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VOL 1 - N0 2 - SPRING 2010

$8 PER EDITION

$36 ANNUAL SUBSCRIPTION

RETENTION OF THE BUILDING INDUSTRY WATCHDOG IS ESSENTIAL

TO BE FAIR, WORKPLACE LAWS NEED REFORM US STYLE LITIGATION MEANS LESS LAW & ORDER BUILDING BUSINESS LINKS WITH CHINA TIME FOR A SOUTHERN AND WESTERN LODGE, PM RESIDENCES IN MELBOURNE AND PERTH SPRING 2010 ACCI | 1


Global energy

Global energy demand is rising and so are consumer expectations

let’s go

At Shell we are unlocking new energy sources and squeezing more from what we have. With others we are finding ways to lower our emissions and helping customers to do the same. In building a better energy future we all have a part to play – let’s go Government incentives and new technologies will help reduce greenhouse gas emissions and safeguard the environment. But society must also use energy more efficiently and secure new sources to meet surging long-term demand. At Shell, they are ready to help tackle the challenges of the new energy future. Energy security The world’s energy use is likely to double by 2050. To help meet this rising demand, Shell is extracting more from existing resources and continuing to push new frontiers of energy exploration. CO2 management By 2050 global CO2 emissions must fall by at least 50%, yet energy demand is predicted to double. No single solution exists to this challenge. Shell is working to manage CO2 emissions in a number of ways –including helping to develop carbon capture and storage technology, helping to develop advanced biofuels and other differentiated fuel products, and through coal gasification technology.

– more people want energy from cleaner sources.

Energy efficiency Learning to use energy more efficiently will help conserve resources and reduce greenhouse gases. At Shell we’re always looking to improve our own energy use and help customers to do the same with more energy-efficient fuels and lubricants. Energy diversity To meet the world’s growing energy demand will take multiple resources, including oil and gas from conventional and unconventional sources. Shell liquefies natural gas, making it easier to transport and opening up huge energy resources. Our gas-to-liquids process turns natural gas into liquid transport fuel and other products. We are also involved in wind energy projects. And we continue to develop our capacity in conventional and advanced biofuels “What should I be doing now”? There are of course numerous activities that one should at least be starting to think about as a business that utilises a fleet of vehicles. One simple activity, a starting point perhaps, that may prove very useful from a local business perspective is to spend some time reassessing your businesses process and tools that are used to capture and monitor your fuel use across your fleet as well as for the drivers of your vehicle(s). This is particularly useful for setting fuel efficiency targets for your business and for identifying and rewarding the drivers of the vehicle(s) that demonstrate excellent

fuel efficient driving behaviours. It also offers the opportunity to identify those drivers that would benefit from training on fuel efficient driving techniques. To help assist you in monitoring your fuel use, you should look to a fuel supplier that is able to provide you with online reporting tools that will help you to monitor and track your fuel use. For example, by using Shell Card Online you are able to run a Fuel Management Report that provides a summary view of the fuel usage, purchases and fuel efficiency of vehicles and also details a comparison with a year to date. The fuel efficiency is based on the km/l calculated on the odometer prompts at the time of payment. The Shell Card feature “Smart Alerts” is another tool that may prove useful to help keep a track of your fuel use efficiencies. The Smart Alert feature alerts you to any purchases made outside the designated purchase limits you have set for your card(s). Alert thresholds can be set at account level where the same set of alerts are set to all cards, or at card level, where unique alerts are set for individual cards. Whenever an alert threshold is exceeded Shell Card Online will generate a report and send an email notification the day after the threshold was exceeded. One such Smart Alert is the Fuel Economy alert that is triggered when the fuel economy of the vehicle (in litres per 100km) exceeds your “average fuel consumption” notification level.

To find out more about Shell Card and the features that can help you reduce your fuel use please contact us on 03 8823 4433

2 | ACCI SPRING 2010

SPRING 2010 ACCI | 3


Commerce & Industry is published by the Australian Chamber of Commerce & Industry (ACCI). No part of this publication may be reproduced in any manner or form without written permission from ACCI. The views expressed in Commerce & Industry magazine are not necessarily those of the editors or the Australian Chamber of Commerce & Industry.

