RUBY:

So, Rick, you have been reading people's emails and letters lately, specifically an apology letter that was sent by a senior government bureaucrat. So can you read it to me?

RICK:

I can because I have a copy of it and it's quite extraordinary. It was written by the former assistant secretary in the Department of Health and Aged Care, Russell Herald, everyone calls him Rusty. And he was apologising for his role in this enormous and strange saga which involved a failed plot to take over Meals on Wheels by a private company, a consulting firm that was receiving millions of dollars in government funding.

RUBY:

Rick Morton is a senior reporter at The Saturday Paper.

The letter in front of him from Rusty is to the chair of Meals on Wheels.

In it, Rusty apologises for his behaviour towards Meals on Wheels staffers, saying it fell "well short" of the standards expected of someone like him.

RICK:

He goes on to say, “I also noted that my emotional state as it was at the time in relation to this project meant I was in effect not fit for duty. This is something I have since reflected on and something for which I must and will be held accountable for as a senior public servant. My regret is not identifying this at an earlier point in time.”

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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

Today, Rick Morton on the failed plot to take over Meals on Wheels - the private company, and the millions in government money.

It’s Tuesday, February 18.

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RUBY:

Take me back to the start of this story, Rick, before Rusty got involved, before he had to make this apology for his emotional state. Where does this begin?

RICK:

Yeah, I mean, things always seem better at the beginning, don't they? Because Rusty was one of the kind of cohort of senior public servants who were charged with home service aged care reform, meal delivery reform. And way back when in 2019 -20, when the Royal Commission into Aged Care reports back, the department decides that Meals on Wheels is not going to be able to compete well in this new future because, lo and behold, you won't be surprised to learn that there's a lot of marketisation happening and a lot of competition in aged care because we privatised everything. So the solution, they thought, was to get Meals on Wheels into a competitive position.

The problem was that the department and some people within the department really didn't like Meals on Wheels. They hated dealing with them. They hated giving money to them because they were so disparate. There were different peak organisations in the different states. Some of them did frontline service delivery, some of them did not. And then, of course, you've got each individual service, which is run by community grassroots organisations, but are often hosted and subsidised by local councils who don't want to do it anymore. And so the government decided to give a whole bunch of money directly to a private consulting firm that had even less experience in meals delivery, Miles Morgan Australia.

RUBY:

OK, so tell me a bit about this company, Miles Morgan Australia.

RICK:

The director of Miles Morgan Australia for the entirety of this project is Lakshman Gunaratnam. He actually bought the company in 2022 after serving as its chief executive since 2019, and they were given their first contract to kind of look at a feasibility study and, you know, come up with a model for how Meals on Wheels could deliver meals at an efficient price.

But I think one thing that's important to know here for context is that we now know that Miles Morgan Australia had likely had bigger designs than just this immediate project. And they had an eye to a much longer horizon about what they can do in a Meals on Wheels space. And they needed strategic relationships to do this, right, And one of the strategic alliances that Lakshman Gunaratnam formed in this sense was the then CEO, sometimes general manager of Newcastle Meals on Wheels, a man called Damien Isaacs.

Miles Morgan Australia essentially cements this strategic alliance with Damien Isaacs by appointing him as a future fit brand ambassador from July 2023. The position came with this bonus salary for him and apparently his wife of about $170,000.

And they were both red hot, red hot for this, you know, the scope of what they were able to do with government backing to completely transform Meals on Wheels.

And when they get this contract extension, both Gunaratnam and Isaacs, you know, they're jumping for joy, basically. And there's emails between the two of them where they're actually planning to fly to Brisbane, where there's a conference where a bunch of Meals on Wheels people are attending. And it also happens to be Rusty, the health bureaucrat, Rusty Herald's birthday. And so Isaacs writes this email to Gunaratnam on July 17, 2023. And he says, sweet as, brother, we are getting Rusty smashed. And then Gunaratnam, who is a man, at least in his 40s, if not older, he responds to that email going, yes, I told him to brace himself as the Brown brothers were in town in brackets, much like the Blues brothers, but far better.

RUBY:

Right.

RICK:

Yeah.

