COALITION SENATORS' DISSENTING REPORT
Introduction
1.1
Coalition Senators are highly disappointed that once again, the
Government has rushed through the Committee a significant Bill that will affect
each employer, employee and independent contractor in Australia without the
Committee being able to conduct fulsome inquiries.
1.2
This Bill was introduced into the House of Representatives at 4.30pm on
30 October and called on for debate the next morning 31 October with a vote
later that day. The Minister has made no explanation for the critical need for
this legislation to be passed and the Department did not provide any
explanation at the Hearing. While Coalition Senators have formed some views
which are explored in this report, given the brief nature of the inquiry and
the time constraints of the hearing it is noted that not all submissions have
received the scrutiny they deserved. Should more time have been allowed, the
Committee could have heard from more witnesses.
1.3
Coalition Senators are concerned that the Government has titled this
Bill as the 'Fair Work Amendment Bill 2012' under the auspices of enacting
recommendations from the Fair Work Review. Despite this deceptive title, this
Bill also makes significant changes to the Fair Work Act in relation to the
operation of Fair Work Australia, Modern Awards and Superannuation.
Recommendation
That the Senate Committee be given an opportunity to fully
consider legislation prior to debate in the Senate.
Superannuation
1.4
Coalition Senators have long expressed concern about the Government’s
failure to address the current closed shop, anti-competitive arrangements for
the selection of default funds under Modern Awards through Fair Work Australia.
Sadly the amendments in this Bill will continue to propagate these closed-shop
arrangements.
1.5
The current process for the selection of default funds under modern
awards, initiated by this government and run by Fair Work Australia lacks
transparency. It is littered with inherent conflicts and inappropriately
favours union dominated industry super funds.
1.6
Coalition Senators welcomed the Government’s belated recognition in its
2010 pre-election policy[1]
on superannuation where they promised to introduce an open, transparent and
competitive process to select default funds under modern awards.
1.7
Despite this election commitment, it took Minister Shorten a
considerable amount of time to ask the Productivity Commission to examine this
important issue.
1.8
After pre-empting its final report, Minister Shorten then cherry-picked
those aspects of the Productivity Commission’s report that maintained the status-quo.
1.9
Coalition Senators are deeply disappointed that the government has
introduced legislation into Parliament which, instead of ensuring genuine
competition, will impose an additional layer of government intervention in the
default fund market – particularly in light of the Government’s election
commitments.
1.10
The government has sought in this legislation to limit the number of
MySuper products in Modern Awards to a maximum of 10, despite the Productivity
Commission’s clear recommendation that:
Recommendation 8.4
The number of default products listed in a given modern award
should be at the discretion of the Default Superannuation Panel.[2]
1.11
Further, the government has ignored the Productivity Commission’s
findings in a number of areas including but not limited to:
- The Productivity Commission’s proposed 'Default Superannuation
Panel' will not be created as recommended - rather it will be subsumed into the
existing Minimum Wage Panel;
- The new Panel is not the final decision maker under this Bill as
recommended – instead the Full Bench of Fair Work Australia (FWA) will approve
default funds in each award after a recommendation from the Expert Panel;
- The process of including funds in awards will only occur every 4
years starting in 2014 when Modern Awards are due for review - as opposed to an
ongoing application process; and
- All awards must have default funds - currently there are 13
awards that do not list default funds.
1.12
Coalition Senators firmly believe that genuine competition in the
default fund market is critically important to ensure efficiencies and value
for Australians in default super funds are maximised. If passed by the
Parliament, this would see the continuation of a process where conflicted
parties within Fair Work Australia will continue to select default super funds
under modern awards.
1.13
In submissions to the Committee, the Financial Services Council said:
We believe the market structure proposed in this Bill for
default super / MySuper will limit competition in the $1.4 trillion
superannuation industry and result in reduced fee pressure and innovation for
consumers.[3]
1.14
Coalition Senators also agree with the OECD:
All OECD countries rely fundamentally on competition in
product markets to organise production. Competition stimulates innovation and
efficiency in the use of resources, thereby leading to greater product
diversification and lower prices. Therefore, competitive product markets are in
the interest of all consumers.[4]
1.15
The government is currently also legislating through its various MySuper
Bills all the consumer protection requirements it judges are important in a
default fund product.
1.16
Given this matter is under active consideration, there is no reason why
every product which qualifies as a MySuper product should not be able to
compete freely in the default fund market. This will surely achieve the best
outcome for employees.
1.17
The Government has provided no justification for the additional cost and
complexity which comes with an additional layer of government intervention in
that market.
