CHAPTER 2


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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