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STANDING COMMITTEE ON EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION
08/06/2007
Workplace Relations (Restoring Family Work Balance) Amendment Bill 2007 Workplace Relations Amendment (A Stronger Safety Net) Bill 2007

CHAIR —Welcome. The committee prefers to take evidence in public. It will consider any request for all or part of the evidence to be given in camera. Thank you for your submission. Are there any changes or additions?

Mr Barklamb —No.

CHAIR —I invite you to make a brief opening statement before we begin questions.

Mr Barklamb —Thank you, and I thank the committee for the opportunity to appear this morning. On 4 June ACCI lodged a 36-page submission addressing a range of issues in both the stronger safety net and the work-family balance bills. I intend only to make some brief opening statements this morning and to confine my comments to the operation of Work Choices generally and the stronger safety net bill. The family-work balance bill is addressed from page 33 of our submission, at section 15.

After 15 months, ACCI believe Work Choices is operating well. It has led to the outcomes we identified before this committee, we say, in late 2005. It has led to or contributed to the creation of more jobs—and yesterday’s job data shows that employment continues to grow strongly—more confidence and opportunities for more productive, rewarding and flexible work. AWA making has taken off following the Work Choices reforms, with the lodgement and entry of over 300, 000 AWAs in the first 12 months. AWAs are also paying well. ABS employee earnings and hours data for May 2006 show AWAs on average paying 94 per cent higher than awards, more than $400 above average award wages. Added to this material, for the benefit of the committee, is something we may all be less familiar with, and this is raised in the submission of the Australian Mines and Metals Association, a major ACCI member. It is the Melbourne Institute wages report data which showed, as quoted in AMMA’s submission:

… average wage increases to workers on individual contracts (6.8%) exceeded those under collective agreements (3.9%) and awards (3.3%).

So, in very brief terms, we come before you to report as Australia’s employers that the Work Choices amendments are generally working positively, delivering the benefits they were designed to deliver and, especially, greater agreement making. Something is really happening out there, Senators: agreement making has taken off. New workplaces are moving into bargaining and new employees are gaining the opportunity for higher wages and greater flexibility that bargaining provides.

We are here today because the government has made a decision to further amend the legislation to add the proposed fairness test, as announced by the Prime Minister on 4 May. ACCI’s response was contained in a media release of the same day. Essentially, ACCI do not agree with the necessity of strengthening the safety net. However, that is what the bill which is currently before you will do—it will strengthen the safety net. The pre-eminent consideration for this committee, we believe, should be the implementation and operation of the changes in the bill you have before you.

ACCI have identified some areas for further consideration in our submission. However, on balance, the formulation of the amendments and their intended operation we believe should not slow agreement making. We believe the form of implementation through the amendments will generally minimise their impact. Our comments are intended to be constructive input within the overall framework of generally supporting the implementation of the stronger safety net announcement. They are framed more often as queries and clarifications, and we commend this input to the committee and to the government.

Lots of claims and counterclaims have been made about what has happened in bargaining between March 2006 and May 2007. Whatever one’s consideration of outcomes and developments may be, agreement making has been changed by the Prime Minister’s announcement and by the introduction of this legislation. The fact is that the addition of the fairness test will affect any agreements from 7 May which would have modified or excluded protected award conditions.

I want to address some points from the submission of our colleagues from the ACTU with which we have no agreement but wish to highlight very briefly on a small number of matters. Firstly, we reiterate our belief that non-monetary compensation and the consideration of exceptional circumstances as factors taken into account in applying the fairness test will come into consideration only rarely. We do not share the ACTU’s view—if this is their view—that this will become common or the usual run of agreement making. We would say that would be an ahistorical assumption from the ACTU and would fly in the face of lessons we know from previously comparable provisions.

Secondly, concerning the ACTU submission, at paragraph 27, we do not agree that taking into account someone’s work and family responsibilities in the assessment of what is fair compensation is discriminatory. I could not put our disagreement in stronger terms; we have a polar disagreement with the ACTU on this. Employees seek a diverse range of flexibilities and they clearly value them operationally in day-to-day work. I had the pleasure of being ACCI’s advocate in the national work and family test case between 2002 and 2005. I think the ACTU has failed to learn the lesson of that case, which is the range of flexibilities employees seek from employers at the operational level. Generally, we think the approach in the bill will be very good for work and family in the minority of circumstances in which it will be applied.

Thirdly, I refer to the ACTU submission, at paragraph 7, where they highlight the number of employees they say will be excluded from the salary cap on the fairness test. Again, if we have understood them correctly, we think the ACTU is on the wrong track here. We understand that the core principle of this bill is that what one has one keeps, with the additional imposition of award designation for persons under $75,000 per year. Of course, non-award or higher-earning employees are excluded. They have no entitlement to the protected matters and no history of award coverage. We also disagree with the construction from the ACTU, which has been advanced in recent days, that persons making a transition from state award coverage into the federal system will have no award comparator or no entitlement to the fairness test. Our understanding of the bill is that these are precisely the sorts of persons covered by the notion of an industry that is usually regulated by an award.

