The recruitment and training disaster that’s going to cost Victoria $30 billion

This week Victoria entered the harshest lockdown so far, in the fight to restrict the spread of the coronavirus.

Premier Daniel Andrews, declared a state of disaster leading to the shutdown of most businesses and significantly greater restrictions on the operations of remaining, essential sectors. An evening curfew and other restrictions on peoples’ activities outside of their home were also announced.

As the second wave of coronavirus surges throughout metropolitan Melbourne, primarily in aged-care homes, the health impact dominates the daily news. Yesterday (Wednesday, 5 August 2020) saw a new daily case record of 725, along with 15 deaths.

Although many people are suffering more than I am, the direct impact on my family is that yesterday was my eldest son’s 21st birthday and we weren’t able to see him in person as he lives 60 km away. We haven’t seen him for three weeks and it’s likely to be another month, at very least, before we’ll be able to see him again.

An inquiry headed by retired judge Jennifer Coate into the role of security guards at quarantine hotels began two weeks ago. Public hearings start today and a report will be released in September. The inquiry will examine the extent to which Victoria’s present surge of infections can be linked to failures in the hotel quarantine program.

The basic facts, as can be ascertained to date, are:

Responsible statutory bodies

  • The Department of Jobs, Precincts & Regions was responsible for the letting of approximately 5000 hotel rooms across 16 Melbourne hotels.
  • The same department was responsible for the contracting out of security services for each hotel. In NSW the police and Border Force officers largely carried out these duties.
  • The Department of Health and Human Services is the state agency charged with the public health response to COVID-19

The security companies

  • The three security contractors engaged to provide hotel security services were Wilson Security, MMS Security and Unified Security.
  • Wilson Security and MSS Security were on the government’s panel of security providers. Unified was not on the panel.
  • Unified Security engaged five subcontractors to provide the required number of guards to service their contract.

The hotels and the virus outbreaks

  • One of the major virus outbreaks (19 traced infections) occurred at the Rydges Hotel on Swanston Street in Carlton. Unified Security was responsible for the security at this hotel.
  • The Stamford Hotel in Little Collins Street also experienced a major outbreak (43 traced infections). MSS Security was responsible for the security at this hotel.
  • After the program commenced Wilson Security lost two of their four contracted hotels, although neither hotel experienced a virus outbreak. Unified took over the contract for both of these hotels.
  • Unified Security ended up overseeing security at 13 hotels.

Recruitment of guards

  • Due to the need to recruit hundreds of guards at short notice a number of subcontractors were engaged to fulfil quotas for shifts at each hotel. At least one of these subcontractors used messages to WhatsApp groups to recruit the necessary guards.
  • Many of the guards hired via WhatsApp messages did not know the company making the request, did not formally register with the company in advance of their assignment and simply turned up at the designated hotel at nominated start time.
  • The rate of pay ranged from $18 to $25 per hour. Guards were not paid as employees; they needed to supply an ABN in order to be paid as a subcontractor.

Induction and training of guards

  • According to a person hired as a guard for the Stamford Plaza there was no on-site explanation of protocols, no training with respect to using personal protective equipment and no training in on-site personal hygiene. The guard was asked to bring her own mask and gloves for her second shift. She decided that the site was too unsafe and declined to return to the hotel for any other shifts.

The standards and accountability applied to the recruitment, induction and training of the security guards hired to supervise returning residents in the hotel quarantine program, would appear to be far short of the standard required to prevent the spread of the virus into the broader Melbourne population.

It’s difficult to know exactly how much this second wave will cost the Victorian economy; as much as $2 billion a week is one estimate. Given the state of disaster applies until 2 September and it’s almost certain that stage 3 restrictions will apply for at least another two months beyond that date, it’s likely that the total cost to the Victorian economy of the restrictions will be north of $30 billion.

Security companies are a, largely unrecognised, sector of the recruitment and on-hire sector. Rarely do these companies employ full time permanent security guards. The security industry’s core business model is the use of casual labour to fulfil contracts.

As an attendee at many major sporting and entertainment events in Melbourne it certainly appears to me that overseas students comprise a substantial proportion of security personnel deployed at these events.

My search of the Labour Hire Authority’s database of Registered Labour Hire Providers (3,312 companies) and Received Labour Hire Applications public register (1,978 companies) uncovered 148 companies with ‘security’ in their business name as being registered labour hire providers and a further 63 companies with ‘security’ in their business name as having registered an application

I failed to find any of the three contracted security providers in either the Registered, or Received, categories. Unsurprisingly, none of the three security labour hire firms are members of the RCSA. I doubt that more than small proportion of the many subcontractors used by the three main security contractors held a labour hire license, or had even applied for one.

It’s astonishing that the Victorian Government’s ignored its own labour licensing requirements to sign contracts with three companies, none of whom had not even registered an application for a labour hire license.

If the Victorian Government took the recruitment industry seriously then they would have insisted on the twin quality standards of a labour hire licence and RCSA membership for any security company contracted to protect the health of its state’s residents and the state’s multi-billion dollar economy, through the hotel quarantine program.

