While the subcontracting model used for New Zealand's Ultra-Fast Broadband (UFB) network was appropriate to meet the uptick of fibre deployment, as was the use of migrant workers. A review has found that Chorus, Visionstream, and UCG did not manage well or understand how this model became vulnerable to such a risk.
"There is evidence that the 'UFB Connect' part of the UFB work programme is where the model is exposed to breaches of labour standards and migrant exploitation," the review by MartinJenkins said.
"These problems relate to services delivered by two of the service companies, Visionstream and UCG, through a range of subcontracted delivery partners."
In October, the Labour Inspectorate arm of Employment New Zealand announced it had completed 75 visits alongside Immigration New Zealand and Inland Revenue in June of 2018 and identified 73 subcontractors in Auckland in breach of minimum employment standards.
The MartinJenkins report said that number represented one in five subcontracting companies involved in UFB Connect, and after further work by Chorus, VisionStream, and UCG, that number was closer to one in three, with 109 companies being examined in total.
"This was sufficient for us to form a view that there was potentially a systemic issue that needed to be addressed," the report said.
The report said Chorus relied too heavily on its Australian service companies, Visionstream and UCG, to manage worker risk and the contracts only forced to pair to meet legal minimums.
"Within the past two years, both Visionstream's and UCG's workforce have rapidly grown, predominantly through an increased use of Indian and Filipino workers," the report stated.
"Despite this growth, Visionstream's and UCG's practices were not sophisticated enough to protect workers in their contracted supply chain from exploitation.
"Adequate protection would have included addressing migrant workers' fear that complaining about labour standards could threaten their right to work in New Zealand."
In response to the review, Chorus said it and its partners would "step up" to identify and mitigate risks.
"We underestimated that risk as it emerged, instead focusing on productivity, health and safety and quality. When issues arose we relied too heavily on the assurances given, which are not appropriate checks in a situation where there are a large numbers of migrants," Chorus CEO Kate McKenzie said.
The company said it would: Require its service companies to appoint people, independent of delivery teams, to ensure subcontractors comply with labour laws; review what companies are paid for task completion and the process used when a job is substandard; require Visionstream and UCG to enforce minimum business standards for subcontractors, as well as provide support services to them; start an on-boarding program for migrant workers; require statutory declarations of compliance from all subcontractors; and establish an ongoing audit program.
Chorus further said it would commit to publishing and regularly reinforcing worker rights and welfare, create a portal to help workers understand their rights, help to transfer visas of workers if required, and establish a trust find to certain workers who cannot secure payment from their employer.
"While the report finds the vast majority of employment law breaches were low level, the way the supply chain is set up means it could still be vulnerable and this will be fixed," Chorus chair Patrick Strange said.
Chorus said of the 109 companies identified between itself, the Labor Inspectorate, Visionstream, and UCG, 22 were blacklisted, suspended, had contracts terminated, or voluntary stopped working on UFB Connect; 41 were in a "remediation process"; 17 were being audited by the service companies; and 30 were found to be compliant.
"The investigations found that contracting employers were failing to maintain employment records, pay employees' minimum wage, holiday entitlements, and provide employment agreements," Workplace Relations and Safety Minister Iain Lees-Galloway said in October.
"This is simply not acceptable and it is not welcome in New Zealand workplaces."
Visionstream took on UFB work in October 2016 and gained installation work for 80% of the network, with the remaining 20% given to Broadspectrum and multi-dwelling unit expert UCG to be installed.
Meanwhile, New Zealand retailer Spark disclosed it had been fined NZ$675,000 for historical billing issues related to "incorrect implementation of a 'welcome credit' when joining Spark for some fibre broadband customers during 2016" and "a billing implementation issue relating to a 30-day notice period when customers left Spark".
Court proceedings were brought on by the New Zealand Commerce Commission, with Speak pleading guilty to breaches to the Fair Trading Act.
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