Chapter 6 Private Equity Engagement and Workforce Issues
The committee has agreed to focus on several topical issues under its
broad terms of reference, including:
- the potential of
private equity to fund the National Broadband Network (NBN)
- workforce issues in
the context of the rollout of the NBN
These issues were identified for future inquiry in the committee’s First
Report and reported on in its Second Report and Third Report.
Private Equity Engagement
The committee continues to be interested in when and how private equity
might be engaged in funding the NBN wholesale platform, and at what financial return to the Government and, ultimately,
taxpayers. This section of the report therefore considers:
- timeframes for
private equity engagement in funding the NBN
- NBN Co’s debt
Government funding of the NBN over the rollout period, under the equity
agreement between the Government and NBN Co, is discussed in Chapter 2.
Private Equity Engagement Timeframe
As in previous committee reports, there was continued interest over the
Fourth Review period in whether a timeframe for private equity engagement in
funding the NBN might be brought forward during the construction phase, thereby
enabling an earlier return to taxpayers. In particular, there was interest in clarifying
to what extent a timeframe for private equity engagement in funding the NBN was
- risk—required rates of
return to government on its investment; or
- government policy
objectives and legislation, and learning and adapting processes on the part of
government and NBN Co at this stage of the project.
In terms of where the balance might be in this equation, the Department
of Broadband, Communications and the Digital Economy (DBCDE) commented that:
In the adapting and learning category... the government
clearly has a policy objective in mind with the NBN. It has a detailed set of
instructions that accompany the statement of expectations and a series of
policy decisions and the parliament has a set of instructions for the company,
with legislation. If a private investor convinced itself that it was prepared
to take the risk and accept what is impliedly a low rate of return for
long-term strategic gain purposes and did want to make an investment then the
company, first, and then the government as 100 per cent owner, second, would
both need to satisfy themselves that this owner would not get in the way of, if
you like, the statement of expectations and parliament’s own intentions as
expressed in legislation.
This matter was further queried on the basis that, if a private entity were
willing to take on the risk of the NBN project at a potentially earlier stage than
had previously been assumed, whether there would still be a level of caution, given
this ‘adapting and learning’ process. The department responded that, ‘[b]efore
you get to the adaptation and learning... the government would want to be
satisfied that it was not risking any basic policy compromise through this
relationship, such as uniform pricing and rollout priorities and so on. There
are a whole lot of quite fundamental points you would want to be reassured of
before you got to that point’.
The department further clarified that the level of control required by a
private equity investor was also an issue:
Historically, being a minority investor is not a comfortable
place for private equity in these sorts of firms, because effectively they are
passively stumping up capital and taking the risks but are not able to
influence at all the direction of strategic change, so private equity tends not
to be terribly comfortable taking those sorts of positions. That is why we
think that it is pretty unlikely in the circumstances that anyone would take
the risk and that, even if they did, they would then have to satisfy themselves
that they would be prepared to follow the directions of the government of the
It was then queried whether this matter may have been ruled out before
it had been tested—whether in fact a private equity investor might be willing
to take on this risk in terms of the level of business control. Mr Peter Harris,
Secretary of the DBCDE, responded:
I would go on the record as saying that would be my advice to
government. My advice would be: be very wary of this. Even if they have
convinced themselves that the risk is sufficient for them to take it up, you
then have to satisfy yourself. I would say that the risk to the project would
be significant in those circumstances—you would end up with an uncomfortable
partner, and that is not a great outcome for any party to set up... I doubt, because of the practical circumstances I
have described, that we would like to see much private equity interest in the
NBN Co. as a business through the bulk of the rollout period, simply because of
There was further interest in the scenario where, if a private equity
investor proposed investing in the NBN, whether there would still be an
impediment to private equity engagement at an earlier timeframe for reasons
other than rate of return. Mr Harris responded, ‘[t]hat is right... When I used
the term ‘risk’ a little earlier I was not referring to people’s views about
the efficacy or otherwise of the business plan... When I say risk, it is what I
call partnership risk. You would have to convince yourself as an investor that
you are prepared to go along with the senior partner’s decisions, continuously.
That is a hard thing to do’.
