CHAPTER 2
Issues
Introduction
2.1
Employment conditions for public sector workers have recently gained attention
due to public sector reforms in a number of states. These reforms have
included:
- changes to industrial instruments, particularly provisions relating
to redundancy and redeployment;[1]
- reductions in staff numbers;[2]
- restrictions on wage claims;[3]
and,
- changes to state industrial tribunals.[4]
2.2
This chapter examines the conditions of employment for state public
sector employees and what powers the Commonwealth has to influence these
conditions.
2.3
The committee received submissions from a range of unions and government
departments. Submissions tended to focus on New South Wales, Queensland and
Victorian examples. The committee also received a number of submissions from
current and former public sector employees affected by these changes and thanks
them for sharing their personal experiences.[5]
Conditions of employment for state public sector workers
2.4
This section provides a background into the regulation of public sector
employment. It summarises general views of the protections and entitlements for
public sector workers, ongoing issues with bargaining and conditions, and
recent changes in Queensland and New South Wales.
Background
2.5
State governments have primary responsibility for the bargaining and
working conditions of state public sector employees. The Commonwealth has very
limited ability to influence these conditions.
2.6
Under the Australian Constitution, the Commonwealth has 'no express
legislative power' to regulate the state public servants.[6]
The Commonwealth relies on the territories power (section 122 of the
Constitution) to regulate conditions for public sector employees in the
Northern Territory and the Australian Capital Territory.[7]
2.7
In 2009 every state except Western Australia referred their powers over
industrial relations to the Commonwealth to create a national workplace
relations system, with certain exclusions. These exclusions are summarised in
the Department of Education, Employment and Workplace Relations' (DEEWR)
submission.[8]
Importantly for this report, New South Wales, Queensland, South Australia and
Tasmania did not refer the Commonwealth power in relation to their public
sector employees.[9]
2.8
Victoria is the only state to have referred its power over public sector
employees, and even this referral contains limitations. It specifically excludes
'matters pertaining to the number, identity and appointment of public sector
employees'.[10]
These exclusions reflect constitutional limitations on the Commonwealth's power
to regulate public sector employment. Such limitations have been enunciated in High
Court decisions such as Re Australian Education Union;
Ex parte Victoria (1995)184 CLR 188 and Melbourne Corporation v
Commonwealth (1947) 74 CLR 31.[11]
These limitations serve to maintain the independence of the States.[12]
International Labour Organisation
(ILO) conventions
2.9
The terms of reference for this inquiry refer to ILO conventions
ratified by Australia. DEEWR has kindly provided a list of the ILO conventions
relevant to this inquiry in their submission.[13]
2.10
The Commonwealth and state and territory governments all share
responsibility for implementing ILO conventions 'according to their respective
constitutional powers'.[14]
Each state and territory government reports individually on how they are
implementing the ILO conventions.[15]
Protections and entitlements for
public sector employees
2.11
Submissions to this inquiry focussed on changes to public sector
employment conditions in New South Wales, Queensland and to a lesser extent
Victoria. Unions representing workers in these states were generally critical
of recent public sector changes and requested Commonwealth intervention.[16]
2.12
However, not all union submissions were critical of state governments
retaining control over public sector regulation. The Public Service Association
of South Australia argued that state industrial regulation 'has afforded state
public sector employees good protection' and has resulted in 'effective and
timely' resolution of industrial issues.[17]
2.13
The committee received submissions to this inquiry from two state
governments: Queensland and Victoria. Both submissions emphasised the rights of
state governments to determine the size and nature of public sector workforces.[18]
2.14
State government submissions defended the conditions of public sector
employees in their states. The Queensland Public Service Commission submission
compared a range of entitlements against the National Employment Standards
under the Fair Work Act (FWA) and concluded that 'state employees in Queensland
continue to enjoy entitlements superior to those provided under the FWA'.[19]
The Victorian Government submission pointed out that they have referred most
industrial powers to the Commonwealth, meaning that the majority of Victorian
public sector workers are covered by the Fair Work Act 2009:
...the vast majority of [Victorian] public sector workers are
entitled to bargain for collective agreements under the FW Act, take protected
industrial action in support of their wage and condition claims and have their
disputes heard and determined by the Fair Work Commission.[20]
2.15
The Victorian Government was adamant that public sector workers in
Victoria have adequate protections and entitlements. They rejected the
suggestion that Victoria's referral of powers, and its necessary exclusions,
have resulted in 'reduced conditions or entitlements compared with employees to
whom the entirety of the FW Act applies, or that these exceptions and
exclusions undermine the protection of their rights in employment'.[21]
Recent public sector developments
2.16
The following section will briefly summarise recent changes in
Queensland and New South Wales, as well as more ongoing issues with bargaining
for public sector workers.
