Transfield finally pays subbies, but also shows some of them the door - EPMU

Transfield may have finally paid subcontractors, but it has also shown some of them the door, EPMU national industry organiser Joe Gallagher tells NBR ONLINE.

Yesterday, the Australian company told NBR it had paid contracts - whom Labour claims were owed up to $10 million after payments missed since July (Transfield won't comment on the amount).

The Christchurch leg of the Ultrafast Broadband (UFB) fibre rollout was won by Christchurch Council-owned Enable Networks, which contracted all engineering work (estimated around $200 million). Transfield in turn subcontracted part of the project.

Mr Gallagher says he understands seven contractors - and an unknown number of staff beneath them - were promised work until the end of this year, but have now been let go. 

The union organiser says he does not think the Australian company has acted in ethical or moral fashion, but that it is within its rights.

"My understanding is that on a supply and demand arrangement and that there was an exchange of emails that suggests there would be work until the end of this year. But an exchange of emails is not w contract," Mr Gallagher says. "Legally, they're in no man's land."

The situation should serve as a warning to subcontractors that they need to get proper contracts in place, the EMPU man says - but adds he's also aware that in the highly competitive UFB subcontracting market "people will do anything to get in through the door."

Enable Networks spokesman Daniel Herd told NBR, "Enable has a contract with Transfield for them to deliver a significant amount of work through to mid-2014. It is up to Transfield how they deliver on their contract with Enable."

Mr Herd says Enable has watched the situation with concern, but that it has not held up progress on the Christchurch leg of the rollout.

Mr Gallagher doesn't like it, but agrees other subcontactors are out there who will take up the slack.

Chorus is responsible for around 70% of the UFB rollout; 90% of its engineering work is contracted to Downer and Visionstream, with Transfield carrying out the balance.

UFB subcontracting work is "a tough game with low margins," Mr Ratcliffe told NBR earlier.

In April, Chorus signed new fixed contracts with Downer and Visionstream as it sought to tighten up spending on its UFB work, tipped to go $300 million over-budget.

Transfield's Chorus contract is performance-based and open-ended, Mr Ratcliffe said.

While still part of Telecom, Chorus set the stage for a more keen-priced UFB bid with a restructure that saw its unionised engineers subsidised to become independent contractors - who in turn subcontracted to the competing Downer, Transfield and Visionstream.

ckeall@nbr.co.nz

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