other day saying NBNCo had grown up; clearly I was wrong.
      Richard Flude
      • Aug 4th for Sept 7

        Richard Flude
  • finally it can be

    clear to the dim wits. Successful rollout of http is a financial matter.
    Remember when NBN Co huffed and puffed about the initial prices put forward by installers.well who is laughing now? Actually noone because it is a monumental stuff up.
    Knowledge Expert
  • ya see, ya see...

    even Mal from struggle street in Vaucluse thinks that free enterprise is a fail, quel irony...
  • Get a life and some figures

    Hey until you guys get me some figures for a fibre splicer sub contractor and what he is being paid on the NBN contract, and I deem it to be "unfair", I will eat my words.

    Until then it's a CLASSIC case of tendering as tight as possible with the thought of shiny millions in estimator's eyes.

    Plain GREED.

    Government wants to cut down on 457 visas and give jobs to Australians, Australians are used to cushy mining wages for smaller amounts of work, are lazy, and greedy in general (NOT EVERYONE JUST GENERAL TREND I'VE WATCHED OVER 2 DECADES). If you're a business owner you'll be nodding your head right now.

    I'm sure the NBN CAN ABSOLUTELY be built faster and at the current budget if not below. I think if this project was started even one or two decades ago, when people worked for their wage, the thing would be completed faster and cheaper.

    The "workers" I see coming through now barely last their 3 month trial when they're employed. Except for the ones from overseas on working holidays, 35+ yo or 457 visa holders.

    A lot of businesses I know are now preferring if possible 35+ yo and internationals for the simple reason that they know how to work for their money.

    Just the way it is. As we've created this rod for our own backs, do NOT be under the illusion any of this will be ANY different under the coalition.

    Just deal with it and get it done, and get it done right the first time.