Honestly, who’d be a government in Australia. You get a public caning from the media for running deficits and then when you drive a hard bargain for the tax-payer (think FBT) in an off-balance sheet enterprise with real and long lasting economic benefits you get this from The Australian:
Construction contractors on the National Broadband Network are pushing to be paid up to 40 per cent more to do further work, fuelling fears of a cost blowout on Labor’s flagship infrastructure project.
The Australian has been told that industry suppliers are looking for increases in the value of contracts of between 20 per cent and 40 per cent for further work and that high-level evaluations are circulating suggesting that the ultimate cost of the project could spiral out to between $60 billion and $70bn.
A slew of NBN Co’s current construction contracts are due to expire between this year and 2016 and will have to be renewed; NBN Co is also expected to take tenders for delivering fibre, fibre links and new developments this year. Some of NBN Co’s main contractors appear to have hit financial strife and some of their sub-contractors have downed tools in Victoria and Tasmania, claiming they are not being paid enough. “There’s a huge probability this thing will go completely through the ceiling,” said a senior industry source.
“You’ve got a situation where a 30 per cent increase would be in most cases probably 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.”
NBN Co spokesman Andrew Sholl yesterday denied suggestions of a cost blowout. “The NBN remains on course to be delivered on time, and on budget,” Mr Sholl said.
“Our prerogative in negotiating all our contracts is to deliver value for money for taxpayers.
It would be a brave soul to predict no cost blowouts in the NBN but the rationale being put forward here is ridiculous. This is what the government is supposed to do. Drive value for the tax-payer. A few vague quotes from anonymous vested interests that no doubt stand to benefit from gouging the contracts, and suddenly the government is the villain for running a tight ship.
None of this stacks up in terms of the economy either. Construction workers are being shed from the deflating mining boom hand over fist. The cuts to mining employment have been in no way offset by the incipient rise in dwelling construction and wages growth is in a clear downtrend:
So, if contractors have buggered it up, then they have done so despite increasingly good conditions for margins. I wonder if having lost much of their mining work they aren’t looking to reclaim some lost business in a big fat gouge, ably supported by our always budget vigilant national paper.
