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Education and Employment References Committee
25/07/2018
Exploitation of cleaners working in retail chains

HOWARTH, Mr Andrew, Compliance Manager, Facilities Management, Woolworths Group

MASON, Mr Trent, General Manager, Facilities Management, Woolworths Group

SINCLAIR, Mr Cameron, Public Policy Manager, Woolworths Group

[09:03]

ACTING CHAIR: I now welcome representatives from Woolworths. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite you to make a short opening statement and, at the conclusion of your remarks, I will ask members of the committee to ask questions.

Mr Mason : Thank you for the invitation to attend today's hearing. I am the general manager of facilities management at Woolworths. I'm responsible for the management of a wide range of services across 1,000 supermarkets, including cleaning services. With me today to my right is Mr Andrew Howth, who is the facilities management compliance manager. He has detailed knowledge of our cleaning requirements and arrangements. I also have Mr Cameron Sinclair, who is our public policy manager in our government relations team. We will endeavour to answer as many questions as we can today. Where we need to check accuracy or cannot immediately respond, we will be happy to take those questions on notice.

At the outset I want to be clear that the past circumstances surrounding our cleaning contractors in Tasmania have been deeply regrettable. We fully acknowledge and unreservedly apologise for the shortcomings identified by the Fair Work Ombudsman in 2014. We did not meet our own expectations for ensuring contractors were doing the right thing by their employees. Accordingly, and as we have previously publicly committed, Woolworths will back pay any cleaner that has been found to be underpaid where their employer, being either the contractor or subcontractor, does not rectify the situation.

I would also like to preface my remarks by noting our long relationship with Tasmania. Our first store opened in Hobart in 1940. Today our footprint includes 31 supermarkets, the majority of which are in and around Hobart and Launceston, employing nearly 5,000 staff.

As outlined in our submission, we adopt an external contracting model for the provision of cleaning services across our supermarkets. We have chosen this model because we believe it provides the best quality cleaning services by dedicated specialists and it is the most cost efficient. In that regard, we are no different from any other business—small, medium or large. We seek to leverage the expertise and scale of external service providers to deliver high-quality and cost-efficient outcomes for our customers. But please let me be very clear: cost efficient does not mean accepting the lowest tender. Cost efficient does not mean accepting unreasonable rates. Cost efficient does not mean taking advantage of people. Cost efficient certainly does not mean tolerating poor or illegal behaviour by our contractors.

The underpayment of contract cleaners in Tasmania has been thoroughly documented by the Fair Work Ombudsman following their 2014 investigation. Whilst we did not fail in our legal obligations, we did not meet our own expectations for ensuring contractors were doing the right thing by their employees. Although the Fair Work Ombudsman found no evidence that Woolworths was an accessory to any underpayments in its investigation, we recognise the critical part that we play in encouraging and ensuring compliance by our contractors throughout our supply chain.

In response we have undertaken a long list of actions to significantly strengthen our governance measures and contractor oversight. These measures include: increasing the frequency of independent expert third-party audits; employing our own in-house auditors and compliance team; extending the availability of our Speak Up whistleblower service to all facilities management contractors and extending the communication of that service; developing an in-house training program for our primary contractors; using a contract benchmarking tool to ensure sustainable rates are paid to contractors; ensuring that 100 per cent of increases in annual award rates are passed on; expanding the training and responsibilities of our field services coordinators to further assist contractors with questions of compliance; and, as noted, we also reviewed our cleaning arrangements and concluded that outsourcing cleaning services provides the best outcomes across a range of variables, including quality, service and value.

We expect further measures to be implemented shortly. We're in active discussions to support the development of the Cleaning Accountability Framework in the retail sector. We are currently working with the Fair Work Ombudsman to execute a deed of proactive compliance covering cleaning services. The draft deed was provided to Woolworths last Wednesday, 18 July, and we are currently reviewing the document before it is formally executed. Throughout this process the Fair Work Ombudsman has been crystal clear about its own expectations regarding measures we should be implementing in response to its investigation—expectations which are now reflected in that draft deed.

As part of our obligations under the deed, we will be publishing notices in newspapers, including local Tasmanian papers. These will urge any cleaners who think that they have been underpaid by one of our cleaning contractors to confidentially advise Woolworths of the potential underpayment. Further, Woolworths will then ensure, to the extent possible, that employees who have been underpaid since 1 July 2014 are paid their full employee entitlements due to them under Commonwealth workplace laws. We should also note our view that the current regulatory framework is robust. This reflects a combination of the passage of tougher laws protecting vulnerable workers by the parliament last year, including increased penalties for noncompliance to complement the existing system of accessorial liability and the regulator's active approach to monitoring and enforcement.

In closing, I do want to reiterate our long history in this state and the positive contribution we have made to Tasmanian communities over nearly 80 years. We look forward to that continuing well into the future as part of Tasmania's growth. We acknowledge that we made mistakes in our governance procedures in the past. We are now well down the path, working closely with the Fair Work Ombudsman to ensure that those circumstances do not arise again. Indeed, some of the measures we have implemented already and are in the process of implementing may provide the committee with examples of some best practice standards across the contracting sector. We ask your permission to table both a copy of this opening statement and a timeline of the changes that we have introduced into our cleaning supply chain starting in 2010 and including the period since the Fair Work investigation began in November 2014. We seek your permission to table these.

ACTING CHAIR: I don't think there would be any objection to you tabling the documents. Thank you. Mr Mason, given the scale of wage theft by Woolworths contractors and the lack of oversight by Woolworths of the contractors, have any Woolworths management been disciplined, demoted or terminated and, if not, why not?

Mr Mason : We have apologised for the shortcomings in our governance from 2014. We've made a lot of positive changes to minimise that risk being repeated, and we do regret the circumstances that existed in 2014.

ACTING CHAIR: That's not what I asked you. I asked you: has anyone at the management level who have been responsible for this lack of oversight—this wage theft that's been allowed to take place—at Woolworths paid any price for this? Has there been any disciplinary action, any demotions or any terminations?

Mr Mason : Not to my knowledge.

ACTING CHAIR: Does that mean 'no'?

Mr Mason : As I stated, not to my knowledge. I'm not aware.

ACTING CHAIR: Can you take that on notice?

Mr Mason : Yes, I can take that on notice.

ACTING CHAIR: Wouldn't you be aware if someone had been disciplined on this?

Mr Mason : I'm not aware. I don't believe so, but I can take that on notice.

ACTING CHAIR: So you don't believe so? Right. When did you first become aware? When did Woolworths first become aware that your contractors and subcontractors were not paying consistent with their legal obligations?

Mr Mason : We were made aware that the investigation was commencing in approximately October or November of 2014.

ACTING CHAIR: So you're saying you had heard no rumours, had no complaints and had no evidence whatsoever that any of your contract cleaners were engaged in wage theft and not complying with awards?

Mr Mason : Not to my knowledge. As I said, we were made aware that the investigation was kicking off in October 2014.

ACTING CHAIR: When you say 'not to your knowledge', you mean that nothing had been put to anyone in Woolworths? You hadn't heard any rumours about problems? You hadn't heard of any wage theft going on? You hadn't heard about 90 per cent of your contractors not being consistent with their legal obligations? You'd heard nothing about workers being paid below minimum hourly rates, nothing about employees not being issued payslips, nothing about 84 per cent of the records being inaccurate and nothing about unrecorded and unreported cash-in-hand payments? You'd heard nothing of that?

Mr Mason : We did not have material evidence, Senator. It was four years ago. It was not a significant—

ACTING CHAIR: I didn't ask whether you had material evidence; I asked whether you'd heard about these issues.

Mr Mason : I was not aware of them, no.

ACTING CHAIR: Mr Howarth?

