Blog: Riding the Neo-Liberal Tiger

By John Ryall, former Assistant National Secretary of E tū

Working as a public hospital orderly, food service worker or cleaner in 1991 was not a very exciting job but was critical to the effective functioning of the public hospital system.

Workers employed in these roles by the Wellington Area Health Board were mainly of Maori or Pasifika origin and through their cultural bonds, their union and their solidarity had developed the hospitals into secure and enjoyable places to work.

The only exception were the Wellington Hospital cleaners, whose work had been contracted out since the 1940s and had to face a three-yearly cycle of re-tendering, which could mean their jobs disappearing or their working hours being reduced.

Even the restructuring of the public health service in the 1980s, with the downsizing of psychiatric hospitals, the privatisation of continuing care and the closure of some smaller facilities had not changed their jobs very much and the processes negotiated with their union had ensured that they had input into every change that occurred.

In the 1990s a double attack on this work occurred through the National Government introduction of the Employment Contracts Act, which destroyed nationally consistent pay rates and employment conditions in public hospitals, and the so-called health reforms, which set up the public hospitals as competing business units (Crown Health Enterprises) bidding for contracts from four regional public funding authorities.

The Crown Health Enterprises (CHEs) were established as wholly-owned Crown companies and their boards were made up of people who had private business experience, with almost none having any experience in the public health and disability system. The CHE management teams were appointed on a similar basis, with our local Capital and Coast Health CHE Chief Executive and Human Resources General Manager both coming from Telecom.

The Service Workers Union members employed in the Wellington hospitals did not notice much difference initially although they were notified that the Area Health Board’s Facilities General Manager, John Dixon, had left his employment to form a company called Tempo Health Support, a company that would later have a big impact on their working lives.

John Dixon had previously worked for one of the cleaning contractors and then became the Hutt District Manager of the Wellington Area Health Board. He was a strong advocate for more competition in health and organised lucrative weekend seminars for aspiring health managers in which they played games pretending that they were representing designated public and private health providers competing for public funding.

One of the Hutt District managers, who was appalled by the pending competitive model of healthcare, commented to me that John Dixon was so captured by the game that he thought he could be a winner if he could set up the right service provider.

New manager steps in

John Dixon was replaced in July 1993 by one of his lieutenants, Walter Baumann, who did not have a health sector background, although had worked since 1990 in the Area Health Board facilities department in charge of maintenance services.

Although he admitted later to the Employment Court that he had no specialist knowledge about orderlies, food services or cleaning, he was driven by a strategy of savings in so-called “non-core” services to put more money into medical services. He called it “medical dollars”.

Almost immediately from the time of his appointment as Facilities General Manager he was reviewing options for saving money including contracting the services out. He held a “brainstorming session” with his senior managers, and they agreed that contracting the services out was a good option, even though as he later told the Employment Court, he had no direct personal experience of contracting out.

He approached various contractor companies for expressions of interest in taking over the Capital and Coast CHE orderly, food and cleaning services. This included the newly formed Tempo Health Support.

He knew that the Service Workers Union employment agreement, and the previous Area Health Board protocols, required him to notify the union of any review of services. However, as he later told the Employment Court, he saw these agreements as a “roadblock” to running an effective business, so decided to ignore them.

In late September 1993 the union received calls from hospital members reporting that Walter Baumann had met with them and told them that he was “considering options” for the future of their services, which would include various contracting companies visiting their worksites to have a look at their work.

I contacted Walter Baumann, who denied that any review of services was taking place and said he was merely throwing a few ideas around. I wrote to him seeking an undertaking to cease the review until such time as the union was notified and a mechanism for union involvement was agreed.

On 30 September Walter Baumann, having failed to give the union an undertaking, put out a media statement saying that the CHE was looking for ways to save money in “non-core services” through carrying out services differently.

This was enough for us. The Service Workers Union filed an application in the Employment Court for an interim injunction against the CHE to restrain any further work on the review until such time as the CHE complied with the union employment agreement and the previous Area Health Board protocols.

