NBN criticised over high salaries

NBN criticised over high salaries

Summary: The question of whether NBN Co executives are paid too much has been raised in the telecommunications industry this week, with some criticising the company's remuneration structure, while the company itself has highlighted its achievements and the need to pay commercial salaries to attract the right talent.

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The question of whether NBN Co executives are paid too much has been raised in the telecommunications industry this week, with some criticising the company’s remuneration structure, while the company itself has highlighted its achievements and the need to pay commercial salaries to attract the right talent.

Yesterday, the Herald Sun published a story that appeared to use information from NBN Co’s 2010 annual report (published in October last year) and its Corporate Plan (published in December last year) to demonstrate that the cost of the company's staff had reached an estimated $132 million per year, with at least 34 NBN Co staff on salaries of between $300,000 and $400,000 a year. NBN Co is strongly hiring at the moment as it bulks up its workforce and the NBN roll-out picks up speed.

In sustained attacks yesterday, Shadow Communications Minister Malcolm Turnbull opened fire at the company on the issue, describing its staff as “well paid”, and Communications Minister Stephen Conroy’s approach to spending on the network as “reckless”.

“This is a start-up business, but unlike every other start-up business, there are no financial constraints at all,” the newspaper quoted Turnbull as saying. “I have heard so many stories in the industry of people being lured from [other] employers with pay rises of 50 to 100 per cent.”

The annual report shows that for the 2010 financial year, NBN Co had four executives on salaries of $700,000 or above, and five more above $400,000. NBN Co chief executive Mike Quigley is personally paid more than $1.8 million a year, but donated his first year’s salary to aid research in brain disease and stroke rehabilitation. Quigley is believed to have significant resources owing from his past history as a senior executive at French networking giant Alcatel-Lucent.

Speaking to radio network 6PR in Perth yesterday, Turnbull said that NBN Co had more employees than it had subscribers on its network, “and they’re very well paid employees”. It was “amazing” that NBN Co had around 1000 employees but only about 560 subscribers on its network, the Liberal MP said. Quigley said at the launch of the Armidale section of the network that, since the start of NBN services at sites in Tasmania in August 2010, 723 customers have ordered services on the NBN, 712 of which had been connected.

“The bottom line,” added Turnbull, “is that this business belongs to a shareholder: Stephen Conroy. Well, it really belongs to the taxpayers, but Conroy’s the minister who is responsible for it and he is absolutely indifferent or reckless about expense.” Turnbull agreed with the 6PR host’s contention that “anyone in business knows that IT is a bottomless pit into which you can tip money if you want to”.

“Of course, absolutely,” he said.

“And that is always going to be the case when you have a shareholder, or a shareholders’ representative, Conroy, who does not care about the expense. If they were fair dinkum, if they were treating this money as they should, as carefully as if it were their own, then they would have done their homework and ensured that they got a cost-effective solution.”

Turnbull himself is believed to be in possession of a substantial fortune, owing primarily to his investments in companies such as OzEmail and WebCentral, as well as his history as the managing director and a partner of investment bank Goldman Sachs Australia. The BRW Rich List, which tracks Australia’s wealthiest individuals, estimated the MP’s fortune at $178 million in 2009.

Speaking in response to the Herald Sun’s report, NBN Co said that it was a start-up organisation that was “growing rapidly”. In a relatively brief time, the organisation pointed out, it had put in place most of the major components upon which the NBN would be based, including:

  • arrangements for its operating and business support systems;

  • a contract for the provision of the fixed wireless network and the interim satellite service (which begins next month);
  • major component supply contracts;
  • design and construction undertaken in five First Release Sites, and the connection of the first mainland test services; and
  • a major construction agreement with Silcar on the terms of construction for 40 per cent of the construction task nationally over the next two years.

NBN Co’s operating costs would exceed its revenues in the company’s initial years, the company acknowledged, but it forecasted positive operational earnings from the 2018 financial year, with positive net incoming to kick in during 2021. “Revenues in the Corporate Plan are projected at $5.8 billion in the 2021 financial year, and $7.6 billion in the 2025 financial year,” the company said. The government’s $27.5 billion equity investment will be repaid over the life of the project.

In terms of its executive remuneration structure, NBN Co pointed out that it was operating in “a competitive commercial market” for staff, and needed to pay market rates to attract and retain experienced and highly qualified people.

“Independent external advice was followed on remuneration levels, benchmarked against industry standards,” the company said. “The $132 million forecast in the Corporate Plan for staffing includes all staff-related costs — salary, training, travel, recruitment etc.”

The senior executives with upper salaries mentioned in the annual report, NBN Co said, were the first staff hired, as they were the ones responsible for creating the company as a whole, developing its strategic decision and making critical decisions about its future. “The senior team were also responsible for the recruitment of their direct reports and for hiring staff to progressively deeper levels in the organisation,” the company said.

