Is Labor digging a hole on NBN labour?

NBN Co's hard stop has many observers wondering if the company hasn't bitten off more than it can chew — or whether construction bosses are just building too much fat into their contracts. Yet as NBN Co works to recover its momentum, it's worth considering whether Labor's determination to complete the project could see an alternative plan following the lead of our Asian neighbours.
Written by David Braue, Contributor

A friend of mine who did not attend university or even finish high school is currently drawing a six-figure package for a construction job that mainly involves pouring concrete and hitting things with hammers.

I don't know whether he'll be involved in the building of the NBN — nor does anybody, after NBN Co's surprise suspension of negotiations with 14 possible contractors. Yet I do know that this surprising turn of events highlights a significant problem in Australia's labour market, where decades of union intervention have normalised a situation where what used to be called "menial labourers" are drawing enormous salaries for digging holes, laying cable, pouring concrete, cutting trees and the thousand other tasks involved in any massive civil works project.

Multiplying these kinds of salaries times the tens of thousands of workers needed to build the NBN — and then adding on the usual margins for risk, both that which is inherent in the project and that posed by the continuing uncertainty around the NBN — is bound to produce a very, very big number indeed. And while NBN Co has assured us that it has an alternative plan that is thought to involve direct negotiations with Leighton-backed joint venture Silcar, I wonder if the solution may eventually lie overseas.


Australian ideas of workers' rights are far more progressive than those of our Asian neighbours. (Credit: David Braue/ZDNet Australia)

Both sides of the NBN debate have drawn heavily on the experience of overseas broadband to justify their respective positions: Stephen Conroy points to massive investments in broadband in other countries, while Malcolm Turnbull has recently taken to arguing that Korea has delivered better, faster broadband that also reduces cholesterol and whitens your teeth. Or something like that.

What these politicians are not, at least outwardly, considering is how those networks came to be built. And if you think they were built by heavily unionised fleets of construction workers enjoying healthy superannuation contributions, generous leave allocations, wage loadings for every hour spent standing upright or breathing while within 50km of a job site, and the like — think again.

Anybody who has visited the high-growth areas of Asia's emerging second-world economies — Dubai, Singapore, Abu Dhabi and even South Korea — knows their spectacular growth is entirely due to the armies of foreign workers brought into the country as a source of low-cost labour. Working under the strict supervision of local foremen and the ever-present threat of deportation, these largely unskilled migrant workers come from India, Bangladesh, Thailand, Sri Lanka, the Philippines, Indonesia and other countries to take on jobs that are too dangerous, monotonous or physically demanding for local workers to bother with.

Fast-growing Singapore, for example, had an estimated 290,000 foreign workers back in 2001, 580,000 in 2006, and added 53,000 more in 2009 alone. An entire government bureaucracy exists to manage their flow into and out of the country, with jail terms and caning among the penalties for those who overstay their permits.


Singaporean law may not mandate seatbelts in ute trays, but it does hold drivers to slower speed limits when carrying workers.
(Credit: David Braue/ZDNet Australia)

Not only are these workers happy to offer their services, but they do it for a song — living in high-density, often squalid conditions without healthcare, overtime, superannuation, protest rights or any of the other perks Australia's unionised workforce has long taken for granted. They can be fired and deported on a moment's notice. And what of on-the-job occupational health and safety protections? Little more than a hard hat and the promise that they can have the rest of the day off if they are crushed, run over, maimed or killed on the job.

Yet despite all this, they work long shifts with little reprieve — channelling the money they make back to families overseas that they may not see for months or years at a time. It's a difficult life by many standards, but the only option available for tens of thousands who have little alternative to a life of poverty and struggle back at home.

Decision time

I mention all this not to expound on the evils of capitalism, but to point out the very real impasse into which NBN Co's announcement places us. While our politicians monster each other over piddling points of policy, they ignore what now appears to be one of two major issues: one, that the construction industry is colluding to overcharge what it sees as a government desperate to get on with the NBN's construction; or two, that Australia's workforce has priced itself out of the market for major civil works projects like the NBN — and NBN Co has relied too much on overseas benchmarks based on lower labour costs.

If the latter is true and NBN Co is indeed in real strife here, it may need to start considering other options — and that could very well include a push for the government to speed the importation of non-unionised labourers to handle the massive amount of civil works involved in this project. Pundits are quick to warn of the difficulties in securing engineering and technical skills to roll out the NBN given competition from the resources sector — but not everybody building the NBN needs to have a Master's in Engineering. Once the initial planning is complete, the majority of the NBN's roll-out will be done by people who, like my friend, are adept at digging trenches, pouring concrete and hitting things with hammers.

The question is: how much do NBN Co's alternative plans rely on alternative labour sources? Given that the Gillard Government has bet the house on the NBN, it's not unreasonable to speculate that it will consider all options to reach its goal, but facilitating the importation of foreign low-skilled workers would be a political hot potato indeed.

As a party that has consistently shown itself happy to erode unionised workers' rights — and one that has agitated endlessly against an over-priced NBN roll-out — this sort of action should sit very well with the Coalition. Yet it would raise uncomfortable questions on both sides of the political fence.

Would a cost-conscious coalition, for example, support the importation of low-cost foreign labour to keep the cost of the NBN low? And would it accept a higher-cost NBN if those higher costs would allow the use of exclusively Australian labour? And would Labor be willing to compromise its history of supporting Australian workers' rights in order to deliver the NBN quickly and at lower cost?

Given the extent to which the NBN debate has been framed against our Asian neighbours, it may well be time to consider whether it's possible for us to keep up with their infrastructure development without adopting labour policies similar to those taken in fast-growing Asian economies.

Would a cost-conscious coalition, for example, support the importation of low-cost foreign labour to keep the cost of the NBN low? And would it accept a higher-cost NBN if those higher costs would allow the use of exclusively Australian labour? And would Labor be willing to compromise its history of supporting Australian workers' rights in order to deliver the NBN quickly and at lower cost?

There is always the possibility that NBN Co is just playing hardball with an industry that recognises the urgency of quick completion and is manoeuvring to extract as much benefit from the public trough as it can; the CEPU's NBN project coordinator Allen Hicks hinted at as much by suggesting pay cuts for NBN workers would slow down the project.

If we try to roll out major civil-works projects like the NBN while affording the entire workforce the same level of benefits traditionally afforded to middle management, the cost of the NBN will indeed blow out dramatically; never mind delays from strike action, mid-term renegotiations, political interference, and the like. And while importing labour to decrease tender costs may be politically and socially unpalatable in Australia, it's been essential in fast-growing countries that have successfully been able to pull up their economies by their bootstraps.

One certainly hopes completion of the NBN wouldn't require erosion of Australian workers' opportunities in this way. Yet as suggested by NBN Co's difficulties in securing its expected price, it's entirely possible that years of construction-industry dominance have put even our low-skilled workers on such a pedestal that we are no longer able to summon the manpower and political will to complete ambitious, nation-building projects. And that realisation, if it proves true and the government does nothing to resolve it, could turn out to be the biggest cost of the NBN.

What do you think? Is it worth paying billions more for the NBN to be built by well-salaried Australian workers? Does a project the size and cost of the NBN require new thinking and a willingness to import labour to keep overall costs down? Or are there entirely different reasons for NBN Co's dramatic change of direction?

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