1.18
Coalition Senators are troubled by submissions that express concerns
about the Minister’s consultation process. The Financial Services Council said:
We note that the Explanatory Memorandum indicates that: 'the
Bill was developed following extensive consultation with superannuation
industry stakeholders.....' This is incorrect. There was minimal consultation
with the superannuation industry on this legislation. Apart from a single
meeting held on 23 October 2012, there was no exposure draft legislation and
therefore no consultation on the draft provisions. The first time the industry
saw the legislation was when it was presented to Parliament.[5]
1.19
Given the Government’s promise of open and transparent governance, this
appears to be yet another example of a distinct lack of consultation. This,
combined with the rushed nature of this inquiry and the speed at which this
Bill is to be progressed through the Parliament, makes for bad decision making
and leaves the effect of this Bill susceptible to unintended consequences.
1.20
Quite clearly, there are significant issues with the superannuation
aspects of this Bill which will lead to poor outcomes for employers and
employees alike, as evidenced in Qantas’ submission:
There is no cogent rationale for changing the position as
proposed in the Further MySuper Bill less than 2 months ago. Such removal will
lead to inconsistencies and impact negatively on employers with
employer-sponsored funds as discussed below.
1.21
Coalition Senators are deeply concerned that Minister Shorten has been
so desperate to protect the vested interests of his friends in the union
movement that he has lost sight of his responsibility as a Minister of the
Crown to act in the public interest.
1.21
Recommendation
1.22
That the Bill be amended to ensure that all MySuper products are
eligible to be selected under the Modern Awards.
Fair Work Review
1.23
On December 20 last year, Minister Shorten finally announced the details
for the review of the Fair Work Act. In doing so, he appointed three so-called
‘independent’ reviewers, Professor Ron McCallum, Dr John Edwards and the Hon.
Michael Moore, who were given skewed and limited Terms of Reference, asking
them to view the issues with blinkers on.
1.24
The Terms of Reference failed to incorporate vital ingredients of
productivity, flexibility and union militancy but were clearly skewed to look
in a particular narrowly focussed direction. Despite having the ‘independent’
Office of Best Practice Regulation attempting to allay Coalition Senators’
fears, documents obtained under Freedom of Information laws revealed that there
was real concern within that office and the Department of Finance about the
“narrow” scope of the review and the omission of productivity, the impact of
union militancy and the cost impact on red tape.
1.25
Further Freedom of Information requests revealed that Mr Shorten only
signed off on the Terms of Reference after political advisers had rewritten
them to achieve Labor’s political goals.
1.26
Coalition Senators note that this is the Professor McCallum who recently
predicted the Baillieu Government would lose the next election and praised the
Leader of the Victorian Labor Opposition Daniel Andrews[6]
and who also said prior to his appointment to the panel that ‘only tinkering
would be required to the Fair Work Act, which would stay in place for the next
decade’.[7]
Such comments hardly inspire confidence that rigorous independent scrutiny
would be applied to the review.
1.27
In May 2006 just two months after policies 'dead, buried and cremated'
were introduced the good professor gave a very robust ideological account of
the legislation, saying:
...it will make our workforce docile and bring in a neo-liberal
hegemony into this country...
And
I fear for this country; I fear for the fact that workers are
going to be in a perilous position. We are going to see, I think within a very
short time, 30% of working women in part-time employment becoming part of the
working poor.
1.28
As well as railing against the independent Australian Fair Pay
Commission, including the trade union boss and community sector worker who were
members as:
...full of what I would call neo-classical and neo-liberal
economists...
1.29
Coalition Senators note that when it comes to the Fair Work Act after a
full two years of operation Professor McCallum believes:
I think this act should be under scrutiny for a longer time...
1.30
Further the professor raged against the use of the Corporations power by
the Coalition when in government but has been strangely silent on its use for
the Fair Work Act.
1.31
Other members of the panel included: Dr John Edwards, a former political
adviser to Paul Keating who went on to write a book titled John Curtin:
Australia’s Greatest Prime Minister. He apparently had not heard of Robert
Menzies. It seems that in selecting the reviewers the most important
consideration was their predisposition to the Labor school of thought.
1.32
Coalition Senators believe that the Terms of Reference deliberately
excluded the vital ingredients of productivity, flexibility and union boss
militancy and were clearly skewed towards a predetermined outcome. Despite the
Review being a disappointing document on so many levels, Coalition Senators
note that on certain issues the reviewers were mugged by stark realities.
