Chorus prepared to ring some changes, but unlikely to drop Visionstream

Monday, 11 March 2019

Chorus is expected to change its subcontracting model, but it remains to be seen whether those changes will go far enough to satisfy its critics.

Broadband company Chorus has confirmed it will make changes to its controversial subcontracting model in the wake of action against contractors by the Labour Inspectorate and a related inquiry it launched in October.

Spokesman Ian Bonnar said he could not say what the changes would be, or how significant they would be.

'But we are not going to stand up and say 'all is well, carry on as you were'.'

Last month, Labour Inspectorate spokesman Michael Docherty said it had lodged claims with the Employment Relations Authority against three firms that had carried out work for Chorus on the ultrafast broadband network after detecting 'widespread' breaches of employment law.

These were Auckland firms 3ML, Sunwin Technologies and Babylon Communications.

The E tū union has questioned the appointment of Mark Ratcliffe, the former Chorus CEO who put its subcontracting model in place, to the government job circuit where he is now the interim boss of the NZTA.

More than half of customers with access to ultrafast broadband have now connected to it - 714,258 customers in total - but there are growing questions about how that success has been achieved.

* NZ boss of Chorus contractor Visionstream to leave company

* Allegations of bribery and 'improper behaviour' investigated in broadband roll-out**

Shine Lawyers says it has got support from hundreds of linesmen for a planned class action lawsuit.

Infringement and improvement notices had been issued to another 34 companies with action against dozens more in the pipeline.

Chorus responded to the Labour Inspectorate's concerns by establishing its own inquiry headed by former deputy State Services Commissioner Doug Martin which has since expanded to also consider a range of accusations made a group of whistleblowers.

The latter included accusations of subcontractors not being paid for 'scoping work' connecting homes to UFB as agreed, and allegations of conflicts of interest among Chorus and Visionstream managers over which Bonnar has said both companies have since taken action.

The whistleblowers also told Martin at a meeting brokered by Stuff in December that they suspected that a Visionstream manager had regularly accepted bribes for approving linesmen to carry out work on the broadband network.

Bonnar said it was 'pretty unlikely' Chorus would completely drop either of its prime contractors, Visionstream and UCG, as a result of Martin's report which is due to completed within weeks.

'But let's wait for the report and see what it says.'

Tim Gunn, an Auckland-based partner at Australian law firm Shine Lawyers, reiterated that it expected to file a class action lawsuit against Visionstream, which is Chorus' largest contractor, within months.

The class action would be on behalf of at least 'hundreds' and possibly thousands of individual subcontractors who he said had been working under 'slavish' conditions but who Shine Lawyers will argue were legally entitled to be treated as employees.

The E tū union has backed the legal action, which will seek back pay, holiday pay and sick pay.

One former linesman who has agreed to be represented by Shine Lawyers in the class action lawsuit said the business model in the industry was designed to pass business risks on to small subcontracting firms, such as one he ran which later went bankrupt.

They were promised a certain revenue stream, causing them to borrow to hire technicians and buy vans, tools and equipment, he said.

'A number of months later they are trapped and it turns into a poker machine style of gambling business until they eventually go belly up.

'This eventually pushes out local hiring to techs usually from outside New Zealand willing to put up with the lower rates until they can no longer continue. This creates a huge revolving door and exterminates the local skilled market,' he said.