NBN Co paid ex-boss Stephen Rue $1.4m during gardening leave after he left to join Optus

The government-owned telco paid former CEO Stephen Rue more than $1.4m after he resigned to helm Optus – a gardening leave salary more than double what the PM earns in a year.

Former NBN Co CEO Stephen Rue’s big pay haul during his notice period, which ends in November, is detailed in the annual report. Picture: Britta Campion

NBN Co has paid its former chief executive Stephen Rue more than $1.4m after he resigned from the government-owned telco to helm Optus – a gardening leave salary more than double what the Prime Minister earns in a year - with the federal opposition slamming the pay packet as not “passing the pub test”.

NBN must adhere to strict laws that require it to treat all telcos equally, given that it is a wholesaler for broadband services.

Gardening leave is a term used when employees are forced to stay away from their workplace during a notice period when they leave to join a rival.

But in NBN’s annual report released late on Thursday afternoon, the telco revealed that Mr Rue “remained an employee of NBN Co and has continued to provide ongoing service to NBN Co during his notice period, albeit on a restricted basis”.

From when he resigned on May 6 until his notice period ends on November 4, NBN Co paid Mr Rue $1.43m. According to its annual report NBN already paid him $2.85m last financial year. The telco said this was in accordance with his employment contract.

But opposition communications spokesman David Coleman said Mr Rue’s pay “just doesn’t pass the pub test”.

“With Australians getting smashed by Labor’s cost of living crisis, this just doesn’t pass the pub test. Families who have been hit by massive NBN price increases will be furious at this news,” Mr Coleman said.

The pay Mr Rue received during his notice period has also raised eyebrows among telco industry insiders, particularly after Optus interim chief executive Michael Venter announced that the company had also hired NBN’s chief corporate affairs officer Felicity Ross.

A NBN spokeswoman did not respond directly to questions about how Mr Rue’s salary was justified during a cost-of-living crisis and when the telco has hiked prices.

“NBN is confident that it has complied with its obligations,” the spokeswoman said.

“Matters relating to Optus should be directed to Optus.”

The annual report also showed that NBN Co received 53 new freedom of information requests during the year, two of which were granted in full, while it refused 12. NBN said it didn’t hold documents for three requests while the other 31 FOI applications were withdrawn.

While Mr Rue received more than $1.4m during his notice period, NBN said it spent less on its auditor, scandal-plagued PricewaterhouseCoopers.

NBN Co paid PwC $4.92m last financial year, compared with $6.9m in fiscal 2023.

Mr Rue joins Optus after a 10-year career at NBN. He was initially the government-owned telco’s finance boss before being appointed its chief executive in September 2018.

He survived two changes of government, seamlessly transitioning from the Morrison to Albanese era, and he is well regarded among policymakers in Canberra.

But NBN has come under criticism from the opposition and its customers recently.

Opposition communications spokesman David Coleman has been critical of the NBN’s satellite services, which have been losing ground to commercial rivals such as Elon Musk’s Starlink.

Mr Coleman said six million Australian families have been “smashed” by NBN price rises of up to 14 per cent since October.

The NBN price hikes have made home broadband more expensive for Australians, with its telco customers – such as Telstra and Optus – passing on the cost rises to households, further placing pressure on the Reserve Bank to rein in inflation, particularly in services.

Telstra also wrote to customers in May, saying it was hiking the cost of its broadband plans by almost 5 per cent a month, citing wholesale price increases from NBN Co.

Liberal senator Dave Sharma also questioned NBN’s interim chief executive Philip Knox over the telco’s finances at a Senate hearing in June.

During the half-year to December 31, NBN had “about $1.06bn negative free cash flow”, which Senator Sharma said was a “deterioration” of about $400m — or 70 per cent — in a year.

Mr Knox attributed the decline to “significant investments we continue to make”.

At the same hearing, Senator Sharma said he had received complaints from constituents in Western Sydney who have had to pay about $9000 to be connected, while others have enjoyed access free-of-charge – even if they were living in the same street.

NBN chief network officer Dion Ljubanovic said for households “within that footprint” it will be a free upgrade, but conceded there will be some who will have to pay thousands of dollars if they want to be connected.