Mr Howarth : I wasn't involved in this category back in those days. I wasn't aware of any issues prior to that date. I do know that there was work happening in the background to improve compliance in this category prior to then.

ACTING CHAIR: Prior to?

Mr Howarth : Prior to 2014. Work commenced around 2009-10 to improve compliance in these areas.

Mr Sinclair : We've provided you with a timeline starting in 2010. To answer the specific questions that Senator Cameron has just outlayed: not that we are aware of; not to our knowledge.

Mr Mason : No significant matters. We were talking with the Fair Work Ombudsman. We have had a relationship with them since 2010, as that document articulates.

ACTING CHAIR: What was raised with you in 2009-10 that made you have a look at this?

Mr Mason : I can't recall the specifics, unfortunately, from 2009-10. I would have to take that on notice.

ACTING CHAIR: Were you responsible for this in 2009-10?

Mr Mason : No, I was not at the time.

ACTING CHAIR: Were you engaged in this area in the company?

Mr Mason : I was employed by Woolworths at that time, yes. Correct.

ACTING CHAIR: So, in 2009-10 it was thought that you had to increase your auditing or your compliance? What happened in 2009-10, Mr Howarth?

Mr Howarth : Again, I wasn't involved in the category in those days. However, from what I've been advised, it was through discussions with fair work and from receiving notice to producers for certain investigations that the discussions began to improve compliance in this area.

ACTING CHAIR: So the Fair Work Ombudsman were, to use the colloquial, sniffing around in 2009-10?

Mr Howarth : That's my understanding, yes.

ACTING CHAIR: Eight years. Between 2010 and 2018 workers have still not been recompensed for wage theft?

Mr Howarth : I'm not sure of all of the details, because I wasn't involved back then, but I'm happy to take it on notice and see what we can—

Mr Sinclair : Can I clarify? I believe that there was one case that we have been involved in here in Tasmania—is that accurate?—as a result of a court investigation or potential investigation.

Mr Howarth : That is correct, yes.

Mr Sinclair : Can you provide more information on that?

Mr Howarth : There was a case where one cleaner ended up going to court and going to mediation from around 2014. However, that wasn't in Tasmania; that was based out of Canberra. That did end up in a resolution through mediation.

ACTING CHAIR: Can you tell me how specialist contractors deliver highest-quality, cost-efficient services to customers when they use poorly paid workers and, in many cases, these workers are having their wages stolen?

Mr Howarth : Cleaning obviously isn't our core business. We rely on the expert services of externally trained contractors to deliver those services. Cleaning is a specialised area where you need to understand things like polish levels on the floors and how to get the best quality for the work that is done. We don't have those skill sets in house, which is why we contract it.

ACTING CHAIR: These shonky providers do have it?

Mr Howarth : I can't comment on whether they're shonky. We don't believe that they're shonky.

ACTING CHAIR: That's the finding, that they've been underpaying. Some of them are under legal investigation. These were shonks.

Mr Sinclair : Senator, as we noted in our opening statement, the past circumstances surrounding our cleaning contractors were deeply regrettable. Senator Abetz used the term 'horrendous' in his remarks. We concur.

ACTING CHAIR: They were shonks, and you claim that they were experts in their field. How can you claim that? How can you sit here with a straight face and claim that these are expert cleaners when they are shonks?

Mr Sinclair : The term that we've used, with the deepest respect, was specialists.

ACTING CHAIR: Specialists at ripping workers off, that's what they were.

Mr Sinclair : Specialist cleaners.

ACTING CHAIR: Specialist cleaners. No, Mr Howarth spoke about expert services. That's what he said; I wrote it down. They weren't experts, were they?

Mr Sinclair : Senator—

ACTING CHAIR: Take me through your quality control that you had with these cleaners.

Mr Howarth : Do you mean back in 2014—

ACTING CHAIR: Back from 2009-10 until now.

Mr Howarth : I can't comment on what was involved back in those days, because I wasn't involved.

ACTING CHAIR: Mr Mason was. He was there.

Mr Mason : I was employed at Woolworths at the time, yes. I wasn't involved specifically in the facilities management area.

ACTING CHAIR: Are you saying that Coles don't keep their premises as clean and as expertly as you do, by using contract cleaners, when they use internal? How do they deal with these issues? Have they just got dirty premises?

Mr Sinclair : Senator, we don't wish to make any comment on Coles—

ACTING CHAIR: But that's the implication.

Mr Sinclair : It's not an implication we'd like to make.

ACTING CHAIR: Whether you'd like to make it or not, you're saying you get better services for cleaners. It's not your core business. Coles have taken a decision to insource. All of theirs, I understand, are insourced. You want to maintain contract cleaners. That's caused all of these problems. Workers have been ripped off. Coles are dealing with it by insourcing. Why don't you?

Mr Mason : We have done the review, and we believe the business model we currently operate is most appropriate for our customers. We have put significant additional governance measures in place to make sure the shortcomings that were identified in 2014 have not been repeated and are not being repeated. We have made a public commitment that we will stand behind any cleaners that can substantiate that they have been underpaid.

ACTING CHAIR: These were horrendous shortcomings—

Mr Sinclair : Can I clarify the question you just asked? I'd appreciate the clarification for my colleagues. None of the cleaners that were identified in the 2014 investigation currently have any involvement with Woolworths.

ACTING CHAIR: That doesn't mean much, because it's obvious you've had problems since 2009-10. When did Woolworths outsource their cleaning services?

Mr Mason : Historically, Senator Cameron. We have pretty much always provided cleaning services externally. I do not know the exact date.

ACTING CHAIR: Can you take that on notice?

Mr Mason : I can take that on notice.

ACTING CHAIR: Can you also, on notice, provide details of the investigation that you did to come to the conclusion—

Mr Sinclair : The internal review?

ACTING CHAIR: The internal review.

Mr Sinclair : Certainly

ACTING CHAIR: Is there documentation that would indicate why you'd go down this path?

Mr Sinclair : We can certainly provide further information on the internal review.

ACTING CHAIR: Who made the decision? Was it the board? Did it go that high, or was it—

Mr Mason : No, these decisions are on an ongoing basis. We review our business model. These decisions do not get presented at the board level.

ACTING CHAIR: So, it's an act of management in the stores to make these decisions?

Mr Mason : In our support office, not at a store-management level.

ACTING CHAIR: You've got your board—what's your position? Manager?

Mr Mason : Correct.

ACTING CHAIR: So, you make the decision, do you?

Mr Mason : In consultation, yes. These would not be going to the board level.

ACTING CHAIR: Who would you consult with on this?

Mr Mason : My direct line manager at the time.

Senator O'NEILL: Is that somebody below or above you?

Mr Mason : Above me—the direct line manager above.

Senator O'NEILL: Who's above them? How are they connected?

Mr Mason : Ultimately, they would report to someone in a board position.

Mr Sinclair : Maybe I can add some clarification here. These are decisions around substantial outlays. Decisions above a threshold would go to the executive committee, which is Brad Banducci and other executives. Decisions below a threshold are made at a line managerial level. Different departments in Woolworths have got quite differing levels of depth in their managerial structure, so the decision that's made in facilities management would certainly be discussed several levels above Trent, and these decisions are reviewed regularly at a managerial level.

ACTING CHAIR: So the decisions to outsource were at quite a high managerial level within Woolworths?

Mr Sinclair : I believe so. If you would like us to provide you with clarification on when—

ACTING CHAIR: Yes. I think I've asked on record. Provide me with details of who makes the decision, when the decision was made to outsource, a copy of the report that says that you can deliver lower cost, higher quality cleaning with what's supposed to be a highest quality service.

Mr Mason : If I could just clarify, we said 'most efficient' not 'lower cost' service.