Finally, we do not share the ACTU’s concerns in paragraph 21 regarding scope for payment in kind. We address this issue in our submission at pages 6 and 7. We point out—and I think it has been pointed out to you this morning, so I need not go over it in any further detail—that any agreement to non-monetary compensation will firstly be exceptional, as we have indicated in our prediction. It has to have value to the employee. It has to be agreed—we are talking about agreements at all times—and the Workplace Authority has to determine its value is fair. We say there is a multilevel safety net in regard to these issues.

In conclusion, we commend the detail of our written submission to you and are very happy to address questions.

Senator BIRMINGHAM —Thank you for your comments, especially for highlighting the jobs and wages growth that has occurred under the workplace relations system. I would like to start by trying to knock on the head some of the furphies around the new fairness test compared to the old no disadvantage test. Under your understanding, was non-monetary compensation allowable for trading away award conditions under the old no disadvantage test?

Mr Barklamb —Indeed. Our understanding is that it could be taken into account but, to return to my earlier comments, it was never the run of the mill or the ordinary nature of the assessment under the former NDT, which was overwhelmingly, as we understood, one of monetary compensation against flexibilities in a particular agreement.

Senator BIRMINGHAM —Under that old system, though, was it possible for a worker to trade away all of their annual leave entitlements, potentially?

Mr Barklamb —Indeed, Senator. And the change in architecture, if you will, in Work Choices, the creation of the fair pay and conditions standard, has made a number of matters more inviolate to bargaining than the previous system, in which there was substantial scope to trade away more than the prescribed two weeks in every four of annual leave, or you could make quite substantial changes to sick leave. So, under the previous NDT, in a sense you could in the vernacular say that, when you looked at everything globally, everything was on the table for fair compensation. We are now talking about a system in which a certain number of core matters are parcelled off. It is somewhat less flexible in bargaining than the NDT which preceded it and more protective of employees in that regard.

Senator BIRMINGHAM —So in fact you could have traded away annual leave provisions and you could have traded away, as you just added, any sick leave provisions under the old system?

Mr Barklamb —Absolutely.

Senator BIRMINGHAM —Those are now protected—

Mr Barklamb —They are protected.

Senator BIRMINGHAM —and indeed there is now potentially even less flexibility for employers under the new fairness test.

Mr Barklamb —Absolutely, Senator.

Senator BIRMINGHAM —We have heard some questioning about the types of non-monetary compensation that might be offered. Is it the view of employers and the ACCI that, for example, car parks in the city would be worth a different monetary value from car parks in non-metropolitan locations?

Mr Barklamb —I think the example we used in our submission was that, were someone to be allocating the same value to a car park in Sydney as a car park in Mildura, we believe the advocate would look closely at it. I had the benefit of listening to our friends from the Commonwealth department try to answer a version of this question earlier, and our belief is that the advocate would look closely at any set of non-monetary compensation. We believe that functionally—pardon me, I am using the old nomenclature; I mean the Workplace Authority—the Workplace Authority will develop its own administrative structures as well. But I would imagine it would develop a system of internal expertise and staffing that would deal with non-monetary compensation. So it would not be a case of each individual officer having to go and research the value of a car park in a particular area. I imagine that would become an area of some expertise for internal staff or a division, and those people would be able to very quickly assess an agreement that was allocating a Sydney CBD value to a car park in Mildura, for example.

Senator BIRMINGHAM —I note that it is the wish of the ACCI that guidelines be published for this area so that there can be some transparency and certainty for both employees and employers in valuing an assessment of non-monetary compensation and other areas of trading away conditions.

Mr Barklamb —I think that would be very useful. When we say ‘guidelines’ we do not necessarily mean an old-fashioned sort of schedule of rates but examples of how things will be valued, examples of how the Workplace Authority may do its work in assessing a fair value and examples of the documentation those lodging an agreement may need to bring forward to have that value assessed fairly and assist the authority in its work. The other thing of course is case studies; we think case studies are of equal value to guidelines, and they will also be very important in assessing these types of areas.

Senator BIRMINGHAM —So is it fair to surmise that, just as we hear employee organisations or unions arguing that they would like to see greater transparency than perhaps the legislation detail might suggest in revealing any areas of trade-off, particularly the valuing of non-monetary compensation, employer organisations such as yours would be looking for a similar level of transparency and openness?

Mr Barklamb —Indeed, Senator. With regard to this issue of transparency, transparency for us is certainty and clarity and guidance on how to navigate the system. We think that is the most important service or feedback that the approval process, or the lodgement and checking process, can offer to our members and indeed to employees. That is the method of communication. I think we can exaggerate the extent to which former processes were transparent as such with regard to, for example, the approval of AWAs or certified agreements by the Industrial Relations Commission. If you read those decisions, they were very often fairly brief and not a detailed line-by-line analysis. I think we should not get too caught up in saying there was formerly a different approach to these things than there is now.

Senator BIRMINGHAM —If we turn to the provisions for exceptional circumstances under the previous tests and compare them with those under the proposed legislation, is it fair to say that the new exceptional circumstances test or ability to trade away conditions is more restrictive, particularly salary conditions?

