Syntheo disaster could lose Rudd's NBN election

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.

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?