Tong's Recycle Debacle

Petition signed by 26,000 ignored – 80 disabled workers to lose jobs…

By Tim Hanna

Update – It seems like this matter hasn’t been resolved! – Read more at SdE workers threatened again…​

Like many Southlanders, I am aware that our region’s recycling is currently handled by SdE Recycling Services.  This charitable trust employs about eighty people with disabilities in one of the happiest workplaces in Invercargill. For many of these employees, it was the first time they had experienced authentic, paid employment and that this workplace provided a focus for their social and interpersonal lives.  It has empowered them and provided them with a dignity and independence that has transformed their lives. I also understand that they did a terrific job and that their contribution was valued.

Tim Hanna meets with workers at the SdE Recycle Centre

WasteNet dismiss the fate of the 82 disabled workers as irrelevant

It was, therefore, a surprise to learn that this great service was to cease.  The current Southland Council, for reasons that are yet to become transparent, has made the decision to cease SdE’s contract and award it instead to a company from the North Island.  This North Island company, whose intentions are to automate the system, would put already marginalised people at risk of unemployment. Like many Southlanders I was left asking the obvious question – why?

An interview on Radio Hokonui recently featured Southland mayor Gary Tong where this was a key focus.  Tong, who has been leading the charge to change the contractor, suggested that the problem began when SdE asked for additional funds over the existing agreement. He suggested that financial ‘issues’ on the part of SdE lay behind the request and that the company refused an offer to provide financial expertise to resolve their problems.  

Tong also stated that he had concerns over management processes and implied that the company’s financial problems were related to rising management costs. He offered no clear response when the interviewer suggested SdE’s workers were underpaid leaving a clear implication of exploitation hanging in the airwaves. (In fact, individual wages for employees with disabilities are set by The Ministry of Business Innovation and Employment in accordance with the workers capabilities.   Any difference between that figure and the disability allowance are made up by the Ministry. As mayor, Tong should have been well aware of these labour laws.)

Tong attributed the failure of negotiations to SdE breaking confidentiality agreements with WasteNet, the body that represents Gore, Southland and Invercargill councils with regard to waste management.  He then found them engaging in threatening behaviour that had left him feeling ‘hung out to dry’. Tong complained that SdE had caused their own staff, for whom he had nothing but respect, terrible distress and stated that he hoped to give then good news soon. He further stated that WasteNet had always had the well-being of SdE’s workers at the forefront of their decisions. Tong said the three councils had then agreed to the contract being put out to tender.


At face value, this may seem persuasive but SdE has a very different version of events.   They emphatically reject every single point the mayor has made as either false or misleading. The problem, they say, did not start when they asked for additional funds; a fact which they do not deny.  Due to changes in the international market for accepting recycled products, they were forced to make operational changes to meet these fluctuating market demands. In fact, the additional sum of $380,000 to bring them to the completion of the contract in 2019 was routinely approved. According to SdE, the problem started when key WasteNet staff insisted, during the course of negotiations, that SdE accept the same financial terms established by the first contract in 2011. Rising costs over the past 8 years coupled with the downturn in international trade of recycled materials made this entirely unreasonable for SdE.

According to SdE, and contrary to Tong’s claims of deep concern over the fate of the 82 workers being paramount, WasteNet dismissed considerations about their employment during these negotiations as irrelevant to the contract. They say that a formal presentation to WasteNet that demonstrated a cost to rate and tax payers of around five million dollars a year should their workers become unemployed was also rejected as irrelevant. They further stated that they were unaware of any initiatives by WasteNet to secure further employment for their workers. They dismissed Tong’s statement that he hoped to have good news for them soon as being cynical and disingenuous.

Tong has never quantified his allegations that the company was poorly managed or of the ‘financial issues’ they were supposedly suffering and in fact when SdE learned that they were not the preferred contractor they still knew nothing about Tong’s concerns other than that he kept publicly stating that he had them. They say they were never ‘offered financial expertise’ but that they did open their books to WasteNet accountants who in fact requested that senior SdE management not be present. Nothing untoward was noted then and nothing has been identified since.  They reject Tongs accusation that they wrecked the negotiation process by breaking confidentiality pointing out that WasteNet’s insistence that they keep the knowledge of their workers impending dismissal to themselves until they read it in the newspaper was unreasonable in the extreme and would leave the company with no ability to mount a defense.