Mr Barklamb —The first thing we would say is that there is a consistency or a continuance of the notion of exceptional circumstances. There is a clear guidance in the legislation to refer to serious economic crises. In the framing of the legislation, the architecture is followed from the pre-Work Choices version. We certainly agree that there is some strengthening in there about genuine value. I do not have the provision open in front of me just at this moment, but it certainly appears to us that that will be very rigorously applied. On a line by line comparison to what went before it, it may be that there are additional protections in there.

Senator BIRMINGHAM —In relation to section 346M(3)—personal circumstances—in the Workplace Relations Amendment (A Stronger Safety Net) Bill 2007, you have made a very strong pitch today that those circumstances, particularly as to family responsibilities, are less than satisfactorily regarded in some of the submissions from the union movement. Could you explain some of the practical provisions that you have seen employers use concerning family responsibilities? How are they being recognised and supported? And where is that perhaps not being recognised in the submissions from the ACTU and others?

Mr Barklamb —All members of the committee will be familiar with the obvious changes in parenting structures—such as both parents in work—from what we once had. Many parents make a lot of effort to try to reconcile different rosters, different times within their personal relationships. We are often told about parents who want to truncate their working time to pick up children from school. An example that I am familiar with from the work and family case is that of a mother who specifically requested to work longer than the period for which a meal break would be allocated under an award, and so a penalty rate would need to have been paid because there was no meal break. She specifically did not want to take a half-hour meal break. She wanted to truncate her working day to pick up her children from school. We have parents that want to work out of hours. They would prefer to work ‘shift parenting’, if you will, to some extent. It suits them to be in the workplace later at night where a penalty rate might be attracted. They wish to work those hours; they suit them. Those hours are not an inconvenience or a disadvantage to those parents in their parenting pattern. Similarly with weekend work, some people want to do their ordinary shifts of work on Saturday mornings and the like. These are the types of requests which are being made to our members on a daily basis that they are seeking to accommodate.

Senator BIRMINGHAM —I notice that the SDA submission suggests that, essentially, all AWAs and certified agreements should be presented to the Australian Industrial Relations Commission for assessment rather than go through the proposed assessment procedure, as was the case under the previous system. What type of administrative burden might that place on employers if they were dealing with that complete assessment?

Mr Barklamb —The first comment I would make in relation to that before I get to the exact question is that time has passed since that proposition. Work Choices changed that. As I understand the policy of the Labor Party, they are not proposing to put agreement approval back into the commission either. So it is a proposition whose time has well and truly passed. That said, to go to the commission requires the services of an experienced advocate. It requires attendance at the commission for particular agreements. The expertise of those various members of the commission in dealing with agreements is not the same as that applied to the agreement-making process by a dedicated Workplace Authority or an Office of the Employment Advocate type of agency, so things can take longer.

I am informed that the time lines for the commission to approve agreements can take longer. Certainly that was the experience with the AWAs that ended up in the commission, although that would not be a fair reflection because they were the hard cases prior to Work Choices. Certified agreement time lines could well take longer and often have taken longer than those of the Office of the Employment Advocate. So you have uncertainty about the status of the agreement, the application of pay increases, milestones and flexibilities under the agreement.

Whilst we would say that the commission has dealt as expeditiously as it can with what it has been doing, this was essentially an administrative process that was wrong for an adversarial or quasi-court based process to deal with. We think there has been a significant improvement in the Work Choices approach of rendering this the preserve of an agreement-approval authority. We need to take little more evidence than that of both alternative industrial relations policies at the moment, which is that they would not return it to the commission.

Senator FIELDING —I refer to point No. 12 on page 4 of your submission where you mention the overwhelming feedback ‘during the first 14 months of Work Choices’. You mention—and it is quite true—‘shortages of labour’. I think the public is concerned about what happens when there is a downturn and unemployment goes up and workers have less bargaining power. What are your thoughts on that issue?

Mr Barklamb —Firstly, I would like to take the opportunity to say this. Whilst obviously economies have cycles and over time things ebb and flow, that is not merely historical determinism. The extent to which a country stays the course on workplace reform and retains a flexible labour market will influence the extent to which we go into recessions, the shallowness with which we go in and the rapidity with which we come out. So it is not simply a given that we will ebb and flow into these things and that workplace reform is irrelevant to our success as a country in navigating the economic course over time. That said, were we in a very different labour market—were we in the labour market of 1992, 1993 and 1994—we would be in a situation with five strong minimum conditions of employment inviolate to bargaining. We would still have a minimum wage that was the highest or second highest in the world. We would still have this new fairness test architecture that ensured that the protected award conditions could not be bargained away for, say, fair compensation. So we would still have a very regulated labour market and an unparalleled degree of employee protection in international terms in a different and tighter labour market with a higher unemployment rate.

Senator FIELDING —Your submission states that you think this change of the fairness test was definitely not needed. I think you have made it clear in your submission that the government did not need to strengthen the workplace safety net. So you were quite happy with the way it was—is that correct?

Mr Barklamb —Indeed.