1.33
The Coalition has flagged general support for the review.[8]
Vice Presidents of Fair Work Australia
1.34
This Bill also contains the creation of two additional Vice President
positions at Fair Work Australia – two of the highest offices in the
organisation. Mr Shorten has completely failed to explain why these additional
positions are required or justified, apart from the Department’s submission
that the President of Fair Work Australia sought the additional roles. These
two positions would slot in as the second and third most senior officers of the
tribunal.
1.35
Since the announcement of these two additional positions, there has been
widespread community concern, including from within Fair Work Australia.
1.36
The Australian Financial Review reported recently that:
In an email obtained by the Weekend Financial Review, Senior
deputy president Les Kaufman wrote to Fair Work president lain Ross on
Wednesday questioning the need for two positions, which reintroduces a level of
seniority at the tribunal that was removed under the Fair Work Act in 2009.
He said the appointments would further erode the standing of
the tribunal and "gives rise to the perception it is being stacked. Although
I have no direct interest in the creation of the two new vice-president
positions because, as you know my commission expires on December 1, I wish to
express my dismay at what appears to be a retrograde step," Kaufman wrote
to Justice Ross.
Deputy presidents Graeme Watson and Peter Richards have also
written to Justice Ross over concerns the federal government will use the
opportunity to install government-friendly appointees. [9]
1.37
Many submissions to the Committee expressed deep reservations about the
inclusion of these two positions. Comments include:
From our perspective the need for the creation of these
additional positions and the requirement that they be statutory positions is
unclear. Neither the Fair Work Act Review Panel nor submissions to the review
have identified the absence of these statutory positions as inhibiting the
performance of Fair Work Australia.[10]
And:
This was not recommended by the Panel. It is unclear why
these amendments are necessary or required and are opposed without amendments.
...
It is unclear why the existing Vice Presidents would not be
suitable for reappointment to the new statutory Vice Presidential roles.[11]
1.38
To this end, there was wide stakeholder support for the appointment of
the two Members of Fair Work Australia titled as ‘Vice President’ to the new
positions. Mr Steve Knott of AMMA told the Committee:
The legislation previously recognised the two existing vice
presidents—Vice President Lawler and Vice President Watson—but the current
legislation does not. The proposal is to have the legislation recognise those
two roles once again and put two new people into those roles. It is a real
pea-and-thimble trick. For those with long memories in industrial relations, we
will go back to the late eighties when there was new legislation and everybody
got appointed except one member of the tribunal, a fellow by the name of
Justice Staples. I think this does give the opportunity—and, again, we have
commented on this publicly—to really damage the independence or the perceived
independence and impartiality of the tribunal. We have senior appointments made
to the tribunal which, through the political cycle—there are people who are
appointed by one side who may not be appointed by another side, but that is the
way it goes over the fullness of time in the political cycle.
1.39
Coalition Senators are deeply concerned that the appointment of
pro-Labor vice presidents would bring into question the tribunal’s integrity
which has already suffered considerable damage courtesy of the Health Services
Union scandal.
1.40
In a significant submission, the Law Council of Australia said:
As a general principle, once a person has been appointed to
sit on a Court or independent Tribunal with designated powers and privileges,
any change that would have the effect of removing or reducing that particular
person’s powers or privileges while not affecting the powers and privileges of
other Members of that Tribunal, has a tendency to undermine the independence of
the Court or Tribunal.
Members of FWA are appointed to a quasi-judicial position.
The status of FWA depends upon the independence and impartiality of its Members
being maintained and being seen to be maintained.
...
Should the Government appoint the two individuals currently
designated Vice President to the two statutory Vice President positions, then
their status will not be reduced. However, if the two Deputy Presidents
designated Vice Presidents are not so appointed, the effect of the Bill will be
to reduce their status. Henceforth responsibilities that would have been
capable of being delegated or given to them by nature of their senior status
would instead be given to the new statutory Vice Presidents.
This would have the tendency to reduce the independence of
the Tribunal in that it will reduce the role and privileges associated with
particular individuals.[12]
1.41
Coalition Senators’ strong view is that regardless of the views on Vice
Presidents Watson and Lawler, in the interests of protecting the tribunal they
should be appointed to the positions – consistent with submissions referenced
in this Report.
1.42
It is noted that there has been public speculation[13]
about the appointment of such people as Mr Jeff Lawrence, Mr Josh Bornstein and
Justice Michael Walton.
