6 Sep 2013

Broadband rollout layoffs looming

6:01 am on 6 September 2013

Several sub-contractors working on the Government's ultra-fast broadband rollout say they're waiting on hundreds of thousands of dollars in overdue payments and several months' work has been pulled out from under their feet.

The unexpected hitch in the $1.5 billion rollout has also sparked questions in Parliament.

The sub-contractors were hired by Transfield Services, an Australian company which has just reported profits of more than $60 million.

In a statement on Thursday Transfield Services said it was working urgently to gauge the extent of the problem and it would not affect its overall work commitments to the Government. On Wednesday, a spokesperson said the payment problems could have been caused by a new payroll system.

A sub-contractor who doesn't want to be named says his earthworks company is owed $600,000, which was due at the end of last week.

He says many of his 30 workers may be let go if the money doesn't come in soon.

Christchurch sub-contractor Daniel Johnston, who runs Earth Tech Contractors, says he is also owed $600,000.

He says he'll make at least five of his 47 staff redundant on Friday but that's because the work is held up.

Mr Johnston says Transfield emailed him saying trenching is being delayed for two to three months because of a redesign of fibre cable ducting.

His staff have already dug 3.5km of trenching and the company was told there was another 12km of work to come.

"When we took the contract on in July there was the promise of a definite 12km of trenching. We geared up appropriately for that and they were pushing and pushing for us to do more.

"And then we got to two days ago ... and we got an email saying they were changing the product and it would be a two to three month hold on any work."

Mr Johnston says there's no reason why earth works can't carry on despite the redesign.

'Bosses' in the dark

The company in charge of 70% of the rollout, Chorus, uses Transfield for some of its work. But Chorus says it doesn't know what the problem is and a spokesperson, Ian Bonnar, says he's still waiting to learn more. "We've not been formally advised of any issue at this stage."

Transfield works not just for Chorus but for Enable, one of the Crown's four partners in the nationwide rollout.

Enable says there's no reason for a stoppage, with spokesperson Daniel Herd saying sub-contractors should have uninterrupted work through until the middle of next year.

Enable says it is in charge of making design changes to its broadband network, not Transfield.

Crown Fibre Holdings, which oversees the entire broadband rollout, referred Radio New Zealand's queries back to Transfield and Enable.

Parliamentary grilling

Finance Minister Bill English was grilled in Parliament on Thursday as to why Chorus was given money at a time when sub-contractors working on the ultra-fast broadband rollout are not being paid.

Labour MP David Parker questioned the Government's plan to give Chorus a tax break worth an estimated $100 million by requiring all copper broadband prices to be the same as Chorus's fibre broadband, so the company can't be undercut.

Mr English said the contractors should be paid and he expected ministers would get to the bottom of it.

He defended the Government's intervention in the copper market, and said he would provide the reasons why if opposition parties requested it.

"We do occasionally make decisions to intervene in the market. We are quite happy to explain those interventions transparently, and for the public and the opposition to see all the rationale behind those interventions."

Maori Party co-leader Te Ururoa Flavell questioned whether the Government would extend its corporate welfare to compensate or subsidise those sub-contractors who haven't been paid.