Senator FIELDING —I will draw your attention to this. Do you think that it is also right that an employee or a worker should be required to work on Anzac Day or Christmas Day and not be paid a cent more and not get a day off in lieu? Is that ACCI’s position?

Mr Barklamb —Public holidays are something that we understand have been dealt with consensually in agreements, both before Work Choices and after, for quite a number of years.

Senator FIELDING —Before this fairness test, was it possible to be required to work on Anzac Day and legally not be paid a cent more and legally not get a day off?

Mr Barklamb —Well, the answer is that under the award system—

Senator FIELDING —The answer is yes or no.

Mr Barklamb —For many awards no, but it was possible to make agreements which rostered work on some public holidays—

Senator FIELDING —Can I go back to that. The question was: was it legally possible before the fairness test to be required to work on Anzac Day and, say, Christmas Day and legally not be entitled to extra pay and a day off?

Mr Barklamb —It was possible, Senator, to make a range of agreements—

Senator FIELDING —‘It was possible’—that is the answer.

CHAIR —Mr Barklamb is attempting to answer your questions, Senator Fielding. Please allow him to do so.

Senator FIELDING —Chair, I just make this comment. We are very short of time and therefore what I am trying to do is to get to the answer quickly. With all respect, I have asked a direct question. It does not need explanation. We all know the answer is yes. I am just asking him to answer the question.

CHAIR —These are complex matters. We do not all know the answers. Mr Barklamb has the floor to answer the question, and I would like you to allow him to do so.

Senator FIELDING —Chair, can I ask the question again so it is pretty simple?

CHAIR —Yes, thank you.

Senator FIELDING —Under Work Choices before this fairness test—which is not in yet but it is obviously going to be—was it legal to have someone work on Anzac Day and Christmas Day and not pay them a cent more and not give them a day off in lieu?

Mr Barklamb —There is a range of possible scenarios that could occur.

Senator FIELDING —But is that one possible scenario?

Mr Barklamb —May an agreement have been reached in those terms? Perhaps it may.

Senator FIELDING —Thank you. You say in your submission on page 33, in relation to Family First’s family-work balance bill, that the Work Choices amendments did not remove things like public holidays. In fact, all that Family First was trying to do was make sure that things like public holidays such as Anzac Day and Christmas Day were not traded away for nothing.

Mr Barklamb —Perhaps I can clarify the basis on which that paragraph is included in our submission. Please do not think this is a reference to you, but others with a very partisan opposition to Work Choices have been very loose with their nomenclature of what the Work Choices amendments did. A number of people have alleged that certain outcomes were a direct result of the passage of the amendments in late 2005, and that is not an accurate description of what was different on 29 March 2006 compared with on 28 March 2006. That was no more and no less than the reference there.

Senator FIELDING —With regard to non-monetary changes that people may be facing—things like changes in shift times and what not: they can be changed without any compensation at all, even under the fairness test. Is that your understanding?

Mr Barklamb —As I understand the previous process of awards, a range of things were regulated in a minority of awards about shifts. I do not understand all awards by any stretch of the imagination to have been very pejorative about rosters and shifts; it was a preserve of some industries and areas. Some awards merely mandated it was a condition of the award that a particular process be followed to vary a shift, so one would breach the award to not follow that process; but there was not a monetary penalty as such, so it was not something to which you could readily assign a monetary value. As a general view from ACCI, we would describe a lot of those sorts of things as an unnecessary prescription of the conduct of day-to-day workplace relations. They do not fall within the same type of former award condition as the protected award matters, which are matters of clear monetary transfer from an employer to an employee. So we would probably say it is a different beast, a different animal.

Senator SIEWERT —You made comments earlier about the benefits that have accrued from Work Choices. I am wondering if you will acknowledge, then, that this was done in circumstances that were considered not fair by many people, because the fairness test has now needed to be introduced.

Mr Barklamb —It is an assessment of the government that these tests needed to be introduced, for the reasons the Prime Minister set out in his statement of 4 May. We have indicated our belief, from our understanding of what was happening in the field, that they were unnecessary. Our feedback is not that the protected award conditions were being changed in some of the ways that are being spoken about.

Senator SIEWERT —How do you know that, since the OEA, as it was, was not releasing details and we have no understanding officially of what penalties and conditions have been lost?

Mr Barklamb —I have no more than the feedback of my 35 member organisations making AWAs in the field on a day-to-day basis: that within the professional expertise and day-to-day agreement making of ACCI member organisations it was not the norm or demand for them to make agreements of the type most extremely caricatured in some areas of debate prior to and after the passage of Work Choices. If I can go back a step, Senator, you were initially asking whether the government saw a necessity for it. I would like to point out that significant efforts have been invested in diminishing the confidence of employees in the employer-employee relationship within workplaces. Going around the country I personally received feedback that a lot of employers have found even collective agreements with unions quite difficult to negotiate in the wake of some very hostile advertising that has occurred prior to, during and particularly following the passage of Work Choices. I would like to take the opportunity to say that some harm has been done potentially to workplace relations by some of the uncertainty that has been created by some of the debate of recent months. It is for the government to say why it made the amendments of early May, but that certainly is a factor that needs to be addressed.