ACTING CHAIR: Have you made an analysis of what the cost would be to in-source as against outsourcing?

Mr Mason : At a high level, yes.

ACTING CHAIR: What's the difference?

Mr Mason : I don't have those exact numbers in front of me at the moment.

ACTING CHAIR: Don't you think we might be interested in that—to see what the benefit is of going down that path?

Mr Sinclair : We're very happy to take that on notice.

ACTING CHAIR: You'll take that on notice?

Mr Sinclair : Yes.

ACTING CHAIR: Okay. What steps have been undertaken to determine that the training undertaken by contract cleaners is sufficient to deliver this purported higher quality service?

Mr Howarth : We have field staff out in the states who will continually monitor the cleanliness of the store and liaise back with the contractors on the quality and any additional upkeep and training that may be required. We don't deliver or provide any training ourselves, because we're not experts in the field.

ACTING CHAIR: But you don't know what training it is. It could be that some young student applies for a job with the contract cleaner and they say: 'Here's a mop. Here's a brush. Here's some cleaning liquid. Away you go.' You wouldn't know how that works, would you?

Mr Howarth : I do know and I do understand that all of our staff that get brought into the stores are trained. They are put with other cleaners and trained at a local level, at ground level. What is involved in that training—I am not aware of what is being delivered. But we also deliver a health and safety induction training program that every cleaner must undertake so they understand their obligation when it comes to cleaning and safety.

ACTING CHAIR: But you don't know what training is being done. Is there any formal training by your contractors on the use of detergents, health and safety matters, any of these issues?

Mr Mason : Certainly when a contractor tenders for work they will provide details as to how they propose to train their employees to ensure that they're appropriately qualified to provide cleaning services to Woolworths.

ACTING CHAIR: How do they do that?

Mr Mason : By a number of means, with regard to on-the-job training, reading material and, as Mr Howarth pointed out, shadowing or following other cleaners to learn on hand.

ACTING CHAIR: But it's not a sophisticated training regime, is it?

Mr Mason : It depends what your definition of 'sophisticated' is.

Senator BILYK: Is it accredited?

Mr Mason : No, it's not accredited.

ACTING CHAIR: So it's not sophisticated at all. It's just—

Senator BILYK: And is it monitored?

Mr Mason : We don't monitor the training of our contractors.

Senator BILYK: So you don't know whether it really happens or not?

Mr Mason : We don't monitor the training of our contractors.

ACTING CHAIR: Given that your competitors, like Coles and ALDI, have got a more efficient span of control—do you understand 'span of control'? Under your management theory, there is a span of control. They actually control the cleaning, because they employ them directly. How do you assert that you've got higher quality cleaning outcomes compared to Coles?

Mr Sinclair : We don't make a direct comparison with our competitor. What we have asserted is that, when we reviewed whether to insource or to outsource to contractors, we concluded that outsourcing to contractors would provide the best quality, the best service and the best value for our business.

ACTING CHAIR: I think there's evidence in the Fair Work Ombudsman's report that you don't know who's been entering your premises. There was no control over who entered your premises. You didn't know who was coming in. You don't have any idea really about what the training was. How can you assert that this is the best way to go?

Mr Sinclair : These points were raised earlier by Senator Abetz. I agree with his characterisation that this oversight was horrendous. It was deeply regrettable. We've come here today. We've come here to support the committee's investigation and we've come here to look you all in the eye and tell you that it was deeply, deeply regrettable. We apologise not just to our customers and to our own team members but to the cleaners themselves.

CHAIR: And what do you say about the discussion we had with the Fair Work Ombudsman about how you were saying that, if there's evidence that there's been underpayment, these cleaners will be paid either by the contractors or by Woolworths? How do you determine evidence if there are no payslips, as the Fair Work Ombudsman has indicated?

Mr Sinclair : Mr Howarth has got a stronger understanding of the proposed deed than what I do, but the wording that the Fair Work Ombudsman used today was 'fair and reasonable'. I would like to make it very, very clear that Woolworths will back pay any cleaners who have a reasonable claim. We put that on the public record in February. We are very happy to repeat that public record. We will not be splitting hairs. We will back pay any fair and reasonable claim.

ACTING CHAIR: How do you determine what's fair and reasonable?

Mr Sinclair : Mr Howarth can provide you more information with what is proposed in the deed. I understand that a fair and reasonable test is not set in stone—it's not something which is explicit—but we are not going to split hairs. We've come here today and we will make that commitment to this committee, as we have made it publicly previously.

ACTING CHAIR: Have you got any estimate at all as to how many—

Mr Sinclair : Do you want to get an answer to the earlier question?

ACTING CHAIR: Yes, go on.

Mr Howarth : Any type of investigation does need to have some form of evidence to be able to prove that there has been an underpayment or that what the cleaner is saying or suggests is correct. So what we consider to be fair and reasonable could be anything from some sort of concrete evidence through to even if a cleaner can bring forward witnesses or they've got something that can guide us to understand how far their back payments go or how much it might be so that we can work and negotiate a figure with the contractors.

Mr Sinclair : As Fair Work said this morning, verbal testimony, I want to be very clear: we will not be splitting hairs on this.

ACTING CHAIR: But there could be a situation where you've got a local Tasmanian cleaner who has been working with a team of visa holders, though all those visa holders are gone. You've only got the Tasmanian worker saying: 'I worked for three months. These were the people I worked with. They're all gone. I can't corroborate this position.' How does that work?

Mr Sinclair : As you say, that could be a scenario. That could be—we don't know.

ACTING CHAIR: How are you going to deal with that?

Mr Howarth : How we deal with those situations is that one of the other things that we will look at is a comparable site. So, if that cleaner comes to us and they've got no evidence, they've got no witnesses and nobody else can come forward, most of the cleaners will know how much they got paid during that period of time. We will be able to go and have a look at other sites that are comparable. We will look to see whether there is any type of—if they have signed into the visitors log at any point during that time, we can extrapolate that out and build up a profile based on what we believe, and based on their testimony, to see whether or not what they're saying is correct.

ACTING CHAIR: The visitors log wasn't being used, was it?

Mr Howarth : It was being used periodically. It wasn't being used constantly. But, to us, we still look at that as a record.

ACTING CHAIR: So you're saying that you failed to properly secure your stores; you failed to take proper steps to ensure you knew who was coming in and out of your stores. An individual cleaner has to prove this to you, even though it's your failure—is that what you're saying?

Mr Howarth : No, that's not what I'm saying. I'm saying that is one avenue that we will use to try and determine what the amount of underpayment is. So that is not evidence that—I'm not suggesting that it would be concrete evidence as to whether or not they were employed there and whether or not they were on site during those days; I'm saying we will use that to build up a profile to try to determine how much this individual has been underpaid so that we can do some calculations. So, if this individual has signed in for one night, one period of time—let's just call it 12 to 3 am—then it's safe to assume that that can be extrapolated out across the week and across the three months in the example that you used. So, if they're telling us that they only got paid a certain amount that doesn't equate to that three hours per night five nights a week or seven nights or three—whatever they tell us that they're working—we can use that to go back to a contractor and say, 'There is evidence that this cleaner was here. There is evidence that this cleaner has been underpaid.'

ACTING CHAIR: What if there's no evidence? And that's your responsibility.

Mr Howarth : We would have to look at it on a case-by-case scenario, and if it is fair and reasonable and it's deemed and there is something there that says that they were there, we would talk to the contractor.

ACTING CHAIR: But the evidence is that there might have been nothing there, because your audit procedures were not in place; your security procedures were not in place. People were entering and leaving without any security or any evidence that they were in there. How do you deal with that?