This led to some discussion on private-public partnerships (PPPs), and the
example of whether private equity investors who were willing to take on that
particular risk in terms of level of control over a project reflected the
nature of many existing PPPs. On the topic of PPPs and the NBN project, Mr
Harris commented that:
It is more a question of both parties being confident they
are prepared to hold hands, as it were, through a period of multiple years of—I
guess I have to use the term—risk taking together. That is quite difficult to
crystallise. As you know, the engagement rule was switched very quickly from
being conceptual to legal. Then you start to draw up the obligations that each
party has, and because the NBN Co. is structured under legislation it will have
very little room to move. In practice, the ownership structures for NBN Co., as
you know, have been established by the parliament and, therefore, we live
within those terms as well as within the statement of expectations and
intentions of the ministers.
As to whether this made the NBN project different from other PPP projects,
Mr Harris observed that:
...most of those are project based; therefore, we can vary
the terms of a tender or a contract to suit the interests of both parties if
both parties are happy whereas legislation [as in the NBN project]... has to
return to the parliament and people in the parliament have to be satisfied that
the changes are acceptable. It is a long and drawn out process and one that
tends not to be consistent with commercial time frames. I know they have
weaknesses but I am probably, on balance, a supporter of PPPs when used in the
right circumstances—and legislation tends not to be part of that.
The Government’s Statement of Expectations
specifies that ‘NBN Co should seek to raise debt capital at the earliest
opportunity it is able without external support’.
NBN Co’s Corporate Plan 2012-15 assumes initial debt-raising in 2015.
NBN Co’s Corporate Plan 2011-13 referred to an estimate of $13.4 billion
of debt funding over the period to June 2021. The new Corporate Plan
2012-15 refers to an estimate of $13.7 billion of debt funding, over the period
to June 2021. The Corporate Plan 2012-15
also assumes that debt funding will contribute ‘up to 31% of the total funding
The Corporate Plan 2012-15 ‘embeds an assumption of debt-raising, which
if successful will provide a mechanism to distribute surplus cash and repay
equity over time after the end of the Fibre network Construction period’.
The Corporate Plan further states that:
...if actual debt raised at the time was lower than
projected, then Equity Funding by Government would need to be increased...
As no assurances can be given that such debt-raising
requirements will be met, the capital structure and debt issuance decisions
will be determined at the time by the Shareholder Ministers.
The committee remains interested in the issue of private equity
engagement in funding the NBN. Against this background, the committee notes
that in the response to the Committee’s Third Report the Government commented:
Following completion of the rollout, the government will
consider the optimum capital structure for the Company, noting that NBN Co
is required to operate within the ownership and investment settings determined
through the National Broadband Network Companies Act 2011.
The committee observes that there is also merit, at this point in time,
in beginning to gauge investor interest in the NBN and explore the optimum
capital structure for the company. The committee has made a recommendation on
With debt financing on the radar for 2015,
the committee also remains interested in NBN Co’s progress to date on debt
financing arrangements. The committee made a recommendation concerning this
area in its Third Report:
- While noting possible
revisions in this area in NBN Co’s next corporate plan, the committee
recommends that NBN Co progress its consideration of debt financing
arrangements as a priority.
The Government response to the report supported this recommendation,
By the time of raising private sector finance, NBN Co will
have demonstrated a strong track record in the delivery of its key objectives,
established investor confidence in both the rollout and take up of this
critical infrastructure, with clear visibility of positive earnings and
However, the Government response further observed that, ‘debt
arrangements are subject to market conditions outside of NBN Co and the
government’s control and will need to be assessed closer to the point that debt
The committee again concludes that, given the significance of debt
financing arrangements to its future funding mix
and the fast-approaching timeframe of 2015 for the commencement of debt
financing, NBN Co should progress consideration of this matter as a
The committee will continue its inquiries into these issues over future
The committee recommends that the Government:
to gauge investor interest in the National Broadband Network; and
the optimum capital structure for the NBN Co.
The committee continues to be interested in workforce issues in the
context of the NBN rollout. This section of the report therefore looks at:
- Telstra workforce
retraining issues associated with the NBN rollout, including the Telstra
Retraining Funding Deed and Telstra Training Plan, and
- NBN workforce
Telstra Workforce Retraining Issues
Telstra Retraining Funding Deed
In implementing structural reform of the telecommunications industry,
the Government’s NBN policy will have a significant impact on Telstra as the
highly integrated and dominant industry incumbent.
The Binding Definitive Agreements between NBN Co and Telstra form the basis of
Telstra‘s participation in assisting with the rollout of the NBN.
In support of these agreements, the Government has committed to
provide $100 million to Telstra under the Retraining Funding Deed (RFD) to
assist it in the retraining and redeployment of Telstra employees affected by
structural reforms of the telecommunications industry.
