NBN CEO Stephen Rue grilled over $77m bonuses

NBN executives have been grilled after staff were paid more than $77 million in bonuses in 2020 despite recording a massive cashflow loss and the service provider being not “up to scratch”.

Hundreds of staff at the government-owned entity on a salary of $200,000 or more received an average bonus of almost $50,000, which was scrutinised at senate estimates given the blowback to Australia Post after it was revealed its executives were gifted $20,000 worth of Cartier watches as bonuses.

Labor senator Kimberley Kitching ridiculed the decision to approve the huge remuneration, citing the cost blowout of NBN as well as the Covid-19 pandemic.

“The cost of the NBN has gone from an original promise by the Coalition of $29.5 billion to $41 billion to $49 billion to $51 billion,” the senator told the senate estimates committee on Thursday.

“After all those cost increases, it turned out the network hasn’t really been up to scratch.

“The Prime Minister was shocked by rewards being given to Australia Post executives. Is he also shocked by these bonus payments?”

In response, Digital Economy Minister Jane Hume insisted there was “no comparison between workers being paid in accordance with their employment conditions and the discretionary purchases of luxury items”.

“We acknowledge that there’s a need to very carefully consider performance payments in the public sector to ensure that they meet the public and the government’s expectations of accountability and transparency,” she said.

NBN chief executive Stephen Rue was one of the highest-paid public service executives in Australia in the previous financial year, pocketing $3.1 million, including $1.2 million in bonuses.

Scott Morrison and Communications Minister Paul Fletcher led the chorus to publicly slam former Australia Post chief executive Christine Holgate for her decision to approve massive bonuses to her staff.

Senator Kitching said she was confused by the varying reactions to the generous bonuses paid out to public service employees and executives.

“Minister Fletcher was alarmed the Australia Post board was considering paying bonuses, yet here, $77 million was paid out. The Australia Post was merely $7 million to their senior executive team,” she told the hearing.

“The minister put a stop to that, quite rightly I think, but here we’ve got another entity under his purview and they’re paying out $77 million during a pandemic when some Australians lost their jobs.”

According to a breakdown of the NBN bonus structure, 3819 employees were paid total bonuses of $77.5 million. More than half of those, 2865, in the salary band of $100,000 to $200,000 shared bonuses of $37.6 million at an average of more than 13,000 each.

The next band up, who earned between $200,000 and $300,000, received a bonus of nearly $50,000, while the eight employees on more than $600,000 were gifted an average bonus of more than $440,000.

In response to a grilling from Labor senators, Mr Rue defended the payments, which NBN clarified as “at-risk” as opposed to a bonus, insisting the current structure is awarded if performance indicators are met.

“There is a difference between a bonus payment and an at-risk payment, and the reason for that is an employee will have a particular remuneration but some of that is put at-risk,” he told the estimates hearing.

“It’s not as if they have a salary and then a bonus comes on top of that – there is a particular remuneration, and then depending upon the performance of the company against board-driven targets, which are typically a range of targets or what’s called a balanced scorecard.”

Senator Kitching asked how the NBN chief executive could justify paying $77 million in bonuses given the government entity ran a cashflow loss for the year of $7.4 billion.

In response, Mr Rue said “the company is investing in its growth”.

“The cashflow loss, as you say, could be looked at in a different way as an investment in the company to broadband services which are crucial for the economic welfare of the nation and for the societal welfare of the nation,” he said.

“NBN sources the vast majority of its talent from the corporate sector plus we have some very important skills.

“Cyber security skills are needed as a national infrastructure business, engineering skills, data scientists – so we need to have a remuneration that reflects the ability to attract and retain staff.

“We do not pay at the top of the market, we pay very much at the medium of the market.”