Mr Sinclair : We accept that there were significant governance shortcomings in 2014.We absolutely accept that.

Senator BILYK: Do you have CCTV cameras in your stores or security cameras?

Mr Mason : We do have CCTV in our stores.

Senator BILYK: So would you look back through those?

Mr Mason : Unfortunately it won't go back four years.

ACTING CHAIR: But this could be underpayments going back to 2009. Do you accept that or are you saying you're not going to go back to 2009?

Mr Sinclair : Sorry, Senator, a number of hypotheticals are being put forward. We are in the process of executing—so we are reviewing the draft with a view to execute a deed of agreement with the Fair Work Ombudsman, and the date that has been proposed in the agreement is back to 1 July 2014. We accept your assertions—we accept them—that the governance oversights were not up to what was in the contracts at the time. We failed in our governance and monitoring of those contracts. We've come here today, as we have stated publicly since the Fair Work Ombudsman investigation report was published in February, saying that we will back pay any cleaners who have a fair and reasonable claim for back payment. We're not going to squib on it. We're not going to split hairs on it. We very, very publicly accept that that is the right thing to do.

Senator O'NEILL: But, Mr Sinclair, surely you would be away from the 7-Eleven case that many workers have walked away from actually receiving their benefits because of the difficulty of providing evidence because of the personal challenges that they've faced. So going on the record and saying that you're going to do this doesn't necessarily mean that people will actually be able to manage the process, get through it and get their fair share.

Senator BILYK: Or maybe even know about it.

Mr Sinclair : Senators, I don't have any familiarity with other wage negotiations. I just want to make it very clear that we are willing to cooperate with not only Fair Work but the committee. We don't intend to provide any obstacle to any worker being back paid. We've come here to cooperate with you. We've come here apologetically.

Senator O'NEILL: Yes, Mr Sinclair, you've said that a few times, but how long will it take for you to go back to a contractor or a subcontractor—many of whom you say don't work for you anymore? How long will this process take? What evidence would you require? It's still very ambiguous. If a cleaner were looking to this inquiry to get some hope of getting their money back, they'd be listening and saying: 'What do they actually mean? How am I going to meet this test?' Going back to the subcontractors, how long will this whole thing take?

Mr Sinclair : I just make a suggestion. As we've stated, cleaners can come to us. We stated that in our opening statement. Cleaners can go to Fair Work. If a cleaner is not comfortable in either of those circumstances, perhaps they could come to the committee.

ACTING CHAIR: That's not our job. You've wiped your hands of responsibility pretty well.

Mr Sinclair : We haven't wiped our hands of responsibility, Senator. We've accepted our responsibility.

ACTING CHAIR: You put the responsibility back on us.

Mr Sinclair : We've accepted our responsibility fully.

Senator ABETZ: Let me compliment Woolworths on their involvement with the Fair Work Ombudsman in seeking to rectify a situation that has occurred and has been in the public domain now for many years. We are nearly at the business end of this investigation with the signing of the deed and then the recompense being made to those workers who were underpaid. Woolworths would contract out a lot of the services that it needs, and I dare say that cleaning is just one of many services.

Mr Mason : Yes, that is correct, Senator. We contract out a number of non-core services—cleaning being one of those. There are a number of them. Waste removal and a lot of those things we obviously contract to the specialists in those areas.

Senator ABETZ: Do you have your own sign-writers, for example?

Mr Mason : We contract out sign-writing.

Senator ABETZ: So from rubbish collection to sign-writing you contract out?

Mr Mason : Correct.

Senator ABETZ: And the normal process is that you put it out to tender?

Mr Mason : Correct.

Senator ABETZ: You may have heard the evidence of the Fair Work Ombudsman that to their knowledge or analysis your head contract for cleaning would have allowed cleaners to be paid at the appropriate rate. To your knowledge or understanding is that the basis on which Woolworths contracted?

Mr Mason : That's correct, Senator. We use a sustainable rate to ensure that the rate that we're paying the head contractor is more than sufficient to ensure that workers are getting paid correctly.

Senator ABETZ: And then the issue became the lack of oversight by Woolworths where cleaning contractors subcontracted and subcontracted—and I think on some occasions we got down to four levels removed from the head contractor?

Mr Mason : Yes, that is correct, Senator.

Senator ABETZ: Right. Just to clear up what the chair was asking in relation to shonky contractors, was the standard of cleaning by the workers acceptable to Woolworths? What I'm getting at is that the cleaning work can be of a high standard. The employer of those cleaners can be shonks and do the ripping off whereas the standard of the work is still acceptable.

Mr Mason : Yes.

Senator ABETZ: I dare say that the same argument would be used by Maurice Blackburn, Lush and others—that their staff provided excellent work and service to customers despite being underpaid by their employer. In relation to the goods you sell at Woolworths, do you go down the supply chain there as well? Being in the Apple Isle, let's talk about apples. Do you tender out and say, 'Look, who can supply us with apples and at what price?' and then come to a contract and an arrangement with them?

Mr Mason : Unfortunately, that's not my area of expertise, but obviously we do have a commercial team that would deal with those goods that we provide to our customers.

Senator ABETZ: Then, as a matter of course, do Woolworths go to the supplier of those apples to ascertain whether the pickers have been paid the right amount of money?

Mr Sinclair : If I may, Senator Abetz, I'm very happy to provide you with a detailed explanation on notice, but Woolworths has just introduced a responsible sourcing policy or is in the process—sorry—of introducing a responsible sourcing policy—and I may add that the government's introduction of a modern slavery act has been one of the influences in this policy environment—where we will be requiring our horticultural suppliers to provide audits of what they are paying workers in their supply chain.

Senator ABETZ: Up until recent events, that was not common practice throughout the supermarket sector, was it?

Mr Sinclair : I have to apologise. I don't have a great deal of familiarity. The impression that I have is that this is a recent initiative in that sector.

Senator ABETZ: So, in purchasing your produce from manufacturers and growers, you tender out and ask for the best price, and that has been the practice up until very recently to the best of your knowledge.

Mr Sinclair : Again, it's very much an area where I don't have a great deal of expertise. My understanding is that we have some agreements directly with horticultural and other fresh produce growers. We have some agreements with grower cooperatives. Then a third category is that we buy from that market; we buy from a local market. So there are essentially three different types. I think the question you're asking probably relates more to the first two: direct grower agreements or direct producer agreements and where we are purchasing from grower or producer cooperatives for our fresh food.

Senator ABETZ: Let's say Woolworths were to have engaged Maurice Blackburn for legal advice. Under normal circumstances, you wouldn't have asked Maurice Blackburn to provide details of the payroll to make sure that all their staff were paid the correct wages. It has now been exposed that they haven't been paying their staff the correct wages.

Mr Sinclair : To respond to your question, my assumption is that we ordinarily would probably not.

Senator ABETZ: Yes.

Mr Sinclair : I'm very happy to clarify that if you wish.

Senator ABETZ: So the point I'm trying to get to is that legally there is no obligation on Woolworths to repay these underpaid cleaners, but you see a moral obligation to do so. Being a corporate citizen that values its reputation, you would seek to ensure that those that are engaged with your business act in an appropriate manner, especially when it comes to payment of workers.

Mr Sinclair : I accept the premise of what you're saying completely. We did note in our opening statement that, while we did not fail in our legal obligations, we did not meet our own expectations for ensuring contractors were doing the right thing by their employees. It's a point we have made repeatedly today and both in our submission and in previous dealings with Senator Cameron. We've made it very clear that this was a horrendous moment back in our past, and we are working very hard to rectify that situation.

