It hasn’t been a great week for that conservative media staple, the anti-NBN story.
First there was an Australian Financial Review story on Tuesday (now, unsurprisingly, no longer online) claiming a senior executive of major NBN contractor Silcar had quit. The story, by David Ramli, was inevitably billed as an “exclusive” and headlined “contractor problems keep rising for NBN”. The reason why the story was “exclusive” then became clear: the executive hadn’t quit, as Silcar rapidly made clear. The AFR had to publish a retraction-in-all-but-name.
It got better.
On Wednesday The Australian’s indefatigable investigator of all things NBN, Annabel Hepworth, had some alarming news: that “the ultimate cost of the project could spiral out to between $60 billion and $70 billion”.
Now, we’re a long-term fan of Hepworth’s reporting of the NBN as well as other matters such as the “independent modelling” that frequently seems to find its way into her inbox, and we understand she enjoys us drawing attention to her excellent journalism here at Crikey. So we were eager to see on what basis Hepworth believed the cost of the NBN could nearly double. The basis was that “a slew of NBN Co’s current construction contracts are due to expire between this year and 2016 and will have to be renewed” and that she’d “been told that industry suppliers are looking for increases in the value of contracts of between 20 per cent and 40 per cent for further work”.
Ah, so, a more pedantic summary of the story would be that industry suppliers would like to increase the costs of work contracts. Though, to be fair to Hepworth, this is news, since most construction firms operate on a non-profit basis and have no interest in trying to inflate their prices. But Hepworth’s maths also seemed to be a little out. The cost of the NBN is supposed to be $37.4 billion. A 40% increase in $37.4 billion is, um, $52 billion, not $60-70 billion.
Nonetheless, aghast at the looming blowout in the NBN’s cost, I checked with the company. According to NBN Co, the total cost of the rollout of the fibre will be around $11.3 billion, a third of which is equipment costs that NBN Co directly controls. The remainder, the construction costs themselves, are worth around $7.5 billion over a decade. So Hepworth’s 40% increase in cost would add $3 billion — not $30-40 billion — to the NBN cost of the build. Moreover, NBN Co has a 10% contingency in place that would cover the $3 billion.
“There’s also the slight matter that none of our contractors have come to us cap in hand demanding a 40% premium. Not one,” NBN Co’s spokesman told Crikey.
So apart from the cost increase that isn’t happening and the maths that was out by a factor of 10, Hepworth nailed it.
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But undeterred by such trivia, Hepworth was back again today, reuniting with her plucky young assistant Mitchell Bingemann to report that Communications Electrical and Plumbing Union officials had attacked NBN Co and Telstra for taking too long to fix the asbestos problem in Telstra pits identified earlier this year. How was this NBN Co’s fault? Well according to one official, David Mier, “NBN Co appeared ‘complicit’ in ‘deliberate delaying tactics'” (because, obviously, NBN Co wants as many delays as possible in its rollout, yes?).
The asbestos issue blew up at the end of May and early June. At that time, there were calls for pit remediation work to be halted until the pits were properly audited and declared safe. Those calls were even reported in The Australian.
Who demanded work stop until the pits were safe? Why… the CEPU itself. So in June the CEPU was demanding a halt to work until everything was OK, and even threatening industrial action unless this was done. Eight weeks later, Telstra’s doing too thorough a job for the liking of the CEPU. Presumably the CEPU wants subcontractors to now go back into unsafe pits.
That little bit of the story didn’t make it into Hepworth and Bingemann’s piece, doubtless due to overzealous subeditors rather than any concern that it didn’t fit the narrative. Though Hepworth had toned down her take on her previous story, noting today “NBN faces demands by the major construction contractors to pay them between 20 per cent and 40 per cent more for further work as a series of contracts are due to expire over the next few years” — a rather more accurate, if still not wholly correct, take.
But at least journalists at the Oz understand the difference between Telstra and the NBN. Wannabe right-wing shockjock Paul Murray also had a go at the NBN on Wednesday. The reason? A caller had rung him at 2UE to complain that Telstra had taken two months to fix his wi-fi and wouldn’t compensate him for it. On that basis, Murray then bagged the NBN for underdelivering, and also lamented that the NBN wasn’t yet available in the Ponds, a huge new suburb in outer-western Sydney.
In fact, the NBN is already available in more than a dozen stages in that development.
Still, they’re just facts. Who cares?