The Australian National Audit Office (ANAO) has put a $30 million price tag on the first failed National Broadband Network (NBN) tender process, blaming the Department of Broadband, Communications and the Digital Economy, Minister Stephen Conroy and the global financial crisis.
According to the ANAO Audit Report No. 20, which was tabled in Parliament on Wednesday, Minister Stephen Conroy pressed ahead with the expensive Request for Proposal (RFP) process for the NBN despite knowing the risks and likelihood of failure.
Following an unsuccessful tender process, the Government announced it would form a new public company, the NBNco, in April last year to build and oversee rollout of the $43 billion next-generation network.
“The department could have better analysed some key risks that had an adverse impact on a successful outcome,” the ANAO report stated. “The Government received clear advice on the full range of risks likely to arise … and the consequences of those risks for the process.
“The Government made a decision to proceed on a course consistent with [the RFP] in the full knowledge of the likely risks and consequences.”
But Minister Conroy defended the process, claiming it wasn’t a waste of money and was instead a method of testing what the market could deliver.
“It provided a pathway to fast-track Australia into a world-class fibre to the premises digital future that will benefit all Australians,” he said in a statement.
The audit is likely to lend credence to groups calling for a cost-benefit analysis and business plan, but both the report and the minister were quick to place at least some of the blame on the Global Financial Crisis.
“Let’s be very clear. When we commenced the tendering process, the economy was booming and Telstra said they were participating,” Minister Conroy told ABC radio. The audit also found the financial crisis greatly affected tenderers and their ability to find funding for any NBN win.
“The magnitude of the global financial crisis was largely unanticipated globally and heightened towards the latter stage of the process,” the ANAO said.
Shadow Minister for Broadband, Communications and the Digital Economy, Tony Smith, rejected Minister Conroy’s defence and laid blame with the Government for ignoring warnings that the process was failing.
“The report should ring alarm bells for Australians about the failure of Rudd Labor to assess risk and ensure value for money,” Smith said. “The only certainty with Rudd Government policy implementation is recklessness, incompetence and a failure to deliver.”