1.43
During the public hearing Mr John Kovacic, Deputy Secretary, DEEWR,
emphasised that the positions had been created on the basis of a recommendation
made by the President of Fair Work Australia, and that 'the positions will be
publically advertised and will be subject to a merit based selection process
consistent with government policy'.[14]
1.44
Coalition Senators note that despite the Government’s ‘merit based
selection’ processes, and the promise before the 2007 election by then Labor
Leader Kevin Rudd that:
I give you this as an absolute guarantee here on your
program. I will not be prime minister of this country and appoint some endless
tribe of trade union officials to staff or ex trade union officials to staff
the key positions in this body. That's not my intention. That's not the way in
which it's going to work.[15]
1.45
There has been an overwhelming number of people appointed to Fair Work
Australia with a trade union pedigree, including in the last round Mr Bernie
Riordan a former Electrical Trades Union official who mysteriously had civil
proceedings against him settled the day before his appointment.
1.46
Despite the Explanatory Memorandum stating that there would be no cost
associated with this Bill, Mr Kovacic stated:
There are costs, and those costs are to be absorbed by Fair
Work Australia. It is difficult to be precise as to the actual cost, given that
the Remuneration Tribunal is yet to determine remuneration for those positions.
I think a ballpark figure in the order of $1.5 million per annum is what we have
been projecting.
1.47
The Coalition trusts that the resourcing of these positions will not
come at the expense of Fair Work Australia’s newly established branch to
oversee the financial accountability and transparency of trade union bosses.
Recommendation
1.48
The creation of two additional Vice Presidents of Fair Work Australia be
strongly opposed.
Recommendation
1.49
Should the positions be created, Vice Presidents Watson and Lawler be
appointed to the positions.
‘Fair Work Commission’
1.50
The Fair Work Review Panel’s clear recommendation that:
The Panel recommends that the FW Act be amended to change the
name of Fair Work Australia to a title which more aptly denotes its functions.
It is recommended that the new title contain the word ‘Commission’ and that it
no longer contain the words ‘Fair Work’.[16]
1.51
Despite this, Coalition Senators were somewhat surprised that the
legislation seeks to change Fair Work Australia’s name to ‘Fair Work
Commission’ – in clear contradiction of the recommendation.
1.52
The Government has refused to provide any explanation for why this
recommendation was partially rejected, however Mr Steve Knott from AMMA has
been able to shed some light on this matter in his evidence to the Committee:
We understand, and you get this through the bush telegraph, that
the very highest levels of government want the name Fair Work retained and it
has now come forward and was put forward as a decision as opposed to a
consultation issue that it will be the Fair Work Commission.[17]
1.53
It is clear that the Prime Minister herself intervened to protect the
‘Fair Work’ name in the title of the Commission, contrary to the recommendation
of a million dollar review and the wishes of the President of Fair Work
Australia.[18]
1.54
Coalition Senators note that there was widespread support for a change
of name. the Maritime Workers Union submitted:
The MUA supports calls for further amendment of the name to
its natural form...
...
The Commission has been and remains a cornerstone of a
functioning Australian democracy and is renowned for its fair and efficient
management of industrial relations following federation with the enactment of
the Conciliation and Arbitration Act 1904.
As such, the Commission deserves a name that is recognised
throughout Australia and should revert to its longstanding and accepted form.
1.55
Coalition Senators note that there is wide stakeholder support for the
name being changed to ‘Australian Workplace Relations Commission’.
Recommendation
1.56
The name of 'Fair Work Australia' be amended to 'Australian Workplace
Relations Commission'.
Other recommendations
Barclay v. Bendigo TAFE
1.57
The High Court’s unanimous judgement in the Barclay v. Bendigo TAFE case
found that union bosses should not be an untouchable class in the workplace –
something also recommended by the Review Panel.
1.58
Coalition Senators welcome the High Court decision and the Fair Work
Panel Review’s recommendation to this end.[19]
1.59
However, Coalition Senators found it disappointing and emblematic that
Labor, through Minister Shorten, intervened in the High Court on the side of the
union boss, Mr Barclay, arguing that it actually was the intention of the Fair
Work Act to make union bosses untouchable even if they did the wrong thing.
1.60
Labor intervened in Barclay using more than $160 000[20]
of taxpayers’ money to argue for the union bosses against a taxpayer funded
education institution.
1.61
Indeed, in a damning judgement by High Court Justice Heydon, it has now
been confirmed that Mr Shorten acted as an ex-union boss first and Minister of
the Crown second after foolishly intervening on the side of the Australian
Education Union in the Barclay v. Bendigo TAFE case.
1.62
Justice Heydon said:
...the Minister's stance before and during the oral hearing was
not that of an intervener, but that of a partisan. For example, some of the
Minister's oral submissions were directed to factual material. This is hardly
the province of an intervener... [21]
1.63
The Committee was told by Ms Lisa Matthews of AMMA:
That (this recommendation) is a step in the right direction
and we would have liked to have seen that in this current round of reforms.
