NBN CEO Defends Staff Bonuses, Whilst Complaints Soar 160%
Chief Executive Officer of the NBN Co, Bill Morrow, has been forced to defend the millions of dollars of short-term benefits allocated to staff, as NBN-related complaints skyrocket almost 160% across the past twelve months to June 30th.
As part of his defence, Mr Morrow informed a Senate estimates hearing last night, that he took a 7% pay cut to his bonus for the 2016-17 period. Morrow was reportedly paid $3.6 million for the period.
Mr Morrow affirmed:
“There is a customer experience measure that determines a certain level of the bonus system and how its paid out. The board chose not to pay out on that measure because that could have been better”.
Allocated short-term benefits include bonuses to NBN Co senior management and staff.
A spokeswoman for the NBN Co states that $109 million is the total of short-term benefits allocated across all NBN Co employees, and does include a portion for annual leave entitlements.
Senior management at the NBN Co reportedly received $2.4 million in short-term benefits for the 2016-17 period.
Morrow has attested that NBN Co’s staff have delivered a good outcome amidst difficult circumstances, and alluded to the negative impact of wrong economic assumptions made by the former Labor government.
He states the decision to establish a new wholesale company – similar in stance to Telstra – has forced the company to take on extra costs, which it has to pass onto retail providers, and thereby consumers:
“Because of the decision was taken back in 2009 to have a completely separate company … NBN Co is obligated to pay Telstra a lot of money,” he said. “If we could have lower costs we would, unfortunately, the hand was dealt to us before we got here … the money we pay to Telstra equates to $15 a month per customer that we have to recover.”
The NBN Co’s Chief Financial Officer affirms that removing the burden of payments made to Telstra would enable it to immediately drop wholesale prices by $15. He states higher costs would not be imposed, had Telstra not been allowed to build the NBN:
“I believe, and its speculation on my part, I don’t have the facts on this, but this is why when Telstra submitted their bid to build this they could have done it cheaper, because they don’t have to pay this sort of money.”
The NBN Co uses some of Telstra’s infrastructure to run the network, and also pays the company for every consumer who moves from its telco network to the NBN. On top of a one-off cost of $10 billion, reports state that by 2020 NBN Co will have to pay annual lease costs of $1 billion.
NBN Co’s defence of its bonus payments to senior management follows Prime Minister Turnbull’s recent comments which labelled the project “a big mistake”.
Finance Minister, Mathias Cormann, affirmed yesterday that there was “no scope” to reduce the value of the NBN, despite its recent performance.