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Wednesday, 16 October 2002
Page: 5252


Senator SHERRY (12:07 PM) —Labor supports both the Workplace Relations Amendment (Registration and Accountability of Organisations) Bill 2002 and the Workplace Relations Legislation Amendment (Registration and Accountability of Organisations) (Consequential Provisions) Bill 2002. The bills come to the Senate having been amended in the House by both the Liberal government and Labor. I will address a number of these amendments in a moment. These bills strengthen and add to the mechanisms which ensure that registered organisations remain democratically controlled by and accountable to their members. Registered organisations in Australia are among the most closely regulated in the world. In part this reflects the central role of registered organisations in Australia's system of compulsory conciliation and arbitration. Since 1994, Australia has gradually moved to a system centred on enterprise bargaining. Registered organisations, like everyone else, have faced challenges in adapting, but their importance is undiminished. Registered organisations remain integral to the development of the award safety net, influencing minimum wages through the annual safety net review and securing changes to other conditions, such as the recent extension of parental leave to long-term casuals and the establishment of a right to refuse unreasonable overtime.

Registered organisations are also vital to enterprise bargaining, not only through their involvement in actual negotiations but also through training and educating employers and employees to bargain, and communicating bargaining outcomes to others and the public at large. In the context of ongoing employer-employee relations, organisations play an important role in settling workplace grievances and pursuing changes to collective arrangements that will prevent future grievances. Because of their importance, the law confers on registered organisations a range of rights and obligations. For example, registration enables an organisation to become a party to a federal award or enterprise agreement. Conversely, the cancellation of registration removes an organisation as a party to an award or agreement, and may even result in the cancellation of the award or agreement. Registration grants an organisation coverage over the occupations or industry in which its members work, in accordance with the organisation's eligibility rule. Under the act, it then becomes more difficult for other organisations to gain representation rights for these classifications or the industry. However, an organisation must be able to substantiate its claim to represent the class of members it covers. Registration confers corporate status on a body that would otherwise be recognised legally as an association. It also imposes detailed obligations relating to their democratic governance, particularly their financial administration.

Democratic governance is critical to the success of registered organisations. It not only encourages existing members to remain committed to their organisations, it also engenders confidence in potential members that, in joining a trade union or employer organisation, they will have an effective say in the affairs of that organisation. In general, registered organisations, both trade unions and employer organisations, are highly professional operations. Most, if not all, would have permanently employed administrative and support staff and are increasingly making use of technology to communicate with and obtain the views of their members. But there is also room for improvement, and much work has gone into developing this bill to a point where it will enable registered organisations to strengthen their democratic governance and accountability.

On the Labor side, I acknowledge the tremendous work done by the former shadow minister for industrial relations, Mr Bevis, a member in the other place, his staff, and the senators on the committee which examined the bills last year. I acknowledge the experience lent by the ACTU, in particular Ms Linda Rubinstein. I also recognise the extensive work done by peak employer bodies and the government on the development of the bills. When presented by the government in 2001, and again this year, the bills were not without their problems. One was the proposal by the government to excise the registered organisations provisions from the Workplace Relations Act. The current and former ministers put on serious voices and said that this was a necessary consequence of the decline in trade union membership in the 1990s. However, the Liberals' hard-earned reputation as a group of inveterate union bashers meant that no-one believed that their intentions were pure or that this reform had any sound basis in policy. The Liberal government's rhetoric of simplification also rang hollow, given the many kilograms of GST legislation it has just imposed on small business.

The fact is that the democratic governance and accountability of organisations matters not only to existing members but to all employees with whom organisations come into contact. This includes employees covered by an award or a union enterprise agreement. On the most recent ABS figures from 2000, 23 per cent of employees still have their actual wages and conditions set by awards, and a further 35 per cent by enterprise agreements—roughly 90 per cent of which are negotiated with unions. Moreover, the effect of federal awards in setting community standards in employment is difficult to overstate. Democratic control and accountability of organisations also matters to employees in formerly non-unionised workplaces where unions are seeking to organise, negotiate an agreement or have an award made. At last the Liberal government realised that they had fooled nobody and decided instead to place the registered organisations provision in a schedule to the Workplace Relations Act, saving workers and business the trouble of reading two acts where one would do.

A second problem with the bill was proposed part 3 of chapter 9, which sought to impose new financial penalties on union officials, employees and members where orders of the Australian Industrial Relations Commission or the Federal Court were not complied with. These were to be added to the arsenal of legal weapons already available to employers, including injunctions, contempt of court prosecutions and financially ruinous common law actions for economic torts. Since only the minister for workplace relations was given standing to apply for the new penalties, these provisions were transparently designed to fulfil the current minister's dream of becoming an industrial policeman, and to lend unwarranted legitimacy to his inflammatory and provocative contributions to industrial disputes. The Liberal government has, sensibly, removed these provisions from the bill; however it has stated its intention to present them separately, so this is a debate to be continued on another day.

