Bills Digest No.164  1997-98 Public Service Bill 1997 [No.2]


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Re-Introduction
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

 

Public Service Bill 1997 [No.2]

Date Introduced: 5 March 1998

House: House of Representatives

Portfolio: Prime Minister

Commencement: On proclamation, but no later than 6 months after receiving Royal Assent.

Note: For further commentary on the Bill as first presented in 1997, readers are referred to Bills Digest No.74 of 1997-98.

Re-Introduction

This is one of a number of bills that may trigger a double dissolution election.

Section 57 of the Australian Constitution provides, in part, that:

If the House of Representatives passes any proposed law, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, and if after an interval of three months the House of Representatives in the same or the next session, again passes the proposed law with or without any amendments which have been made, suggested, or agreed to by the Senate, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, the Governor-General may dissolve the Senate and the House of Representatives simultaneously. But such dissolution shall not take place within six months before the date of the expiry of the House of Representatives by effluxion of time.

The Public Service Bill 1997 was introduced into the House of Representatives on 26 June 1997. The House, having incorporated 16 Government sponsored amendments made in response to the Joint Committee of Public Accounts (JCPA) report on the Bill and the Public Employment (Consequential and Transitional) Amendment Bill 1997, passed the Bill on 30 October 1997.

The Bill was introduced into the Senate on 10 November 1997 and was passed with a total of 52 non-Government amendments on 19 November 1997. A message was reported in the House on 20 November 1997 which, on 5 December 1997, formally disagreed to the Senate's amendments and laid the Bill aside.

The present Bill was introduced in the House on 5 March 1998 and passed by it on 11 March 1998.(1) The Bill was introduced into the Senate on 12 March 1998 with the Second Reading Speech delivered by Senator Newman.(2)

Purpose

In closing the debate on the present Bill, the responsible Minister, Dr David Kemp, summarised the Government's position in the following terms:

A new Bill is essential because there are a number of key areas in the current legislation that are not amenable to simplification by administrative action. For example:

  • giving employment powers direct to Agency Heads;
  • ensuring a secure Parliament-endorsed legislative framework for APS values, the new code of conduct and protection of whistleblowers;
  • removing complex appeals arrangements;
  • removal of inflexible employment categories; [and]
  • removal of compulsory age retirement.

Therefore, it will be impossible to build a fully coherent, reformed, management structure without legislative change.(3)

Background

The Bill proposes significant changes to the legislative framework governing employment in the Australian Public Service (APS) and will affect approximately one in three persons employed by the Commonwealth.

The Bill replaces the 300 pages of dense, complex and poorly organised drafting in the Public Service Act 1922 with an 'admirably direct and succinct statement of the essential characteristics of public service'(4) totalling a mere 41 pages.

Much of the present Act's detail is not replicated in the new legislative framework. Other matters are to be dealt with by way of regulation or in binding directions issued by the Public Service Commissioner.

The new Act will also operate in tandem with the Workplace Relations Act 1996 (WR Act) and other employment related legislation.(5)

The APS Departments are subject to the new financial accounting and reporting measures for the Commonwealth public sector that were agreed by the Parliament on 29 September 1997 and are now operative.(6)

As at 31 December 1996, the number of staff in the APS totalled 134 617. This is projected to reduce to about 115 000 by June 1998.(7)

Of these, 112 766 were paid permanent staff (down 7.4% since December 1995). The number of temporary staff decreased by 1 600 or 10.3% in the twelve months to December 1996.(8)

Commonwealth employment not covered by the Public Service Act includes about 58 000 defence force personnel, 33 000 employees of non APS authorities and 123 000 employees of Government Business Enterprises.(9)

The APS has been undergoing a process of continuous change and downsizing since the major legislative reforms enacted by the Hawke Government in 1984 and the adoption of the mega department model and abolition of the Public Service Board in 1987.(10)

In key respects the present proposals seek to adapt the legislative framework to changed operations and priorities, characterised by a greater focus on outcomes instead of process, that have applied in the APS for many years.(11)

Many of the proposals also reflect what is now current practice in the States and Territories. Legislation in the form introduced by the current Government has been 'on the drawing board' since the time of the Machinery of Government Changes in 1987. A Bill, (no doubt) not entirely dissimilar to the present, was being prepared by the previous Government in response to the Report of the Public Service Act Review Group (the McLeod Report)(12) but was not introduced before the March 1996 Federal Election.