CONTACT US Editor-In-Chief Ben Carter Telephone 03 9668 9950 ben.carter@acci.asn.au Advertising Sales Marc Wilson Telephone 0419 107 143 Emie Perez 0421 285 975 4 | ACCI SPRING 2010

5

POST ELECTION COMMENT Agenda 2011

7

NETWORK POWER

8

THE WORKPLACE The fair work act - is it working

10

Overview - Workplace health and safety

12

ECONOMY Policy discipline needed to manage recovery

16

FEATURES U.S. style litigation means less law and order

18

PM’s residences in Melbourne and Perth

22

Good faith bargaining

24

Retention of the building industry watchdog

26

Where is productivity bargaining in Australia

28

GLOBAL ENGAGEMENT How APEC can assist business growth in AsiaPacific

30

Building business links with China

32

MEMBER PROFILES NSW Business Chamber

34

National Electrical and Communication Association

35

Australian Paint Manufacturing Federation

35

EVENTS ACCI General council dinner Launch of Commerce and Industry Magazine

36 40

WELCOME

CONTENTS COMMERCE & INDUSTRY Editor-In-Chief Ben Carter Editor Brett Hogan Design HSA Design, Melbourne Advertising Gypsy Media & Marketing Marketing Authentic Marketing, Media & Events

A word from the CEO

A WORD FROM OUR CEO Peter Anderson, Chief Executive With the 2010 federal election well behind us, ACCI is now prosecuting our Agenda for Jobs & Growth – a ten – point reform plan with the new parliament and minority Gillard Government. Our Agenda, ranging from calls for a fresh wave of economic reform, to scaling back some government spending and shining a spotlight on the tightness of bank finance available to small and medium businesses, is based on our research of the views, perceptions and concerns of Australian business. Thousand business owners and operators, such as those who receive Commerce & Industry, contributed to our research via our quarterly economic surveys and our 2010 Pre-Election survey which specifically identified issues which should addressed by the new government. They told ACCI, our Chambers of Commerce and our national Industry Associations that the private sector did not need handouts, but expected government to make good on its promise to put a strong economy at the centre-stage of national politics. Prime Minister Gillard has since said that her government will ‘walk the economic reform road every day’. Our task, through the pages of Commerce & Industry and in direct dialogue with her Ministers, departments and officials is to make sure that happens. So far, the signals are mixed. There is a commitment to a tax summit, a desire to proceed with national reform in areas like health and safety regulation, a push to increase workforce participation and new investment in skills and vocational education. On the down side, we see some of the new employment laws adding cost, unfairness and inflexibility, big money is being spent on national broadband without a cost / benefit analysis, a superannuation slug is planned

for the country’s million employers and a controversial new mining tax is being touted as tax reform. Also looming over national public policy debate is the Government’s postelection change of heart that now sees it contemplating a tax on the emission of carbon dioxide by industry, even though Kevin Rudd’s failed emissions trading scheme caused everyone such pain just a year ago. However, the government is at least now talking to a wider cross-section of the business sector, and not just trade-exposed companies or energy producers. On behalf of the 350,000 businesses in the ACCI national member network, many of whom are small and medium business owners and readers of Commerce & Industry, I have accepted the government’s invitation to be part of its Business Roundtable on climate change policy. It’s an opportunity to explain some of the good sustainability initiatives being taken by Australian industry to lessen our impact on the environment without embedding a carbon price in our economy. It’s also a chance to put on the table the challenge industry has to remain competitive if businesses in other nations with whom we compete do not bear comparable burdens. With the newly elected Australian parliament seemingly tugging towards a more ‘green’ agenda, this is a really important moment for the mainstream business voice to be heard loud and clear. If you are a business owner or manager and want to have your voice heard at the Business Roundtable, contact your ACCIaffiliated Chamber of Commerce, national Industry Association or ACCI. I hope you enjoy the Spring Edition of Commerce & Industry.

SPRING 2010 ACCI | 5


COMMERCE & INDUSTRY POST ELECTION COMMENT

AGENDA 2011 By Peter Anderson

Canberra has plenty of open space but with a more crowded government and parliament there is a lot of jostling about. A hung parliament that tugs to the left and a minority government formed by a loose coalition of disparate interests is the new order of business.