Senator SIEWERT —So you do not think these changes are necessary. Is that a correct interpretation of your comments?

Mr Barklamb —That remains ACCI’s position.

Senator BARNETT —Thank you for your comprehensive submission. It is most appreciated. In your opening statement, you referred to the Melbourne Institute study mentioned on page 13 of the AMMA submission. I understand AMMA is a member of your organisation. Based on your advice and feedback from your members, does that Melbourne Institute study seem to be consistent with the feedback you are getting on higher wages and AWAs compared to awards and collective agreements?

Mr Barklamb —Indeed, our members are describing wages growth as fairly healthy but within bounds under both forms of agreement and certainly there are very strong rewards for employees entering AWAs.

Senator BARNETT —Secondly, the AMMA submission referred at pages 8 and 9 to the AWA penetration in the mining industry. Have you had a chance to consider the penetration in industries where your members are prevalent?

Mr Barklamb —We have certainly had an opportunity to consider that. I have not brought that data with me today but I can indicate that our understanding of the penetration of AWAs in the mining industry is far closer to that of our expert member that makes the AWAs in that industry, the Australian Mines and Metals Association, and certainly would exceed the types of public impressions that may have been given of low penetration of AWA making in the mining industry. We do not think those figures are quite accurate, or we need to nuance exactly what we are talking about—what proportion of all employees in the industry are covered by them or whether we are talking about the proportion since Work Choices. On either measure, we understand AWAs in the mining industry, as in many industries, have become one of the key mechanisms to secure workplace change. They are relied upon, they are supported and they are entered into in very strong numbers on a day-to-day basis.

Senator BARNETT —They say:

A review of ... agreements lodged in the 12 months to 31 May 2007 reveals that 73.5% of resource sector employees were covered by an AWA.

What is the percentage in other industries—you may be happy to take it on notice—where your members are prevalent because that is a very high percentage?

Mr Barklamb —I think we can get you some information. We will send something to the committee on that basis but our understanding is that the mining industry is among the stronger users of AWAs—without question.

Senator BARNETT —You mentioned the ACTU submission and your concerns about it in a number of respects. Page 2 of their submission says:

The Bill does not protect employees from agreements that undermine the safety net.

What is your response to that?

Mr Barklamb —I would think that is a completely unsustainable proposition. The safety net, as we have gone to earlier, has the inviolate parts in the Australian fair pay and conditions standards, which are protected, without question, under a stronger system. Indeed it is a system of higher penalties than we have ever had in Australia, with more active and resourced enforcement than ever before. This bill adds an additional set of protections for an additional set of matters. I would find that a completely unsustainable proposition from the ACTU.

Senator BARNETT —How would you compare the government’s legislative protections for those on AWAs with employees who have a common-law contract arrangement?

Mr Barklamb —Thank you for this question because it has been exercising my mind for quite some time. A common-law contract is an over-award payment under any other name. It was possible in 1965, 1975, 1985, 1995 et cetera. It is not a new proposition in Australian workplace relations. It is not in any way an alternative proposition to individual agreement making through statute. It cannot, to use the words of this bill, ‘exclude or modify an award condition’. All one can do is exceed each and every line item in the award and provide equal or more than it within an over-award pay scenario.

In relation to the question of enforcement and observation of the two forms of instrument—although you would not even call the Commonwealth contract an instrument—it is a natural exercise of one’s contractual rights. An AWA contains tightly prescribed enforcement provisions. It is very clear that it can be enforced by the new Workplace Ombudsman structure that is proposed in this bill. There are very significant and clear penalties for breaching an AWA, and it is lodged and maintained in a written form, so there is no ambiguity about ultimately what was lodged with and accepted by the Workplace Authority.

A common-law contract may or may not be in writing. Does the version I have meet the version the employer has? Where do I take the employer to litigate on that? What personal cost do I assume in that litigation to try and recover what I say might be my entitlements under that common-law contract? Even further to that, to put on the hat I should be wearing, the employer hat, the employer may believe under a common-law contract that they have paid enough over the odds to make specific changes, such as to shift worker overtime through some additional payment. Where they are in error, there is no ability to even argue the case about the particular trade-offs you may have advanced. A far more certain structure is to be using an AWA where it has been assessed against this new test in particular, because that trade-off or nexus will have been properly assessed and you can have confidence in it and its enforceability over time.

Senator MARSHALL —This legislation has an obvious policy objective outcome, and that has been basically most of the discussion around the place. Of course, this sort of legislation also has some practical compliance issues, which I would like to explore with you as representatives of business. I would like to talk about how the policy outcome being one thing actually impacts on what people have to do to comply with the legislation. Could you explain to me, from a business perspective, what extra activities will be required from any business, small, large or medium, to comply with this particular piece of legislation?

