NBN Co lags behind schedule while bosses get ahead on bonuses

THE company responsible for building the national broadband network is spending 25 times as much on executive salaries as it earned from selling broadband to customers, its annual report shows.

By InvestSMART · 21 Oct 2012

By InvestSMART ·
21 Oct 2012

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THE company responsible for building the national broadband network is spending 25 times as much on executive salaries as it earned from selling broadband to customers, its annual report shows.

Executives at the NBN Co were also paid bonuses of $642,000 despite the project's slow roll-out and termination payments reached half a million dollars.

The opposition's communications spokesman, Malcolm Turnbull, said the company's annual report, released on Friday night, showed the roll-out of the network was a year behind schedule with 24,000 homes and businesses connected to the national broadband network at the end of last month - about 10 per cent of the company's original target.

"[Treasurer] Wayne Swan wrote an article today boasting he has empowered 'shareholders to help tame executive pay in the companies they themselves own'," he said.

"Australian taxpayers are the owners of NBN Co, and many of them may ask why executives are being paid six-figure bonuses when the roll-out is so far behind schedule and NBN costs so far above budget."

Mr Turnbull also pointed to high spending on corporate travel and legal fees as further proof of the blowout in costs associated with one of the government's marquee infrastructure projects.

A spokesman for the Minister for Communications, Stephen Conroy, said the government did not comment on salaries but remained committed to its target of having construction completed or begun in 758,000 homes and businesses by the end of the year.

The federal government will release its budget update this week amid speculation it will have to find savings of as much as $4 billion to keep the budget in surplus.

Among the areas rumoured to be cut are university research grants and superannuation concessions.

Mr Swan wrote in yesterday's Sydney Morning Herald there would be "sensible spending cuts" and that the government would do "everything possible to protect jobs".

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Frequently Asked Questions about this Article…

What did NBN Co's annual report reveal about executive pay versus broadband revenue?

The annual report showed NBN Co spent 25 times as much on executive salaries as it earned from selling broadband to customers. The report also noted executives received bonuses of $642,000 and termination payments reached about $500,000.

How far behind schedule is the NBN roll-out and how many premises are connected?

The report said the roll-out was a year behind schedule, with 24,000 homes and businesses connected at the end of last month — roughly 10% of the company's original target.

What government target remains in place for NBN construction?

A spokesman for the Communications Minister said the government remained committed to having construction completed or begun in 758,000 homes and businesses by the end of the year.

What concerns have politicians raised about NBN Co's costs and spending?

Opposition communications spokesman Malcolm Turnbull pointed to the slow roll-out, high executive pay and bonuses, and increased corporate travel and legal fees as evidence of cost blowouts. Treasurer Wayne Swan has written about empowering shareholders to help tame executive pay and stressed sensible spending cuts while protecting jobs.

Could NBN Co's cost issues affect the federal budget or public spending?

The article notes the federal government is due to release a budget update amid speculation it may need to find savings of up to $4 billion to stay in surplus. While not tied solely to NBN Co, the NBN's cost blowouts are part of the broader spending scrutiny that could influence where savings are sought.

What specific spending items at NBN Co were highlighted as problematic?

Politicians highlighted high spending on corporate travel and legal fees in the annual report as further evidence of cost blowouts associated with the project.

Who technically owns NBN Co and why does that matter for executive pay scrutiny?

Australian taxpayers are the owners of NBN Co, which is why commentators and politicians have raised questions about six-figure executive bonuses and large termination payments while the roll-out lags and costs exceed budget.

As an everyday investor, what should I watch in future NBN Co updates?

Based on the article, watch for progress on the roll-out schedule and connection numbers, any changes in executive remuneration or termination costs, updates on corporate expenses like travel and legal fees, and government statements about funding or targets that could affect the project's finances.