Prime Minister Gillard has since said that her government will ‘walk the economic reform road every day’. Our task, through the pages of Commerce & Industry and in direct dialogue with her Ministers, departments and officials is to make sure that happens.” CEO, Peter Anderson

In a democracy, independent and minor party politicians tend to be a magnet for single issue lobbying and special interest causes. Changes to the way parliament operates add to the likelihood that stand-alone issues, even some loopy ones, get air time on the floor of parliament. Amidst this eclectic mix, sits the real economy. Responsible economic management and support for the private sector must remain central to all government and parliamentary decisions. Crowd that out and we end up with economic drift. Private businesses should contribute their fair share, but they are not cash-cows. Workplaces are places where we spend a lot of time but they are not social laboratories for individual fads or experiments. Wealth must be created before it can be redistributed. These truisms should be etched in the screensaver of each national politician, lest the new order compromises level-headed thinking. The Gillard government must be given time and space to govern but it is outcomes that matter most. Sighs of relief that a government is being formed should not mean a return to business as usual. The government and the business community has to set the bar higher for itself because the economic challenges are steep and democracy just delivered a higher degree of difficulty. Government leadership will still set the tone of national governance. Strong leadership from Prime Minister Julia Gillard is needed, now her government has a second chance. Political leadership accompanied by the right reform agenda builds business and consumer confidence, and confidence spreads into investment, jobs and prosperity.

6 | ACCI SPRING 2010

There is a world of difference between a government that looks busy but achieves little and a government that is busy and achieves much. As the Spring session of Parliament closes and the Government, Opposition and cross bench MPs start thinking about the Christmas break , ACCI has kindly added to their Christmas reading with this six point plan, which if adopted would help them to come roaring out of the legislative gates in 2011. One: Start abolishing payroll tax. Don’t wait for next year’s tax summit. Payroll tax penalises employers each time they employ someone. Run with this Henry tax review recommendation, and get the Premiers around a table at a special pre-Christmas COAG to plan new financial arrangements that allow its phasing out. Result: multi government co-operation and increased employment. Two. Retain the building industry IR watchdog. Left wing building unions and the Greens want the IR watchdog in the building industry scrapped even though a Royal Commission put it there and it has kept union lawlessness under check. Result: stability in industrial relations and message to Greens that government is in charge. Three: Develop consensus on skills and labour migration. The election campaign debate on population and migration wasn’t good for the economy. Ask one of the independents to work with business groups and unions to present government and Opposition leaders with a joint position on likely skills needs and labour migration levels over next five years.

Five: Less spending by government on itself. New Ministers to direct all departmental secretaries to double the efficiency dividend to generate 2% savings in each of the next three years. Result: quicker return to budget surplus. Six: Allow after school employment in shops. Direct the new Industrial Relations Minister to ask the IR tribunal to change the rule that has forced retailers to sack after school employees where three hours of work can’t be found. Result: more youth jobs. The beauty of this six point strategy is that not one step relies on legislation to be agreed by the new hung parliament. The government can implement this plan at the first cabinet meeting next week. It would show that it can get on with the business of government after weeks of indecision. Above all it would convey a powerful message that the business community too should get on with the job of investing and employing , in the knowledge that the government might have lost its majority but not its commitment to the private sector.

As much as politics has changed, no social causes can be funded or implemented

Result: consensus building and better functioning of labour market.

without a strong

Four: Invest in infrastructure. Start acting on recommendations of Infrastructure Australia to get rid of transport, port and logistics blockages.

economy and the

Result: economic stimulus and higher productivity.

it generates.

jobs and revenues

SPRING 2010 ACCI | 7


COMMERCE & INDUSTRY NETWORK POWER

www.neca.asn.au

www.cciwa.com

www.nswbusinesschamber.com.au

www.vecci.org.au

www.masterbuilders.com.au

www.amma.org.au

NATIONAL ELECTRICAL & COMMUNICATIONS ASSOCIATION (NECA)

CCIWA

NSW BUSINESS CHAMBER

VECCI

MASTER BUILDERS AUSTRALIA

AMMA

NECA has been a keen participant in debate around the implementation of the National Broadband Network (NBN) as NECA members and other participants in the electrical industry will complete much of the flow on work required for Australian households to access the technology.

