Joe Hendren

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Friday, August 28, 2009

Greedy hypocrisy of Telecom bosses

At the same time Telecom are attempting to force their staff employed as lines engineers to become dependent contractors, a move that will more than halve their income, the company continue to defend paying multi million dollar salaries to their top executives.

To make matters worse, Telecom CEO Paul Reynolds recieved his full performance bonus despite Telecom recently announcing a 43% drop in profits. The EMPU estimate his total remuneration package for the year is $7 million. Six other top executives receive a total of $11 million to share amongst themselves.

This problem is not new, and despite the excuses has nothing to do with the recession. A 2007 survey by Sheffield of 501 chief executives* found the proportion of bosses not reaching targets rose from 28 per cent in 2006 to 43 per cent in 2007. Those who missed targets were still paid three quarters of their targeted performance pay. Its highly unlikely these same bosses were so understanding when it came to paying their own workers based on performance.

Telecom chairman Wayne Boyd said Reynolds got the maximum bonus for his outstanding first full year in which he had negotiated the company's obligations with the government. It says a lot that Telecom believe Paul Reynolds deserves $7 million for his work attempting to influence the Government. It says a lot because this demonstrates how skewed the priorities of the company have been ever since it was privatised - protect the monopoly, or something as close to the monopoly is the goal - not providing decent telecommunications services.

As John Minto says, Telecom have been a boil on the country's backside for almost 20 years since it was privatised by Labour and National. Minto also notes the company employs over 90 lawyers and suggests this monster legal team is there to protect Telecom's near monopoly.

Telecom's relations with government have sometimes resembled Elizabethan style patronage, where monopolies were given out to loyal courtiers, who undertook a little price fixing to ensure they were enriched at public expense. This is an close description of the privatisation of the company, yet most people have no problems describing Elizabethan examples as political corruption. Telecom would have loved the 16th century - even if there were no phones.

Quite by accident, I did a google search in New Zealand with the words outstanding and CEO. Funninly enough its a rather boring platitute hosted on a lot of CEOs. Its just false flattery, in the mode of 'Oh, your majesty' (note capitalisation is a political issue).

Just this week, a telecommunications watchdog, the Independent Oversight Group found that Telecom had breached its operational seperation undertakings by offering wholesale discount deals to its customers. The IOG called these breaches 'non-trivial', which is another way of saying these breaches were serious. So Telecom is up to its old tricks, fighting and suppressing competition whenever it has the chance to occur. Why am I thinking about the prospects of a 'dissolution of the monasteries' right now? If that's going a bit far, at least make operational separation a genuine separation and break the company up.

It is also up to its old tricks in its relations with its employees. Even National MPs are recommending the engineers refuse to sign the nonsense contracts offered by Telecom

Telecom are not offering their engineers a genuine 'business opportunity' as they are setting all the terms of the contract. Work will only be offered on Telecom's terms - these workers will be nothing like real independent contractors, and will lose the overtime payments they receive now. Telecom are offering no redundancy, yet the engineers are being given the 'opportunity' to front up with $60,000 for their own vans and equipment. The income of the lines engineers will drop by up to 66%, which of course is the reason why Telecom is attempting to pull this stunt. Please support the engineers and their families - in this situation they have little option but to go on strike.

Instead of gifting their new CEO all sorts of travel allowances when Paul Reynolds shifted from the UK, why didn't Telecom ask him to bring his own plane?

* Source: Dominion Post (6/3/2008), "Bosses collect despite targets"

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Monday, August 24, 2009

Telecom Alternative Annual Report now available

From the Council of Trade Unions. I will update the post when a weblink to the PDF document becomes available. Given Telecom released their annual report this week, the following should also be of interest to investors.

Telecom Alternative Annual Report 2009

Performance highlights:
  • OECD leader! – Top 5 highest prices, but amongst lowest reinvestment in infrastructure.
  • Terminator! – Commerce Commission says Telecom’s termination charges are twice as high as they should be.
  • Walk the talk! – Dragging its feet over opening up the network to competition.
  • Top gear! – New mobile network interfered with rival’s signals before launch because of lack of filters.
  • Roger that! – Perennial nominee in Roger Award for Worst Transnational Corporation – Winner 2004 and 2007!
  • Roaming! – Call centres offshored.