In comparison with executives at other major telcos, NBN Co executives appear to be paid more than some but less than others. iiNet’s 2010 annual report, for example, shows that the company’s highest-paid executive, chief executive Michael Malone, picked up on $668,000 that year, with others such as chief technology officer Greg Bader on $424,000. Other executives were on salaries commonly between $200,000 and $400,000.

However, Telstra’s top executives were routinely paid more than $1 million each in total remuneration during the 2010 financial year, according to the company’s annual report; with the company’s chief executive David Thodey pulling in $3.2 million in total, and several others such as CFO John Stanhope above the $2 million mark.

Topics: Broadband, NBN, IT Employment

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24 comments
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  • Yeah. Well who would believe it noses in the trough surprise surprise !
    GBE-71384
  • I believe all executive management is over paid…

    If you look at salary trends over the last 100 years or so, in the early days the likes of nurses were paid more than business managers… Interesting that those who helped others were formerly considered more worthy than those who look after them self, but not now? I guess those who looked after themselves… really, looked after themselves…!

    However given the choice of Mike Quigley @ $1.8m or say, Sol at a base salary of $3m (plus easily reached incentives, which blew out to more than double that)…well!

    And here comes the government v.s private sector $ spiel...from which FUDster this time?

    BTW GBE, if you're going to try to stress a point, at least do it properly, please... it's "snouts" in the trough, a`la pigs...!
    Rizz-cd230
    • I was not referring to pigs Mate. And how long have you been the moderator here Fizz read the artificial no mention of pigs.
      GBE-71384
      • DER... that's what "snouts in the trough" is referring to... the analogy of greedy people enjoying lurks and perks, like pigs...no wonder you are unable to understand the NBN if you are too dumb to understand a basic saying...!
        Rizz-cd230
  • So you have been promoted from village idiot to moderator have you Fizz.
    GBE-71384
  • Oh "nose in the trough"... after reading your comments, with years of training and improvement, one day, you may progress many rungs up the ladder to village idiot!
    Rizz-cd230
    • I will tell you something an old liberal fudster knows there are thousands of public servants sitting around doing nothing and getting well paid for it. It's endemic if you do that in private enterprise you go out of business.
      Now you home work for the day is to find out why no global telecommunication company would sink their money into the Australians NBN. I know the one word answer it starts with P.
      GBE-71384
      • Ummm.. yes whatever, but thank you for at least admitting what we all knew anyway, that you are a Lib FUDster...!
        Rizz-cd230
  • What the? You guys talking about me behind my back....AGAIN!!!
    VillageIdiot-9b40e
    • Humblest apologies for grouping GBE with you VI, that was most thoughtless of me...!
      Rizz-cd230
  • Because when you have a $36 billion project to administer, the most important thing is to pay the people making the key decisions as little as possible. You know, because getting third-tier talent would be good enough, right?
    Gwyntaglaw
    • Well if that is true why wasn't private enterprise falling over themselves to set up an NBN. Reason it's a non profit money pit and the best people who want to be affiliated with success will not go near it the NBN.
      GBE-71384
      • Ummm because OBVIOUSLY it isn't profitable in a commercial sense, which is why the government has to step in...ffs... hellooooo!
        Rizz-cd230
    • I thought the best people were in private enterprise and I didn't see any private company's falling over themselves to invest in the NBN but there is a line up with their hands out.
      GBE-71384
  • It would be nice to get some comment here with out the posts being jumped by labour party Trolls.
    GBE-71384
    • Bit rude coming from a "self confessed old Liberal FUDster - GBE"...!

      But no, your dumb comments are being jumped on by Pro-NBNers of many different political persuasions. Labor, swinging voters (such as me), Nats and I know of many who post who suggest they try to balance it out by voting Greens but placing the Liberal candidate as first preference... ooh and of course, even your fellow Libs (those sans the Ovis aries gene of course) jump on you!

      Rest assured "self confessed old Lib FUDster - GBE", if the NBN as it stands was Coalition policy I would still be here forwarding the same arguments, in support of the Coalition and guess what...? You'd be here agreeing with me, such is your fickleness...!
      Rizz-cd230
  • The issue here is they are getting paid out of government money, in the case of other companies like iiNet, that money is coming from iiNet consumers that choose to go with iiNet.

    On the other hand, there is no choice out of NBN. Its just way too easy for government to squander taxpayers money, they have no restraint whatsoever
    deteego
    • LOL... answered in full... dat ego...sigh!
      Rizz-cd230
    • Now that I have that LOL off my chest, check my very first comment, above, dat ego...

      Here's a snippet - "And here comes the government v.s private sector $ spiel...from which FUDster this time"?

      And the winner is "dat ego" fulfilling my prophesy as clearly stated ... speaking of plankers! Thanks planker!
      Rizz-cd230
  • If the NBN was a profitable business the government would never have got a look in private enterprise would be out bidding each other to set it up. The NBN is a misguided and poorly planned money pit.
    GBE-71384