Senator ABETZ: I indicated to the Fair Work Ombudsman that I thought that there may have been certain security implications as well for your stores in having people enter them without signing in properly. That would have been to your potential detriment as well—not oversighting your own contracts in the manner that you had intended them to be—

Mr Sinclair : Again, I agree with the premise of your assertion. May I take this opportunity to have my colleagues explain specifically what we are proposing to do, or are about to do, with respect to geofencing payroll systems?

Senator ABETZ: Yes. Can you explain that for us?

Mr Howarth : Certainly. Part of the deed is that we will be requesting our contractors to utilise the services of auditable third-party payroll systems with geofencing capabilities. Effectively, that means it will be some sort of application where, as soon as the cleaner arrives on site, they will be expected to sign in to the site via the application. The geofencing doesn't allow them to sign in unless they're within the geofence. They can't sign in on their way to work or after they've left the site, and it times out once it leaves the geofence. It will become an accurate timekeeping system for when the cleaners are actually on the sites.

Senator ABETZ: Thank you for that. In your submission, you talked about your whistleblower service as well. Are you able to expand on that for us a bit?

Mr Howarth : Certainly, Senator. The whistleblower service, known as Speak Up, is an external arrangement that is managed by Deloitte. Effectively, the whistleblower will contact Deloitte via a number of ways, be it phone, email or even fax if required. It can be anonymous; they don't have to give their name and their details. They can report anonymous complaints. That is then passed through to our Woolworths risk department, who will assess it, and then it will be farmed out to the relevant department for investigation. The cleaners complaints will come through to me and my team for investigation. We will look at any complaint that comes through that way.

Senator ABETZ: Under the heading of 'Whistle-Blower Service' in your submission, the third paragraph refers to online induction. How can you guarantee that the person on the keyboard undertaking the online induction is in fact the actual prospective cleaner or employee?

Mr Howarth : There are a couple of ways in which we try to close that gap. One of them is that each individual cleaner's email address is registered, so it has to physically go to them. A second way is that they have to upload a copy of their licence at the time that they're doing a particular induction. Then they also have to take a live webcam photograph of themselves that has to match their licence.

Senator ABETZ: So it's a live webcam?

Mr Howarth : It's actually a photo that they have to upload at that particular time. It will come up on the screen and say, 'Take a photo now,' and a photo will be taken, one way or another, and then loaded onto that particular screen.

Senator ABETZ: But it's not continuous live monitoring of the person on the keyboard?

Mr Howarth : No, it's not.

Senator ABETZ: You may be aware that, in relation to other online inductions, such as the right of entry course, the courts have determined that certain individuals did those courses and filled in the tests for persons other than those who were actually on the keyboard. So it is open to fraud and manipulation, which has been determined by a court. But that occurred with a right of entry induction for certain union officials. Given that we now know that happens within the union's sphere, it stands to reason, potentially, that, if a shonky contractor wanted to cover for certain workers, they would just get them to sit there and give them the codes or whatever so that they could get into it. Being vulnerable workers they'd be more than willing to say, 'Yep, this is my email address. Take a photo of me,' and then just set them aside whilst somebody does the test or induction for them. I would just leave with you as a thought, given previous unfortunate history in this area, that online induction can be manipulated as well.

In relation to the back payment that you have gratuitously but very fairly agreed to make—it is good of you to do that—you've been asked about a lot of hypothetical situations, which I would suggest to you is difficult to answer, because it will be decided I assume on a case-by-case basis

Mr Howarth : That is correct.

Senator ABETZ: In those circumstance, until you have decided the case-by-case situations, the only real question we as a committee can ask of you is what degree of good will is going to be exercised by Woolworths and will you be erring, potentially, on the side of a few overpayments, in your thinking, rather than a few underpayments?

Mr Sinclair : We would certainly never be erring on the side of underpayments. As I have said, perhaps gratuitously, repeatedly, we have made a very clear commitment to right a wrong and to back pay any fair and reasonable claims.

Senator ABETZ: Earlier, you said that the companies that you had engaged are no longer so engaged with Woolworths. Is that correct?

Mr Howarth : Those companies that we believe were identified by Fair Work? Yes, that's correct.

Senator ABETZ: What are you doing now to ensure that your new contractors are not going to engage in similar conduct?

Mr Howarth : We have implemented a number of processes across the last number of years, one of them being auditing. We now audit 10 per cent of our sites on an annual basis—

Senator ABETZ: I assume, randomly.

Mr Howarth : Five per cent of them are random, and five per cent of them are made up of random and targeted approaches. We audit 100 per cent of the contractors across five per cent of their sites. So every head contractor gets audited every year, and then we will also look at a cross-reference of their subcontractors as well to ensure that we are covering off as many individual sites with individual subcontractors as we can.

Mr Mason : If I could just clarify, that's using independent, expert third-party auditors as well as Andrew's own internal compliance team. He has a team that are also going out to site, talking with cleaners and with our store management teams to ensure that compliance is occurring at site level.

Senator ABETZ: Just as another example of your outsourcing, I dare say Deloitte is on a contract with you, as well, to provide the whistleblower service—

Mr Mason : Yes, that's correct.

Senator ABETZ: which you find convenient to—

Mr Mason : And our third-party auditors, as well.

Senator ABETZ: And your third-party auditors, just as another example of the numerous contracts that you would have. Can I ask even the basic question: does Woolworths own all its own properties that it operates out of?

Mr Mason : No, we do not own all our own properties.

Senator ABETZ: So you would have contracts just to lease the premises.

Mr Mason : Correct.

Senator O'NEILL: How many contractors or subcontractors who failed to pay proper wages were there identified by Fair Work?

Mr Howarth : To our knowledge, it was four.

Senator O'NEILL: At what level?

Mr Howarth : At both head contractor and subcontractor level.

Senator O'NEILL: How many of each?

Mr Howarth : I would have to take that on notice to find out.

Senator O'NEILL: How did you pay their workers back?

Mr Howarth : We have not paid back anything to those workers. We have asked for the information—

Senator O'NEILL: I have to ask why.

Mr Howarth : We have asked for the information from Fair Work so that we can address it. To date, we have not been passed on any information.

Senator O'NEILL: So what are the dates we're talking about there when you became aware that you had four contractors, head or otherwise, who had not paid fair wages? When did you become aware of that?

Mr Howarth : We became aware of it earlier this year, in February.

Senator O'NEILL: And it's several months down the track and you have not taken any action to repay those workers who you know, through the Fair Work Ombudsman investigation, were not being paid accurately?

Mr Sinclair : I will just clarify what action we have taken. The action we have taken is to ask Fair Work for more information. That's the action we've taken. With the deepest respect to Fair Work, we've been asking for several months for that information.

Senator O'NEILL: Will these people be dealt with in a different way from anybody else who wants to come forward?

Mr Howarth : I wouldn't expect so. I would expect that, once Fair Work are able to hand over the information, we will make contact and deal with them directly, the same way as any other cleaner who approaches us.

Senator O'NEILL: How many contractors and subcontractors do you have, Mr Howarth?

Mr Howarth : In the cleaning space, we have16 head contractors and approximately 425 subcontractors.

ACTING CHAIR: I think you indicated 427.

Mr Howarth : My apologies—427.

Senator O'NEILL: You indicate in your submission that there are now only two levels of contracting permitted. Would you be able to provide on notice an outline of the number of subcontractors that existed back to 2009?

Mr Howarth : Happy to take it on notice and see what we can provide.

Senator O'NEILL: Thank you very much. Are you confident that every one of those contractors and subcontractors are not engaging in wage theft currently? Can you guarantee me that no-one is being underpaid in that chain?

Mr Sinclair : Senator, with the deepest respect, we can certainly audit and we can certainly do everything that we possibly can, but I think it's very difficult to accept the premise of your question.