Employee relations:
  • Chorus of disapproval – Telecom lines division Chorus hangs engineers out to dry.
  • Vision problem – Telecom turning blind eye to Visionstream’s ugly dependent contractor model.
  • BYO – If you want a job, bring your own van and equipment – decent income not included.
  • Our most important asset – You’d think Telecom would have more concern for skills shortage workers essential to its business, not allow its contractor to drive down their earnings, put them at risk of bankruptcy, and maybe lose them from the industry altogether.
Customer service:
  • Own goal – It’s Telecom’s cables that won’t get fixed if engineers have to cut corners to try and squeeze a living out of the job. Guess who else loses? That’s right – you, the customer.
Support the Telecom line engineers – Call 0900 STAND TALL to make a $10 donation to the support fund, or call 0800 1 UNION for more information on how you can help.

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Thursday, August 06, 2009

Silence from Labour on ministerial housing is a mistake

It is most unfortunate the Labour opposition have made the decision to join National's conspiracy of silence over the out-of-town housing allowances issue. Even if Labour had some dirty laundry themselves, it is more important to speak out and differentiate themselves clearly from National, who being in Government would normally take most of the rap.

Instead, Labour look like they are out of touch. When they have reluctantly commented on the issue they have appeared nervous and indecisive.

If Phil Goff was a better opposition leader he would have gained the initiative by immediately demanding an inquiry into the issue, freely admitting there may have been some Labour 'mistakes'. At the same time he could have barraged Key with suggestions on how to do things better. Good use of parliamentary questions and Trevor Mallard may have uncovered information that put ministers under more pressure.

Instead Goff let John Key gain some of the initiative with his soft as Teflon 'review'. Through their actions the right encourage cynicism toward politicians - it just so happens a electorate with less expectations of politicians usually suits their agenda. So in their silence, have Labour helped the right undermine faith in democracy?

Unfortunately, a 'plague on both your houses' has been a common theme this week - in more ways than one.

As for the Greens, IMHO they had nothing to worry about regarding the Green Futures Superannuation Scheme - the fact they have been more open about their arrangements for years should provide enough political cover.

There are reasonable and necessary expenses for being an out-of-Wellington MP. Its only the profit seeking rorts that need to stop.

I was working in Parliament in 2001 when National and Act's campaign against Hobbs and Bunkle was in full swing. It went far beyond just raising issues - it was the right of New Zealand politics at their most nasty, personal and vindictive. I remember thinking at the time there soon must come a point where the public would start feeling sorry for Hobbs and Bunkle - it really was that bad.

Richard Prebble was particularly obnoxious - it might be a small mercy, but the end of his second political career can be traced to his involvement in the Hobbs and Bunkle bashing. Speculation about his replacement as Act leader started soon after the 2002 election.

The memories of that National and Act campaign were a key motivation behind my posts this week.

Not that I am suggesting Labour and the Greens should now run a similar campaign - instead its more important to remind the public how nasty the Nats can be, as well as highlighting their obvious hypocrisy. How easy would it be right now to paint the Nats and Roger Douglas as greedy out of touch bullies? Unfortunately the opposition are failing to be an effective opposition right now.

Many of the National MPs who were frothing at the mouth in 2001 are now claiming, on questionable grounds, higher out-of-town allowances than Bunkle or Hobbs - it just beggars belief.

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Wednesday, August 05, 2009

Wayne Mapp's career - don't speak ill of the dead

National party ministers, including Wayne Mapp are facing public condemnation for their practice of renting out their own Wellington apartments while they claim allowances from the taxpayer to live in more plush surroundings.

Reading through some old Hansard's again - I wondered - did Wayne Mapp predict the end of his own political career nearly eight years ago? The incident by which I refer was on 1 August 2001 when he criticised Marion Hobbs and Phillida Bunkle for claiming out-of-town housing allowances.
Dr WAYNE MAPP (NZ National---North Shore): I can only say to Mr Benson-Pope that those in glass houses should not throw stones. I have only to think about the likes of Marian Hobbs, and what she has done. Or to think about Phillida Bunkle, which leads me to wonder why Phillida Bunkle is still sitting over there. Are the pleas of that member to her leader still going unanswered?

Hon. Murray McCully: Don't speak ill of the dead.

Dr WAYNE MAPP: Well, there we are: ``Don't speak ill of the dead.'' That is now on the record.
Wayne Mapp - don't speak ill of the dead - that is now on the record.

The same goes for McCully too.

If Mapp thinks the political career of Bunkle and Hobbs' was over in 2001, to have any consistency, he must think his own career has now hit a big iceberg in 2009.