RUBY:

I suppose the next question is what do they do next? Do they get Rusty smashed?

RICK:

Well, I mean, I need to be fair to Rusty here because Rusty, we have no evidence that Rusty knew about this plan.

And at the same time, they're doing all of this. Miles Morgan Australia have spent about $100,000 on legal advice through a law firm to help Isaacs with what Newcastle Meals on Wheels subsequently said under new management was a hostile takeover attempt of the New South Wales peak body, Meals on Wheels New South Wales, of the board, because Newcastle Meals on Wheels CEO Isaacs was a member of the board. And according to this timeline of events, you know, there was influence being brought to bear on the board to try and shape it to their vision.

RUBY:

Right. OK, so you have this company Miles Morgan, which has won this government contract to transform Meals on Wheels. But at the same time, they are also getting legal advice on how to take over Meals on Wheels, what’s been described as a “hostile takeover”. So how do they go on that?

RICK:

Well, yeah, not well, but they tried. They tried. That was kind of like a Game of Thrones thing was happening for control of the future of Meals on Wheels, including the control of the brand and the logo. So Gunaratnam, you know, he's possibly, we don't know, but possibly using taxpayer funds from the contract to pay a law firm to get legal advice about how to take over Meals on Wheels state peak body and then gets that same law firm to get advice about collapsing or winding up Meals on Wheels Australia, transferring it to a company limited by guarantee and then saying, hey, do we get to keep the state trademarks?

RUBY:

I mean, Rick, what's being attempted here is audacious, at the very least.

RICK:

It is audacious, and as my editor said, it is a finely threaded needle. And there's no better example of that than what happened at the Whitehorse City Council.

So there is a service in Victoria which is, threatening to be shut down because the local council in Whitehorse City Council doesn't want to run it anymore.

So, you know, the department realised they needed someone to come in and save Whitehorse because they'd have some vulnerable Australians without meal delivery services, which is part of the aged care safety net, right? Miles Morgan Australia are the preferred people to go in and save that service. The government just wants to give them money to go and take over it. But they can't because they're not a Commonwealth home support package contract holder.

So what they do is they say, hey, Newcastle Meals on Wheels, can you be the host of this service? And so Newcastle Meals on Wheels, when Damien Isaac, was still the CEO, said, sure, let's do it. And that's what happened for a short while.

RUBY:

OK, so in reality, though, it was Miles Morgan Australia who was running the whole operation at Whitehorse.

RICK:

That's exactly right. They had control of the systems, control of the buildings. They were planning the runs, the meal delivery service, everything. But they couldn't do it officially because they weren't a holder of a Commonwealth home support package and approved provider of one of those contracts. And so they had to, you know, essentially trick everyone into thinking that Newcastle Meals on Wheels was the service provider when they had almost nothing to do with it. And of course, then that became a difficult deceit to uphold when a pesky senator by the name of Janet Rice, a Green Senator at the time, starts asking questions and demanding to come and have a look.

RUBY:

And so what happens when she gets there?

RICK:

I love this part of it.

RUBY:

That’s after the break.

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RUBY:

So Rick, Miles Morgan is secretly running Meals on Wheels in Whitehorse. And Senator Janet Rice has started asking questions about this and has decided to visit the site. So tell me about her trip there.

RICK:

So the department knows at this point that the Whitehorse Meals on Wheels site is being run by Miles Morgan Australia. They claim that they didn't know they were as heavily involved as they were, which then necessitates this Rube Goldberg machine cover up between Miles Morgan Australia and the department with the reluctant acquiescence of Newcastle Meals on Wheels, where they say, all right, Janet Rice is coming. Miles Morgan Australia will send home all of the staff who have been propping up this service and will just send the Newcastle Meals on Wheels CEO Damien Isaacs, he's still CEO at this point, to take Senator Rice around, do a tour of the site and, you know, we'll give him a script to tell him what he can and can't say so we don't tip anyone off.