The application seemed to have the required effect and the CHE agreed to formally initiate a review of orderly, cleaning and catering services with the involvement of the union. This was done on 6 October 1993.

Covert behaviour

On 21 October 1993 I met with two facility services managers and agreed on a mechanism for the review, which would include joint work on the service specifications, a transparent tendering process and once a preferred tenderer was selected a meeting between the union and the CHE to compare the contractor’s proposal with the current in-house provision so hopefully a joint recommendation could be made to Walter Baumann.

While our meeting was taking place to agree on a mechanism for union involvement, Walter Baumann was, as the Employment Court later described it, covertly presenting a proposal to the CHE board. This proposal was to not proceed with a tender, but to support the contracting out of the services to Tempo Health Support.

Without any knowledge of the CHE board’s decision union delegates worked with the facility service managers on the tender specifications, which we thought was to be let in December 1993. We did not know that all our work was in vain, as the decision about the contracting out and preferred contractor had already been made.

From December onwards all communication with Walter Baumann and his team ceased despite numerous calls from the union. On 24 February 1994 new cook-chill carts appeared at Kenepuru Hospital and the food service workers were told they were converting from a cook-fresh to cook-chill system, an option that had not been a specific part of the tender.

An angry threat of union legal action led Walter Baumann to announcing a 1 March meeting to discuss “the next stage of the review”. While the union representatives thought the meeting was to discuss the comparison between the preferred tenderer and the current service, Walter Baumann opened the meeting to announce that the CHE had  awarded the contract for their hospital cleaning, food services and orderlies (at Kenepuru Hospital only) to Tempo Health Support. He then proceeded to introduce Chief Executive of Tempo Health Support, John Dixon, and said the union should talk to him about the transfer of the required staff over to their new employment.

The union was blindsided by this turn of events and realising that the contract was due to start by the end of April 1994 immediately convened meetings with members to discuss the union options.

Members were worried about their jobs, concerned about cook-chill and concerned about the maintenance of their employment conditions during any transfer. Some members wanted to leave provided they were paid redundancy pay while others wanted to fight against the CHE and not let the contracting out take place. Some even blamed the union, believing a deal had been done with the CHE. It was a difficult job working out a union strategy given the divergent member views.

After long discussions the union delegates recommended to members that we should all transfer over to the contractor, that we should seek CHE agreement for the maintenance of all employment conditions during this transfer and subsequent transfers and that the union should submit personal grievances for every member who had been affected by the CHE contracting out decision.

Walter Baumann disappears

Within two weeks of his announcement of the awarding of the contract to Tempo Health Support Walter Baumann was dismissed from his employment at the CHE for reasons that have never been revealed.

Ongoing discussions took place with the CHE management about the transfer of employment and while they agreed that all employment conditions would be maintained during the initial transfer to Tempo Health Support they would make no commitments about transfers if the CHE decided to change contractors in the future.

The first stage of the transfer was due to occur at Kenepuru and Porirua Hospitals with the cleaning and food service workers. On the first day of the transfer all workers were expected to sign-on for employment with Tempo Health Support before they commenced work. While the workers all turned up at their start times they refused to start work or sign-on for employment with Tempo Health Support until the union’s demands for security of employment were met.

The sit-down action brought things to a head very quickly. It was a brave step to take with a lot of risks, but the workers were angry at the way they had been treated and this anger gave them strength.

After CHE threats of dismissals and injunctions (given the workers were no longer employed by the CHE it was difficult to dismiss them or injunct them) they realised that there was no food being produced, so quickly adopted a more conciliatory tone and signed an agreement guaranteeing the continuation of the workers’ employment conditions during this contract change and any future contract changes.

Given that New Zealand workers would not gain the legal protection of maintaining conditions in a transfer from one employer to another until 10 years later this was a great victory, which built solidarity amongst the workers going into an uncertain employment with a new employer.

Personal grievances raised

The next day the personal grievances against the CHE and Tempo Health Support were raised on behalf of nearly 200 union members.