Senator O'NEILL: So you cannot guarantee that your 16 head contractors and 425 or 427 subcontractors are currently paying legal wages—that they could be engaging in wage theft and you would not know?

Mr Sinclair : It's not that we would not know; it's just that I'm very reluctant to accept a hypothetical—

Senator O'NEILL: I am not surprised, Mr Sinclair. Mr Howarth, can you answer my question? Can you guarantee me today that your 16 head contractors and your 427 subcontractors are paying legal wages today?

Mr Howarth : Senator I can't guarantee that, no. All I can do is support the processes—

Senator O'NEILL: If they were your employees, Mr Howard, would you be able to guarantee that?

Mr Howarth : If they were my employees, yes, I would.

Senator O'NEILL: Could you on notice provide more details about your contractors and subcontractors? How many have you dismissed in addition to those identified by the Fair Work Ombudsman?

Mr Howarth : Only one of the four contractors is still working for us as a company. That was one of the companies where the prosecution was dismissed by Fair Work.

Senator O'NEILL: So there are only three companies no longer working for you? Is that correct?

Mr Howarth : That is correct.

Senator O'NEILL: You have not dismissed any subcontractors?

Mr Howarth : The subcontractors don't work for us.

Senator O'NEILL: They have a relationship with the contractor.

Mr Howarth : That is correct.

Senator O'NEILL: So, of the 16 that you have, how many are new ones?

Mr Howarth : Sorry?

Senator O'NEILL: How about you give me a time line for the 16—when that number went up and went down? How many did you have in 2009?

Mr Howarth : I would have to take that on notice.

Senator O'NEILL: Given the public fallout of this and the well-aerated public sentiment that's been expressed today about trying to make things good and given that your competitor, Coles, has indicated that they've shifted to an employer-employee relationship so they can guarantee that there's no wage theft in their cleaning service—a service which keeps the shop clean for everyone—I'd be very surprised that your board hasn't taken an interest in this matter. Mr Mason, your evidence earlier was that this was all a decision that was made at the managerial level. Could you give me some indication on why the board would not want to know about the decision-making around this matter?

Mr Sinclair : Sorry, just to clarify, again, the premise of your question—I'm very happy to defer to Mr Mason—our board, if I may speak on behalf of the board and the executive committee, are certainly very interested in this matter. They are certainly very interested. The question that was addressed earlier was whether or not a decision to insource or outsource would go to the board, and the clarification I provided was that, ordinarily, that decision would be made at an executive or managerial level and not at a board level. But, on your specific question about the board, the executive or anyone else within the organisation, there is a great deal of interest in this matter. It is a deeply regrettable moment in our history.

Senator O'NEILL: Is it a decision by the board to continue to operate a model which has been proven now by the Fair Work Ombudsman and by your own evidence here today to have failed workers and led to wage theft? Is that a board decision or is it a managerial decision?

Mr Mason : I think, as Cameron articulated, this is a managerial decision with executive input. But I would say that the additional measures we have put in place since 2014 have eradicated the risks that have been articulated.

Senator O'NEILL: But you can't guarantee me that people are getting fair wages. If I look at your sheet here—2013, 2014 and 2015—you've been doing all sorts of things. But, despite updating your benchmark tool and advising of a speak-up line in 2015—despite all of those things—today you cannot guarantee me that workers who are cleaning your stores, employed by contractors and subcontractors, are not experiencing wage theft. That's a matter that I think the board would be interested in, and I would like, if I can ask for it, any correspondence within Woolworths with regard to this matter and board consideration of the decisions that have been made to continue to provide a contracting service for the cleaning of Woolworths.

Mr Sinclair : I'm very happy to take that on notice. But, to your point, and with the deepest respect, I'm not going to come here today and provide any rolled gold guarantees at the risk of one of our contractors doing something that they should not be doing. I can't do that.

Senator O'NEILL: No, but Woolworths could employ their cleaners and guarantee accurate wage payment. They actually could do that, and your competitor has done that.

Mr Sinclair : We accept the premise, and that's a matter that you obviously can put to Coles in an hour or so.

Senator O'NEILL: So corporate responsibility to clean up some of the mess that can be identified with people who can—

Mr Sinclair : Is something we accept completely.

Senator O'NEILL: to the extent possible, provide some evidence is not the same as providing a clean shop which is cleaned by local people who are guaranteed fair wages. There's a big gap between what you're doing today in terms of a clean-up and an ongoing commitment to ensure that proper wages are paid to cleaners in Woolworths.

Mr Sinclair : Can you clarify your question?

Senator O'NEILL: No, that's fine—it's a statement. I'll move back to the chair. Thank you very much.

ACTING CHAIR: In relation to the reverse onus of proof in this deed, are you prepared to accept that, if a worker makes a claim—a contractor who's claiming they were subject to wage theft—and if the contractor is saying that that's not the case, the contractor would have to have the onus of proof on them?

Mr Howarth : Yes, 100 per cent.

ACTING CHAIR: So the reverse onus of proof is accepted? That's good. None of you guys are industrial experts, are you? Is there no-one here who can talk about section 558B of the act?

Mr Sinclair : No, none of us are industrial experts. If you have any specific questions, I'm very, very happy to take those on notice and put them to both our legal team and our workplace relations team where there is an expert.

ACTING CHAIR: Did you think about bringing either one of your legal team experts here or an industrial expert to the hearing?

Mr Sinclair : Did we think about it? Absolutely.

ACTING CHAIR: Why didn't you bring them?

Mr Sinclair : We brought the people today who could speak to the terms of reference.

ACTING CHAIR: The terms of reference lead off into a range of areas.

Mr Sinclair : I don't want to impugn the drafting of the terms of reference, Senator.

ACTING CHAIR: I don't think you should, actually, and you shouldn't look so smart-arse about it.

Senator ABETZ: That's—

ACTING CHAIR: I withdraw. I just had to make the comment. We may have to bring you back with some of your industrial people. Are you prepared to come back to a future hearing with either your legal people or your industrial people?

Mr Sinclair : We would certainly consider any requests that the committee made of us.

Senator ABETZ: And if you don't, you'll be subpoenaed, as you know.

ACTING CHAIR: Probably. So you can't deal with 558?

Mr Sinclair : I'll be very happy to take any questions on notice.

ACTING CHAIR: We might bring people back and deal with it then. When you tender for your contract cleaners, the amount of money in the tender that you accept determines the capacity of the contractor to pay legal entitlements. That's correct?

Mr Howarth : That's correct.

ACTING CHAIR: Was there any consideration given by Woolworths about these contract cleaners being able to bargain with their employer?

Mr Howarth : I can't comment on the relationship between the cleaner and their employer. I'm not privy to the negotiation process involved with them.

ACTING CHAIR: But do you accept that you've got some control over what money is available to the contract cleaner?

Mr Howarth : Yes, I do.

ACTING CHAIR: So you've got control in relation to that. So the wages and conditions that the contract cleaners are engaged in depend on whether you are prepared to pay a certain amount of money.

Mr Howarth : Correct.

ACTING CHAIR: Did you factor in an employee's right to bargain with the contractor?

Mr Howarth : No. The simple reason is that we don't know the age or level—we don't get any guidance from the contractor on who they're going to employ to carry out these services. There are different rates for the different levels—CSE 1, 2 and 3.

ACTING CHAIR: But that's the award; that's not bargaining.

Mr Howarth : That's right, Senator. We work out what the minimum threshold is for everyone to be paid correctly, and then it's up to the contractor to submit a price based on our specifications to clean the store.

ACTING CHAIR: So you work out the minimum threshold for them to be paid correctly. Is that the award wage?

Mr Howarth : That is the award wage.