Mr Barklamb —I can certainly have a go at that. There are others who may be involved more closely day to day in the former AWA making, under the previous system, so they could give you a more authoritative answer, but this would appear to me to require the employer firstly to fill out a more detailed form. I know that sounds somewhat trite but I actually think that will be the currency that will oil the wheel of how this will operate. As I understood it, the previous NDT system was administered by asking the employer to articulate items in the award which were modified or excluded and what else was in the agreement, in the quid pro quo or balance sense, against that. So, day to day, an employer will have to go into a little more detail on the operation of the agreement and identify the fair compensation, or what they say is the fair compensation. An employer would also need to provide some details of those elements of fair compensation in seeking to lodge an agreement.

We have mentioned that we believe the exceptional circumstances avenue and the non-monetary compensation type avenues will be just that—exceptional or rare—but obviously when those routes are pursued there would be additional paperwork and evidence required of an employer seeking to lodge something in those terms. There is also an ability, at section 346M(6), for the Workplace Authority director to inform himself or herself in any way he or she considers appropriate about the fairness test. So it may be that an employer might be required to provide more information or to facilitate site visits or contact between staff of the authority and their staff. It is a slightly lengthy answer but I think that gets to the sorts of flavours of what more might be required of an employer day to day after the introduction of the proposed test.

Senator MARSHALL —Maybe this is not the right question, because you have already indicated that you do not necessarily see a need for this. My question really was—answer it how you like: do you see that the extra requirements at a practical day-to-day level match or are compatible with the policy outcome directive or do you see an imbalance there?

Mr Barklamb —Do you mean the policy outcome the government has identified in introducing the amendments?

Senator MARSHALL —Yes.

Mr Barklamb —We have indicated that we thought that this was not necessary and that it carries some additional administrative structures or imposts on our members. I think that is accurate. But the formulation is in terms which will allow the Workplace Authority to communicate with our members. We already had a question earlier from Senator Birmingham about guidelines and case studies. We think there is an opportunity to make this as easy to comply with as possible. We have certainly been very supportive of the efforts of the advocate since its introduction to do that. Are there some additional requirements on us? Yes. Are they consistent with the policy requirement of the government? With respect, I guess that the government has determined that it will go this course and put the test in place. The one thing we do have confidence in is that the existing structures and experience to date will give us something we can navigate.

Senator MARSHALL —That is the other area that I am not convinced about. How will it actually apply effectively? I am concerned about the non-public process of determining these issues and the lack of precedent. The guidelines are there but I do not see any provision in the act to enable anyone to determine how they are applied in every individual case. I am concerned about how people come to a full understanding of what may or may not comply. I think it is going to be a grey area and, in some respects, pot luck.

Mr Barklamb —With respect, I cannot agree with that because we do have the experience under the previous no-disadvantage test. When there is regulatory change of this type to agreement approval, yes, there can be some learning that the users of the system need to do. We freely acknowledge that. Our members will need to learn some new approaches and ways of doing things, but that learning is quickly moved through and we feel that we are in an approach now where we have the benefit of the previous NDT example. We have had the example of the advocate working with those lodging agreements from the employer community over time between 1987 and 2005 and being able to quickly communicate an understanding of what is in and what is out and what can and cannot be done. Whilst we are going through a bit of an adjustment, I think we are in a pretty good position to have a pretty quick communication in the implementation of this new test to have a fair bit of transparency and understanding of precisely what is possible, what will be approved and what will not be approved.

The other thing is that the feedback to me on the advocate is that it is an organisation that takes its internal consistency and administrative processes quite seriously. It is fairly customer responsive and people do want to argue the toss about particular provisions and to understand why or how they need to be modified or, particularly for my members and others seeking to lodge agreements all the time, to develop a bit of feedback to understand what they need to do in the future to make the agreement process work more easily. We have confidence that this is an iterative learning process that will be navigated quite quickly.

Senator MARSHALL —So you think that, once an agreement has been approved as passing the fairness test, that agreement will be able to be relied upon in the future?

Mr Barklamb —I would be very cautious in saying that because I understand that the test requires consideration of the particular circumstances and the particular remuneration structure required—putting to one side the non-monetary and exceptional circumstances which are arguably less able to be extrapolated to other cases because they would require a circumstance-specific examination. I think that the authority will identify and promote those examples which it thinks are clearly able to be generalised from its guidelines, case studies and those types of examples and, in doing that, will communicate the type of general propositions which arise from the approval of specific agreements.

Senator MARSHALL —If we take the car park example, are you suggesting to me that, within the same employer group, the same car park could have a different value assigned to it per employee or per agreement?

Mr Barklamb —No, I am not. That would be the sort of area where there would be communication between those seeking to examine the agreement and those seeking to lodge the agreement. There are opportunities for prelodgement approaches. If you are going to be lodging other agreements, with a similar non-monetary compensation for car parking, it would be prudent in that circumstance to identify that to the people who are dealing with your agreement or identify it in writing when applying and seek to specifically advance an agreement on the basis that you will be trying to repeat that process for others.

Senator MARSHALL —Is it possible that a car park could have a different value applied to it by different individuals? The provision of a car park may be worth something to someone but not worth much to someone else?

Mr Barklamb —At all times this is an agreement. So, if you are a committed bike rider or a public transport person, like me, the provision of a car park may not be something you freely agree to in your particular remuneration structure. It may not be of value to you.