I now turn to a number of amendments moved by Labor to these bills in the House of Representatives. Firstly, proposed section 21(b) concerns the registration of enterprise associations. It is important to be clear about the intended effect of this amendment. The Workplace Relations Act currently provides that a designated presidential member of the AIRC may grant an application for registration made by an enterprise association:

... if, and only if ... the association ... is free from control by, or improper influence from:

(i) any employer, whether at the enterprise in question or otherwise; or

(ii) any person or body with an interest in that enterprise; or

(iii) any organisation, or any other association of employers or employees ...

On 27 October 1999, Vice-President McIntyre of the AIRC refused to grant an application for registration of an enterprise association known as the Suncorp-Metway-QIDC Enterprise Union because members of the SMQEU, including members of its management committee, held shares in the employer company. In response, the government proposed an amendment, now section 20(1A) of the bill, which reads:

For the purposes of paragraph (1)(b), if a person or body has an interest in the enterprise in question, the Commission may decide that, despite the interest, the association is free from control by, or improper influence from, the person or body.

Note: The Commission could conclude that the association was free from control etc. by the person if, for example, the nature of the person's interest was not such as to give the person a major say in the conduct of the enterprise or if the person did not have a significant management role in the association.

The supplementary explanatory memorandum published by the Liberal government relevantly explained this amendment, in paragraphs 30 and 31, as follows:

30. Amendment No. 58 will address a decision by the Australian Industrial Relations Commission (AIRC) that found that the Suncorp-Metway-QIDC Enterprise Union (SMQEU) was ineligible for registration on the basis that, among other things, the SMQEU was not free from `control or improper influence from ... a person with an interest in the enterprise'. This was due to the fact that members of the SMQEU, including members of its committee of management, held shares in the enterprise and therefore had an interest in the enterprise.

31. Amendment No. 58 inserts new subsection 20(1A) to make it clear that the mere holding of an interest in an enterprise in question by members of the association is not, in itself, sufficient to determine that the enterprise association breaches the requirement in paragraph 20(1)(b). Rather, the focus is on whether the enterprise association is free from control by, or improper influence from the person or organisation.

At this point, it is important to note that proposed section 20(1A), while relaxing or easing the restriction on members of an enterprise association having shareholdings in the employer enterprise, still directs the commission's attention to whether the relevant shareholder member has `a significant management role in the association'. Labor agrees that the focus should appropriately be on whether the enterprise association is free from control by, or improper influence from, the enterprise. A critical issue in this regard will be the nature of any funding or services provided by the enterprise—the business—to the association. Accordingly, Labor proposed an amendment, now proposed section 20(1B), which relevantly provides:

For the purposes of paragraph (1)(b), if an employer meets or will meet costs and expenses of the association, or provides or will provide services to the association, this assistance must be taken into account when considering whether the association is free from control by, or improper influence from the employer.

This amendment is intended to address another aspect of the decision of the commission in the Suncorp-Metway-QUIDC Enterprise Union (SMQEU) case. In that decision, while rejecting the application for registration on the basis that members and officers of the enterprise association held shares in the enterprise, Vice-President McIntyre held that he would not have been compelled to have rejected the application merely because of assistance provided by the employer to the association, which consisted of the following: the enterprise association was funded by the company, the enterprise association had been provided with office accommodation on the company's premises, the association's office equipment and supplies were provided by the company, and the salaries of the employees of the enterprise association were paid by the company. In his decision, Vice-President McIntyre specifically stated that he would have been compelled to have found otherwise in respect of that issue of control or improper influence if he had been applying the provisions of the United Kingdom Trade Union and Labour Relations Act 1971.

Section 31K of the UK act provides for the registration of independent trade unions. The act defines an independent trade union as a trade union which:

(a) is not under the domination or control of an employer or a group of employers or of one or more employer associations; and

(b) is not liable to interference by an employer or such group or association arising out of the provision of financial and material support or any other means whatsoever tending towards such control.'

The Labor amendment is intended to import in terms appropriate to the Workplace Relations Act the same principles as are contained in the United Kingdom legislation. In preparing the wording of clause 20(1B), Labor agreed with the Liberal government that it was appropriate for the commission to retain its discretion. Labor also accepted the argument put by the minister to the shadow minister for workplace relations, Mr McClelland, in correspondence dated 20 August 2002, `From a practical perspective, employers commonly provide service to unions such as the use of meeting rooms, whiteboards and email facilities.'