In 2001 Bunkle and Hobbs stood down while their out-of-town allowances were investigated. Despite the public anger, in 2009 no National party ministers have resigned or stood down. Clearly John Key sets lower standards for his cabinet than Helen Clark did.

Not only is the reference to those in glass houses not throwing stones ironic given his own behaviour - it was also the title of a Colin Espiner blog this week on stuff. I am sure glass houses don't cost $1000 a week. Nor would shipping containers or double bunking.

Following the election last year I heard reliable rumours the Department of Defence were not relishing the impending appointment of Mapp as their Minister. So I am sure another Minister can easily be found.

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Tuesday, August 04, 2009

National's hypocritical bunkle over housing allowances

A number of National party ministers are renting out their own Wellington apartments at a profit while they claim allowances from the taxpayer to live more expensive homes. Murray McCully, Tim Groser and Phil Heatley essentially have Wellington property investments indirectly subsidised by the taxpayer by the fact they don't have to live in them. Additionally, Bill English claims around $50,000 a year of allowances to pay the mortgage on his $1.2 million dollar Wellington home.

When the story concerning Bill English's home first broke I was prepared to consider he may have a special case given it would be difficult to house his large family in a typical ministerial house. That said I expect that one could be found if required.

Yet as I thought about it more, two things made me less sympathetic. The first was the revelation of the rort being played by other ministers who already have Wellington apartments. More seriously, as my mind cast back to 2001 it became very clear that many of the Ministers in question are being simple hypocrites.

In 2001 National attempted to make a big issue out of Labour Minister Marian Hobbs and Alliance Minister Phillida Bunkle claiming out-of-town allowances to subsidise Wellington accommodation, worth up to $16,000 a year, while they were on the Wellington Central electoral roll. Both were eventually cleared of wrongdoing, but Bunkle did not get her job back.

In 2001 now local Government Minister Rodney Hide expressed disappointment* that an Auditor General's review of out-of-town accommodation allowanaces paid to Wellington based MPs was only going to look at the rules rather than the two MPs concerned, Hobbs and Bunkle. I very much doubt Rodney will be consistent and now say Prime Minister John Key's review should concentrate on the behaviour of certain individuals instead of just looking at the rules.

So what were Bill English, and Murray McCully saying in 2001 about this issue? Indeed it could be said McCully invited such comparisons in a speech to the house on 14 February 2001.
"I take the opportunity today to remind two members of this House of some words they have used on previous occasions, and to invite them to inspect their conduct of recent weeks against the yardsticks that I believe they have created for themselves."

Quite. Your turn Mr McCully. It is also interesting that in your attack on Bunkle you suggested the court of public opinion is a better guide as to what is right - so you can hardly claim to hide behind the rules now can you?
"To most members of the public, that looks like a person who lives in Wellington inquiring of the Parliamentary Service Commission, before she had even become a member, what she would have to do to collect the allowances, then contriving her circumstances so as to be able to complete the assertions that she did complete, and thus collect the Wellington allowance. That is how it looks to ordinary New Zealanders."

To most ordinary New Zealanders collecting rent on a Wellington apartment you own while you live in another taxpayer funded house looks like a taxpayer funded money making scam. Yet McCully's own words would also seem to doom his own deputy leader.

Bill English moved his family to Wellington some years ago - its where his wife works, and where his kids go to school. On these grounds most members of the public would regard him as a Wellington based MP. Claiming you live apart from your family in Clutha Southland seems like contriving your circumstances to collect allowances, which is rather similar to how the public regarded Phillida's claims she lived in Waikane.

With Heatley and English claiming between $48,000 and $52,000 its worth noting this is over three times the value of the allowances claimed by Hobbs and Bunkle.

On 14 February 2001 Bill English made this contribution to the debate on the Prime Ministers Statement
"Today's Evening Post headline sets the tone for the Government for the year: ``Ministers face legal probe''. When have we ever seen a headline like that in a newspaper? Two Ministers face a legal probe for a couple of simple reasons. One reason is that Marian Hobbs told Wellington Central people that she was a Wellington Central resident, while she was claiming an allowance for being an out-of-town MP. Ms Bunkle had any number of houses, one of which appears not to have existed while she was claiming an allowance for living in it. There will be more to be disclosed about that. But that is the tone that has been set. "

Has Bill 'any number of houses' English set the tone for his own Government this year? If you were to take his own words at face value it would appear so.

* Source: TVNZ, 25/1/01 'Another inquiry into MP allowances'

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