NBN Cost to Pass $60 Billion: Report

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Wednesday, July 24th, 2013
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The cost to build the National Broadband Network in Australia is set to soar past $60 billion as troubled construction contractors seek price increases of up to 40 percent, a media report has claimed.

A report in The Australian says sources have told the newspaper industry suppliers are seeking price increases of between 20 and 40 percent and that high-level evaluations suggest the ultimate cost of the project could spiral out to between $60 billion and $70 billion.

“There’s a huge probability this thing will completely go through the ceiling” the newspaper quotes one senior industry source as saying.

“You’ve got a situation where a 30 percent increase would in most cases probably be a minimum. And they haven’t attacked any of the difficult work yet, as in downtown Melbourne and Sydney, where you have older apartment blocks.”

According to the report, the source says amounts budgeted for the project are not realistic and that demands for remuneration increases on the part of subcontractors will force upward pressure on contracted prices as a large number of contracts become due for renewal over the next three years.

In Ballarat, around 50 subcontractors have returned to work on Tuesday after a pay dispute with contractor Transfield  whilst in Tasmania, unrest over pay between Visionstream and some of its subcontractors his threatening to disrupt the rollout.

The NBN project hit trouble earlier as NBN Co, the company responsible for the rollout, spectacularly missed its targets – passing only 207,000 homes and businesses before June 30 amid challenges managing contractor relationships despite initial targets to pass 341,000 homes before that date.

Still, the company insists it remains on track to deliver the project on time and on budget, NBN Co Spokesman Andrew Sholl reportedly telling The Australian the project will repay all of the taxpayer investment plus more.

The latest reports come amid ongoing debate over the future of the network as the government continues to proceed with its plan to deliver high speed broadband to individual homes and businesses but the coalition insists on a cheaper version of the project which would see fibre optic cable rolled out to the street corner rather than to individual premises.

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