Federal

Nov 20, 2015

Outsourcing lets NBN keep its ‘commercial-in-confidence’ secrets

Our government sure is on the ball when it comes to outsourcing responsibility.

Josh Taylor — Journalist

Josh Taylor

Journalist

We still don't have an answer to many basic questions about the National Broadband Network (and remember, it is your money being used to build it), as outsourcing allows NBN to hide all sorts of information, claiming "commercial in confidence". When NBN Co, as it was then known, was set up under the former Labor government in 2009, it was never intended that the company would build the entire broadband project itself. NBN never had the skilled workers and expertise to be able to build the project on its own. Operating as a wholesale-only company means NBN needs to enter into commercial agreements with existing telecommunications providers like Optus, iiNet and Telstra in order to provide services to customers. And that means NBN has used the "commercial-in-confidence" excuse time and time again to avoid providing detail on a wide variety of information, both under the former Labor government and now as Malcolm Turnbull's multi-technology mix rolls out. Example One How much taxpayer money is going to one of the biggest financial services companies on Wall Street? And what is the nature of the arrangement? Outsourcing allows NBN to keep that information secret. In 2012 Fairfax journalist Lucy Battersby attempted to access documents under freedom of information in relation to the appointment of Goldman Sachs as a corporate adviser to NBN. NBN rejected the request, stating it would result in the company being forced to pay higher costs for services. When reviewed by the Office of the Australian Information Commissioner, then-commissioner James Popple found that that Goldman Sachs' work for NBN Co, in providing corporate advice to the company, could be considered commercial advice:
"The corporate advisor was expected, amongst other things: to provide assurances that NBN Co will operate efficiently and at a minimal cost; to ensure quality of outputs; and, in the longer term, to maintain a commercially viable business platform that will allow NBN Co to pay commercial dividends and eventually privatise. I consider that the role of such a corporate advisor is commercial, and that documents in the last two categories listed above directly relate to NBN Co’s commercial activities."
Popple, therefore, upheld NBN's decision to reject the request. This decision, and an earlier one preventing the release of Telstra's $11 billion agreement with NBN, has subsequently been cited by NBN in rejecting other, similar, requests for information under FOI that is "commercial-in-confidence". Example Two Not even Parliament can overcome the mighty "commercial in confidence" excuse to find out information about the company it created and owns. In the last Parliament, independent MP Rob Oakeshott chaired a joint parliamentary committee looking at the NBN. In one of the committee's reports into the NBN examining the construction contracts in 2011, Oakeshott indicated that the use of the "commercial-in-confidence" claims during hearings could have impeded the committee's ability to do its work. The committee was seeking contract detail at the time because NBN had been struggling to negotiate its construction contract, and the committee was also seeking more insight into the Telstra and Optus agreements signed with NBN. Difficulties with the construction contracts were one of the reasons for the delays in the NBN under the former government. Then-CEO Mike Quigley would often respond to questions stating he could not disclose commercially confidential material. Then-opposition communications spokesman Malcolm Turnbull, while often disagreeing with the committee's majority view, agreed NBN could not always just rely on confidentiality claims to keep from giving evidence. "While appreciating that some matters are genuinely commercially sensitive, the Coalition members of the committee do not see why a commercial contract should receive automatic and blanket protection from parliamentary scrutiny simply because it involves a private sector counter-party," Turnbull said. Example Three How did NBN come up with its figures for the supposedly expensive Labor version of the NBN? We don't get to know, because -- you guessed it -- it's "commercial in confidence". For a long time NBN also used the "commercial-in-confidence" excuse to avoid providing a breakdown of the cost to roll out the network per premises. This could jeopardise its construction contract negotiations, the company said. But as soon as it became a controversial topic, NBN was finally able to produce a figure. Since the change of government, the true cost of the rollout is now a matter of contention. Turnbull's reviews massively increased the estimated cost for Labor's model -- and claimed that the multi-technology mix the Coalition favoured was much cheaper. Even now, NBN is still attempting to claim commercial confidentiality over information for the fibre-to-the-premises rollout NBN is no longer rolling out in full. As part of the company's corporate plan, NBN developed a "high-level desktop analysis" of what it would cost to deploy a full fibre-to-the-premises network under current contracts instead of Turnbull's multi-technology mix. In a committee hearing held on the day Turnbull challenged Abbott for the leadership, NBN chief financial officer Stephen Rue told the committee the analysis on a model of the project NBN was not going to commit to would still be commercial-in-confidence.
"[STEPHEN] CONROY: There are no new FttP contracts to be signed for brownfields. How are the details of something that is no longer happening commercial-in-confidence?

