Syntheo disaster could lose Rudd's NBN election

Syntheo disaster could lose Rudd's NBN election

Summary: Mike Quigley was quick to claim that Syntheo's collapse would not dely the NBN rollout in Western Australia and South Australia — but with just a month until the election, this was the last news NBN Co needed. Will it be a free kick for the Coalition?

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One of the most interesting things about Kevin Rudd's re-emergence as prime minister has been his willingness to trash Labor dogma to make up the political ground that Julia Gillard lost. Education, disability care, the carbon tax, boat people — everything has been on the table as Rudd races toward the middle to shore up the party's position and close the gap with Tony Abbott.

Or, to be precise, nearly everything. By far Labor's most expensive and substantial policy — the NBN — remains untouched, with Anthony Albanese continuing to parrot the party line and spew well-worn bons mot even as the withdrawal of Syntheo highlights the industrial-relations nightmare that the NBN has become.

CC BY-SA 3.0 warsame90 (http://en.wikipedia.org/wiki/File:Eylcamel.jpg)
Just how much work can NBN Co heap onto its remaining contractors?
(Image: CC BY-SA 3.0 warsame90)

The whole reason a joint venture like Syntheo is created, after all, is to spread risk and pool resources between Service Stream and Lend Lease; in handing back the contract to Lend Lease, Service Stream is blatantly conceding that the actual rollout has neither the risk profile nor the available resources it needs.

NBN Co continues to argue that everything is under control, as in Quigley's quick nothing-to-see-here proclamation. And, yet, there is nothing business-as-usual about an NBN rollout that, a month from the election, continues to generate a seemingly unstoppable flood of bad news.

Stephen Conroy may go down in history as the great conqueror of Telstra and the architect of the NBN, but there are already signs that, freed of his bulldog tenacity, the NBN's sheer bulk and complexity could be its undoing.

Missed targets, asbestos-related delays, the collapse of a key rollout subcontractor, revised targets met by the proverbial skin of the teeth, and ongoing niggling fears that Australia's private sector does not in fact have the resources to pull this off — all are putting Rudd's Labor government into an unsettling position in which we simply cannot see the light at the end of the Telstra duct, so to speak.

If Abbott doesn't jump on this latest development and vigorously throttle this latest development with both hands, he's probably asleep or dead. Just consider what his Coalition did with the school halls and pink-batts policies.

Having a major contractor simply throw its hands up and walk away from a massive construction deal is surely not going to send a positive message to the rest of the industry.

Sure, SA Power Networks and Downer EDI are being said to have picked up the slack left by the Syntheo train wreck — but those companies won't have much extra capacity for SA and WA rollouts from staff that are already over-extended for existing east-coast rollouts.

Both contractors will be happy to pocket more millions to add SA and WA to their to-do lists, but they'll be moving into an industrial-relations climate sure to be tainted by Syntheo's collapse. Meeting their expanded obligations will require convincing once-bitten-twice-shy subcontractors in both states to keep working hard on contracts that one contractor has already dismissed as being commercially unviable.

Albanese has publicly dismissed the contractors' complaints, recently alleging that they were using the media to push for pay increases. Those issues may rightly be problems for NBN Co lead contractors rather than the government, but they will become a nightmare for a Labor government that had, among other things, promised that the NBN would be a steady and profitable source of employment for many years to come.

Whether Syntheo was simply poor at costing the project, or whether it is indicative of a broader problem around skills, Syntheo's failure reinforces everything the industry (and Malcolm Turnbull) has been saying about NBN contracts for months. It can't have but sent shivers up the spines of the other NBN contractors, which will naturally see a commercial opportunity, but will also be rightly concerned about skills availability, steady payment for completed work — and, of course, the potential for a radically different NBN market after the election.

If Abbott doesn't jump on this latest development and vigorously throttle this latest development with both hands, he's probably asleep or dead. Just consider what his Coalition did with the school halls and pink-batts policies.

Successfully doing the same with the NBN could be disastrous for Rudd: With 2.2 million Western Australians and 1.7 million South Australians now basically being told it's considered commercially unviable to bring them more fibre-to-the-home services, Syntheo may have just damaged Labor's chances in those states.

While the demise of Syntheo may not be Rudd's fault, it is definitely his problem. With the election on a knife's edge, Syntheo's collapse could be the straw that broke the proverbial camel's back.

While the promise of the NBN was once a sure-fire vote-getter, Rudd must deal with the increasing reality that the NBN rollout is simply not in the position it needed to be at this point. Contracts are in place, but the project's fundamentals are being questioned at every level — giving the Coalition's alternative policy political weight that glosses over its technological inadequacies.

