NBN construction pay rates 'extremely poor': NSW Business Chamber

The New South Wales Business Chamber has said that it has received complaints from NBN contractors over the pay rates for constructing the fibre network.

The New South Wales Business Chamber has told a parliamentary committee looking into the rollout of the National Broadband Network (NBN) that contractors have complained to the chamber over the "extremely poor" rate of pay.

"The chamber has, however, received a number of complaints from contractors in relation to the NBN Co cabling tender process, and the poor logistics capabilities of some companies that have signed individual contracts with the NBN Co," the chamber said in its submission.

"One particular contractor from the Sydney region advised that since the cancellation of the cabling tender process more than 18 months ago, there has been extremely poor rates of work for contractors, as well as a lack of communication between the NBN and contractors about when work opportunities of this nature will actually be made available."

The comments align with the comments made by subcontractors late last year that NBN Co fibre network construction contractors Syntheo and Silcar were paying as much as 75 percent less than the current going rate for cabling jobs.

The Australian Financial Review also reported in February that internal documents it had obtained from NBN Co showed that the going rate for NBN contracts to install cables or new pipes were up to 75 percent less than the current market rate.

An NBN Co spokeswoman told ZDNet that the company negotiated value-for-money contracts with its construction partners, with an eye for the subcontracting deals that would also have to be arranged.

"These agreements were reached after extensive national and international benchmarking of costs for similar construction projects to arrive at a fair balance of risk and reward. These contracts were developed conscious of the need for further sub-contracting arrangements," she said.

"We rely on our construction partners to manage their sub-contractor arrangements fairly and reasonably."

The chamber also claimed that Telstra was "selling off its exchanges to the NBN Co with no stop gap before the rollout of the NBN in 2015". Telstra leases space to NBN Co, but the original copper network remains in place for 18 months after an area is declared ready for service on the NBN.

The chamber claimed that because Telstra had put off doing any ADSL upgrades to those areas, one town, Wauchope, had no additional ADSL ports to get services and were forced to instead use wireless.

"NBN Co should be considering appropriate transition mechanisms in these circumstances to ensure service continuity for users."

The chamber said that the NBN is "a critical infrastructure project" for Australia and a high-priority development, but some of the 12,000 businesses the chamber represents were said to be disappointed at the slow pace of the rollout.

"However, part of this frustration with delays may also be due to the keenness of businesses to get connected as soon as possible," the chamber said.

Difficulty with getting construction workers for the project as quickly as required last month forced NBN Co to revise down its forecast for the number of premises it will pass by the end of June 2013 from 341,000 to between 190,000 and 220,000.