The living legacy of Australia’s first Chamber of Commerce, the NSW Business Chamber will celebrate its 125th Anniversary at its 2010 Annual Award Dinner on 26 November 2010. The Awards recognise NSW’s finest businesses. The voice of NSW’s businesses community has continued its rigorous and vitally important policy advocacy in the lead –up to one of the most crucial state elections in NSW history.

In particular, NECA has highlighted the costs that consumers will incur in ‘retro-fitting’ their residences to take full advantage of the services delivered on NBN infrastructure.

NECA has also called for NBN Co to release implementation details so that industry can be prepared to efficiently participate in the roll-out. NECA is also staging its Annual Excellence Awards which recognise outstanding practices in workplace safety, energy efficiency and installation. They also recognise the vital importance of vocational education and training with special Trade Teacher, School Student and Apprentice awards categories. NECA has been a keen participant in debate around the implementation of the National Broadband Network (NBN) as NECA members and other participants in the electrical industry will complete much of the flow on work required for Australian households to access the technology.

Perhaps not since the days of Jack Lang has NSW been in such parlous condition and the NSW Business Chamber’s 10 Big Ideas To Grow NSW continues to set the policy agenda ahead of the March 2011 poll.

CCIWA also celebrated it’s 120th birthday.

The living legacy of Australia’s first Chamber of Commerce, the NSW Business Chamber will celebrate its 125th Anniversary at its 2010 Annual Award Dinner on 26 November 2010.

8 | ACCI SPRING 2010

As a principal representative of the energy and resources sector, AMMA has been active in its advocacy for reform of the Fair Work laws. This advocacy is built on the experience of its members and AMMA’s Finding Fairness? A review of the first 12 months of the Fair Work Act 2009. AMMA also released Argument or Agreement – What faith can we have in good faith bargaining? The report details employers early experience of enterprise bargaining under the Fair Work Act.

www.actchamber.com.au

Areas covered included: Small Business, Tourism & events, Regional Victoria, Infrastructure, Workplace health, education & training, Energy Environment & Climate Change

The policy agenda included fixing federation, taxation and budget management, infrastructure, addressing labour shortages, industrial relations, climate change, competition reform, education and training and health.

Two years on, CCIWA’s scorecard rates the WA Government on its response. The result? A mixed bag.

The event brings together representatives from business in Victoria’s regional and rural communities, business leaders and government to address issues, ideas and initiatives which are central to sustainable regional prosperity. The outcome of the Regional Convention was VECCI’s New Directions For Sustainable Regional Prosperity. This compliments VECCI’s State Election policy Agenda For Regional Victoria.

VECCI also released its policy priorities for the 2010 Victorian Election being held in late November 2010. VECCI effectively marked the start of the campaign, setting the agenda when it released its policy agendas in October.

CCIWA released Federal Strategies For Growth setting out the policy priorities which should be followed by the Gillard Government.

As the voice of Western Australian business, they set the agenda on the election of the Barnett Government with their Strategies for Growth policy agenda for the state, on which they sought action from the newly elected government.

In October the Victorian Employer’s Chamber of Commerce & Industry (VECCI) held its Regional Convention in Ballarat. The 2010 Convention follows the highly successful Inaugural Regional Convention in Bendigo.

Victorian Election

Western Australia’s peak business organisation has been active in its advocacy on both state and federal policy arenas.

Also released was CCIWA’s WA Government Scorecard.

Advocates for Regional Prosperity

Master Builders Australia (MBA) released its Economic Analysis of Building and Construction Industry Productivity 2010 Report produced by KPMG/Econtech in October 2010. The Report highlights the benefits which the Australian Building and Construction Commission provides to the Australian community by boosting productivity in the construction industry. The construction industry accounts for nearly 10% of Australia’s GDP, employs many thousands of Australians and is the lifeblood of other industries through its supply chain.

The MBA is also celebrating its celebrating its 120th Anniversary while recognising excellence in the building and construction industry at its National Awards.

ACT & REGION CHAMBER OF COMMERCE & INDUSTRY

The construction industry accounts for nearly 10% of Australia’s GDP, employs many thousands of Australians and is the lifeblood of other industries through its supply chain.