Labor accepts that the provision of such minor facilities, more as a matter of courtesy, in itself may not indicate control by, or improper influence from, an employer. However, the provision of such minor assistance is to be contrasted with the significant resources provided by Suncorp-Metway to the alleged SMQ Enterprise Union as outlined in Vice-President McIntyre's decision of 27 October 1999. With due respect to the former vice-president, it is difficult to see how an association so wholly dependent on an employer for funding and administrative support could truly be free from control by, or improper influence from, the employer. Everyone knows there is a community of interest between employers and employees in cooperating to ensure a business succeeds, but workers also have the right to effective representation by an independent trade union to secure fair wages and conditions to support themselves and their families. Cooperation is vital, but the rhetoric of cooperation must not be used to cover up the inequality of bargaining power inherent in the employer relationship, nor the distinct interest of capital and labour in securing a fair share of wealth generated by industry or, in particular, in the Suncorp-Metway case, where they clearly tried to establish a union that was dominated by the interests of the employer and the business.

In moving this amendment, Labor was strongly concerned to ensure the commission, in exercising its discretion, takes into account the nature of any services or funding provided by an employer. Labor believes the amendments strike an appropriate balance whereby an enterprise association is not disqualified from registration merely because members hold shares in the enterprise as opposed to persons who have a significant management role in the association, nor because an employer provides minor resources by way of courtesy to an enterprise association such as accommodation equipment supplies.

I turn now to another Labor amendment relating to proposed sections 164A and 164B which is intended to address a deficiency in the law first identified by the Federal Court in Darroch v. Tanner, a case involving the now shadow minister for communications, Mr Lindsay Tanner. The deficiency identified by the court was the lack of a power to rectify a breach of the rules involving the expenditure of union resources by a person who is not, in respect to the matter, under a continuing obligation to perform the rules at the time of the court proceedings. The deficiency was subsequently criticised in the case of Cook v. Crawford by Justice Shepherd, who said:

This case provides a clear indication of the needs for the amendment of the legislation to confer on this Court wide powers to make orders in respect of offices and members of organisations who are recreant to their duties, unless a court has clear injunctive power that this is the sort of problem that can arise.

The amendment will empower the Federal Court to make orders designed to rectify a breach of an organisation's rules by a person acting unreasonably, notwithstanding that the person is no longer under an obligation to perform and observe the rules. Labor made a number of other amendments to improve the security of ballot material that was recommended by the Joint Standing Committee on Electoral Matters in its inquiry into industrial relations. However, it is not necessary to cover those details now.

While this debate is appropriately focused on democratic control and accountability of registered organisations, it is important to remember that democracy and accountability are values that should apply as much in the workplace as within trade unions and employer organisations. On this score, the Liberal government's industrial relations policies and proposed laws are an abysmal failure. First of all, the Liberal government, in 1996 award-stripping legislation, removed workplace consultation as an allowable award matter. The basic right to employee consultation about workplace change, which trade unions had begun to secure through the award safety net, was taken out with the stroke of a pen. The absence of such a right in the award safety net naturally makes it more difficult to secure through agreement making. Then the Liberal government embarked on its aggressive ideological campaign to promote non-union enterprise agreements, chanting all kinds of empty rhetoric about encouraging managers to talk directly to their employees.

When one looks at this year's report on agreement making under the Workplace Relations Act, produced by none other than the Department of Employment and Workplace Relations, with the Employment Advocate in tow, one sees the hard evidence that the Liberal government's mindless pursuit of ideology has made it less likely that employees will be genuinely consulted about important decisions affecting a business. Only 46 per cent of non-union enterprise agreements provide for employee consultation, compared with 77 per cent of union agreements. Only 20 per cent of non-union agreements provide for employee representation, compared with 81 per cent of union agreements.

This issue is fundamental to Australia's economic future. We will not have sustainable productivity growth if the Liberal government is not serious about ensuring democracy and accountability in the workplace. Former European Commissioner with responsibility for Employment and Social Affairs, Padraig Flynn, said there were two basic facts of modern industrial life:

One is that constant industrial change and corporate restructuring is an inevitable part of remaining competitive in the world. The second is that, if this constant industrial change and corporate restructuring is to meet its objective—if it is to be a positive factor in our competitiveness—then it needs to engage the workforce, as an integral and as a formal part of that process.

The Liberal government, in its eagerness to please the H.R. Nicholls Society and like-minded ideological militants, has failed abysmally to recognise these imperatives. Unlike the Liberals, whose sole interest is in bashing and vilifying unions and their members, Labor is committed to seeing greater democracy and accountability in Australian workplaces.