Tempo Health Support, later morphing into Tempo DNC Health Support, had a tumultuous two years in the Capital and Coast CHE services until it went into liquidation leaving the CHE to take the orderlies back in-house and, with few providers to choose from, to mothball the cook-chill equipment and transfer the food service and cleaning services to another contractor on a cost-plus basis.

The personal grievance claims, headed up by union delegates Mihi-Tuarangi Andersen, Randall Peterson, Martha Crawford, Jane Butler, Faye McVicar and Falanika Siania, slowly moved their way through the courts, although it took five years, one strike-out application and two interlocutory hearings before their big day arrived.

On 19 October 1999 the Employment Court hearing opened with a prayer by Union Pasifika Convenor Elizabeth Lee-lo in front of a court room packed with union members and their families. Judge Coral Shaw gave a wry smile as Aunty Liz asked God to recognise the poor workers and give the judge wisdom to make the right decision.

The court heard evidence from 15 worker witnesses and from myself on behalf of the union. My evidence took a full day with most of the cross-examination around diary notes from my meeting with the CHE managers, which had been the subject of forensic examination at the instigation of the CHE.

The court case took 11 days finishing just before Christmas 1994, with the decision not being delivered until April 2000.

The decision said that the CHE had made 10 breaches of the collective employment agreement and the other agreements with the union, had acted in a covert manner to bypass the union, and wrongfully dismissed the union members even though all those who wanted to transfer maintained their employment conditions.

Employment Court Judge Coral Shaw said the workers were entitled to damages for the way they had been treated and suggested that the union negotiate the appropriate sum with the CHE, which by this time was in the process of becoming a District Health Board.

Negotiations with the District Health Board management commenced soon after the decision and when they did not reach agreement it was proposed that a Labour Department mediator be asked to hear the arguments on behalf of the union and the DHB and make a final and binding decision.

Union claims $1 million

Mediator Walter Grills convened a session to hear from the union and the District Health Board. The room was packed with current and ex-workers who were involved in the case. The Union proposed that in addition to appropriate apologies from the DHB chief executive, each of the workers be given $5000 tax-free and the union be paid $70,000 for its legal costs. The claim on the DHB was exactly $1 million.

Union lawyer Luci Highfield asked each of the workers present to speak to their damages claim and they did so, telling tearful stories about the way their jobs and lives had been turned upside down and put under considerable stress by the underhand way the CHE had treated them.

Porirua Hospital cook Lucy Rodgers, who had worked at the hospital for almost 20 years, described the betrayal that she felt at the actions of the CHE management. She said that her secure world had been turned upside down, that her health had suffered and that she had to withdraw her daughter from a boarding school because she was uncertain about her family’s economic future.

Walter Grills released his decision, which included support for the full union claim. It was accompanied by a District Health Board agreement for official apologies to be extended by way of a letter each to the affected workers and the DHB hosting a dinner at Takapuwahia Marae for the workers and their families, where another apology would be given.

For the 300 people who turned up to Porirua’s Takapuwahia Marae for the dinner and apology it was a sweet end to an eight-year struggle for justice.

Even though the District Health Board Chief Executive Margot Mains had not been involved in any of the events of 1993/94 it was appropriate that she fronted up and personally apologised for the hurt and damage that her predecessor managers had caused for the workers and their families.

Tai Elkington, a Kenepuru Hospital orderly, was proud that the apology and dinner could be held on his marae in front of his family. He said that even though time had passed it was important for him that there was formal recognition of the hurt that had been caused.

It was the closing of a page on a very sad period in the history of the Wellington public hospital system, where the mad scientists of the neo-liberal market-led health reforms were let loose and allowed to make the lives of workers from the communities with the highest health needs the subjects of their experiments.

While the position of these workers could never be restored to what they enjoyed in the 1980s they had the satisfaction of knowing that through their solidarity and perseverance they had exposed the duplicitous conduct of their public sector employer and created greater job security for workers into the future.