Some aspects of the Bill have attracted a degree of criticism, others - even those promoting largely symbolic change - have been the subject of heated debate.

The legislation covers a broad and disparate canvass and the following discussion necessarily focuses on those issues which have attained prominence in the public discussion to date.

Developing the Bill

The present impasse comes at the end of a lengthy, continuous and generally bipartisan reform process that can be traced back at least as far as the Public Service Reform Act 1984 which created the Senior Executive Service (SES) and formally gave Ministers greater control over the operations of Departments.

A Review of the Public Service Act 1922 was announced by the then Assistant Minister for Industrial Relations, Hon Gary Johns, on 30 June 1994.

The Report of the Review headed by Mr Ron McLeod was presented to Minister Johns on 22 December 1994.

In August 1995, the Keating Government announced its response to the McLeod Review, accepting the overwhelming majority of the Report's 118 recommendations.

In November 1996, Minister for Industrial Relations, Peter Reith, issued a Discussion Paper, entitled 'Towards a Best Practice Australian Public Service'.

Between December 1996 and February 1997, there was an extensive consultation program within the APS and involving major interested parties, on Minister Reith's Discussion Paper.

On 7 February 1997, the Senate Finance and Public Administration References Committee conducted a Round Table to consider the Minister's Discussion Paper.(13)

In May 1997, the Public Service and Merit Protection Commission (PSMPC) and the Department of Industrial Relations published an action plan for the new Public Service Act. The paper was entitled, 'Accountability in a Devolved Management Framework'.

On 26 June 1996, the Public Service Bill 1997 and the accompanying Consequential Provisions Bill were introduced in the House of Representatives.

After the Second Reading, both Bills were referred to the JCPA for Report by 4 September 1997 (later extended to 29 September 1997). The JCPA commenced hearings with a Round Table on 6 August 1997.

The JCPA reported on 29 September 1997.

Both Bills were also referred to the Senate Finance and Public Administration Legislation Committee on 4 September 1997. The Committee reported on 2 October 1997 but made no recommendations.(14)

The Parliamentary Service Bill 1997 and associated measures were introduced on 23 October 1997 in the House of Representatives.

As noted above, the two Houses have been deadlocked since 5 December 1997 when the House of Representatives indicated that it would not agree to the Senate's amendments and laid aside the Bill.

Minister Kemp announced on 25 February 1998 that the Government would bypass the Senate and implement many of the reforms proposed in its Bill by administrative and other means.

These administrative changes came into effect on 15 March 1998 and provide for:

  • Departmental Secretaries to have more extensive powers in relation to the management of staff;
  • new Public Service Values and a Code of Conduct for staff; and
  • the protection of whistleblowers who allege breaches of the Code of Conduct.(15)

The Minister has also indicated that the Government will use the provisions of the WR Act 1996 to secure further changes in employment relations in the APS.(16)

Main Provisions

The Senate amendments to the initial Bill were extensively debated in that Chamber(17) but have not received detailed attention in the House.

The Opposition Spokesperson on Industrial Relations, Mr McMullan, has indicated that the ALP will be moving those amendments agreed by the Senate in 1997 when the Bill is again debated in that Chamber. He has further indicated, however, that the ALP does not intend pursuing the Opposition amendments that did not receive Senate support during last year's debate.(18)

Detailed discussion of the less contentious provisions of the Bill is available from other sources including: Hansard, JCPA Report No.353 and other Parliamentary Library publications including previous Digests. What follows is a brief outline of the main areas of disagreement between the two Houses.

Restriction on Australian Workplace Agreements

An Australian Workplace Agreement (AWA) is a form of federal industrial agreement which may be made between specified types of employer and one or more of their employees.(19) AWAs may displace the terms of federal awards and certain Commonwealth and State industrial laws. AWAs do not, however, prevail over existing or future certified agreements unless such a certified agreement contains a clause allowing it to be overridden by an AWA.(20)

Clause 20 provides that Agency Heads (these include Departmental Secretaries, Heads of Executive Agencies and Heads of Statutory Agencies) exercise the powers of the employer in relation to persons employed in the respective Agency. Their powers, as employer, are to be prescribed by regulation.

The Senate amendment to clause 20 (and the consequential amendment to clause 8) limit the employment powers of Agency Heads by preventing them entering into Australian Workplace Agreements with APS employees. The making of such agreements would only be possible where specifically permitted by a regulation made under the proposed Act.

