The union representing workers laying out the National Broadband Network (NBN) believes their wages will be squeezed as the project manager seeks to tighten up construction contracts.
NBN Co, in charge of the $36 billion project, has told 14 firms vying for a contract that their proposals are too expensive.
The company is seeking a new construction firm to roll out optical fibres for the second stage of the NBN rollout.
[ Receive up-to-the-minute news on telcos in Computerworld's Telecoms newsletter ]
The government business enterprise says the quotes are inflated and has “indefinitely” suspended tendering.
The Communications Electrical and Plumbing Union, which represents NBN workers, fears workers will lose out.
“Traditionally, when they want to cut prices, it’s the labour prices they reduce,” the union’s NBN project coordinator, Allen Hicks, told AAP.
“In a commercial market, the project administrators say, `Your tender’s too high’.
“They normally revisit labour costs because prices of materials are normally fixed.”
Hicks said NBN Co should reveal what other project agreements it was comparing tenders against, arguing cheaper wages would jeopardise the prospect of the rollout being delivered on time.
But NBN Co’s head of corporate services, Kevin Brown, said construction firms were charging too much.
“I wouldn’t describe it as price gouging but we’re not satisfied we’re getting fair value for money so we’re going to go about this in a different way,” he told ABC Radio.
Brown said discussions were taking place on Friday with “an Australian company”.
He declined to say if this would involve a new arrangement with Telstra.
The telco giant and NBN Co are negotiating a potential $11 billion deal that would allow NBN Co to access Telstra’s underground cables as part of the rollout.
Opposition leader, Tony Abbott, has compared the latest NBN controversy with cost blow-outs in the federal government’s school halls program.
“It was always very unrealistic to expect that the NBN would be built at the price the government set it,” he told reporters in Brisbane.
“This was always going to be school halls on steroids.”
In a statement, NBN Co explained it was seeking a “new approach” to award a tender as part of a “national construction footprint”.
The NBN business model involves supplying 93 per cent of Australian homes with optical fibre cables.
The rollout is scheduled to be completed in December 2020.
The popularity of fixed-line internet connections is soaring, regardless of the NBN rollout.
Internet service subscriptions climbed above 10 million for the first time in December 2010, marking a nine per cent jump in just six months, official figures show.
The number of business and government subscribers grew by a whopping 26 per cent to 2.3 million.
Slow dial-up services linked to copper telephone lines appear to be losing favour, accounting for less than seven per cent of connections.