Government says 'no thanks' to NBN committee recommendations

Recommendation to revisit strategic review process rejected by Coalition

The federal government has issued a formal response (PDF) to the set of recommendations contained in in the interim report of the Senate Select Committee on the National Broadband Network.

The interim report was released in March. For the government to accept the recommendations of the Labor and Greens dominated committee would have represented an about-face by the Coalition, which since coming to power last year has moved to replace the Labor and Greens-backed fibre-to-the-premises NBN model with a 'multi-technology mix'.

The formal government response, signed by communications minister Malcolm Turnbull and finance minister Mathias Cormann, rejects three of the committee's recommendations — that NBN Co submit a revised strategic review; that the process of producing a "document with the deficiencies evident in the Strategic Review" be investigated, and that the "Senate amend the Committee's Terms of Reference to enable ongoing and robust Parliamentary oversight of the National Broadband Network".

The response "notes" the report's other recommendation, that the rollout of an FTTP network should be accelerated while further analysis of the NBN is undertaken.

A lenghty response (PDF) by Turnbull to the interim committee report and a dissenting minority report already made clear the Coalition's disdain for the Senate committee, describing it as a "highly politicised and at times farcical face-saving exercise".

"The majority interim report seeks to discredit the various independent analyses of the NBN undertaken since the September 2013 election," the dissenting report states.

"Instead it asks the public to believe that the NBN was on track and just around the corner – after six years where Labor’s walk never once matched its talk. The plausibility of this narrative is a matter for the Australian public to judge for themselves."

The committee's interim report expressed "significant concerns with the accuracy and reliability" of the strategic review process that led to NBN Co adopting the multi-technology mix model for the network favoured by the Coalition.

"The Committee considers that the assumptions and conclusions set out in the Strategic Review are unreliable in the case of all examined scenarios," the interim report states.

It claims "financial manipulations and other irregularities" found their way into the strategic review conducted by NBN Co late last year, including the exclusion of $4 billion in incremental architecture savings, assumptions regarding the delay in the revised deployment schedule, overly pessimistic revenue assumptions and the factoring in of higher unit costs for the fibre build that add $14.4 billion in capital expenditure.

The government response to the interim reports comes as a review (PDF) conducted KordaMentha into NBN Co's management was tabled in parliament.

The review concludes that NBN Co's boards under the previous government did not have the "the mix of skills and experience ... appropriate for a company of the nature, scale and complexity of NBN Co".

"Overall, the NBN Co Boards have been described to us as having a 'lack of dirt under the fingernails', i.e. they had a collective lack of deep operational experience and insight in areas critical to success of NBN Co," the report states.

Responses included in the report from former NBN Co directors and former NBN Co CEO Mike Quigley took issue with KordaMentha's findings. "We... generally disagree with the findings in the Draft Report, and consider a number of them to be unsupported by the facts," states the letter from former NBN Co board members.

"As directors of NBN Co, we have each acted with care and diligence. From the first appointment of any of us, the board of NBN Co ... cultivated a culture of continuous feedback. This practice applied to all directors, including executive directors, laying a solid foundation for monitoring the performance of the Board."

The letter was signed by Peter Hay; Diane Smith-Gander; Gene Tilbrook; Siobhan McKenna; Terry Francis; Harrison Young; Rick Turchini; Brad Orgill; and Alison Lansley.

Quigley's letter takes issue with the accuracy of a number of the claims in the report and states: "It should be noted that any one of the projects NBN Co was undertaking; Satellite, Fixed Wireless, Brownfields, Greenfields, the Transit Network, a major OSS/BSS development, a new wholesale product and pricing structure plus a 27-year SAU, would be a major challenge for even a mature Telco.

"NBN Co was doing it all simultaneously, while building a company from a standing start."

Follow Rohan on Twitter: @rohan_p

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