The RFD between the Commonwealth and Telstra came into force when the Binding
Definitive Agreements commenced in March 2012. The term of the RFD is for eight
years, and Telstra can request an extension of a further three years.
The objectives of the RFD are ‘to support the availability of an
appropriately trained workforce for the NBN and to retrain Telstra staff who
may otherwise face redundancy as a consequence of the rollout of the NBN’.
In its submission to the inquiry, Telstra emphasised that:
...implementation of [the] Retraining Funding Deed is a
critical part of Telstra’s agreements with NBN Co and the Government.
We have long understood that the structural changes being
imposed on the telecommunications sector, by the roll out of the NBN, would
have significant implications for our business, including our people.
As we progressively migrate customers to the NBN and
decommission our copper access network, the scale of the network maintenance
task will diminish. This will have a direct and long term impact on the way
Telstra operates and will have practical implications for our people.
The RFD sets out how Telstra will identify employees eligible for
retraining in NBN related technical, process and system activities; the scope of
training courses to be made available; the standards and quality that must be
met; and the timing of training. It operates by identifying two categories of
employee: an Automatically Eligible Workgroup (AEW) and another group of employees
who may be determined to be eligible. The AEW group includes the Telstra:
- copper and hybrid
fibre coaxial (HFC) based field workforce which undertakes installation and
maintenance and construction and maintenance activity on Telstra’s Customer
- direct field support
workforce which conducts copper/HFC based field workforce support, including
workforce management, workforce and resource planning, and construction program
- support of copper/HFC
operations workforce which provides design of products, management of damages,
network integrity, plant assigning, customer network improvements and contract
- wholesale copper
service workforce which provides the interface between retail service providers
and Telstra in relation to copper services.
The other eligible group comprises those ‘employees who Telstra is
satisfied may face redundancy over time (if not retrained) as a consequence of
the decommissioning of the copper network or the deactivation of the HFC
As at 1 March 2012 the AEW group numbered 6,255 employees.
To place this in context, Table 6.1 sets out Telstra’s workforce composition as
at 30 June 2012.
Table 6.1 Telstra Workforce Composition (as at 30 June
Domestic full time staff headcount
Total workforce FTE
Domestic controlled entities
Offshore controlled entities
Corporation, Submission 12.1, p. 2.
The committee was interested in the composition of the AEW and whether there
might be a group of Telstra employees who could potentially miss out on access
to the AEW. Ms Ros Eason, Senior National Industrial Research Officer from the
Communications Division (CWU) of the Communications, Electrical and Plumbing
Union (CEPU), responded that:
...the core of [the AEW] is the customer field
workforce—service delivery and the design and construction functions. We are
satisfied at this stage that that is going to be targeted... There may be some
questions around the edges, but I do not think there is any question that the
core of people who will be targeted by this funding are the people who need to
There was also interest in whether the size of the AEW group might
change, depending on how much work Telstra gained over time from the NBN
rollout. Telstra explained that:
...the training is for two groups. There is the AEW, and we
expect that to stay relatively constant. It is that sort of 6½ thousand mark.
But then there is also another group, which is those people who are not within
the AEW area but who otherwise may face redundancy as a result of the NBN
rollout. At the moment we do not have a good estimate of what that group will
be, but then that group may fluctuate depending on exactly what happens in the
This led to queries about the number of Telstra employees in the other
eligible group under the RFD. Telstra responded that:
There is provision within the deed that recognises that there
might be other groups outside of that eligible group and, therefore, there is
capacity to bring them into the retraining funding deed if they are identified
as being impacted by the NBN...
That number is not known and it is not specified. There is
just an acknowledgement that there may be more and therefore they should have
access to the retraining.
As Telstra further clarified, ‘at a time of very significant change for
our business and at a time when we cannot actually predict seven or eight years
into the future’, there may be ‘other employees who would be impacted in
addition to those that we can see now’.
Another matter of concern was whether there would be employment within
Telstra for every person in the AEW who received retraining under the RFD. The
CWU commented that ‘it is obviously the expectation... that, if Telstra is
going to spend money retraining people, we assume that they are going to use
them. They do not spend the money to retrain them, then push them out the door
to work for their commercial rivals’.