ACT & Region Chamber of Commerce & Industry has continued to implement initiatives to assist Canberra businesses to maximise their potential. Recently they launched their Women In Business events providing a business networking forum for business women in the ACT.

SPRING 2010 ACCI | 9


COMMERCE & INDUSTRY THE WORKPLACE

THE FAIR WORK ACT – IS IT FAIR? IS IT WORKING? An edited extract of David Gregory’s address to the Industrial Relations Society of Victoria. To make a judgment we need to consider how the Fair Work laws have performed against the two key objectives identified by the Government as the rationale for their introduction. Firstly, the Government indicated it was moving to put in place laws that are “fair for working Australians.”

Australia’s traditional “Monday to Friday, nine to five” style of award regulation, and for those looking to step out of award coverage into a collective agreement the rebranded “no disadvantage” test, together with a rigorous agreement approval process, awaits.

Secondly, “it would put in place a framework to enable co – operation and collaboration in individual workplaces to be the means to deliver productivity, growth and sustainable Australian businesses.”

• Next a low paid bargaining stream and equal remuneration provisions that provide further avenues for new entitlements to be established, ultimately by arbitration in appropriate cases, and

We can quickly confirm that the FWA delivers “in spades” in terms of standards and protections for employees. No question about delivery on the commitment to put in place laws that is fair for working Australians. We now have in place –

• new “workplace rights” provisions – another significant addition.

• an expanded framework of legislated minimum standards, the NES, that apply to all Australian employees from the CEO down; • an extended unfair dismissal jurisdiction, with small business no longer exempt, that has delivered more than 12, 000 unfair dismissal claims in year one; • a comprehensive national award system, revamped in terms of the number of awards, but still retaining much of

10 | ACCI SPRING 2010

So a framework that is big on fairness, which business welcomes as we do need a system of minimum standards to provide an underpinning safety net for Australian employees. However, to be genuinely fair workplace laws also need to recognize the needs of employers and while ACCI accepts the need for an appropriate safety net the nature of those minimum entitlements should not act to work against the achievement of outcomes in individual workplaces, based on the needs of that workplace and its employees. The safety net must be just that. It should not be so extensive that it removes the incentive

to bargain at the workplace level. So, what about delivery on that other critical objective identified by the Government – a framework that can, through collaborative and cooperative approaches, deliver productivity gains in individual workplaces and be a means to contribute to growth and economic development? After sixteenth months of operation the Fair Work law’s score on this objective shows little evidence of real progress. The Fair Work laws attempt to achieve to deliver these outcomes for employers through collective processes based on co - operation and collaboration between employers and employees, and their representatives, in individual workplaces. These collective processes are intended to be facilitated by new mechanisms - the bargaining representative provisions, the potential to obtain Majority Support Determinations, which can bring a reluctant employer to the bargaining table, and the bargaining in good faith provisions, which can enable orders directing reluctant parties to do certain things or behave in certain ways. But there is little evidence of bargaining processes where productivity considerations and the genuine interests of the business are being seriously put on the table.

Most negotiations instead are about money and other entitlements or focused on enhancing union entitlements and involvement, or about placing more restrictions on the employers, for example – • limitations on the use of casuals • restrictions on the way in which contractors might be engaged • restrictions on the use of individual flexibility arrangements. On one view the Act’s boundaries and parameters are still being explored and understood. Business has accepted that the system is evolving and given it the

Why then, is the new framework not delivering? ‘benefit of doubt’ from its introduction. But many employers are also questioning why established bargaining processes required such a dramatic overhaul and needed this new framework of regulation imposed on top. There is also a need to look at whether those mechanisms intended to “grease the wheels” of bargaining and negotiation are being used constructively to achieve collaborative, mutually beneficial outcomes through collectively bargained processes, or whether they are simply being used as weapons in an enhanced adversarial contest that has more to do with union entitlements and opportunities to recruit new members, than anything to do with productivity gain, collaboration, and business sustainability. And there is a significant structural issue that was perhaps always going to stand in the way of what the Fair Work laws were meant to deliver.

