Australians are facing the prospect of billion dollar budget blow outs from the building of a national broadband network (NBN) after it was revealed that most risks associated with building the fibre network are to be shifted from construction companies to the Government owned NBN Co.
It has also been revealed via the leaking of a confidential document to the Australian newspaper that the NBN Co and the Unions associated with the building of the network have negotiated a 36-hour working week, nine-day fortnight, 20-minute smokos, “crib” breaks after more than 90 minutes overtime.
On top of this the Communications Electrical and Plumbing Union had told construction firms bidding for the NBN contract that workers posted to work outside of their home State will need food and accommodation allowances of up to $400 a night.
One construction company boss told ChannelNews that Communications Minister Stephen Conroy will be long gone, when the full impact of the real cost of building the National Broadband Network are fully realised.
Recently the head of Infrastructure Australia, Rod Eddington, said that Australian governments did not have the money to develop our infrastructure needs and would need to rely on private sector cash.
He said that rather than leave labour relations to the private sector, the government has agreed to onerous labour agreements with the unions based on the disastrous Victorian desalination plant. The agreements will add a minimum of 25 per cent to the cost of the NBN and greatly jeopardise its fragile economics.
Business Spectator said that the agreement gives unions extensive rights over labour use in the project management. There is great danger that anyone attempting to build the NBN using that labour agreement will suffer the same fate as Leighton at the desalination plant. (See Channel News story here).
The Union claims for the building of the NBN has not been finalised but if accepted could blow out the building of the Network to $50 Billion as opposed to the $36 Billion being suggested by the Labour Coalition Federal Government say several sources.
Later today the NBN Co is expected to announce that Silcar, a joint venture between a Leighton Holdings subsidiary and Siemens, will be awarded a large portion of the contract work for the initial roll out of the NBN.
Last week Leighton Holdings chief executive, David Stewart, criticised the NBN Co for setting unrealistic expectations for contractors after the NBN Co initially said that most of the risk for cost overruns, delays and design defects would have been borne by the contractor.
Aware of this issue the NBN Co and the Federal Government has moved to eliminate this concern in an effort to get the roll out of the NBN back on track after several contractors loaded their submissions to the NBN Co in an effort to overcome Union claims. This resulted in all 14 submissions being put on hold because of the high costs outlined in the contracts.
Opposition communications spokesman, Malcolm Turnbull, described the project as a “financial black hole”.
Last month, NBN Co chief executive Mike Quigley told a parliamentary inquiry that the earlier tender process had been abandoned as “we are particularly sensitive to this because this is taxpayers’ money which the company will be spending”.