Mr Daryl Quinlivan, Deputy Secretary from the DBCDE, similarly noted
I think that is very much the objective that Telstra has. In
fact, that is the rationale underlying the arrangement generally. You might
recall that the origins of this were part of the broader agreement with Telstra
on the definitive agreements with NBN Co. This was an ancillary agreement and
the underlying logic was that payment to Telstra to retrain staff and avoid
redundancies created a lot more value for Telstra than the value of the payment
and so there was a win for both parties in the transaction that contributed to
the value Telstra was realising from the definitive agreements generally. So I
think it is very much Telstra’s objective that they retain these people within
the company and therefore avoid the redundancies, and that is how the value is
created for the company.
However, in response to this matter, Mr Julian Clarke, Director of
Workplace Relations and Policy from Telstra, clarified that:
It will depend on the rollout, the extent of what we are
asked to do by NBN, how many customers we have at any given time—those sorts of
The purpose of the deed is
obviously to retain as many people as we can. We recognise that we have a very
skilled workforce at the moment. We want to retain as many of those people as
we can and we understand that is the purpose of the retraining. If you are
asking me whether I can give a guarantee that every employee who is in the
automatically eligible work groups will be retained, it is not something that I
could be in a position to do now but more because I do not know what will be
happening in the future.
Similarly, Mr James Shaw, Director of Government Relations from Telstra,
I think it is fair to say that we are not designing this such
that we retrain and then just exit employees. We like to keep our employees. We
have invested a lot in them. Irrespective of the Commonwealth funding or
taxpayers’ funding, here under the retraining funding deed, we have invested a
lot in our skilled employees out of our shareholders’ dollars and we would like
to continue to employ those people and utilise their skills to provide services
to our customers...
we just cannot guarantee, given what we have in front of us
at the moment, that everyone would be retained in the business.
To further explore this matter, the committee queried whether one of the
key performance indicators of the RFD required that a certain percentage of
employees in the AEW be employed within Telstra for a certain period of time.
Mr Shaw responded, ‘I do not believe so, no’.
This led to interest in whether there was instead an expectation by
government about how long employees would retain employment within Telstra as a
result of retraining under the RFD. Mr Clarke responded, ‘[n]ot as far as I am
aware’, but emphasised that ‘it is important to remember the dual purpose that
the deed is expressed to have, which is (1) to support the retraining of
employees within Telstra and (2) to support more broadly the skilling of the
workforce to roll out the NBN’. To further clarify this
point, Telstra explained that:
The purpose is so that they either continue employment within
Telstra or retrain to operate in the NBN environment... In essence, they were
saying... ‘Here is a Commonwealth contribution of $100 million to assist
in the retraining of workers affected by the NBN, such that they are then
skilled up to work in a fibre world, either with Telstra or with other people
associated with the NBN’.
As Mr Shaw further commented, ‘the minister and the NBN Co. have both
indicated that they expect significant employment during the rollout of the
network, that it will generate significant new jobs’ and therefore, ‘if we look
at the market rather than just Telstra for employment, there are a range of
opportunities that will arise as a consequence of the rollout of the network
Noting commercial sensitivities, this then led to a query about the
volume of Telstra’s NBN related work, as it obviously had implications for
Telstra employees being retrained under the RFD. Telstra observed that the
‘bulk of the work’ currently being undertaken as a result of the NBN rollout
was ‘related to the build of the transit network, which is part of the
definitive agreements’, but emphasised that they ‘stand ready to do whatever [they]
can to assist NBN Co. to expedite the rollout of the network’—while also recognising
that NBN Co have a ‘commercial imperative’ and are ‘bound by procurement
Against this background, there was a query about a recent loss of
Telstra positions, with a number of positions also apparently moving offshore—in
particular, regarding whether these employees were eligible for retraining and
redeployment under the Telstra RFD as part of the NBN rollout. Telstra
explained that this was ‘not connected at all with the NBN rollout’
and therefore these employees did not fall under the RFD:
...those Lismore and Townsville call centres and the like
were not NBN related. So they were caught up with our general provisions...
The point we would make about the structure and composition
of our workforce is that there are a range of factors that impact on employment
decisions in the business. The NBN and the structural change to the industry
that the NBN is creating is one of them. There are a whole range of other
factors at play within our business at the moment which impact on employment
As Telstra further clarified, employees whose ‘roles are redundant for
reasons unrelated to the rollout of the NBN (e.g. reduction in call volumes due
to more transactions online and/or fewer complaints) would not be eligible for
Telstra Training Plan
The RFD requires that a Training Plan be developed by Telstra and
approved by the Commonwealth. The Training Plan is therefore a significant
component of the RFD. Each Training Plan covers a three-year period, with the
initial Training Plan covering the period 30 April 2012 to 30 June 2014.