Collective bargaining road block Collectively bargained enterprise agreements have only ever extended to cover a limited part of the Australian workforce. The overwhelming majority of businesses and employees have instead existed under a framework of award conditions and a variety of other informal and often individual based arrangements. For those businesses a framework which only enables enterprise specific conditions to be developed through collectively bargained processes is putting in place an option that is often unfamiliar and one they have little involvement with. It raises concerns about the time and effort involved the possibility

In saying that we also need to put to bed the ridiculous notion that anyone who argues a case for change is simply advocating a return to “WorkChoices”. Unions want change. of union involvement in their business operations, and the technical processes that might await them in conclusion as part of the agreement approval process. This situation is compounded by the fact that unions have acted to close off the option of entering into individual flexibility agreements - despite the protections that sit around this option - they can't be offered as a condition of employment, they can’t leave an employee any worse off, and an employee can walk away from the agreement by simply giving the employer 4 weeks notice of their intention to do so. So, the nature of these outcomes and these developments under the Fair Work laws must be considered and kept under review as part of a legitimate, ongoing process of debate and discussion about the appropriate nature of Australia’s workplace relations system in a modern contemporary context. Because whilst fairness is an important underpinning to a credible and viable framework of workplace regulation so is an emphasis upon productivity, growth and business sustainability. So the debates around these issues will inevitably continue. We for our part will continue to encourage and seek constructive change as part of those processes. Despite what our political leaders are saying or not saying it is inevitable that whilst the existing laws are bedded down changes will be required and both the Government and the Opposition need to have an open mind about making or advocating change as experience with the system and the Fair Work laws develop and expand. In saying that we also need to put to bed the ridiculous notion that anyone who argues a case for change is simply advocating a return to “WorkChoices”. Unions want change. Employers will propose change. Political parties will advocate change. To suggest calls for change simply imply a return to the past is nonsense as the proponents of that line of argument are in reality only too well aware.

clear case in point. A deluge of 12,000 applications in 12 months. Are the barriers to entry to low? Is the system focused enough on dealing with genuine applicants? What about the double jeopardy faced by employers when they take action because of concern about OHS, sexual harassment or racial vilification only to find themselves lumbered with an unfair dismissal claim. Certainly claims appear to be being dealt with relatively quickly, with almost all resolved in the conciliation phase. But time periods and speed of resolution tell only part of the story. Are employers being placed in a situation where they feel that they have no option but to settle? What about the framework of bargaining and agreement making? Is it working to deliver a more cooperative, collaborative approach or simply providing more avenues to pursue for the respective parties in an increasingly adversarial contest? Inevitably discussion must also return to the role and place of individual agreements. Many employers are comfortable negotiating one on one and have often known nothing else. Many employees are also comfortable dealing at this level. The existence of a comprehensive safety net removes much of the criticism that has been leveled in the past at the individual agreement making stream. An individual agreement making option based around these sorts of considerations will inevitably be part of the ongoing debates about the shape of Australia's workplace relations system in the future in a modern contemporary context. Clearly, an appropriate safety net will also be a critical part of the picture as well as we work toward a framework of regulation that strikes the right balance between fairness and considerations around productivity, growth and sustainability.

Some aspects of the new laws already warrant review. The unfair dismissal provisions are a

SPRING 2010 ACCI | 11


COMMERCE & INDUSTRY THE WORKPLACE

A CURRENT OVERVIEW OF THE PROCESS TO HARMONISE AUSTRALIA’S WORKPLACE HEALTH, SAFETY AND COMPENSATION LAWS AND REGULATIONS By Anne Bellamy

Safe Work Australia completed development on the model Work Health and Safety Act provisions earlier this year. Any technical matters that may justify an amendment are still to be reviewed by Safe Work. The Act is due to come into force in all Australian jurisdictions on 12 January 2012. Jurisdictions are expected to introduce the Bill into their Parliament as soon as possible to ensure passage prior to the implementation date. The regulations which will support Act

training of safety representatives and dispute resolution. Regulations relating to matters such as first aid, personal protective equipment, workplace facilities and emergency management will be included in a group of general regulations. The second area is hazard based regulation. Regulations such as traffic management, remote and isolated work, noise, manual tasks, work at height, hazardous substances and electricity. The other substantive area is industry based regulation. Regulations include, but are not limited to construction, demolition, logging, underwater diving and fatigue – long haul driving (still being considered by SIG).

are in the final stage of development prior to being released for public comment in late 2010. Regulations relating to existing national standards are included in the legislative package as well regulations currently in force in the majority of jurisdictions. Existing regulations in a minority of jurisdictions are generally not adopted in the package. Regulation development has been a two stage process.