One argument for limiting the powers of Agency Heads in relation to AWAs is that the terms of such individual agreements would be secret and thereby contrary to established principles of accountability in spending public money.

The Government argues that the amendment is unnecessarily restrictive; that such agreements have already been negotiated; and that accountability concerns are met by agencies having to report in their annual reports on the numbers of employees whose remuneration packages exceed $100 000.(21)

Remuneration of Senior Officials

Clause 46 provides that the remuneration of the Public Service Commissioner is to be set by the Agency Minister.

Clause 53 provides that the remuneration of the Merit Protection Commissioner is to be set by the Public Service Minister.

Clause 61 provides that the remuneration of Departmental Secretaries is to be set by the Prime Minister.

Clause 68 provides that the remuneration of the Heads of Executive Agencies is to be set by the Agency Minister.

Senate amendments to each of these provisions included the rider that the remuneration and conditions for these positions must be set 'on the advice of the Remuneration Tribunal and are to be published in the Gazette'.

The Opposition argues that the amendments are required for transparency and that to maintain independence, it should be obligatory to seek the advice of the Remuneration Tribunal. The Government argued that the amendments were unnecessary and that it would as a matter of course seek advice from the Remuneration Tribunal.(22)

Termination

The Bill as introduced excluded access of more senior officials to Division 3 of Part VIA of the Workplace Relations Act 1996. Division 3 provides remedies for employees whose dismissal from employment is held either harsh, unjust or unreasonable or who are dismissed for some prohibited cause such as union membership, their age or their religious beliefs.

The WR Act remedies for wrongful dismissal would otherwise be available to senior public servants covered by federal awards, as they are not subject to the statutory income limit of $ 66 250 per annum which prevents federal non award workers from gaining access to remedies under the WR Act.

Heads of Executive Agencies

Subclause 67(5) prevents Agency Heads seeking relief for unfair or unlawful dismissal under the provisions of the WR Act.

This subclause was deleted by the Senate amendment that also replaces the preceding subclause [67(4)] with a provision requiring that the Agency Minister receive a report about the proposed termination from the Public Service Commissioner and the Secretary of the Prime Minister's Department before dismissing an Agency Head.(23)

Secretaries of Departments

Subclause 59(4) prevents Departmental Secretaries seeking relief for unfair or unlawful dismissal under the provisions of the WR Act.

A Senate amendment removed this restriction.(24)

Senior Executive Service (SES)

Clause 38 prevents SES employees from seeking relief for unfair or unlawful dismissal under the provisions of the WR Act.

A Senate amendment repealed this clause. Further the amendment provided that in the case of termination of the employment of an SES employee, the Public Service Commissioner must certify that the termination meets the minimum requirements specified in a direction issued under proposed section 36 (see below). The termination must also be certified as being in 'the best interests of the APS'.

Clause 36, which provides that the Public Service Commissioner must issue written directions in relation to SES employment, was amended in the Senate to make it mandatory for the Commissioner to issue such directions in relation to engagement, promotion, redeployment, mobility and termination.

The Government had proposed that SES employment rights be guaranteed by other means. To quote Senator Ian Campbell:

The Bill retains the concept of the Senior Executive Service (SES) and includes for the first time a clear statement of the Service-wide role of the SES. While Agency Heads will have enhanced responsibilities in relation to the SES, the Public Service Commissioner will be required to issue Directions about employment matters relating to SES employees. These will cover appropriate selection processes, in order to ensure that decisions are made on the basis of merit, and termination processes, including a requirement to certify that a termination is in the best interests of the Service. This will address JCPA concerns that SES employees should be free from any apprehension that they may be dismissed for providing robust advice to their Agency Head. I emphasise that the Directions, just as the regulations, are legislative instruments which Parliament can disallow.(25)

The Opposition's position on the termination of SES staff was summarised at the Committee Stage by Senator Faulkner who stated that:

In relation to Opposition amendment No. 38 to clause 38, termination subject to the Workplace Relations Act, given the increased powers of agency heads to set salary and conditions, as well as hire and fire, there is a very strong argument that SES officers should have at least some protection from capricious or arbitrary dismissal. Of course, further protection will be afforded by the certification proposed in the new section 38.(26)

Termination generally

Clause 29 deals with the powers of an Agency Head to terminate staff subject to the provisions of the WR Act.

The Senate amended this provision to specify grounds for taking such action (eg unsatisfactory work) and removed subclause 29(3) which would have prevented a termination being challenged on the ground that a statement of reasons had not been provided to the dismissed worker.