Senator MARSHALL —No, but I suspect we all understand that the reason we are here with this legislation is that many agreements are put as a ‘take it or leave it’ option. If there is a standard pattern AWA across the employer group which, to my understanding, is more common than not, it includes the provision of a car park. It is put on a ‘take it or leave it’ basis. How is that reconciled when it is worth something to someone but it is of no value to someone else?

Mr Barklamb —To go back to the first question as to whether it could, inherently, have a different value, from one car park to the next, I do not—

Senator MARSHALL —But people agree to it because it is a case of: ‘Either agree to this or no job.’

Mr Barklamb —I do not accept the premise of that. The extent to which particular agreements are negotiated or imposed is something that has taken up a lot of discussion.

Senator MARSHALL —That is why we are here with this legislation, isn’t it?

CHAIR —Not necessarily.

Senator MARSHALL —Previously, technically, every employee and every employer agreed with trading their protected award conditions; hence, the need for this legislation to protect them. Doesn’t the mere existence of this legislation acknowledge that people really were not agreeing?

Mr Barklamb —I probably led myself slightly off track here. We certainly do not believe that there is any sustainable basis to conclude that any particular proportion of agreements between March 2006 and May 2007 had a particular character with regard to protected matters. I think many fairly unsustainable characterisations have been made on that. To return to your previous line of questioning on car parks and the assignation of value, I do not have a set view on whether something has a constant value. That would be something for the Workplace Authority, but they may look, for example, at treatments of car parking in other areas of law such as taxation or fringe benefits tax. I am not sufficiently aware or expert enough to say whether there is a variable value or in fact one standard value that would be assigned to some of these things and whether that would be persuasive to the authority in considering the extent to which compensation is fair to a particular employee.

Senator MARSHALL —How will your members deal with the tax application for non-monetary benefits and will it create a burden for business?

Mr Barklamb —As I understand it—and I am not a tax person—the tax framings and understandings are there, well determined and understood. It is simply a matter of whether an employee in a particular agreement has a particular benefit and, if so, the employer would be aware of the tax treatment of that benefit.

Senator MARSHALL —But remuneration in any form is taxable, isn’t it? There will have to be a tax implication for non-monetary benefits?

Mr Barklamb —No more or less than the packaging of such things prior to these amendments. Particular benefits have always been provided for a number of employees, be they child care, car parking or other things. That tax treatment would be the same challenge for our members as it has always been.

Senator GEORGE CAMPBELL —Twice now you have referred to the fact that your organisation does not believe this legislation is necessary. You say that is based on information being provided to you, presumably, by your member organisations, of which you already said there are 35?

Mr Barklamb —The exact numbers may be slightly incorrect. It is 35 or 36, from memory.

Senator GEORGE CAMPBELL —Is AiG one of your member organisations?

Mr Barklamb —No, it is not.

Senator GEORGE CAMPBELL —So your 35 member organisations have been saying to you that the legislation is not necessary, and none of the things that the government is seeking to address in this legislation are happening in workplaces that your 35 or 36 member organisations have membership in?

Mr Barklamb —I want to perhaps clarify the basis on which we say that. It is a mix of an understanding of the macrodata, the employment data, the wages data, and the general day-to-day feedback we take from a number of employers about what is going on out there in the community—

Senator GEORGE CAMPBELL —What data precisely are you talking about?

Mr Barklamb —The first part of my comment refers to the macrolevel employment data and wages data. I mentioned the employee earnings and hours survey before, the Westpac Melbourne Institute—

Senator GEORGE CAMPBELL —This is the ABS data?

Mr Barklamb —It is ABS data. I understand the point you are making about a second tranche of material. Firstly, we have an understanding of the macrodata showing sound outcomes. Secondly, we have our day-to-day discussions with employers at large, who have described to us generally the making of AWAs with fair reward and remuneration in them. Thirdly—I do not want to tell you I have spoken to all 35 of our members about this; all 35 of our members do not necessarily make AWAs—the feedback to me from the professionals who make AWAs is that, for the most part, they are making them with high remuneration and outcomes for employees. They are not of the type caricatured by certain representations of AWA-making. The fourth basis on which we base the opinion that it is not necessary is that we have some serious questions about the types of so-called evidence that people have presented about what was happening between March 2006 and May 2007 and we have significant doubts about the reliability of that material.

Senator GEORGE CAMPBELL —So the data that you are relying on are ABS statistics?

Mr Barklamb —At the macro level—yes.

Senator GEORGE CAMPBELL —Are they representative surveys?

Mr Barklamb —Yes. In talking about wages growth generally in employment they are obviously the macrosurveys of the economy.

Senator GEORGE CAMPBELL —Are they representative surveys?

Mr Barklamb —Absolutely.

Senator GEORGE CAMPBELL —But the only organisations in the country that would have detailed data on what is happening within AWAs or in negotiation of AWAs would be the Office of the Employment Advocate or now the Workplace Authority office.