ACTING CHAIR: So you've got control over exactly what an employee is paid by these contractors, and given that you are setting your rates to the minimum award rate, there is no capacity for these employees to bargain with their employer to improve their wages and conditions, is there?

Mr Howarth : Senator, we don't set the rate.

ACTING CHAIR: Yes, you do. You just said you did it.

Mr Howarth : No, we don't set the rate. We have what we call a benchmark rate, which is a threshold. So as long as they are over that threshold—they could be considerably over that threshold—we will still consider to do work with them based on the value-add that they can provide to us as a business.

ACTING CHAIR: How can you say that? The contract cleaners are on an extremely small margin, aren't they?

Mr Howarth : I can't offer any opinion as to whether or not it's fair.

ACTING CHAIR: But you've indicated that you set the threshold, so they pay legally, and you've conceded that that is the award.

Mr Howarth : We do have contractors that will price below the threshold, and we will not do work with them. The idea of the threshold or the benchmark, as we call it, is to ensure that the employees that our contractors are employing can be paid the minimum. That doesn't mean that they will be paid the minimum; it means that they can be paid the minimum.

ACTING CHAIR: So if a contract cleaner wants to pay more than the minimum, you are not paying for that extra pay, are you?

Mr Howarth : We are if that contractor prices that into their pricing model.

ACTING CHAIR: But if you contract at the minimum, they can't do that.

Mr Mason : We don't contract at the minimum; we contract at the sustainable rate, which ensures coverage of the minimum, but contractors obviously make a profit margin on top of that.

ACTING CHAIR: On notice, can you provide details of exactly what the rate is that you've contracted to the cleaners. It's a standard contract, isn't it, across all the contract cleaners?

Mr Mason : Yes, we can take that question—

ACTING CHAIR: So, if someone bids the lowest rate—I'm not saying that it is—or if they bid at a certain rate, you're saying that rate must meet the minimum standards?

Mr Mason : The minimum sustainable rate; otherwise, the tendered rate that is too low will be rejected and not considered.

ACTING CHAIR: You've said that a number of times. That's not what I'm looking for. I'm looking for the capacity of these workers to actually engage in bargaining with their employer. There is no capacity for them to sit down with a boss and say: 'Look, with the 17 bucks an hour I'm getting, I can't feed the family. I want to bargain with you. I want to get access to an enterprise agreement.' They've got no capacity to do that, have they?

Mr Mason : I don't think I can comment on that, Senator.

ACTING CHAIR: But you must be able to. You've set the rate at the minimum rate. If there is any bargaining that takes place—

Mr Mason : Senator, if I can just clarify: we haven't set the rate at the minimal rate; we've set it at the sustainable rate, which is not the minimal rate. So there is an opportunity—

ACTING CHAIR: What is that sustainable rate?

Mr Mason : I can't quote that. We can take that on notice and give it to you, as you've requested.

ACTING CHAIR: Okay. But you've got some control over that.

Mr Mason : We have control over the sustainable rate to ensure that workers are paid their minimum wages at the very least. Correct.

ACTING CHAIR: Once these start to go into pyramid subcontracting, you would have had to expect that there would have been problems in the context of that sustainable rate being paid to cleaners, wouldn't you?

Mr Sinclair : Can you just clarify when you mean?

ACTING CHAIR: Once you start going down the pyramid subcontract, there will be more and more levels of subcontractors.

Mr Sinclair : You mean hypothetically?

ACTING CHAIR: No. This not hypothetical. This is what happened. This is not hypothetical. This is what the Fair Work Ombudsman found. There were a number of levels of subcontracting.

Mr Sinclair : In 2014?

ACTING CHAIR: It may have even gone back to 2009. You can't tell me.

Mr Sinclair : No.

ACTING CHAIR: You don't know.

Mr Sinclair : No.

ACTING CHAIR: You don't have a clue about what has been happening with your subcontractors. That's your argument. You don't care.

Mr Sinclair : Senator, with the deepest respect, that's not our argument or our statement.

ACTING CHAIR: Since 2009, we've had problems with subcontracting and you've failed to do anything about it. That's the reality. You've done nothing.

Mr Mason : I think we have taken a number of measures since 2009, Senator, and a significant amount since 2014.

ACTING CHAIR: All right. If you can, on notice, provide details of every initiative you've taken since 2009 through to the present time. Some of it's in the latest stuff, because you've been caught out on this—not doing proper audits, not having control over your contractors in terms of access to their clients and not ensuring that the contractors are getting legal minimum rates of pay. So give me details of what you're claiming you have done since 2009 to make sure that workers are fairly treated.

Mr Sinclair : In addition to the information provided to the committee today?

ACTING CHAIR: Yes, in addition; because you've said that you've done stuff since 2009. That would be good. My view is that, once you've got these pyramid subcontractors in place, you would have had to expect that workers would have been ripped off. That's all the expert evidence we've had. All the experts can see this, but you can't. Is that correct?

Mr Sinclair : Senator, I really can't comment on your views.

ACTING CHAIR: Why can't you?

Mr Sinclair : They're your views, Senator.

ACTING CHAIR: No, it's the reality. You've had workers on $7 an hour.

Mr Sinclair : Senator, I flatly reject that assertion, which you have made on several occasions.

ACTING CHAIR: The evidence was that workers were on a training wage by your contractors, and some workers were on $7 an hour.

Mr Sinclair : I note that you qualified this comment after the Caboolture hearing by asserting that it was workers under our purview, and you did not make that qualification today. I flatly reject the assertion that we have workers on $7 an hour.

ACTING CHAIR: Not Woolworths workers; contract workers.

Mr Sinclair : Correct.

ACTING CHAIR: Contractors.

Mr Sinclair : Correct; not Woolworths workers. I flatly reject the claim.

ACTING CHAIR: But workers that you have an influence over, correct?

Mr Sinclair : I flatly reject your assertion that Woolworths has workers on $7 an hour. We pay our contractors sustainable rates.

ACTING CHAIR: I am not arguing that Woolworths have direct employees; I am arguing that workers and contractors engaged by Woolworths were paid as low as $7 an hour.

Mr Sinclair : That is a claim. We flatly reject the assertion or the insinuation that they were Woolworths workers.

ACTING CHAIR: I'm not claiming they were Woolworths workers; I'm claiming they are contract workers that Woolworths could have influenced. But your processes completely fail to protect them.

Mr Sinclair : That may be the case.

ACTING CHAIR: Is it the case?

Mr Sinclair : It may be the case.

ACTING CHAIR: Is it the case?

Mr Sinclair : It may be the case.

ACTING CHAIR: What do you mean by, 'It may be the case'?

Senator ABETZ: The facts speak for themselves.

ACTING CHAIR: Is it the case or not? I'm just asking you to concede.

Mr Sinclair : I appreciate that that is exactly what you are asking me to do—

ACTING CHAIR: But you won't do it?

Mr Sinclair : I flatly reject the assertion that there were Woolworths workers on $7 an hour.

ACTING CHAIR: I'm not making that assertion. If you think I made that assertion, I withdraw that. I am not making that assertion. What I am saying is that the evidence before us is that there were contract cleaners on $7 an hour—on a training wage apparently. You are not prepared to concede that?

Mr Sinclair : If that was the case, it is deeply regrettable. As I have said, it is horrendous. We apologise profusely for our engagement with contractors that were doing that to their staff.

ACTING CHAIR: Your apology doesn't help those workers who couldn't put food on the table.

Mr Sinclair : I accept the premise of that assertion.

Senator ABETZ: But you are willing to compensate them?

Mr Mason : We have publicly stated that we are happy to stand behind our commitment.

ACTING CHAIR: Since 2009, when these issues started being raised with you, until recently you didn't take reasonable steps to deal with the issue, did you?