Queensland
2.17
In 2012 the Newman Government in Queensland began introducing a series
of service delivery reforms and public sector changes. The Queensland public
service will be reduced by 14 000 full-time equivalent (FTE) positions in 2012–13,
including voluntary redundancies for 10 600 employees.[22]
As part of these changes, provisions relating to consultation about change,
termination and redundancy were negated in industrial agreements applying to
public service workers.[23]
The Queensland Industrial Relations Commission is now required to take account
of the State's financial position and fiscal strategy when arbitrating
industrial matters for public sector employees.[24]
2.18
The committee heard evidence from individuals affected by the changes
who were understandably disappointed in losing their jobs. For example Mr
Michael Nolan submitted:
I am still smarting from what happened to me and the way it
happened. I did not seek a redundancy, I do not want to retire and I did not
want to end my 44 year career in public pathology in this way.[25]
2.19
Mr Peter Johnstone, a senior member of the Queensland public service,
felt that the changes removed protections for public sector employees:
I believe that recent changes to directives and legislation pertaining
to public sector employment in Queensland have taken away a ‘safety net’ which
ensures good planning and management around human resources. Following my
redundancy I was advised that, given the nature of changes made to legislation
and directives, I had no capacity to appeal the decision which was made and the
apparent lack of process which accompanied this decision.[26]
2.20
A number of the Queensland union submitters argued the changes
constitute breaches of ILO conventions. For example the Queensland Council of
Unions argued the negation of provisions relating to termination, secured
through previous bargaining, is contrary to the principles of collective
bargaining and a violation of the ILO Right to Organise and Collective
Bargaining Convention 1949 (No. 98).[27]
2.21
The Queensland Government acknowledged the controversial nature of these
public sector reforms but argued that they were necessary given the financial
position of the state. They defended the changes to redundancy provisions,
arguing that the previous conditions had 'impeded on the ability of the
government (and its departments) to make and implement decisions as to how and
what services it delivers'.[28]
They further argued that the removal of employment security provisions was
justified because 'a guarantee of employment security is not something that
routinely exists in Australian jurisdictions'.[29]
2.22
The Queensland Public Service Commission also rejected the suggestion
that the recent changes have breached ILO obligations. Their submission argued
'Queensland has incorporated terms and conditions into its legislation that are
consistent with, or more beneficial than, Australia has committed to through
various ILO conventions'.[30]
New South Wales (NSW)
2.23
In May 2011 the O'Farrell Government introduced an amendment to the Industrial
Relations Act 1996 (NSW) that means that state's Industrial
Relations Commission must 'give effect' to any NSW government policy when
making decisions about public sector conditions.[31]
One of the key NSW government policies is that any wage increases for public
sector workers above 2.5 per cent must be offset by employee related cost
savings measures.[32]
The government also made changes relating to redundancy provisions in 2011 and
enacted staffing cuts.[33]
2.24
Similar to the Queensland situation, NSW unions argued that the legislative
changes in NSW are inconsistent with certain ILO conventions. For example, the legislation
provides that policies relating the management of excess public sector
employees are not to be incorporated into industrial agreements.[34]
The NSW Nurses and Midwives Association argued this is inconsistent with ILO Right
to Organise and Collective Bargaining Convention 1949 (No. 98) because the
Government could change these policies without going through a bargaining process
or amending legislation.[35]
2.25
The NSW Government did not make a submission to this inquiry, therefore
it is difficult to assess these arguments. The committee notes that NSW has not
referred its industrial powers over public sector workers to the Commonwealth.
General issues with public sector
bargaining
2.26
Union submitters claimed public sector employees are disadvantaged in a
number of areas when it comes to bargaining with state governments (and
subsidiary agencies). This disadvantage extended to:
-
Limitations on protected industrial action;[36]
- 'triangular' bargaining — where a third party stranger (the state
government portfolio agency) exerts an influence over the bargaining
representative (the direct employer); [37]
and,
- 'surface bargaining' — where a state governments allegedly relies
on their ability to terminate industrial action (and therefore does not engage
in genuine bargaining).[38]
2.27
The state government submitters rejected these claims, arguing public
sector employees do not face particular difficulties bargaining with state
governments. For example, the Victorian Government denied 'triangular'
bargaining compromised negotiations or disadvantaged employees. They submitted:
The Victorian Government strongly rejects any suggestion that
public sector employees face particular difficulties in bargaining when both
the direct employer of those employees and the portfolio agency with
responsibility for that workforce are engaged in negotiations. No public sector
agencies in Victoria have been found to have breached the good faith bargaining
obligations in the FW Act as a result of the involvement of departmental or
agency representatives.[39]
2.28
The Queensland Public Service Commission argued that the Queensland
bargaining provisions create a process 'comparable to that provided for under
the FWA' and gives employees a 'fair and appropriate opportunity for
participation in collective bargaining'.[40]
Having referred their industrial powers to the Commonwealth, the Victorian
Government argued the 'vast majority of public sector workers are entitled to bargain
for collective agreements under the FW Act, take protected industrial action in
support of their wage and condition claims and have their disputes heard and
determined by the Fair Work Commission'.[41]
2.29
Finally, unions also noted the difficulty in bargaining with state
governments who are both the employer and legislator; governments can use
legislation to change entitlements outside of the bargaining process.[42]
Committee view
2.30
Some of the issues raised above relate to the intrinsic nature of public
service employment. For example, state governments will always have the dual
role of employers and legislators when it comes to public sector workforces;
just as the Commonwealth has a dual role as employer and legislator of the
Australian Public Service (APS).