Subsequent plans are to be lodged six months before the expiry of the previous
plan. The first Telstra Training Plan was formally approved by the Government
on 25 June 2012.
The scope of the Training Plan is to identify training needs, course
development, training methodology and targets for retraining. The Training Plan
deals ‘primarily with employees who are in the AEW, as they can be specifically
identified’. Under the terms of the
RFD, ‘not less than 70 per cent of funds spent in any three years of a Training
Plan must go towards the development and delivery of Accredited Training
Courses by a Registered Training Organisation’.
Noting that the Training Plan is commercial-in-confidence, the committee
was nonetheless interested in gaining a better understanding of how the plan
would operate. In response, Telstra provided a summary of the plan.
The DBCDE also provided some background on the Training Plan, noting that it
- Forecast inputs to
the Training Plan, which identify the class of Telstra employees that may be
retrained and forecasts their retraining needs and possible redeployment
- Curriculum and
courseware development, which outlines the proposed approach for developing
- Learning delivery
plan, which details the proposed course delivery method and the plan to deliver
courses across geographic regions.
- Training and
financial reporting, which includes the format for reporting and tracking
budgets and training activity.
- Training Targets,
which have been set for the eight year life of the deed...
In terms of the number of Telstra employees that had received training to
date under the Training Plan, Telstra noted that, even though the first year of
the plan had been shortened:
...in those 2 months, more training was delivered than the
Plan required with 107 Telstra employees being retrained against the 40 estimated
under the Plan. All of those retrained employees were in our copper/HFC areas
and retraining related to the installation and migration curriculum. In total,
there were [2,826] training attendances in the 2 months, which comprised
[1,890] attendances related to structural separation undertaking training and
 attendances related to other curricula. We also developed 21 courses,
primarily in the installation and migration curriculum, as was anticipated
would be developed under the Plan.
Telstra further outlined that:
Year 2 of the Plan commenced on 1 July 2012. Between then and
30 September 2012, we have delivered a further 856 training attendances
across the installation and migration, value add premises, planning design and
construction, and customer support curricula. Telstra currently has 40 training
courses under development consisting of 34 new courses and 6 updated courses.
This is on track to meet the target set in the Plan. Telstra already has 30
training courses available in the NBN retraining catalogue.
The DBCDE provided similar statistics on Telstra employee retraining
under the Training Plan, further noting that, ‘of the 107 Telstra employees
retrained, 16 were in TAS, 31 in VIC, 44 in NSW/ACT and 16 in QLD’.
It is anticipated that the majority of the technical training delivery will
occur in years 3-8 of the term of the RFD, reflecting ‘the expected profile of
the NBN build’, with a ‘minimum of 173 training courses’ having been developed
or having had content revisions in the first three years of the plan.
Certain categories of employees have been identified in the AEW, but the
committee was interested in the specific types of roles that employees might
perform once they had undertaken retraining under the Training Plan. As Ms Eason,
Senior National Industrial Research Officer from the CWU, commented, ‘I think
what is being said is, “We still don’t quite know what the exact profile will
be of telecommunication service industry workers in the future and just what
the skill mix will be which will be of use” ...Exactly what that person looks
like and what training you need to create them is not yet completely fixed’.
On this point, Telstra explained that it had ‘mapped employees in the
AEW to new functions and forecast the skills required to undertake these
functions’. While noting that the
details of this forecast are ‘commercially sensitive’, Telstra broadly
identified six retraining categories:
- planning design and
construction of the NBN using FTTP, wireless and satellite technology
- operational elements,
including installation and migration of services from Telstra’s existing
networks to the NBN
- operations and
maintenance activity on the NBN
- support for network
elements including network transport and interconnect
- back of house and front
of house activities that support customer migration, new connections and
customer and network assurance, and
- installation and
maintenance of in-premises products and services.
Telstra also commented that, ‘we know some of the things that we will require
them to do’, in that the employees who have already been retrained ‘can do a
new skill, and that was the installation and migration of customers from our
network onto the NBN’.
In terms of how success would be measured under the Training Plan, Telstra
noted that the plan included the following targets:
- a three year high
level NBN Retraining Courseware Development Plan, which is reviewed every 12
months. It also sets out Telstra methodology for developing courseware, how it
intends to evaluate and review courseware, as well as how health and safety
requirements will be incorporated into training and evaluated
- targets for the
number of courses that will be developed during each year of the Training Plan.
