Stephen Conroy’s NBN coup: Burgess

There are heartening signs that the most-feared sources of NBN cost blow-outs are being contained, following the leaking of a draft agreement between unions, government and major contractors yesterday.

Business Spectator is indebted to Ken Phillips for obtaining the leaked document, which appears to confirm assurances given by the Communications Electrical Plumbing Union last month in two areas – firstly that wages paid to NBN workers will be in-line with conventional electrical trades rates rather than the high rates of pay being awarded at Victoria’s Wonthaggi desalination plant; and secondly, that NBN construction contracts will not simply stretch the Australia’s already strained electrical trades skills base, but will train substantial numbers of new workers.

Previously, the CEPU has provided some details of the framework agreement which was agreed to by contractors, union and government in. However, the scant details provided to Business Spectator left much uncertainty. The leaked document goes some way in confirming those details.

According to the CEPU, the basic rates payable under enterprise bargaining agreements (which will have to be based the framework agreement) is $61,626 for a communications technician and $64,715 for a linesman – both based on a 36 hour week rostered around a nine-day fortnight.

Those rates look fairly contained alongside the current average full-time weekly earnings of $67,018 – though they will be augmented by overtime and allowances. The leaked draft agreement shows the rates that will apply – double time for weekends and double-time-and-a-half for public holidays.

We will not know until the mainland roll-out begins in earnest how much of the work will be completed on weekends, but given that the agreement makes provision for ‘ordinary hours’ to be up to 10 hours per day with no overtime rates applying, it seems obvious that most work will be done at normal rates – at least early in the life of each three-year EBA.

If, as contracts progress, they fall behind schedule, this would likely change. However, from the government’s point of view, the risk of wage blowouts due to projects slipping behind schedule will be borne by the employers – as acting NBN Co CEO Kevin Brown explained to Alan Kohler on last Sunday’s Inside Business.

The $380 million ‘alliance’ style contract successfully negotiated between NBN Co and Silcar apportions regulatory risk entirely to the government (ie. it take responsibility for final negotiations with Telstra), while the risk of cost blow-outs in the main fibre rollout goes to Silcar. The same arrangement is expected to underpin further roll-out contracts expected to be announced later today – The Australian newspaper reports that $400 million in contracts will go to five companies: Transfield Services, Syntheo (a joint venture between Service Stream and Lend Lease), Vision Stream, ETSA and Monadelphous.

As Robert Gottliebsen pointed out last week, the establishment of moderately priced EBAs in Victoria, Queensland and the ACT is a coup for Communications Minister Stephen Conroy, and will set a strong precedent for helping employers defend ambit union claims in other parts of the country.

On the training front, the framework agreement sets out clear rules – there must be one apprentice for every four qualified workers; adult apprentices will be paid higher rates than younger apprentices (this will be an important factor is attracting adult workers, particularly in regional areas suffering low workforce participation), and standard four year apprenticeships will apply. On the latter point, it is not clear whether the final framework agreement will take account of Labor’s promise in the May budget to accelerate apprenticeships based on skills rather than time-served – given the chronic shortage of skills, exacerbated by mining-boom demand for skilled labour, one can only hope so.

This framework agreement lays the groundwork for three years of relative stability in the NBN roll-out – it is intended to lock employees in for three-year EBAs at wages typical of the wider industry, and, most heartening of all, train up the workforce required when the project hits full speed in a few years’ time.

Most importantly for taxpayers funding our biggest ever infrastructure project, the framework will allow EBAs to be put in place quickly, get the roll-out happening, and give every voter feedback required to decide before the next federal election whether Labor’s NBN promises can be brought to fruition on time and on budget.

This article first appeared on Business Spectator.