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Ministers for the Department of Communications and the Arts

Review into Governance of NBN Co Released

14 August 2014

An independent review into NBN Co’s governance has found its former directors lacked the skills, experience and backgrounds to provide adequate oversight of the National Broadband Network–Australia’s largest ever infrastructure project.

The Board appointed by the Labor Government “had a collective lack of deep operational experience and insight in areas critical to the success of NBN Co” and is described as having a “lack of dirt under the fingernails”.

The review found the most glaring deficiencies were in NBN Co directors’ collective experience of the telecommunications industry, Government Business Enterprises (GBEs), infrastructure projects, and financial controls.

In both 2012 and 2013 NBN Co commissioned an independent external assessment of the skills and performance of the Board. In both years the external assessment raised concerns over areas of the Board’s expertise. Yet in both 2012 and 2013, NBN Co’s chair told the Government that “no areas of concern arose that are required to be raised with Shareholder Ministers.”

The directors’ lack of experience in dealing with Governments meant the NBN Co prior to March 2013 saw oversight provided to Government Departments as “an annoying interference”.

The NBN Co Corporate Governance Review was conducted by leading forensic firm Korda Mentha. It provides a number of recommendations for improving the oversight of GBEs.

Other findings include:

  • The Board’s ability to test the assumption of whether the rollout could be completed in 10 years was made difficult given the policy directions of the then Shareholder Ministers and the attitude of the CEO (p.34)
  • Informal communication between the CEO and the then Shareholder Ministers was a source of concern for directors (p.8)
  • The company did not develop adequate performance indicators to measure the success of the CEO until 2013 and had inadequate succession planning in place.

The Government will use these recommendations to further improve the governance of the NBN project and other GBEs.

Key recommendations from the report include that the Government create governance guidelines specifically for GBEs, and that Board Performance Assessments should be undertaken by an independent, external party and report directly to Shareholder Ministers.

The Coalition Government will use this report to continue its reform of the NBN project, to increase transparency and oversight arrangements and ensure that we learn from the lessons of past mistakes.

The report is available from the Parliament of Australia website at: http://www.aph.gov.au/Parliamentary_Business/Chamber_documents/Tabled_Papers/Current_list

Media Contact: David Bold, Office of Malcolm Turnbull MP - 0427784451, David.bold@communications.gov.au.

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