- an annual delivery
plan, which details the number of courses intended to be delivered and the
number of people that are planned to attend training during each quarter in
each geographical location...
- a forecast, for the
eight years of the Retraining Funding Deed, of the annual and cumulative
planned spend for both courseware development and training delivery. It is
intended that actual spend will be tracked against this. The planned spend may
be revised, from time to time; and
- for each of the eight
years of the Retraining Funding Deed, targets for:
- total spend
number of courses to be developed/refreshed; and
number of employees who will be retrained in a new skill.
The CWU confirmed that it was ‘supportive of the general thrust of
Telstra’s proposed training plan’—in particular:
- ...that the training
will be based largely on the nationally endorsed training package for the
telecommunications industry (ICT10) with outcomes aligned to the Australian
- A focus on the
development of higher skill levels and roles (generally at AQF3 and 4)
- Targeting of areas
where there are well recognised skill shortages relevant to the NBN rollout, e.g.
- Development of skill
profiles matched to emerging work opportunities.
Full Qualification and Recognition of Prior Learning
The CWU raised recognition of prior learning (RPL) as a key issue in
terms of enabling Telstra employees to ‘gain nationally recognised
qualifications as part of the overall NBN training and certification effort’,
...the recognising of prior learning that we are saying we
would like to combine with the retraining [is] to make sure that people have
the best chance of coming up with a cert II, a cert III or a cert IV—that is,
to bring people up to a full qualification level as part of the internal
training program. Some companies do not like a fixation on certification, but
most employees like it. Even if employees have got a guarantee of work for four
or five years, or for 10 years, for them to come out of this exercise with a
cert IV or a cert III would be, in our view, a good outcome. And that would be
achieved by a mixture of retraining on the basis of recognised training
packages and, possibly, recognising prior learning.
On this point, the CWU was particularly concerned about employees ending
up with a ‘patchwork of skill sets’—‘[y]ou can have a whole range of
competencies and just have one or two units missing—and therefore you will not
have a full cert II or a full cert III. That is the issue. You might end up
with a kind of patchwork of skill sets which leave you just short of a full
According to the CWU, Telstra had indicated that, as part of its
training program, it would ‘consider combining RPL with new training “where [it
was] reasonably able to do so”’. The CWU explained that
it had raised this matter with Telstra and:
...again they have said: ‘Yes, where it makes sense’. That
is, where we are talking about maybe a few units needed to bring somebody up to
a full qualification. But there is no ironclad guarantee...
Telstra are saying: ‘We don’t recognise that as necessarily
part of our obligation under the trust deed...
[Telstra’s] position has always been: ‘We’ll train people and
where possible we’ll bring them out at a full qualification level, but if that
doesn’t make sense for us—if it is just a group of skill sets and not a full
qualification, then that is it.’ We think it makes sense in this context to
combine the two things...
We have raised that with them because we think that not only
do we want people trained against externally recognised qualifications but we
also like the idea of people coming out with a full qualification.
However, the CWU did note some progress in this area: ‘Telstra do appear
to be doing some work now on aligning their internal training to the ICT team
package. And you do that if you are putting in place the preconditions for
recognising prior learning... but as to getting the ironclad commitment of
“Yes, we’ll do that,” as you can see, we have not got that in these discussions’.
In response to these concerns about whether retraining for NBN related
work under the Training Plan would see Telstra employees reach full
qualification level or leave them with only a group of skill sets, Telstra explained
that ‘what we have said to the CEPU during consultation’ is that we are asking,
‘what are the skills that we need people to have? We will retrain people to do
the things and we will then map that through to the AQF. Whether or not that
actually gives somebody a full qualification... will depend on exactly which
modules they do and how many of the competencies they gain’.
In terms of whether this would then see employees attaining the full
competency, Telstra further clarified that:
It is not a decision we have actually made yet. But what we
have said is that we understand the position that has been put to us—that
surely it makes sense that if somebody has got 90 per cent of the qualification
we help them get the 10 per cent—and that is something we will look to make a
decision on when we get to that point. What we do accept is that there is some
logic in that. I suppose what we are not doing is saying to an individual
employee, ‘We will train you so that you have everything for this particular
certificate’. That is not the way in which the training is being rolled out. It
is being rolled out more on an as needs basis, based on the particular type of
work that we have and the skills that we identify they need to be retrained in
to do that work.