SdE reject every point Tong made as either false or misleading

During the radio interview Tong also referred to health and safety issues at the company and SdE concede that they are the defendants in a case that has been bought against them by Worksafe NZ. The case involves an able employee who climbed into a machine and suffered injuries to his foot. The case is currently before the court where SdE has applied to be discharged without conviction. There is no way to completely guard against bad decisions by individuals SdE say but by all reasonable accounting their safety record is exemplary.  

They also claim to have evidence that, again contrary to Tong’s comments, neither Gore nor Invercargill ever approved the tender being re-let as required by the three way agreement between the councils and they have been told by insiders that Southland District Council never did either. The latter is impossible to prove either way as that council refuses to release any minutes of such a resolution but SdE believes that Tong and WasteNet have acted improperly and way beyond their mandated powers.

SdE complain that when Tong stepped in to replace one of the members of the six person Waste Advisory Group which governs WasteNet he represented a far greater conflict of interest than the member who stood aside for the same reason and that the body and its political allies had waged an unfathomable  war against SdE that displayed clear bias. This bias has been expressed on a number of fronts. 

Alex Crackett, one of three city councillors who ‘mediated’ the issue with representatives of the Gore and Southland district councils reportedly stated to the parent of an SdE employee that  “unfortunately SdE staff are victim of an inefficiently managed/governed company” She was said to then claim that if another contractor [not SDE] “comes in they will need the disabled workers as their wages are subsidised by the Ministry of Social Development and therefore that will make the contract more lucrative”. Once again SdE reject her condemnation as being entirely without substance and her promise of ongoing employment as being cruelly misleading. 

The mayor of Gore Tracey Hicks also joined Tong to voice the same kinds of negative statements about SdE stating that although WasteNet had tried hard to work with SdE over the last eight years the company wanted more money for less production. However SdE say that there was never any suggestion that the amount of waste processed would be reduced. To the contrary there was every expectation that further wards would be bought into the scheme and that the amount of waste would actually increase. The pair also claimed that SdE would not budge on its demands whereas SdE reported that WasteNet would not consider any price increases over the price set eight years previously. This represented an impossible demand. Throughout the process and to this day SdE believes that Tong and his supporters were from the beginning determined to get rid of SdE and its 82 disabled workers.

In spite of Tong and Hicks continuing to insist that they were first and foremost concerned with the fate of the 82 workers the new contract made no mention of them and thereby attached no value to their continuing employment. SdE believed the councils had a clear obligation in law to take such social costs into account when letting such contracts and they were further surprised when the contract turned out to be for 16 years and not the eight they had believed it to be. Hicks and Tong claimed the ‘preferred’ contractor could offer substantial savings but in fact the Gore District Council Report which compared the costs estimated the difference between SdE’s assessed contract cost and SEL’s contract cost was just $74,438.00 for Gore and $177,505.00 for Southland District Council. Given all of the legal and other costs incurred this did not impress SdE as being greatly significant, especially as it appeared the new contract was for a reduced service.

On June 5 the Invercargill Mayor Sir Tim Shadbolt used his casting vote to open up the meeting to the public against the wishes of Tong and his supporters and then again to oppose the WasteNet recommendation to change  contractors. He did so to the joy of SdE supporters who packed the public gallery and it now seems that SdE and their 82 workers will remain on the job for at least the next year.

Throughout the entire debacle a public petition was circulating in support of SdE which garnered a staggering 26,000 signatures while at the same time disquieting revelations began to be made public about Tong’s preferred contractor – Smart Environmental.

The Weekend Herald revealed allegations that Tongs preferred contractors were committing massive criminal fraud

A major Weekend Herald investigation revealed that the company allegedly behaved like ‘New Jersey mobsters’, dumping rubbish after hours in refuse transfer stations it controlled to avoid weighbridge systems so that it could pay the councils it served less than half the money it owed them for using the facilities. Digging into Smart’s Waikato operations the newspaper claimed to have found evidence of altered spreadsheets, missing reports, dockets and money. They reportedly found clear evidence of trashed recycling and hundreds of tons of unaccounted waste at Transfer Stations. The Thames District Council confirmed it was investigating the company but by then the council itself was being investigated by the Auditor General’s Office amid accusations from industry insiders that the council was either incompetent or worse. 

I recently spent time with some of the employees at SdE and when they learned I was standing for Mayor of Southland they asked about my policies and eventually about my attitude toward them. I told them that if I became mayor I would do everything I could to ensure that they kept their jobs. Southlanders have made their feelings on the subject abundantly clear and in the absence of any discernible and compelling reason to change I find it baffling that anyone would want to act so callously as to take away the thing they love so very much – their right to work and to be good citizens.

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