That's not great for Rudd, who can hardly scale back the NBN or substantially change its design: Doing so would be tantamount to admitting that Abbott and Malcolm Turnbull have been right all along. And yet, if he doesn't admit that something needs to be done better, he will be painted as hopelessly and ineffectually optimistic.

Rudd has made hard decisions about other Labor policies; perhaps now he needs to seize the NBN by the horns before it pitches him over the fence.

His best strategy is to acknowledge the NBN's challenges, but highlight its fundamental advantages — and to point out that a Coalition policy would necessarily be executed by the very same subcontractors that Labor is dealing with now, but with the looser worker protections and pro-business slant for which the Coalition stands. Turnbull's policy is, in other words, hardly a slam-dunk.

While the demise of Syntheo may not be Rudd's fault, it is definitely his problem. With the election on a knife's edge, Syntheo's collapse could be the straw that broke the proverbial camel's back.

What do you think? Should Rudd start plain-talking about the challenges the NBN faces? Or just stay the path and hope enough people hate the Coalition's alternative policy?

Topics: NBN, Broadband, Fiber, Government AU, Telcos, Australia, Next Generation Networks

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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Talkback

19 comments
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  • You answered your own concundrum

    "Sure, SA Power Networks and Downer EDI are being said to have picked up the slack left by the Syntheo train wreck — but those companies won't have much extra capacity for SA and WA rollouts from staff that are already over-extended for existing east-coast rollouts."

    You buried this gem, why? Just as the coalition would employ the very same tradies to trench and splice copper and greenfields fibre, SA Power Networks and Downer EDI will employ them now to continue working under new oversight.

    Seriously, this is a non-story, David.

    Why are you not asking Turnbull for costings and the detail of his plan for gigabit broadband using VDSL? Or even for his 2019 FTTN speed upgrade including the number of refrigerated nodes?
    umbria
    • The scale is completely different

      "Just as the coalition would employ the very same tradies to trench and splice copper and greenfields fibre, SA Power Networks and Downer EDI will employ them now to continue working under new oversight."

      Fibre splicing demand & pit remidation is considerably less for FttH which is why it is faster and less expensive.

      "Seriously, this is a non-story, David."

      Really, every NBNco disaster is a non-story; none ever lead to delays or cost overruns? None are signs of problems with the project?

      "Why are you not asking Turnbull for costings and the detail of his plan for gigabit broadband using VDSL?"

      Perhaps because it isn't the collation plan.

      Form David's article:
      "Rudd must deal with the increasing reality that the NBN rollout is simply not in the position it needed to be at this point"

      Rudd doesn't deal with realities at all, he makes press conferences. Thought bubbles he outlines falls apart a week later. He is a clown, modern Labor his circus.
      Richard Flude
      • FFS

        Oh here we go again!

        Seriously, the same contractors will be under the Coalition Goverment.!

        This article is just a negative - are our country just a bunch of whingers?
        DanielZenno
  • I don't really see the issue to NBNCo.

    Sure, politically, it's a big blow for Rudd because the average Australian doesn't understand how business contracts work.

    But Syntheo quite clearly didn't plan or cost their obligations to NBNCo. correctly. This is an admission of it. They have even agreed to pay back advances. 2 other contractors have stepped in to fill up Syntheo's place, so it's not like NBNCo. are running out of takers.

    I understand the Silcar contract was extended by a year too, so it appears even their current contractors still believe they can make a profit, perhaps with some tweaking of terms with NBNCo.
    seven_tech
  • Richard

    I'm feeling more comfortable with Labour (as much as it makes me shiver) than an Abbot lead coalition which is refusing to get ANYTHING independently costed and refuse to provide actual details of their alternate FASTER, CHEAPER NBN..... Mals only comment back is.... we'll tell you after the election.

    Abbotts comments regarding his promises to buy the nation.... treasury cant be trusted.

    Treasury worked for John Howard...

    Also Richard... how about you start answering some of the question people stick to you with you post News limited propaganda?
    Yettie79
    • Treasury?

      The recent budget lasting all of three months; 5 weeks into the new financial year. Treasury a joke; heavily politicise under Labor.

      Anyway treasury doesn't cost elections policies; that task is handled by the Parliamentary Budget Office.

      I'm not an Abbott fan, he too is big govt. But to question the coalition NBN plan, most detailed of any policy we've seen, is quite bizarre. The NBNCO's corp plan is in tatters, near daily disaster stories yet the "on time and budget" line continues without question.

