Stagecoach Urges Union to Call Off Pointless Strik
4 May 2005
Stagecoach Urges Union to Call Off Pointless Strike
As of tomorrow, the Combined Unions representing most Stagecoach Auckland Drivers will undertake a pointless six-day strike – a strike that will cause severe disruption to Auckland public transport and put many drivers out of pocket. The Unions are proceeding with their strike despite the recommendation from the independent Government-appointed facilitator that they accept the Company’s offer.
“This is a strike that makes no sense.” says Ross Martin, Executive Chairman of Stagecoach New Zealand.
“Following months of deadlock, both parties agreed to engage with the Employment Relations Authority (ERA) to bring about a resolution. The ERA listened to the case of both parties, took a careful look at our finances and operations and then made an independent recommendation. In the interests of public transport and avoiding any further disruption, Stagecoach has accepted that recommendation. The Unions have simply chosen to ignore it.
“Stagecoach engaged in the ERA facilitation in good faith as the only fair and practical way of resolving the ongoing dispute before it resulted in further public disruption. If the shoe was on the other foot, we all know Stagecoach would be expected to do nothing less than meet the recommended settlement in full.
“On top of that, we are now in the process of moving from facilitation to arbitration with the ERA. That means the ERA will be dictating a binding settlement to both parties - which makes further industrial action even more pointless – as Stagecoach’s hands are now essentially tied.
“The latest offer made by Stagecoach to the Unions, the offer recommended by the ERA facilitator, is for a 14.8% wage increase over three years, with 7.6% of that increase coming now – plus a $600 settlement payment. Stagecoach is proud of that offer. It is head and shoulders above any collective employment offer on the table across private industry at the moment.
Stagecoach is now committed to arbitration. That places this dispute in the hands of the ERA and we hope the ERA can bring this saga to a close as quickly as possible. Further industrial action will achieve nothing but disruption. The Unions must call off their pointless strike,” says Mr. Martin.
A copy of the memo containing the ERA’s recommended settlement follows.
Memo from ERA Facilitator to Stagecoach and Union Advocates
Date: 29 April 2005
To: Gary Froggatt, Advocate for Combined Unions
And to: Andrew Caisley, Advocate for Stagecoach NZ Ltd
From: Alistair Dumbleton, Member of Employment Relations Authority
_Facilitation of collective bargaining – Recommendation by Authority under provisions of Employment Relations Act 2000_
 On 15 April 2005 by determination given under section 50B of the Employment Relations Act 2000, a member of the Authority (James Wilson) referred the employer and the combined Stagecoach employees’ unions to facilitation under the Act. The referral was made, on grounds, following an application to the Authority by Stagecoach
 Upon such referral, facilitation is to be carried out in accordance with the requirements of section 50, subsections E to I, of the Act.
 For the purposes of the referred facilitation I met with the employer and union parties for two full days on 18 and 19 April 2005 and for a half day on 28 April 2005. At the last meeting as planned the parties presented to me their latest proposals for settlement, addressed submissions on these and had an opportunity to obtain clarification from each other of their respective positions.
 I consider that the facilitation process at the stage it has reached should extend to the making of a recommendation by the Authority as provided for by section 50H of the Act.
 Accordingly I now recommend to the combined unions (Tramways, Akarana, Engineers and Distribution), to their members affected by the current negotiations and to the employer, that in settlement of the negotiations the new Collective Agreement should include the following terms;
(i) With effect from 1 May 2005 an hourly wage rate for an Operator 3 of $15.00; and
(ii) With effect from 7 May 2006 an increase of the above hourly rate to $15.33; and
(iii) With effect from 29 April 2007 an increase of the above hourly rate to $16.00.
(iv) A term of 3 years, from 1 May 2005 to 3 May 2008 for the collective agreement.
 I recommend that pursuant to the parties’ Bargaining Process Agreement dated 12 November 2004, the unions’ members be asked forthwith to ratify a Collective Agreement containing the above wage rates and term.
 I further recommend that upon ratification as above by the combined unions’ membership, Stagecoach pays a lump sum of $600 to each employee to be covered by the Agreement. That sum may be pro-rated according to each employee’s length of service during the period from 1 November 2004 to 1 May 2005.
 In short the three principal reasons for my recommendation above are as follows;
(i) The wage rates and term of the Agreement recommended above were proposed by Stagecoach at the conclusion of the negotiations I attended on 19 April 2005. At that time the unions on behalf of their members, through their advocate, expressed those rates and that term to be acceptable to them.
(ii) In percentage terms the recommended increases in pay are 7.6% from May 2005, 2.2% from 2006 and 4.4% from 2007 until expiry of the agreement. The first increase of 7.6% significantly exceeds the 5% minimum sought by EPMU, the Engineers Union, in negotiations to renew key collective agreements on behalf of its members.
For the three years in which they will apply these increases will be ahead of the predicted rate of inflation - 2.6% to 2.8% as measured by the CPI.
Further justification for the level of wage increase proposed by Stagecoach is found in the fact that the rates recommended will be higher than those paid by any other suburban bus operator in the Auckland area.
(iii) In considering the affordability of better wage rates, particularly as proposed by the unions on 28 April 2005 (an increase to $16 per hour from 1 May 2005), of relevance is the Ernst & Young report dated 27 April 2005 on the profitability and the return on equity of Stagecoach. This information was provided at my request. Ernst & Young has no interest in Stagecoach or its business. That accountancy firm is not the provider of services to the employer.
Although the report is retained by me in confidence because it contains commercially sensitive information, the Unions were offered an opportunity to have it considered by their own nominated professional accountantcorporate financial adviser, provided that person undertook to me to keep the base information confidential. The Unions advised they did not wish to have the report inspected to obtain a second opinion on it.
The Ernst & Young report provides commercial and financial justification for the rejection by Stagecoach of Union proposals for higher wage increases. Stagecoach has not paid a dividend since it acquired the business from its former operators. This is because of the capital intensive nature of the business. Ernst & Young concludes in its report that the level of profitability of Stagecoach provides a return on equity to the company’s shareholder that is sub-optimal.
 I observe that the prolonged nature of the negotiations (the ground on which referral to facilitation was made) and even more so the direct action taken to date as of right by union members, must inevitably reduce the level of wages the employer can afford to pay in settlement of the collective agreement. Proposed further direct action by operators will continue to reduce the amount of money available to the employer to fund a settlement. That much is simple economics.
_Publication of recommendation_
 Finally, I recommend that my recommendation above be immediately published in full or in summary by suitable and convenient means;
(a) by the combined unions to all their members affected by the negotiations; and
(b) by the employer Stagecoach to all of its employees affected by the negotiations.
The Authority is not doing so but the parties in their discretion may release this recommendation to members of the public and to the media.
Member of Employment Relations Authority
Released to parties at 5.55 pm, Friday 29 April 2005