"RUE: We are still actually negotiating contracts for the multi-technology mix, which includes FttP. Things like pricing arrangements are obviously sensitive to our RSPs and our revenue going forward. So there are plenty of issues that are very commercially sensitive."

Example Four OK, so if we can't find out how much of our money it will cost, can we at least learn when it will be ready? Nope again. NBN has two documents it uses as a guide for when the NBN will be connected. The first is the publicly available three-year rollout plan released just before Turnbull became prime minister. It gives rough quarterly timelines for when a suburb can expect to be connected to the NBN. The second is a document detailing more specific "ready for service" dates that is given to NBN's retail customers like iiNet, Optus, and Telstra. NBN's commercial relationship with the retailers is used in this instance, to protect information NBN doesn't want to be made public Due to all the rollout delay problems example two caused the former company's branding, the current administration of NBN does not want the latter document released at all, in case there are delays in the rollout in the future. Former communications minister Stephen Conroy attempted to table the document in the last Senate estimates hearing, but NBN's current CEO Bill Morrow sounded like his predecessor in again attempting to claim commercial confidentiality:
"This document is, under a widespread agreement by employees and RSPs [retail service providers], under confidentiality. The reason we have confidentiality agreements with employees and the RSPs around this is that, if let out, consumers will then begin to say, 'I get my NBN service on this particular date.' With these moves and changes -- that could be everything from the RSP delaying that service offering to us moving that date because we are moving a lot of different elements -- that consumer will be frustrated with nbn. That frustration could lead to a lower take-up rate that could impact the internal rate of return on the investment by the taxpayer. "Therefore, there is a commercial implication behind revealing this information, otherwise we would have shared it openly and publicly, as we have with the construction start time frame. So that is our primary concern."
In this respect, NBN is attempting to argue that brand protection is a reason to claim commercial confidentiality.

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7 comments

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7 thoughts on “Outsourcing lets NBN keep its ‘commercial-in-confidence’ secrets

  1. MJM

    Turnbull’s handling of the NBN remains a major concern in my view. If ever a politician’s actions contradicted his/her high sounding words NBN provides the casebook example.

    For this reason alone I remain unconvinced that Turnbull is the PM Australia needs at this time. Better than Abbott he certainly is (I couldn’t count the number of opportunities in the last week while on the summit circuit that PM Abbott would have caused me to cringe) and undoubtedly Turnbull’s a smoother talker than Shorten. But can he do more than talk smoothly? Gratitude that he talks the talk is not enough – we need to see him walking the walk. But so far few positions have been changed.

  2. Jaybuoy

    Mr Broadbands albatross..

  3. zut alors

    Agree with all comments by MJM.

    If Turnbull was prepared to sell us down the river for a third rate communications network he is capable of acting against the nation’s interest in other matters.

  4. Chris Tsarion

    I rather think that Telstra played both Labor and Liberal for mugs.

    So why would we expect to be told the details by either party?

  5. CML

    No matter the cost, date of completion or secrecy, the nbn will still be a dog.
    Labor is committed to fixing this debacle and returning to the FttP as originally planned. However, it will cost a motza to correct the appalling mistakes made by Malcontent in his former portfolio.
    But still he is Mr Wonderful…..goodness knows why!

  6. boyo

    Turnbull’s lies and misinformation about the NBN and his Mtm have tainted my view of him.
    As far as I am concerned, he has no credibility.

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