      Vote for whoever you like; spare us the ignorance on the way to the ballot box.
      Richard Flude
      • ...

        If Coalition Party had any brains it will use the PBO / Treasury to defuse the situation, but I'm pretty sure we know they won't until the last day of the election.

        I know the costs differences of the NBN and Coalition NBN, it is simply NOT worth the trouble going with Coalition NBN.

        Why should we fork out $3000 dollars for Fibre, when the Goverment is suppose to be providing these BASIC services from the get go, I couldn't give a toss as to who it was.

        But the fact is this debate has been going on since the Goverment had 50% control of Telstra.

        It was also then Coalition Party selling Telstra, thus causing the current Goverment and Future Coalition Coalition Party Goverment to spend more money on the project.

        Would you pay $3,000, when the Goverment can get it done for $2500 or so? And it's the Better version and not the crappy Fibre-on-Demand version?

        This crap should have been started ages ago before Telstra sale.

        Coalition Party had their chance, it's time for Labor to have their chance.

        Coalition Party FAIL.
        DanielZenno
        • Surely Labor has "had their chance" too

          6 years; 200k people with fibre passing their premises, 55k of which unable to order any service for upto 18mths.

          Billions borrowed, 3k employees, contractor disasters, revolving door for management. 2m households without even ADSL when they came to power still without it.

          NBNCo is an illusion; their 50+ media team spinning rubbish.
          Richard Flude
          • FUD

            Richard a lot of what you say has a ring of truth HOWEVER, where do you get six years from buddy?

            The Tasmania TRIAL did not start till 2010. That's 3 years ago in my books? And that was only the TRIAL not the START OF CONSTRUCTION.

            Please, if you're going to argue your points don't over-exaggerate so much all the time. That is exactly what Malcolm did when he was here debating with myself and other concerned citizens in a forum. ASt one point he was referring the the NBN as a $90b cost.

            Righto. I've asked before but are you SURE you aren't really Malcolm or one of his cronies?
            Ramrunner-5dd3e
          • 6 years of Labor

            "Surely Labor has "had their chance" too"

            Sorry if it wasn't clear.
            Richard Flude
          • Surely Labor has "had their chance" too

            "6 years"

            And the Liberals had a decade to do something about it (the committee John Howard setup recommended fibre back in 2000).

            Apart from a half arsed RFP, they did nothing. at. all.

            At least Labor actually got something started about it...
            Tinman_au
      • Hmm...

        "a joke", "bizarre", "tatters", "disaster", "ignorance"

        Over dramatise much? Almost every post from you is like a small episode of "Days of our Lives"...
        Tinman_au
        • Left out "farcical"

          the debt for so little "tragic".

          Entirely foreseen, how they abused these talkbacks.

          Never seen Days of our Lives; I'll have to take your word for it.
          Richard Flude
  • Capitalism

    This is kind of a non-event and something you could see coming. It's how capitalism is supposed to work, survival of the fittest business...
    Tinman_au
  • Reasoned reporting or just politicking?

    This is all that can be reasonably expected for almost any IT project of this size.

    Regardless of the (almost inevitable) exceeded deadlines, this is still very much worth doing and completing. That everyone is stretched to the limit, and some contractors fall, is a managed risk. It is at least a benchmark this massive undertaking is happening, as timely and as tightly as it can.

    You fluster "If Abbott doesn't jump on this latest development ..." - well that would be typical negative politicking, wouldn't it? Could he realistically do it better - probably not.

    ZDNet readers might really prefer more experienced and rational technical or project management insight into such a project, not crass political commentary. Better to leave that for the tabloids.
    Tonybaby
    • If reasonably expect

      Why wasn't it included in their corporate plan?
      Richard Flude
      • Huh?

        Why would they include other companies financials in their own corporate plan?
        Tinman_au
      • another ... Huh?

        what a peculiar comment, Mr Flude
        i'm trying very hard to sere any relevance what so ever
        khsharpe
  • kinda wondering why not ...

    "Contracts are in place, but the project's fundamentals are being questioned at every level — giving the Coalition's alternative policy political weight that glosses over its technological inadequacies."

    perhaps you should have included a little more detail on the coalition's technological inadequacies, so that we could decide if your premise has merit? Might also help us decide if we still prefer labor's option?

    as an aside, i'm old enough to remember the Sydney Opera House from inception to completion plus numerous major undertakings since. I'm not overly interested in press whinings about cost over runs and things not working to schedule or plan. I want a premium product at the end of the day, not the coalition's 2nd rate offering a generation plus will have to live with. And i have to say, journo's negative reporting on this became a tad tedious ages ago
    khsharpe