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Agency Bargaining in the Australian Public Service: A Stocktake
Steve O'Neill
Economics, Commerce and Industrial Relations Group
APS employment policy has traditionally been the preserve of the central
agencies: the Departments of Finance, Industrial Relations and the Public
Service and Merit Protection Commission (DoF, DIR and PS&MPC).
Two reports in 1991 evaluated the scope for departmental or 'agency'
bargaining in the Australian Public Service (APS) and foreshadowed the
intent of senior APS managers and the Government-
- to devolve pay bargaining arrangements to agencies,
- to raise productivity of agencies; and
- to look at the options for distributing that productivity.
A report of a group of senior department heads looked at pursuing efficiency
measures while making the link between efficiency and public service values.
Their report, Improving Productivity: A Challenge for the Public Service,
noted that in recent years the APS had achieved good productivity outcomes,
and that therefore the question was how to distribute the gains between
clients, government and employees. Agency negotiation on productivity
redistribution was one avenue identified by the group.
Three models for agency bargaining were suggested, which allowed an
agency to retain the benefits of productivity to varying degrees. Model
1 allowed each agency to develop its own responsibility for pay and conditions.
Model 2 retained an APS enterprise base pay system but allowed the agency
to pay the benefits of productivity on top of the base level at the agency's
discretion. Model 3 allowed agencies to negotiate productivity improvements,
but pooled some of the financial gains flowing from these to fund service-wide
pay increases.
Also the then Minister for Industrial Relations, Senator Cook, commissioned
a further report by John Niland, William Brown and Barry Hughes. Breaking
New Ground: Enterprise Bargaining and Agency Agreements for the
Australian Public Service highlighted bargaining issues which would
have to be addressed in agreements. For example, it addressed methods
of assessing productivity in the APS environment, suggesting the establishment
of performance indicators to assist with such a task.
These two reports put a structured case for agency bargaining, although
some of the actual issues had been raised earlier. (Performance pay, for
example, was flagged in APS wage rounds of the late 1980s.)
Agency bargaining generally commenced in the APS from the start of 1993,
and has since been implemented through three complex APS enterprise agreements
(note that there had been earlier agency agreements, for example, in the
Australian Tax Office and Department of Social Security). Agency bargaining
nevertheless has been accommodated within these APS enterprise agreements.
The first, called Improving Productivity, Jobs and Pay in the Australian
Public Service 1992-1994, allowed agencies to pursue local agreements
which could pay all staff, excluding the Senior Executive Service (SES),
additional to the APS enterprise increases of 4.9% provided in the first
agreement.
In terms of the three-model option developed by the heads of departments,
the bargaining structure chosen by the parties was Model 3, in which productivity
improvements of agencies involved in agreements would in part be pooled.
In addition, this first APS enterprise agreement required certain payments
to be paid to senior officers and equivalents, and to members of the SES.
The senior officer and equivalent group numbered about 10 000. For this
group there were a senior officer allowance, performance pay
and reimbursement of work related expenses. Senior
officers at the top of the 'C' level earned around $47 000 per annum in
1994. For such an officer, the allowances would have added (on average)
$3500.
Performance pay was tied to an annual appraisal process. Joint guidelines
released from the central APS agencies in 1994 made it clear that performance
pay should be paid to at most 80% of an agency's senior officers.
On the one hand, the special treatment of senior officers sought to
respond to the perception that this group were being denied wage justice
in light of pay trends benefiting their private sector counterparts, a
point noted by the Government at the time(1). Yet, the senior officer
package hinged upon the group adopting responsibilities consistent with
those generally expected of middle ranking executives in the private sector,
such as appraisal and acceptance of some need to work longer hours, or
at home on weekends despite any personal costs on family life.
The elite of the APS is made up of around 1500 SES officers, CEOs of
agencies and statutory officers. The SES was to be subject to performance
appraisal and pay, with limits of $10 000 for lower band executives, and
$15 000 for the higher band SES officers. Where performance was not found
satisfactory the SES officer could be regressed within band.
Agencies which secured agency agreements were to identify financial
gains from improved productivity brought about by their agreements and
divert part of their productivity gains into a pool operated by DoF.
At the expiry of the APS enterprise agreement, the funds in this pool
would be distributed as pay increases for the agencies which did not reach
such an agreement, and so maintain more or less uniform pay structures
across the APS. This scheme of make-up pay came to be known as Fold-back.
However, the sooner an agency signed an agreement the sooner its staff
would benefit from any salary increases, and they would have the possibility
of gaining an extra salary over a two year period.
In October 1994 a review of agency agreements was undertaken, published
as the Joint Review of the APS Agreement. By the end of 1994, agreements
had then been struck in the key departments (such as Defence and Social
Security) in 15 agency agreements, and it became apparent that while the
large agencies had the financial independence to negotiate industrial
agreements, that ability was not as available to the smaller agencies,
and smaller agencies formed a small agency network to highlight the particular
difficulties they faced in agency bargaining.
The next APS enterprise agreement, Interim Framework Agreement Australian
Public Service, was certified in April 1995. Its purpose was to pay
the first round of Fold-back to those agencies which had not struck enterprise
agreements, in two instalments about six months apart. At that time, the
quantum of funds available in the Fold-back pool was not precisely defined,
but pay rates for agencies which had not arrived at a local agreement
were to be increased by 2% on 12 January 1995. The second and final Fold-back
payment was timed for July 1995. In the event, this also turned out to
be 2%. This agreement also provided for a transitional arrangement to
cash out senior officers' performance pay and senior officer allowance.
A third APS enterprise agreement, titled Continuous Improvement
in the Australian Public Service Enterprise Agreement 1995-96, operates
from September 1995 to the end of 1996. It provides three
increases totalling 5.6% over 18 months. Among its provisions are:
- commitments to adopt the principal findings of the Report of the
Public Service Act Review Group
- including the senior officer allowance in base salary rates, while
reviewing overtime rates for certain groups of senior officers who worked
rostered overtime
- replacing the reimbursement of work related expenses with an expense
allowance, paid quarterly
- agency bargaining was to continue, but clause 8© limits such
agreements by not altering service-wide pay structures and classifications,
nor deviate from APS regulations.
Agreements could address efficiencies, working time and leave matters,
and they could be certified in their own right or be attached as appendix
to the parent award. (Also in 1995, APS awards were reviewed under s.150A
process of the Industrial Relations Act and over 100 awards were
replaced by one award). A further review of agency agreements, APS
Agency Agreements and Continuous Improvement (1995) concluded that
87% of the APS workforce was covered by 55 agency agreements by the end
of 1995.
Notes
- Senator McMullan explained to Estimates Committee D on 11 May 1993
that: From my own experience, the place in the public sector where
the pressure was emerging, because the various changes that had taken
place had left one group behind, was at what is called the senior officer
level. ... There was, I think, a widespread perception that those were
the people who had been left behind by the changes that had been made,
both at the bottom and at the top.
Senator Cook, addressing Estimates Committee A on 12 May 1993, similarly
noted that: If you compare rates of pay in Austrade to the going rate
in the private sector for people of comparative standing, I think you
would have to say that in Austrade they are on the downside and at the
bottom line of that comparison. They are not at levels of remuneration
similar to the private sector, although the private sector is the field
from which you would attract this talent.
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