1.64
Coalition Senators are disappointed that the Government did not use the
‘first tranche’ to enshrine this recommendation into legislation that would
ensure that union bosses are treated the same as all other employees in the
workplace.
1.65
There is broad concern in the community in relation to reports[22]
that the Government will give union representatives and members a new avenue to
sue for alleged discrimination against them when acting in that capacity under
changes to discrimination laws announced Attorney-General Ms Nicola Roxon.
1.66
Coalition Senators are concerned that the new legislation would allow
for expanded protections for union bosses who do the wrong thing in the
workplace, despite the High Court’s judgement in the Barclay v. Bendigo TAFE
case and the Fair Work Review Panel recommendation.
JJ Richards
1.67
Then Opposition Leader Kevin Rudd pledged, that the Fair Work Act would
not allow the return of ‘strike first, talk later’. Yet, the decision of the
Federal Court in the JJ Richards case tells a different story.
1.68
The Federal Court’s judgment accepts that the argument advanced on behalf
of JJ Richards was understandable and reasonable but for the specific wording
in the Fair Work Act which entitles unions to obtain protected action ballots
in circumstances where most reasonable people would argue that should not be
allowed.
1.69
The Government is yet to tell us whether this was simply a drafting
error or that Labor deliberately misled the Australian people. Their silence is
interesting and causes Coalition Senators to suspect the latter.
1.70
When asked at the Hearing, Mr John Kovacic of the Department, said:
Without having seen the appearances of the early witnesses
this evening, I would imagine it is a reasonable expectation that there might
have been differing views as to the approach on those recommendations. That was
consistent with what emerged in the consultations that the minister convened
around the panel's report, where there was clearly not a consensus view around
on how to respond to those particular recommendations. As I mentioned in the
opening statement, this bill really reflects those recommendations where there
is a consensus...[23]
1.71
Coalition Senators believe that if the provisions of this case had
exposed a drafting error, the Government would move with some speed to
implement the stated policy that received electoral support at the 2007
election. Coalition Senators are concerned that, should the Government not
rectify this, it will be viewed as a broken promise in a similar vein to the
Carbon Tax that Australia had to have despite promises to the contrary in 2010.
Recommendation
1.72
Fair Work Review Panel Recommendations 31 and 47 be implemented as soon
as practically possible.
Key Performance Indicators
1.73
Coalition Senators are concerned that despite some of the amendments in
this Bill coming out of the Fair Work Review’s Post-Implementation Review,
witnesses could not point to these amendments leading to any substantive
increases to the Government’s Key Performance Indicators[24]
for the Fair Work Act.
1.74
Mr Daniel Mammone from the Australian Chamber of Commerce and Industry
told the Committee in relation to the key performance indicator of Working Days
Lost due to Industrial Disputes:
So, in terms of the first tranche response bill, there are no
changes in terms of the restrictions on taking protected industrial action per
se.[25]
1.75
While there was evidence from the Australian Council of Trade Unions,
consistent with public statements from the Minister for Employment and
Workplace Relations that:
Taking a longer term view (see figures below), it is clear
that current levels of industrial disputes are at historically very low levels
even when one takes into account the peaks associated with large bargaining
rounds.[26]
1.76
Coalition Senators note that the most recent Industrial Disputes data
released by the Australian Bureau of Statistics reveals an 8 year high on
working days lost due to industrial action. It is clear that both the Minister
and the ACTU have used a very long term view to try and misconstrue the
statistics. This dishonest approach does not allow for a transparent industrial
relations debate.
1.77
Coalition Senators note that the 293 100 working days lost due to
industrial action is the equivalent of 1,221 people sitting out on strike for a
whole year. Avoiding such an outcome would lead to a significant productivity
improvement.
1.78
In relation to another Key Performance Indicator, productivity, Ms Lisa
Matthews of AMMA said:
In relation to productivity improvements, we cannot really
see any of the aspects of the bill adding to industry productivity.
1.79
While the first tranche legislation will make changes around the edges,
Coalition Senators are disappointed that the Government hasn’t taken this
opportunity to address the militancy, flexibility nor productivity problems
that have been unleashed in the wider community courtesy of this Act.
Conclusion
1.80
While having broad-ranging concerns with this Bill, Coalition Senators
believe the concerns can be addressed with relatively minor amendments.
Recommendation
1.81
The Senate amend the Bill in line with recommendations in this report.
Senator Chris Back
Deputy Chair |
Senator
Bridget McKenzie |
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