NBN corporate plan consultant accused of conflict of interest

A consultant to the Department of Communications over NBN Co's new corporate plan has been accused of having a conflict of interest, given his role in developing NBN Co's 2013 strategic review.

A consultant hired to advise the Department of Communications on NBN Co's new corporate plan also had a role in NBN Co's strategic review, which formulated much of the company's direction for the multi-technology mix rollout in the new corporate plan.

Department of Communications secretary Drew Clarke today confirmed at an NBN Senate Select Committee hearing that 333 Group's managing director Chris Martin was one of two external consultants brought in by the department to review NBN Co's new three-year corporate plan.

The document outlines the company's plan of action for the next three years of the network rollout that was submitted to the government earlier this year.

According to Martin's biography on 333 Group's website, he was also the lead on the NBN strategic review, which advised the government that the so-called multi-technology mix model, including fibre to the node and hybrid fibre-coaxial (HFC), would replace much of the planned fibre-to-the-premises rollout.

Clarke said that Martin and Robert James from iMediate consulting were brought in to add expertise that was lacking in the department, while the department reviewed NBN Co's corporate plan.

Former Communications Minister Stephen Conroy indicated that having Martin consult on the corporate plan that is based on his work in the strategic review was a conflict of interest.

"It stands out like the proverbial. It is extraordinary that you would sign off on something like this," Conroy told Clarke.

Clarke said that the two men were just part of a 12-person group across his department and the Department of Finance overseeing the corporate plan, and that the decision to bring in the review of the corporate plan into the department was to build a skill set in the department and work closer with NBN Co.

"It was my judgement that these gentlemen complemented the skills of the department," he said.

Clarke rejected accusations that Martin had a conflict of interest, stating that Martin brought "entirely appropriate insights to the department".

Conroy said that moving to a model where the Department of Communications in large part reviewed the corporate plans was in stark contrast to the way corporate plans were reviewed during his tenure, with external organisations such as KPMG and Ernst & Young brought in to handle the entire review.

James, who Conroy said has an extensive history with Telstra, has also worked in the past (PDF) with well-known Labor NBN critic and former Telstra chief economist John de Ridder.

Clarke today confirmed that the cost for the four-person panel tasked with undertaking the cost-benefit analysis of the NBN had reached AU$420,000, and indicated that there may be small additional administrative fees added on later.

The Centre for International Economics, which was asked to develop the cost-benefit analysis model for the panel, was paid AU$660,000, excluding GST.

Clarke said the full costs for the review would be provided later.

Earlier this week, NBN Co revealed that in the last financial year, the company had spent AU$50.5 million on consultants, with AU$13.5 million going to Boston Consulting Group, AU$4.05 million going to KordaMentha, and AU$3.3 million to Deloitte Touche Tohomatsu.