Safe Work Australia completed development on the model Work Health and Safety Act provisions earlier this year. Any technical matters that may justify an amendment are still to be reviewed by Safe Work.

The first stage required the development of a policy paper on each area identified in the preliminary review as possibly requiring regulations.

A number of priority codes scheduled to be released with the initial legislative package include managing risk, consultation and chemical related.

The purpose of the policy paper was to examine the status of regulations on the specific matter, hazards and risks associated

Potential priority codes include facilities, noise, manual tasks, confined spaces, work at heights, excavation, demolition, tilt up and registered plant. The final set of regulations will be grouped into ten chapters. Guidance notes to assist in the interpretation

with the matter being examined, appropriate controls and the need for regulation to ensure identified controls. Where the paper contained a recommendation for regulation, the proposed content of the regulation was included. Each paper was presented to the Strategic Issues Group of Safe Work Australia for consideration. Regulations fall under three substantive areas. The first set addresses administrative matters required to administer the Act. These include the definition of a body corporate for the purpose of the Act, procedures relating to the election and

Regulations relating to matters such as first aid, personal protective equipment, workplace facilities and emergency management will be included in a group of general regulations. of certain provisions of the Act and to a lesser extent the regulations will be developed. A list of the guidance notes is not available and it is not known how many of the notes will be available at the time of implementation of the legislative package. Safe Work Australia is expected to consider the full package of regulations at its November meeting and make a recommendation to the Workplace Relations Ministerial Council that the regulations and codes are released for public comment shortly thereafter. The public comment phase provides the opportunity for persons conducting a business to closely examine the impact of the proposed regulations and provide comment. In particular the package documentation will identify a number of areas for particular focus. One such area is whether a breach of a regulation should attract a fine associated with a breach of duty of the Act rather than the lower fine normally associated with a regulation.

12 | ACCI SPRING 2010

NATIONAL WORKPLACE SAFETY LAWS By Carolyn Davis Australia’s state and federal governments recently agreed for the first time to develop national workplace safety laws. The benefit to business of harmonisation is the opportunity for a consistent workplace safety system which is common across jurisdictions and a consequent reduction in the regulatory burden. For smaller businesses it will not necessarily result in dramatic change of their dayto-day operations but it will provide consistency. Larger business will reap significant benefit from workplace safety laws which are the same regardless of location, industry sector or scale of the enterprise. ACCI and the members of our national network have been at the forefront of

Australia’s state and federal governments recently agreed for the first time to develop national workplace safety laws. policy and advocacy on this issue of vital importance to the day to day operations of Australian businesses regardless of their size or the industry they operate in. Anne Bellamy from Chamber of Commerce and Industry Western Australia (CCIWA) represents ACCI on Safework Australia, the body principally responsible for driving harmonisation. In conjunction with our national member network, ACCI has been preparing a national industry by industry response and collating the views of other industry associations through the ACCI also convened National Employer’s Occupational, Health and Safety Consultative Forum (NEOHSC), which brings together the views of employers across the country in regard to OHS and worker’s compensation matters. ACCI, the ACTU and state governments are represented at NEOHSC and have worked constructively and collaboratively

for nearly two years. This makes the New South Wales (NSW) Government’s decision to back agree from the national agreement on the harmonised work safe laws doubly disappointing. ACCI has publicly condemned the NSW Government’s action. Notwithstanding the damaging action of the NSW Government, work is continuing and ACCI has been leading the coordination of employer response to the proposed national regulations which will accompany the WHS Act. ACCI is strongly advocating for regulations which assist in achieving the objective of the national work safe laws – safer workplaces. To be effective they must be performance based, be achievable by particular industries and take into account the varying size of businesses which may not have the capacity to constantly access expert advice. They should also come with a cost and regulatory impact which are not crippling for industry, meet best practice guidelines and be fair to all parties. It is vital that industry has a strong role in the detailed content of these proposed regulations, especially before Safework Australia submits them for public comment. ACCI is supporting employer organisations representing different industries to recognise issues which may affect the operations of their members. We have established Reference Groups to review the final regulator package and ensure a consistent and clear national employer response.

