NBN executive inexperience led to 'gold-plating': Turnbull

Shadow Communications Minister Malcolm Turnbull has accused NBN Co CEO Mike Quigley and other executives in the company of being unsuitable to run the company.
Written by Josh Taylor, Contributor

Shadow Communications Minister Malcolm Turnbull has said that NBN Co CEO Mike Quigley's lack of experience in running a telecommunications company has contributed to the "gold-plating" and excessive spending of the company.

In a keynote speech at the Communications Day Summit in Melbourne this morning, Turnbull said that the National Broadband Network (NBN) would be an important election issue in 2013 for the Coalition. He took aim at the "heroic disregard for facts, evidence, and accuracy" surrounding the reporting of the NBN. He argued that criticism of the comments he made two weeks ago, in regard to Quigley not being qualified to run the company rolling out broadband fibre across Australia, was unjustified.

"Mr Quigley's career was spent at a vendor of networking equipment, where he was extremely successful," he said. "Mr Quigley has not worked for a telecommunications carrier. He hasn't ever been responsible for a network rollout or an operating telecommunications business. Nor, as it happens, have any of the current directors of NBN Co — there, we have five former bankers, two former McKinsey consultants, two former equipment vendors, but no former telecom executives."

Turnbull said that the most recent board appointee, Dr Kerry Schott, was more qualified, having run Sydney Water. But the lack of experience, overall, meant that NBN Co had set unrealistic goals.

"In my view, this has contributed to NBN Co setting, for itself, milestone after unrealistic milestone that it has abjectly failed to achieve," he said. "It has contributed to NBN Co's culture of gold-plating and excessive spending, because if capital is not constrained and those supervising the enterprise are not directly familiar with its task, the safest option is to choose the most costly option. And the easiest way to deal with mounting pressure and slipping schedules is to throw money at them."

Turnbull said that the Coalition's policy for the NBN will be, in large part, dictated by the contracts that NBN Co has already been locked in to. The Coalition will keep the fixed-wireless and satellite services for this reason.

He also added that, if the Coalition wins government, he would hold an inquiry into the management and the governance of NBN Co, and look at the contract commitments that have been made by it.

"We do not know what contractual commitments we will inherit, or how these may be varied to suit a changed design. And given Senator [Stephen] Conroy's extravagant rhetoric about 'locking in' Labor's NBN, we have every reason to be cautious on this front — although, it is our very strong expectation that the Department of Finance, which is a 50 percent shareholder in NBN Co, will have properly and comprehensively protected the interests of Australian taxpayers and Australian democracy in this matter."

He said that he cannot be precise about how much a Coalition government would pay Telstra to access the copper for a fibre-to-the-node (FttN) approach, instead of the current fibre-to-the-premise (FttP) approach, because he cannot negotiate with Telstra while in opposition.

For this reason, Turnbull said that he could not cost his policy today.

"If we were in government and working from a clean sheet, we could very easily cost our policy down to the last cent — much more accurately than Senator Conroy has been able to cost his. But we are not," he said. "And given so much of the uncertainty we face is in the hands of the [current] government and NBN Co, I am not going to claim otherwise."

"The one thing we do know, and all you know here, is that FttN is substantially faster and cheaper to deploy than FttP. That is why so many telcos around the world are deploying it."

He predicted that if Labor returns to government after the 2013 election, he "wouldn't be surprised" if taxes were raised for the telecommunications industry, once Labor realises the true cost of the network.

"They may try to raise taxes on other parts of the telecommunications industry to pay for it," he said.

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