Mr Barklamb —This matter is well known to the committee, but we would dispute that they have that data. Thank you for the opportunity to address this question. Some very preliminary, non-validated and non-verified data was presented in estimates in mid-2006, which does not enjoy the imprimatur of the office. There was a second set of leaked data, as I understand it, earlier this year which enjoys no statistical validation or checking. I have got a number of points I can make about this. The May 2006 data involved a couple of hundred AWAs and a partial assessment only of them—not the quid pro quo, not the trade-offs, not the extra money, not the extra flexibility—but even then it was 200 agreements out of 306,000, a sample of about 0.1 per cent of all AWAs made during the period.

I will throw in another point for the sake of it. Looking at the structure of the protected conditions, as they are included in the act between March 2006 and May 2007, lends itself to a very crude understanding of what the agreement may have done. One reading of the agreement may be that this removed the protected conditions, but it may have only modified them. It may have only changed one penalty rate in one circumstance, but it could have been read very easily to have changed them all. So we have no confidence in the data that people are bringing forward to show particular outcomes for those periods.

Senator GEORGE CAMPBELL —But you are happy to accept the ABS statistics and rely on that data and you are happy to accept the data from the OEA—is that right?

Mr Barklamb —We do not understand the data has the imprimatur of the OEA.

Senator GEORGE CAMPBELL —It is their data. They are the only people in the country who are collecting data on AWAs. You have to take it there to have it registered. What they said at estimates a week ago was that they have not done a statistical analysis on all of the AWAs, but you would presume that if they are giving even a cursory glance at them when they are registered they would be picking up discrepancies in those AWAs.

CHAIR —You might allow Mr Barklamb to respond.

Mr Barklamb —As I understand it, there are two pieces of data which have come out publicly from the OEA—and I use the term ‘from’ advisedly because there was the initial set of estimates data and then there was the second set of what appeared to be leaked data. Neither was statistically verified. Neither was said to be a representative sample. Neither enjoyed the imprimatur of the OEA as finalised or reliable data—nor indeed, as I understand it, was it ever accepted or acknowledged or advanced on the basis that it was even an accurate account, presentation or interpretation of the agreements concerned. So I must say to you that in statistical or analytical terms I believe we do not know, and that information is not reliable.

Senator GEORGE CAMPBELL —Where do you believe the government got the information, the data or the advice from that this legislation was necessary if none exists?

Mr Barklamb —As I understand it, it is the government’s own policy commitment to make these changes for reasons the government has set out.

Senator GEORGE CAMPBELL —But the government believed the changes were necessary because something was happening out there in the workplace. Where do you believe they got the advice that these changes were necessary?

Mr Barklamb —The government has made its own assessment that these changes will strengthen the safety net in the system. We have come before you to say that, whilst we may not feel they are necessary, they will generate a stronger safety net. The one thing I have said to you today that we do know was going on—the one thing I can personally indicate to you from talking with employers—is that there was an element of workplace disquiet and a diminution of workplace relations within some workplaces because employees were rendered afraid or uncertain about their workplace relations and trust in the employer through some very negative advertising and publicity.

Senator GEORGE CAMPBELL —You’re not suggesting that they just got their information out of the newspapers or that it is based on scare stories or scare campaigns run by the ACTU?

Mr Barklamb —There have been a range of things going on. I am merely saying to you that, at the workplace level, some workplaces have had a diminution in their workplace relations, trust and confidence due to general public impressions that we believe were created in error.

Senator GEORGE CAMPBELL —Without any substance to those circumstances at the workplace?

Mr Barklamb —We know of no substance to the particular things that are being advanced. The ACTU have run the ad highlighting the advocate’s evidence to estimates in May 2006, and I have indicated to you a range of reasons why we believe those are unsustainable presentations of non-facts.

Senator GEORGE CAMPBELL —I will finish on this question. If your member organisations, the 35 or 36 of them, were negotiating agreements that were undercutting wages and conditions, would you expect them to tell you?

Mr Barklamb —I do not sit down and closely interrogate my members. I am talking about the kinds of catch-up conversations one has. One asks how the system is going. One assesses the experiences of one’s members both at a social level and within our forums. I do not want to lift the veil on how we make our decisions, but we obviously have discussions around the table about how things are going. We take feedback from our members about the agreement making they are doing. Have I put them in the witness stand? No, I have not. Have I had conversations with a range of them about how AWA making is going and the types of things their employers are doing? Yes, I have.

Senator FIELDING —I did not get a chance to ask the department about this, but I know they will probably be watching and maybe they can answer the question as part of their written response. There was an article in the Weekend Australian about an employee of Global Television Services who was sacked for operational reasons, and the operational reasons were that the company decided to restructure. The company was not in any financial difficulty. The Australian Industrial Relations Commission has ruled that this is legal under Work Choices. I know that Family First is alarmed by that report, and I was wondering whether you were alarmed by it.

Mr Barklamb —I know nothing about that report, I am sorry. I did not see the Weekend Australian.

CHAIR —I am sure if the department are watching they will take that into account when they put in another submission. The time for this discussion has expired. The committee will suspend for morning tea.

Proceedings suspended from 10.34 am to 10.51 am