Magazine of Socialist Action in Australia

NBN: Private contractors gouging the taxpayer

Reading Time: 2 minutes

Secrecy and scandal surrounds the rollout of Australia’s National Broadband Network (NBN). Syntheo, the biggest contractor working on the project, has reportedly placed gag orders on subcontractors preventing them from talking publicly about any work on the project.

In some cases subcontractors have even been prevented from talking directly to NBN Co, the government agency responsible for the rollout. In many ways this is no surprise as reports suggest that major contractors have been charging NBN Co up to two and a half times the amount they are paying to subcontractors who actually carry out the work.

The NBN is the largest Australian infrastructure project in recent history. The concept of utilising fibre optic cables to deliver high speed internet is to be supported. The problem however is that the government has set up the project in such a way that allows private companies to profiteer at the taxpayer’s expense. A service that is affordable for all is also not guaranteed.

The government’s use of private contractors, who then farm the actual work out to smaller subcontractors, has helped facilitate a huge price gouging scam. As a result of subcontractors being squeezed on price they tend to rush the work and cut corners. This is leading to low quality work, problems and many delays. In one Canberra suburb around 15% of fibre cables had to be replaced due to poor quality work.

One subcontractor revealed that while the major contractor was charging the government about $106 per meter for drilling, they were only offering subcontractors about $38 per meter for the same work. In another case a major contractor was offering about 90 cents a meter for ‘rod and rope’ work when the going rate was closer to $2.50 per metre.

NBN Co has claimed that subcontractors have a commercial arrangement with the major contractor and therefore the federal government has little to no control over what rates are offered. This set up is what lies at the heart of the problem. When government work is outsourced there is no opportunity for public oversight and control.

Rather than setting up a complex web of contractors and subcontractors a more efficient way to deliver a project like this would be for a publicly owned and controlled enterprise to plan, mange and employ the workforce directly. That way decent wages and working conditions can be guaranteed, quality control can be better monitored and those in charge of making decisions can be held accountable.

In this day and age high speed internet should be seen as a basic service provided to all. The only way to ensure such a service is provided would be for the NBN to be controlled by a publicly owned and operated communications sector. Public ownership, democratic control and planning are the only ways to cut across private profiteering and deliver people the services that they need.

By David Suter


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