Money 'Sham contracting', debt and distress overwhelm telco repair workers

17:57  12 january  2018
17:57  12 january  2018 Source:   ABC News

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After years struggling with depression and unemployment, Michael Porter joined a training program anticipating a steady job and a decent wage. Instead, he encountered a black hole of labour subcontracting and was left ,000 in debt before he had even started work .

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Michael Porter has struggled to hold onto a job.© Provided by ABC News Michael Porter has struggled to hold onto a job.

A workforce management company that holds contracts with Telstra, Foxtel and NBN co is being accused of exploiting young trainees overwhelmed by debt and distress.

In just seven years, Tandem Corporation has grown to become one of the country's largest private firms, with an annual turnover of $600 million.

If you've recently had help fixing a problem with a home phone line, or installing Foxtel, there's a strong chance you've had a visit from a Tandem subcontractor.

One such subcontractor was Michael Porter.

After years struggling with anxiety, depression and unemployment, Mr Porter joined a training program anticipating a steady job and a decent wage.

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Instead, he encountered a black hole of labour subcontracting and was left $60,000 in debt before he had even started work.

His problems typify many of the issues faced by people on the dole in a welfare system where services such as training are increasingly provided by for-profit companies.

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'I felt like this was my last chance'

In 2013, Mr Porter started an apprenticeship to become a technician qualified to complete installations and repair faults on Telstra's copper phone lines.

It was part of a Government program to find work for the long-term unemployed, and he had enrolled in the program at the recommendation of job centre Wise Employment.

Mr Porter was excited by the opportunity of work, but thought refusing the training could jeopardise his unemployment benefits.

"I felt like this was my last chance to make an effort in my life," he told 7.30.

Michael Porter has struggled to hold onto a job and is still being hounded over unpaid bills.© ABC News Michael Porter has struggled to hold onto a job and is still being hounded over unpaid bills.

He said he was told the training would lead to work with ISGM — now known as Tandem.

But a few weeks later ISGM said that in order to get the work, Mr Porter would be employed as a subcontractor, and would need to establish a business in his own name, and buy a van and thousands of dollars worth of tools.

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"Basically, I was told what had to be purchased," he said.

"There was a list of required items — every item on that list had to be in my van, or else I wouldn't be allowed to start work."

Shopping list came with $60k price tag

The trainees were advised to buy a long list of equipment from ISGM's preferred provider, Techpac.

Those who could not stump up approximately $60,000 to pay for the equipment were encouraged to borrow the money from Macquarie.

Mr Porter borrowed $43,000 for his vehicle and $20,000 for his tools. In his loan application to Macquarie, he disclosed that aside from personal effects and his wife's car, he had just $40 to his name.

In the fine print, it emerged that Techpac got a commission for the loans from Macquarie.

These loans would almost certainly be in breach of Australia's responsible lending laws, which prevent financial institutions lending to people in financial difficulty.

But because they're made to a business and not an individual, the obligations on the bank are less onerous.

What's more, Mr Porter's contract with ISGM provided no guarantee that he would be provided work.

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So after six months' training, Mr Porter and his fellow trainees graduated with a qualification, a business, and debts of tens of thousands of dollars.

Mr Porter pulled in about $1,100 a week before taking out expenses, but within months the mounting debt and stress had become too much.

"Not only was I at nothing, but then I went into the red for $60,000," he said.

"At one point, I was up the pole [working] and I was shaking so hard I considered cutting the line and just letting it go."

'I used to be an easy-going bloke'

Robert Mutch was overwhelmed by debt after starting work© ABC News Robert Mutch was overwhelmed by debt after starting work

Another former subcontractor for ISGM, Robert Mutch, reached his crisis point last year.

"Unfortunately, I tried self-harming not so long ago, believing it would be easier if I just gave up," he said.

Like Mr Porter, Mr Mutch was an ISGM trainee who found himself overwhelmed by debt once he began working on his own.

"The money I was expecting to make and what I was actually making were worlds apart," he said.

Mr Mutch said he was suspended without warning in 2016 because his work was not up to standard.

By the time ISGM agreed to take him on again, his vehicle and tools had been repossessed.

"It was horrible… horrible for my family, and for me. I used to be a pretty happy, easy-going bloke," he said.

Mr Mutch now takes anti-depressants to get through each day, and is seeing a psychiatrist.

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Job rights watchdog raises the alarm

Zana Bytheway, executive director for employment rights legal centre JobWatch, said Tandem's model could be a case of sham contracting.

"If you look at it at it's very best, it is a cumbersome and ineffective employment method," she said.

"At its very worst, it could be alleged that it is coordinated exploitation."

Zana Bytheway says she is troubled by reports of workers being signed up before they know their rights© ABC News Zana Bytheway says she is troubled by reports of workers being signed up before they know their rights

Ms Bytheway said it was "extremely troubling" when vulnerable workers signed up to agreements without knowing their rights.

"When you are an independent contractor you are basically being asked to run your own business, not everybody is suited to run their own business, not everybody has a business mind," she said.

"Vulnerable people are drawn in by the welfare system to participate in such arrangements because clearly they cannot say no to such arrangements because of the threat of losing their welfare payments.

"I think it's unconscionable. When you take into account Michael's particular vulnerability, it should never have got this far."

ISGM said it did not require the trainees to "obtain finance from any specific company".

"Introductions to various services providers were offered but business investment decisions were wholly the responsibility of the participants," the company said.

"Participants were encouraged to seek independent advice and make a decision about the opportunity based on their circumstances."

Macquarie said "any client in the program undergoing repayment difficulties was offered a full range of hardship and financial assistance including repayment relief".

Techpac — the company which sold the tools and got a commission from the loans — was not available for comment.

'This whole thing has really messed him up'

Mr Porter stopped working for ISGM three years ago. He has since been in out and out of hospital with severe mental illness, and was discharged from his latest stint in November.

His marriage ended and he is still being hounded over unpaid bills.

Barbara Porter says her son has been © ABC News Barbara Porter says her son has been "messed up" by the situation

These days, Mr Porter spends much of his time doing odd jobs at his mother Barbara's house home on Victoria's Mornington Peninsula.

"I think this whole thing has really messed him up, set him back for years and probably, hopefully hasn't permanently damaged his health," Ms Porter said.

"The facts of this situation, it's complex but it's nasty, and I just didn't think that Australian life would get to such a low really with what we're doing to our young people."

Low wages, high debts and housing bubble threaten the Australian economy in 2018 .
The unemployment rate surprisingly fell in 2017, while wages continued to grow at a record low rate. Immigration picked up, giving Australia one of the highest rates of population growth in the developed world.

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