Consultation is an important aspect of the Telstra RFD. Under the deed,
Telstra must consult with unions on the implementation of the plan at least quarterly,
and it is also required to consult with the DBCDE on at least a six-monthly
basis. In accordance with these
obligations, Telstra commented that, to date, it had:
...met with the unions and the Department on 4th November
2011, 19th March 2012, 20th June 2012 and 19th September 2012. On these
occasions we have discussed:
- the development of
the Training Plan;
- the training courses
that have been developed and delivered according to the Plan; and
- the target number of
employees to be retrained and the actual number who have been re-trained by
Telstra to date in excess of that target.
Telstra noted that these meetings had been ‘open and cooperative and...
involved significant discussion between the participants’.
On the consultation process so far, the CWU commented that ‘[i]t is more
than tick-a-box... all the way down the company in the different layers that we
are involved with that is a sharp awareness, and that is creating a sort of
willingness to engage’.
The DBCDE noted that it had attended, as an observer, Telstra’s
quarterly meetings with the unions and, in this capacity, considered that ‘Telstra
is meeting the consultation and stakeholder engagement requirements under the
The RFD includes a detailed reporting regime, covering both financial
and training activities. As the DBCDE outlined, Telstra must:
- provide a half yearly
report to the Department on progress against the training plan and a more
detailed annual report to the Department on the training plan; and
- meet with the
Department every six months and, unless agreed otherwise, to discuss, among
other things, the progress of the retraining; and
- hold quarterly
meetings with its unions which the Department will attend as an observer.
Telstra provided the department with its annual report on progress
against the Training Plan in August 2012, and the report included information
- number and
geographical location of employees that were retrained
- number of employees
retrained from each Telstra work group
- nature and quantity
of training courses developed and delivered
- number of employees
trained and the pass rate from each course
- amount of funding
used on accredited training as a percentage of total funds expended
- progress against
Further, the committee notes the Government’s support for a
recommendation in its Third Review report concerning public dissemination of a
reporting document on annual progress under the Telstra RFD.
It was agreed that information about progress of the RFD could be ‘included in
the annual statement outlining the direct and indirect employment benefits of
the National Broadband Network’, provided as part of the Government response to
the committee’s review reports.
In terms of how expenditure for funding under the RFD is budgeted over
the eight years of the deed, the DBCDE advised that:
The Australian Government provided Telstra with an upfront
payment of $100 million (exclusive of GST) in 2011-12, as announced in the
Economic Statement 2010, which was subject to the Commonwealth approving the initial
training plan and budget.
The training plan includes training targets, one of which is
an eight year expenditure forecast which utilises the full $100 million
payment. It is envisaged that yearly targets will be adjusted from time to
Telstra must provide the department with a new annual budget
at the start of each financial year during the term of the RFD and the budget
must include a breakdown of proposed spending.
NBN Workforce Planning
The CWU raised the issue of NBN skills supply issues, noting that it had
been ‘warning of possible skill shortages in relation to the NBN rollout for
several years’—in particular, the CWU was concerned that:
...responsibility for skill development and supply does not
and cannot be made to rest with any one participant in the project. As a
result, co-ordination and funding questions in relation to skill shortages have
These have been exacerbated by structural changes in the
telecommunications workforce over the last decade... which has seen many former
employees become sub-contractors. Such workers may often not have the means or
the incentives to undertake retraining for the NBN project, especially where
significantly higher skill levels are required.
The CWU further clarified that these activities need to be ‘sufficiently
well funded and coordinated to ensure a timely supply of skills to the project’—however,
at present, ‘there does not appear to... be one body which has the
responsibility or the resources for developing an overall workforce strategy in
this area and ensuring its implementation. This is a matter which we consider
warrants the committee’s and the government’s further attention’.
In response to this matter, the DBCDE emphasised that:
The Australian Government is committed to ensuring there is a
well-trained and accredited workforce for Australia’s largest infrastructure
project and the government is confident that NBN Co and its service
delivery partners will be able to source expertise and resources to fulfil
NBN Co’s analysis suggests that the implementation of a
variety of resourcing and skilling strategies will ensure that there are enough
people in the industry to meet the skills requirements for the construction of the
The DBCDE further noted that the department and the NBN Co are ‘working
closely with all stakeholders including the NBN Co’s service delivery partners,
the industry skills boards and training organisations to facilitate
partnerships and support an appropriately skilled workforce to support the
In terms of the major areas of emerging NBN training need and workforce
demand, including local/regional employment, the DBCDE explained that:
NBN Co has forecast that the total number of new jobs created
in the construction of the NBN alone is between 16,000 and 18,000.
