Fletcher chief defends pay rate cuts

Around 1000 firms and 12,600 subcontractors have been sub-contracted in Canterbury. Photo / Greg Bowker

Fletcher Building chief executive Jonathan Ling says pay rate reductions on the huge Canterbury earthquake repair are simply a matter of supply and demand.

The Council of Trades Unions has claimed Fletcher Earthquake Recovery is profiting from cutting the rates but Ling said it was simply a matter of economics and the supply of people being greater than the work on offer.

Ling said much of the work in Christchurch was slow to start, particularly commercial rebuilds due mainly to insurance issues, and infrastructure repair.

However Fletcher EQR was on target and he was more than happy with progress, he said.

David Peterson, Fletcher EQR general manager, said the business had nothing to gain from reducing pay rates for plasterers and painters.

But the union disagreed. Helen Kelly, union president, said Fletcher's move was taking advantage of contracted labour.

The company was abusing the contracted-out employment relationship to profit at the expense of people rebuilding Christchurch, she said. That was holding up the rebuild too, she said.

But Peterson said Fletcher EQR was paid by the Earthquake Commission on the basis of a flat percentage project management fee.

"It therefore has nothing to gain from any reduction in market rates," he said of Fletcher. "It does not seek to influence rates up or down. As required by Fletcher Construction's agreement with EQC, Fletcher has been reviewing rates since the repair programme began, to ensure that these were aligned with market conditions. A formal review of rates was established in March," Peterson said.

That review was carried out with independent market data and information from contractors who were working within the scope of the programme.

Some rates went up, he said, citing pay for workers grinding out and epoxy filling cracks in concrete.

Some rates went down, he said, for specialists carrying out finishing work, mostly plastering and painting on internal walls.

"The EQC assessment rate, reported as $25 per square metre, for painting, was reduced to a market rate," he said.

That was reported to have been dropped around 20 per cent to $19 /sq m now.

Peterson said it was clear that the rate for this work had initially been set at a level well above the relevant market indicators.

The new painting and plastering rates had now been reviewed by Rawlinsons, a national quantity surveying consultancy, which has found them to be fair and reasonable in the current market place, he said.

Fletcher is project managing about 100,000 repairs for the Earthquake Commission and latest data released in April showed 40,000 urgent repairs were finished and 80 per cent of the houses to be fixed would be done by 2014.

Fletcher has contracted around 1000 firms and 12,600 subcontractors in Canterbury under special arrangements with EQC, it said.

Some subcontractors say Fletcher has a stranglehold on the market but they are too afraid to speak out against the business because they fear they might not be picked for work in future if they do.