2.31
The committee acknowledges that changes to public sector employment can
be difficult, especially when it involves voluntary redundancies for some
employees. Nonetheless, the committee understands the need for state
governments to take action when such reforms are necessary to ensure the
continued viability of the public sector, create flexible service delivery, and
balance state budgets.
The Commonwealth's legislative and regulatory powers
2.32
A number of submitters requested the Commonwealth intervene in the
regulation of state public sector employment. This section considers whether
such intervention is feasible.
Constitutional options and
limitations
2.33
Some submitters suggested the Commonwealth could use its 'external
affairs' power to regulate state public sector employees.[43]
This refers to Section 51(xxix) of the Constitution, which allows the
Commonwealth to make laws in relation to international treaties or conventions.
The national workplace relations system is supported in part by the external
affairs power.[44]
The Australian Council of Trade Unions (ACTU) also argued the Commonwealth
could use its 'conciliation and arbitration' power (Section 51 xxxv) to
'establish an agreement-making stream and to broaden the coverage of modern
awards', meaning public sector employees would be covered by the national
system.[45]
2.34
DEEWR argued that while using these powers is theoretically possible;
there are complex and significant impediments. For example, the Department
addressed the feasibility of the conciliation and arbitration power thus:
The conciliation and arbitration power (section 51(xxxv))
gives the Commonwealth power to legislate with respect to ‘conciliation and
arbitration for the prevention and settlement of industrial disputes extending
beyond the limits of any one State’. This power has historically been used to
support Commonwealth workplace relations legislation and, in conjunction with
the incidental power (section 51(xxxix)), would support legislation to
establish a process for prevention and settlement of interstate industrial
disputes. However, the conciliation and arbitration power might not so clearly
support direct regulation of the rights and obligations of employers and
employees, for example through the National Employment Standards, as the
corporations power does.
Use of the conciliation and arbitration power to regulate
State public sector employees and employers is also constrained by the requirement
that there be an interstate dispute. Further, while it would be possible for
the Commonwealth to rely on both heads of power, each power authorises a
different method of regulation and allows different coverage.
2.35
The Department concluded that relying on the conciliation and
arbitration power 'would involve complex legislative reform'.
2.36
Finally, the Community and Public Sector Union (CPSU) suggested that the
Commonwealth urge Victoria to amend its referral of powers to include 'rights
to regulate redundancies or the use of fixed terms employment'. They further
argued that the Commonwealth should 'legislate on this matter to the full
extent of its constitutional power to regulate Victorian state employment'.[46]
This proposal was supported by the ACTU.[47]
2.37
Whether the Commonwealth used its external affairs, conciliation and
arbitration or other powers, or negotiated with states to amend referrals, it
would still have to act within the constitutional limitations set out in cases
like Re Australian Education Union; Ex parte Victoria (1995)184 CLR 188 and
Melbourne Corporation v Commonwealth (1947) 74 CLR 31. The proposals by
unions do not adequately address how these constitutional limitations would be
overcome. For example, since the AEU case found that the Commonwealth cannot
limit the size of public sector workforces, it is unlikely the Commonwealth
could regulate redundancies as proposed by the CPSU. In any event these precise
matters have not been tested before the courts.
2.38
Even more important is the recognition of the authority of the states in
these issues. As the Victorian Government submitted, it is a matter for the
states to decide what industrial powers they choose to refer in relation to
public sector workers. Such referrals must 'preserve the State's capacity to
function as an independent unit of federation'.[48]
Conclusion
2.39
State governments are independent members of our federation; all
Commonwealth legislation needs to preserve the capacity of states to function
as governments. This principle has been reflected in key High Court cases and must
frame any discussion about regulating state public sector employment.
2.40
The committee notes that Victoria is the only state to have referred
powers to the Commonwealth to regulate public sector employees. This referral
contains appropriate exclusions reflecting the limitations of Commonwealth
power and the committee does not recommend any changes.
2.41
For the remaining jurisdictions, New South Wales, Tasmania, South
Australia, Queensland and Western Australia, it is a matter for these states to
decide what powers to refer to the Commonwealth.
2.42
Public sector reform is a contentious issue. The committee understands
that staffing reductions and voluntary redundancies can have a significant
impact on the individual workers affected, as well as their families and
communities. The committee trusts that state governments do not make these
decisions lightly, and carefully consider the consequences of such reforms.
Senator Chris Back
Chair, References
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