And Newcastle Meals on Wheels are like, hang on a second, this isn't right. And they actually asked during a board meeting, there was a phone call with Rusty Herald, who was dialled in, and they said, why do we have to lie to Senator Rice on the 30th of January, this is 2024, that, you know, we've been out there running the Whitehorse service when we haven't, it's been Miles Morgan Australia. And the file note that they made says, Russell said the department were not aware that MMA were in Whitehorse as much as they were and they don't want that. And so they, MMA, are now being managed and will not be used after the 8th of March 2024.

So essentially, they agree that they'll send Damien Isaacs with a script that was written by Lakshman Gunaratnam. And the script literally says to any Meals on Wheels person there that day, that if you're asked who you work for, in the first instance, you say Damien Isaacs or Newcastle Meals on Wheels and only if you're pushed do you say Miles Morgan Australia.

RUBY:

I mean, this is outrageous, Rick. You can't tell people to lie to a senator like this.

RICK:

Well, apparently you can. And they essentially got away with it because they split her up. They sent Damien with Senator Rice and they sent her advisor off with another Meals on Wheels member. And of course, Newcastle Meals on Wheels, who tried to warn about this visit being faked anyway, were so concerned by what they saw and what actually happened on the ground that they actually rang Senator Rice afterwards to say, hang on, what you thought you saw was a complete fabrication. And none of what you saw today was real. It was a facade to try and trick you into thinking that this was being managed by us and it's not. It's a private consultant.

And then at Senate estimates on February 15th, so only less than a month later, Briony Mitchell, who's the new chair of Newcastle Meals on Wheels and her team, wrote to First Assistant Secretary Thea Connolly in the Department of Health and said, we were gobsmacked to hear that Miles Morgan Australia have been provided a new contract, a new contract, for $1.6 million to, quote unquote, close out the transition of Whitehorse Meals on Wheels to Newcastle.

And they had sunk, the department that is, had sunk many millions of dollars into this project already, and they had almost nothing to show for it. And so suddenly Miles Morgan Australia gets $1.6 million to do a document handover and a transfer to business as usual, which is, yeah, it's unfathomable.

So, the Australian National Audit Office is investigating all of this, and they're actually due not too far away from now, actually, to hand down their report.

RUBY:

So, Rick, at the end of all of this, where does it leave Meals on Wheels? Because despite whatever the department might have thought of the service, it is essential for so many people. I actually used to go out with my umar and my oppa when I was young, and we would do Meals on Wheels together.

RICK:

Oh, did you?

RUBY:

Yes, I did, and I remember the people who we gave the meals to, and they're often lonely, elderly people who really rely on the service. So, I mean, will Meals on Wheels continue?

RICK:

That is, thank you for making that observation, because really the biggest value in Meals on Wheels is the time they spend with the elderly. It's incidental time, but it's still time. It's not like they just fling the frozen meal through the kitchen window. They might do a little bit of dusting while they're there, or sit down and have a cup of tea. It's part of the service, right? And you can't replace that with a full-blown market, and I think the department did recognise that, and I think perhaps that's why they got so overly invested in this thing to the detriment of Meals on Wheels, funnily enough.

People want that kind of level of service. They don't want another NDIS comes along, and then everything gets marketised, and then suddenly no one's doing anything that they're not getting paid for, whereas Meals on Wheels was fundamentally different to that, and there's a difference between supporting someone to adapt to a new world and forcing them out of operation because you don't like the model.

RUBY:

Rick, thank you for your time.

RICK:

Thank you, Ruby, for your volunteer service as a youth.

RUBY:

I loved it.

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RUBY:

Also in the news today,

The Reserve Bank of Australia is widely expected to cut interest rates today, as the bank holds its first meeting of the year.

The official cash rate has been at a 13 year high of 4.35 percent since November 2023 and most economists are predicting a cut of 0.25 percentage points, to 4.1 percent.

And, the U.S. Secretary of State says Ukraine and Europe will be part of any quote “real negotiations” to end Russia’s war in Ukraine.

Attempting to downplay Europe’s concerns of being cut out of initial talks between Russia and the United States set to take place in Saudi Arabia this week, Marco Rubio said a negotiation process has not yet begun in earnest, and Ukraine and other European countries will be brought into the fold as talks advance.

I’m Ruby Jones, this is 7am. Thanks for listening.

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