Decisions in a crisis are, by their very nature, are going to be made with less than complete information available. Hindsight will frequently reveal those decisions to be poor ones.

However in this case the Victorian Government had quality standards, one of which they had created, available to them as clear benchmarks to assist make a good decision in a crisis, and they ignored these standards.

The outcome has been many more deaths and infections than were otherwise likely, and a $30 billion-plus hit to the local economy; outcomes that were, largely, preventable had attention been paid to the necessary standards of recruitment, induction and training that the gravity of the situation demanded.

Sources: The Age, 4 August 2020; The Age, 24 July 2020; ABC News, 21 July 2020

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16 Comments

  1. Jennifer Hobbs on 06/08/2020 at 2:17 pm

    Love this blog Ross.

    You make several very valid points around mistakes made that we will all be paying for, for a very long time.

    • Ross Clennett on 07/08/2020 at 11:40 am

      Thanks, for your comment, Jennifer.

  2. Darren Taylor on 06/08/2020 at 2:19 pm

    Another great blog Ross.

    • Ross Clennett on 07/08/2020 at 11:40 am

      Cheers, Darren.

  3. James Persson on 06/08/2020 at 2:22 pm

    Great summary, with lots of rumours floating around social media and word of mouth.

    Quite disappointed to read this is the case so far.

    • Ross Clennett on 07/08/2020 at 11:41 am

      Unfortunately, I suspect the Commission of Inquiry will uncover more reasons for us to be disappointed, James.

  4. James Purtell on 06/08/2020 at 2:51 pm

    Once again, Ross, you nail the insight into the situation and the hypocrisy/inefficacy of these Labour Hire Licensing schemes – especially if they’re not even being used by the Government that brought them in! Don’t normal employers face $500,000 fines by not using registered providers?
    This is classic bureaucracy for bureaucracy sake and do what I saw not do what I do mentality.
    It would be laughable except that the serious consequence of this incompetence has been lives lost and the economy destroyed.

    • Ross Clennett on 07/08/2020 at 11:43 am

      Thanks for your comment, James.

      This debacle will make all recruiters even more skeptical about the overall value that a labour licensing scheme, in its current format, will provide to the very people its meant to help.

  5. Paul McCormick on 06/08/2020 at 3:04 pm

    Dear Ross, I look forward to your blog when the Royal Commission publishes its findings. In the meantime your guesstimates of the loss to the Victorian economy and how long Stage 3 restrictions will last are just that: guesses. As for your son’s 21st birthday, you guys played your part and thank you for that. Let’s see the findings of the inquiry and then action them.

    I personally don’t think that blaring headlines, dodgy pictures, wobbly guesses presented as facts do anything to illuminate the community. That’s up to the inquiry.

    Thanks.

    • Ross Clennett on 07/08/2020 at 11:46 am

      Thanks for your comment, Paul.

      I hope you are right. I certainly want the Commission of Inquiry to dig into the weeds of what went wrong here as a means to ensure the same mistakes are never made again.

  6. sharon vandermeer on 06/08/2020 at 4:27 pm

    Definitely nailed it Ross and what a breach of many areas and the results are devastating.
    What I dont understand is why there was no reviewing of how it was all playing out by the Govt.
    At least they would have caught it much earlier and the damage maybe much less.

    • Ross Clennett on 07/08/2020 at 11:48 am

      Thanks, Sharon. I certainly hope the lessons are learned and the importance of a rigorous process and high standards in both recruitment and training is learned by all governments.

  7. Manda Milling on 07/08/2020 at 11:21 am

    Thanks, Ross.

    As we all know, the Labour Hire Licences required a substantial amount of business and personal information to be submitted, together with payments for the privilege. It is particularly galling that the Victorian Government circumvented (ignored) their own processes.

    At this stage Ross, all any of us can do is ‘guess’ regarding the ‘Board of Inquiry’, as its hearings have been delayed until 17 August and the results have been postponed from September to November!
    Thanks for the blog Ross, we appreciate you doing the leg work to ‘highlight’ some of the devastating impacts to the Victorian economy.

    • Ross Clennett on 07/08/2020 at 11:52 am

      Thanks for your comment, Manda.

      Let’s hope the economic impact of Stage 4 can be minimised; most easily done by all Victorians abiding by the restrictions in order to get back to normal life as soon as possible.

  8. Jenny on 07/08/2020 at 12:29 pm

    An ex Director of a security company told me this was an incident waiting to happen. He said that Victoria Police have issued many licenses over the years to anyone who wants to set up a security company. There has been much subcontracting often several layers down and a lot of cash in hand payments.

  9. Euan on 23/08/2020 at 8:50 pm

    Kind of reminds me of the Lindt Cafe siege, when the NSW Police would not allow the SAS do what they are trained to do, all because of “jurisdictional boundaries” (and maybe ego?).
    At least here in NSW the Health Department has not gone out on a limb with “managing” the security situation.

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