Mr Howarth : We did begin carrying out all the audits in 2014 and have worked very hard to be able to identify any underpayments.

ACTING CHAIR: Would it be true to say that you have no idea how much wage theft has taken place under these contracts that Woolworths have put out to 300-odd contract cleaners?

Mr Sinclair : I stand to be corrected, but I think that is essentially the premise that was accepted by Fair Work earlier today: we do not know.

ACTING CHAIR: It could be millions of dollars. What's the figure in Tasmania?

Senator ABETZ: Underpayments?

ACTING CHAIR: Yes.

Senator ABETZ: It is $64,000, of which $21,000—that is identified.

ACTING CHAIR: Yes, that's identified; but that doesn't mean to say that is the only amount.

Senator ABETZ: Clearly.

ACTING CHAIR: So it is $64,000 in Tasmania, the smallest state. So that could be multiplied significantly across the country, correct?

Mr Sinclair : It absolutely could be multiplied significantly.

ACTING CHAIR: How much profit did you make last year—a billion dollars?

Mr Sinclair : I believe that is approximately accurate.

ACTING CHAIR: So you make a profit of $1 billion and there are contractors engaged by your contractors getting $7 an hour. It's pretty bad, huh? As Senator Abetz said, it's horrendous. Has anyone within Woolworths taken responsibility for this?

Mr Sinclair : We are here today to accept responsibility.

ACTING CHAIR: So your management systems broke down completely in relation to this. Would that be correct?

Mr Sinclair : There were significant shortcomings in the managerial and governance oversight of this particular issue. We accept that.

ACTING CHAIR: So the workers lose tens of thousands of dollars, contract cleaners, but no-one in Woolworths, not one manager, not one person in any capacity of control and management has had any implications for this complete breakdown?

Mr Sinclair : Other than the implications of the significant increases in audit governance procedures that we've undertaken since 2014.

ACTING CHAIR: That's not an implication for any of your management team.

Mr Sinclair : The time and effort is certainly an implication.

ACTING CHAIR: The time and effort is an implication? What sense does that make? There are no implications for your management team. They still make the same money. They may even have had pay increases. The Woolworths board has just wiped its hands of this in terms of individual responsibility haven't they.

Mr Sinclair : I think that's an unfair characterisation of the interest the Woolworths board has taken in this matter.

ACTING CHAIR: It's not an unfair characterisation; it's a fact. You've conceded that there has been no implications for any Woolworths executive, no implications for any Woolworths manager when it could be—we don't know—millions of dollars of wage theft under the systems that you've set up. That's the issue.

Mr Sinclair : Since 2014, we have introduced many changes to the way that we monitor the contracts that we have with our cleaners here in Tasmania and around the country.

ACTING CHAIR: The point I'm making is: is there any potential that any executive, that any manager who's responsible for this horrendous wage theft that took place will face any consequences?

Mr Sinclair : The consequences of these past practices is that we have significantly increased the attention and resources that we devote to monitoring and ensuring that compliance and proper governances in place to ensure that we are keeping an eye on this.

ACTING CHAIR: But that is post the fact.

Mr Sinclair : That's correct.

ACTING CHAIR: So workers can be horrendously ripped off, your management systems can break down to the extent you don't know who's in your stores, your management systems can break down to the extent you don't know what contractors are being paid and yet no-one, not one individual in Woolworths, will pay any price for these horrendous breaches of workplace laws, these horrendous examples of workers being exploited? These are vulnerable people so Woolworths just go, 'We'll fix it from now on.' Is that the position?

Mr Sinclair : We have devoted significant resources in our facilities management team, our legal team and our workplace relations team. We have had new management. Brad Banducci became CEO recently and has made it very clear that this incident in 2014 did neither met a reasonable standard of governance nor did it meet the expectations of our customers or our community.

ACTING CHAIR: The Fair Work Ombudsman described some of your contractors as 'shady' and 'unsophisticated'. Is that correct?

Mr Sinclair : It may be how Fair Work characterised them.

ACTING CHAIR: Do you accept that?

Senator ABETZ: Do you mean subcontractors or contractors?

ACTING CHAIR: It was contractors and subcontractors.

Mr Mason : I think may have reflected some of the organisations that were involved at the time, but the practices put in place removed them from providing services to us.

ACTING CHAIR: So Mr Mason and Mr Howarth, do you accept any responsibility at all for these horrendous breakdowns in management processes?

Mr Mason : Senator Cameron, I have apologised on behalf of the business for the shortcomings that were identified in 2014.

ACTING CHAIR: I'm asking: do you accept any responsibility?

Mr Mason : I accept on behalf of the business the shortcomings that were identified.

ACTING CHAIR: You don't accept any personal responsibility?

Mr Mason : For rectifying—absolutely—and that's a big part of my responsibility, to put these proactive measures in place.

ACTING CHAIR: No, I'm not asking about rectifying. I'm asking about you presiding over part of your responsibility. You, Mr Mason, and you, Mr Howarth: as senior executives in Woolworths, do you accept any personal responsibility for this wage theft that took place?

Mr Sinclair : Senator Cameron, we are all here to accept that responsibility. We are here to openly accept that responsibility. We are here to accept that our past practices were not up to standard.

ACTING CHAIR: But in accepting the responsibility, the only people who are damaged are the contract cleaners, who have had payments as low as $7 an hour. No management, no board executive—no-one—has accepted any personal responsibility or suffered any personal consequences for what is a huge breach of fair and reasonable management practices. Is that correct?

Mr Sinclair : We have accepted that our practices in 2014 were not acceptable.

ACTING CHAIR: That's not what I'm asking you. If you could just answer the question: no-one at any level of management of Woolworths has suffered any consequences as a result of these horrendous practices. That's the question.

Mr Sinclair : The consequences of these oversights are that there have been significant changes in the way that we monitor our contracts.

ACTING CHAIR: I don't know why you won't answer the question. We'll have to get it back if you're not—can you give some thought to being open, honest and upfront in relation to this issue, because we're running out of time, and I'll be bringing you back.

Senator ABETZ: Chair, can I quickly ask two follow-up questions. You would have heard the evidence of the Fair Work Ombudsman, which basically indicated that, on their investigation, this was not an activity knowingly engaged in by Woolworths.

Mr Sinclair : No evidence that Woolworths aided or abetted.

Senator ABETZ: Yes. I believe you have been asked to provide a list of your contractors. It is interesting that you have appeared here under potential threat of a subpoena, yet none of the contractors or subcontractors have as yet been so threatened. I hope that that will occur—

Senator O'NEILL: We couldn't get a list of them!

Senator ABETZ: once we know the contractors and subcontractors. Whilst you have taken moral responsibility for the underpayment, for which I commend you, it is clearly the subcontractors down the chain that have been the shonks and that have engaged in this horrendous activity. I would encourage you to supply whatever information you have to the committee so that we can further investigate these matters. I assume you have already provided all that information to the Fair Work Ombudsman. Is that correct?

Mr Howarth : That is correct.

Senator ABETZ: And that is, to your knowledge, how the Fair Work Ombudsman has been able to recover at this stage about one-third of the underpaid wages that they identified here in Tasmania.

Mr Howarth : I think they had that information prior to us supplying that to them.

Senator ABETZ: All right. Thanks, Chair.

Mr Sinclair : To your point, we will certainly cooperate with the wishes of the committee on this matter.

ACTING CHAIR: Is that list of your subcontractors available?

Mr Sinclair : We received the request from the secretariat late last week, I believe, with a deadline of 3 August, I believe, and we are working very hard to fully consider that request. I may stand to be corrected, but my understanding is that we will be providing most if not all of the information that has been requested.

CHAIR: All right. We will suspend.

Proceedings suspended from 10:34 to 10:57