Business

Chorus speaks out on migrant exploitation

Identification of widespread employment breaches among some Chorus subcontractors has prompted the telecommunications infrastructure company to investigate its own systems. In an interview with Newsroom, Chorus executive Ian Bonnar talks through some of the issues with reporter Teuila Fuatai.

Rolling out ultra-fast broadband in New Zealand has been complicated. The government enlisted Chorus, which was spun out of the old Telecom, to carry out the bulk of the work. Chorus subcontracted the job to four big international companies which in turn subcontracted it out to a host of smaller local companies.

That is a lot of people clipping the ticket before an actual technician on the ground gets paid.

Newsroom and other media organisations have run stories about migrants, mainly Filipino and Indian, being exploited by these small subcontractors. The E Tū union says Chorus has had its head in the sand, or at least its hands over its eyes.

Chorus’ standard response was that it had looked into the various allegations and found nothing untoward.

However, confirmation from the Labour Inspectorate that widespread problems do exist, appears to be changing things.

Instead of providing the usual written response to questions Chorus’ head of corporate relations Ian Bonnar, agreed to be interviewed.

Bonnar asked if he could run through some of the numbers and background to the current ultra-fast broadband (UFB) build, before covering how Chorus has planned, built and maintained the multi-year project which is now nearing completion.

It became clear Bonnar and presumably other executive members had felt reassured by their contractors' claims the network rollout was going well and incidents of alleged employment abuse were isolated.

Ian Bonnar, general manager corporate relations at Chorus. Photo: Supplied.

Why had they not dug deeper?

A number of individuals – migrant and non-migrant – have contacted Newsroom to report alleged labour law violations, health and safety problems and issues with unsuitable workers.

One subcontractor even went as far as emailing a breakdown of expenses associated with a fibre installation job. According to the subcontractor’s figures, the “cut” taken by the four big infrastructure companies directly contracted by Chorus, left little to no amount for subcontractors and those who carried out the actual field work.

It was always going to lead to undercutting and exploitation, the subcontractor said.

Several people also described exploitative practices on the UFB build as an “open-secret” in the industry.

How is it things seem so different from Chorus’ perspective?

Bonnar: “The way in which we’ve structured it is we’ve been very specific about what the requirements are of our primary contractors [Vision Stream, UCG, Downer and BroadSpectrum].

"If it’s proven that these people [subcontractors] are in breach, then our primary contractors are in breach with us.”

Bonnar also justified why Chorus employed the four “primary contractors” in the first place, pointing to New Zealand’s ongoing skilled labour shortage.

“It’s not actually our expertise getting large workforces scaled up and scaled back down again. That is what these big infrastructure companies do,” he said.

“This is their core business. And once they finish with our big project, they’ll go do a big road, or power project or something like that. While they bid for the work through us, it’s up to them how they resource it and find people.”

“The question is: ‘Could we, and should we have done more?’”

Notably, since the Labour Inspectorate announced its early investigation findings, Chorus has brought in consultancy firm Martin Jenkins to investigate problems in its systems.

In answering his own question, Bonnar draws on the experiences of other “utility” industries like electricity and building which operate supply-chain models. In the building industry, allegations of migrant exploitation and shoddy workmanship have hit also hit headlines lately.

“That’s part of what we’re asking the [Martin Jenkins] report to look at – that is when issues were raised, were our processes fit for purpose or robust enough to make sure the inherent risk in a model like this, with large migrant populations, is managed as much as possible?

“I guess we thought so until the Labour Inspectorate came out with their information. Even when the previous ones [alleged problems] had been raised, we’d done audits, we talked to people and sought the assurances,” he said.

As the discussion moved to the economics of the "model", Bonnar remained frank about the situation. Asked if, as the subcontractor who emailed about fibre job installation costs alleged, there was simply just not enough money to pay for the all the players in the supply chain, he said: “I think that’s the bit that really needs to be clarified.

“That’s the crux of the important piece of work here: does the model, whereby you get subcontractors reporting to subcontractors...take so much margin out at every stage that it drives those sorts of behaviours?”

The E Tū union and the migrant workers interviewed by Newsroom have no doubt that the answer is “yes.”

For Chorus, which is nearing the end of the UFB build, those questions will officially be answered through recommendations from the Martin Jenkins inquiry, expected into next year. Meanwhile, the Labour Inspectorate's investigation is also ongoing, with the agency saying it aims to lay charges in cases it is investigating.

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Chorus is a foundation partner of Newsroom

Read more:

Migrant exploitation and the true cost of UFB

Chorus hires Martin Jenkins