Will Len Brown save face? | The Jackal

31 Mar 2012

Will Len Brown save face?

On March 8, Auckland Council Investments Limited (ACIL) Chief Executive, Gary Swift said:

Greater labour utilisation formed only part of POAL’s strategy for achieving a better return and it is wrong to assign blame for the current situation on the target, he said. If the target hadn’t been put in the SOI the PoAL board would still be implementing the same strategies.

Personally I don't think that's correct. The industrial dispute between POAL and MUNZ seems to have essentially arisen because Auckland Council required a better return. They allowed ACIL and POAL to undertake whatever changes they thought were required to meet that target.

The Auckland port was in fact already highly profitable, with ACIL able to distribute a 66% higher than budgeted for dividend to Auckland Council in 2011.

ACIL's statement of Intent (PDF) also outlines that they're meant to identify and resolve potential conflicts and keep Auckland Council fully informed of the implications from implementing their long-term strategy in relation to POAL.

Clearly the port was performing better than expected prior to POAL announcing it was going to contract out to try and meet the demand for a 12% return, which is unheard of in the port industry, especially during an economic downturn.

On January 1, a draft copy of the POAL Labour Strategy (PDF) was leaked online, with mediapeopleNZ reporting:

MUNZ National President Garry Parsloe says the document shows POAL management have been pursuing a deliberate strategy of ramping up the current industrial dispute while saying they want to resolve it.

The draft management plan sets out a comprehensive contracting out plan, disparages the ports owners and board of directors, and predetermines there is no intention of seeking a negotiated solution.

"There was never any intention to genuinely negotiate or mediate, there has just been public relations spin and an extreme anti-worker agenda."

POAL did in fact plan to contract out well before collective bargaining commenced in 2011.

They entered negotiations with MUNZ without any actual intention of negotiating in good faith. If you have any doubt that this is the case, here's the Auckland Council 2010/2011 Annual Report (PDF), which states that the POAL Labour Strategy was developed before June 30 2010.

In my opinion, trying to leverage such a huge return has obviously led to the conflict. Being that it's the Auckland Council through ACIL that is demanding a doubling in profits, we can directly attribute blame for the dispute there... and here's the clincher:

To improve the result for 2011/2012 ACIL will be working with the board of POAL to develop a strategic plan which will aim to improve the profitability of the company.

That means ACIL was directly working with POAL on the Labour strategy that has caused all the problems... and through a legislative requirement ACIL had to inform the Auckland Council of that plan as well.

As Mayor of Auckland, it is reasonable to asume that Len Brown would have known about POAL's intention to disregard the Employment Relations Act (PDF), which states that negotiations must be undertaken in good faith. He has an obligation and the power through ACIL to halt POAL from pursuing their destructive labour strategy, which Judge Travis has somewhat curtailed (PDF) last Tuesday.

Len Brown still has the chance to save face by taking control of the situation and ensuring that the dispute does not continue. At the very least he could request that ACIL revise POAL's Labour strategy... he can even reappoint their board of directors if he wants to.

It's not just POAL that the Auckland Council has a stake in either... they own 50% of Seafuels Ltd., which refuels most cruise ships, commercial and container ships around Auckland, they own half of North Tugz, which provides services to both the oil industry and the general cargo berths at Whangarei and Marsden Point and the Auckland Council also have a 27.5% share of United Containers Ltd., which is a leading shipping container distributor amongst other endeavours in New Zealand and Fiji.

So it's safe to say that the Auckland Council is heavily invested in the sector. You can therefore see why they're not intervening in the POAL vs MUNZ dispute... because they will directly benefit from a reduction in wages that wont just be confined to the watersiders.

The sad fact of the matter is that it's a cold-hearted calculation; savings over time from reduced wages is greater than the short-term loss from an industrial dispute. Somebody should tell Len Brown that it doesn't make it right though.