NBN Co has identified that 80 per cent of the workforce will
be spread across the top five occupational groups of labourers, NBN
Linesworkers, NBN Installers, NBN Splicers and earthmoving plant operators.
The company undertakes workforce modelling using the national
rollout schedules to forecast demand for workers, by region, occupation and
time. This modelling has recently been refreshed and reviewed against the
current three year rollout plan.
NBN Co has developed a skills formation strategy which
targets occupational qualifications at Certificates II and III with the
objective of building the industry’s capability. To this end, NBN Co is
working with selected training organisations to identify skills gaps and to
The Government response to the committee’s Third Report provides further
details on NBN skilling strategies and major areas of emerging NBN training
need and workforce demand, in line with the committee’s recommendation to that
Over future reporting periods, the committee will continue to be
interested in monitoring progress under the Telstra RFD and Training Plan in
supporting the availability of an appropriately trained workforce for the NBN. The
committee was therefore interested in whether the RFD and its accompanying
Training Plan were publicly available documents. Telstra explained that both
documents were commercial-in-confidence. However, as outlined
earlier, both Telstra and the DBCDE were able to provide the committee with an
overview of these documents. The committee welcomed the details provided on the
RFD and Training Plan by the DBCDE and Telstra. The committee further notes the
reporting regime that has been established for the RFD and the progress
reported to date against established performance targets under the Training
In this regard, the committee also notes the Government’s support for a
recommendation in its Third Review report that the DBCDE ‘publicly disseminate
a reporting document on annual progress under the Telstra Retraining Funding
Deed’. The committee therefore
looks forward to receiving the next annual update on this matter.
The committee will also continue to be interested in monitoring the size
and composition of both the AEW and the other workgroup eligible for retraining
under the RFD in terms of the numbers and roles of Telstra employees
retrained/redeployed and successfully transitioned over into the NBN sector, particularly
given the uncertainties about the future size and composition of this second
group—‘[a]t this point in time, it is not possible to accurately estimate how
many employees may be in the second category’.
The number and role of Telstra employees who do or do not fall into this
eligible group are of interest here—the reasons for their eligibility or
exclusion. As the committee heard, ‘employees will only fall into this
category, and be eligible for retraining, if their role may be redundant
because of NBN rollout. Employees whose roles are redundant for reasons unrelated
to the rollout of the NBN... would not be eligible for retraining’.
The committee recommends that, in providing an annual
statement to the committee on the progress of the Telstra Retraining Funding
Deed (RFD), the Department of Broadband, Communications and the Digital
Economy include in this information an update on:
company retention rates for employees in the Automatically Eligible
Workgroup, retrained under the RFD;
current numbers and roles of employees in the other eligible workgroup under
the RFD and an overview of the current reasons for eligibility or exclusion
in terms of this group.
The committee notes the concerns raised about Telstra employees receiving
a full qualification, where applicable, under the Training Plan as part of the
RFD, rather than a ‘patchwork of skill sets... just short of a full
qualification’. It therefore sees
benefit in further consultation between the DBCDE, Telstra and the relevant
unions on this matter as part of the continuing formal consultation process
under the RFD.
Given that the purpose of the RFD is to assist in the retraining and redeployment
of Telstra employees, to prepare them to work on NBN related activities,
forward projections concerning the scale and composition of this employment
market are of significance. Against this background, the committee notes the
Government’s commitment, in line with its response to the committee’s
recommendation in its Third Report, to publish such
information on an annual basis.
The committee notes that, as further recommended in its Third Report,
this annual statement will also include information on major areas of emerging
workforce demand and training need in this regard, to ensure that the Australian
workforce, more generally, has the skills-set to be able to implement and
maintain the NBN into the future.
On this point, the committee acknowledges the statement made by the
DBCDE that the department and NBN Co are ‘working closely with all stakeholders
including NBN Co’s service delivery partners, the industry skills boards and
training organisations to facilitate partnerships and support an appropriately
skilled workforce to support the rollout’. The committee believes there
would be benefit in further coordinating this area, in developing and
implementing the overall workforce strategy.
The committee recommends that, in providing an annual
statement to the committee outlining the major areas of emerging National
Broadband Network (NBN) workforce demand and training need, the Department of
Broadband, Communications and the Digital Economy include in this information
a more detailed report on:
workforce development strategy supporting the NBN rollout, including current
workforce modelling and outcomes from work with training organisations and
industry skills boards, to identify skills gaps in this area and develop
the development and implementation of this overall workforce strategy is
26 February 2013