The Opposition's rationale for specifying the grounds for termination in the legislation is that these are important matters and that notice and reasons for dismissal should be given in writing. Senator Faulkner also noted that the grounds specified in the amended provision were the same as those identified by the Government for SES employees.(27)

The Government's position is, in the broad, that similar remedies exist under the WR Act and that creating a second similar (but not identical) set of grounds for relief would be confusing and generally unproductive.(28)

In relation to subclause 29(3), the Senate accepted that the subclause could entirely undermine substantive protections provided by clause 29.(29)

Review of Actions

Clause 33 provides for the creation by regulation of mechanisms for reviewing staffing decisions.

The Senate amendment creates these mechanisms under the Act and retains the present system of tripartite appeals committees.

The Opposition argued that the Government's draft regulations failed to provide the Merit Protection Commissioner with sufficient power and sufficient independence.(30)

The Government does not agree that the Merit Protection Commissioner needs to be an independent statutory authority and opposes the retention of the tripartite appeals system.(31)

Annual Reports

Clauses 44, 51, 63 and 70 all require certain office holders to prepare annual reports for ministers and the Parliament.

The Senate amended these provisions to require these reports be prepared in accordance with guidelines approved by the Joint Committee on Public Accounts and Audit.(32)

Endnotes

  1. The present Bill retains the 16 amendments made in the House on 30 October 1997.
  2. Senate, Parliamentary Debates, 12 March 1998, 661.
  3. House of Representatives, Parliamentary Debates, 11 March 1998, 661.
  4. Phillipa Weeks, Submission to Joint Committee of Public Accounts, Review of Public Service Bill 1997, Submissions, volume 4, 424.
  5. For example, Maternity Leave (Commonwealth Employees) Act 1973 and the Long Service Leave (Commonwealth Employees) Act 1976.
  6. Auditor-General Bill 1996; Audit (Transitional and Miscellaneous) Amendment Bill 1996; Financial Management and Accountability Bill 1996; and Commonwealth Authorities and Companies Bill 1996. These Bills received the Royal Assent on 24 October 1997 and came into effect on 1 January 1998.
  7. PSMPC, APS Staffing Statistics Report 1996: 12 and Budget Paper No.1, 1997-98: 4-5.
  8. Ibid.
  9. Ibid., 25.
  10. See Geoff Winter, 'Wither Public Sector Employment?', IRS, Research Note, No. 17 of 1997-98 for more detail on the extent of staff reductions and comparisons with other OECD countries.
  11. An observation made in slightly different terms by the JCPA at paragraph 2.24 of Report No.353.
  12. 22 December 1994.
  13. The Committee subsequently published a full transcript of these proceedings.
  14. The Minority Report of Senator Allison recommended that the Bill be withdrawn and redrafted taking into account concerns raised in JCPA Report No.353. Senator Allison also recommended that the Bill not be debated until all the subordinate legislation is available in final draft form.
  15. See Commonwealth of Australia, Statutory Rules 1998, No. 23. These regulations are, of course, subject to possible disallowance.
  16. House of Representatives, Parliamentary Debates, 11 March 1998, 661.
  17. Senate, Parliamentary Debates 17, 18 and 20 November 1998.
  18. House of Representatives, Parliamentary Debates, 11 March 1998, 716.
  19. The constitutional basis of AWAs rests on range of constitutional powers other than the industrial power. Hence employers, who are trading, financial or foreign corporations or whose employee's principal place of work is in a Territory, or where the employer is the Commonwealth or where the employer is a private sector employer in Victoria, may all make AWAs with their employees. Relying on the trade and commerce power, waterside workers, most maritime employment and airline crews may also be covered by AWAs.
  20. Refer WR Act 1996, section 170VQ.
  21. Senate, Parliamentary Debates, 17 November 1997, 8906-07.
  22. Ibid., 19 November 1997, 9069-71.
  23. Ibid., 19 November 1997, 9088-9090.
  24. Ibid., 9085-9086.
  25. Senate, Parliamentary Debates, 10 November 1997, 8627.
  26. Senate, Parliamentary Debates, 18 November 1997, 9024-9025.
  27. Ibid., 9008.
  28. Ibid., 9008-10.
  29. Ibid., 9011.
  30. Ibid., 9015.
  31. Ibid., 9016.
  32. Ibid., 19 November 1997, 9067-69.

Contact Officer and Copyright Details

Bob Bennett
23 March 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.



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