Carolyn Davis is ACCI’s Manager of Workplace, Health, Safety and Compensation. To have input into ACCI’s coordinated national response to the federal government’s national harmonised workplace safety regulations contact ACCI’s Workplace, Health, Safety team on 03 9668 9950. SPRING 2010 ACCI | 13


COMMERCE & INDUSTRY THE WORKPLACE

TO BE FAIR, WORKPLACE LAWS NEED REFORM Australia’s business organisations have issued a unanimous call for the Government, the Parliament, regulators, industry and tribunals to take swift and pragmatic action to remedy problems which have emerged in the first eighteen months of the Fair Work Act’s operation. This call for action was an outcome of ACCI’s Workplace Policy Committee Meeting in Melbourne in October 2010. It was attended by senior executives of twenty business organisations from across Australia and representing all industry sectors.

concern of state and territory Chambers of Commerce and Industry Associations that the Fair Work system is not delivering on one of the government’s key objectives for the laws – that they would deliver productivity, growth and sustainable businesses.

·· Cost increases and loss of flexibility have occurred in some industries, in some states despite the Government’s promise to the ensure the contrary

·· Increased union use of loose adherence to right of entry rules, threats of industrial action, attempts to frustrate employers’ direct communication with employees, attempts to control hiring of contractors and heightened risk of demarcation disputes ·· Red tape and undue complexity in getting bargaining agreements approved ·· Regulation which makes it more difficult to offer existing employees ongoing employment when a business changes hands but needs to establish more efficient work practices

The Committee heard substantive reports from business organisations that business owners and managers are experiencing a lack of fairness in the application of important elements of the Fair Work system, and that this is having a negative impact on the operation of their businesses. Specific areas of concern included:

The Committee strongly expressed the

·· Excessive wage demands and increases in collective bargaining that exceed inflation have not been matched by efficiency and productivity gains and some unions have resisted serious dialogue on the issue

1

·· One size-fits all minimum engagement rules in some industry sectors, particularly in regional Australia, have cost young people after school jobs ·· Award wage movements greater than the rate of inflation and, in many industry sectors, above the level of business activity which limits the capacity for enterprise bargaining to occur

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4

3

5

·· A large spike (63%) in the number of unfair dismissal claims, use of new ‘adverse action’ claims to bolster unfair dismissal allegations, a return of ‘go away money’ (in 75 % of cases) to settle cases, employers being caught in ‘double jeopardy’ tangles after dismissing employees for OHS breaches or sexual harassment and inconsistent application of the Fair Dismissals Code exposing some small businesses to claims despite their adherence to the Code. ·· Inconsistencies and grey areas in the application new awards and employment standards between industry, tribunals and regulators have not been resolved. While some have been ironed out through dialogue or litigation, others remain including potential new employer obligations to pay annual leave loading on unused leave when leave is paid out on cessation of employment. The Committee also announced that it would conduct an evidence based review of the Fair Work system to identify solutions to these and other identified problems.

6 1 Marcia Kuhne (CCIWA), Michael Moloney (Chamber of Commerce NT), Chris Platt (AMMA), Rick Carney (Business SA) , Jim Hargrave (Australian Printing Industry Association) 2 Gary Brack (CEO AFEI), Greg Schmidt (ACT Chamber of Commerce & Industry), Jennifer Cromarty (ARA) 3 Leyla Yilmaz (VACC), Marcia Kuhne (Chamber of Commerce& Industry Western Australia) 4 Geoff Bull (AMMA) 5 The Paid Parental Leave team from DEEWR 6 Daniel Mammone - ACCI Manager of Workplace Policy & Legal Affairs, David Gregory ACCI Director of Workplace Policy 14 | ACCI SPRING 2010

“The review will be forward looking and will examine the contemporary needs of Australian workplaces in a modern economy and will not cherry-pick the Fair Work laws or hark back to Workchoices or other past systems,” Peter Anderson said.

“AFTER TODAY’S MEETING OF NATIONAL AND INDUSTRY WIDE EMPLOYER REPRESENTATIVES, IT IS WHOLLY UNREALISTIC FOR THE GOVERNMENT, OPPOSITION AND THOSE SITTING ON THE CROSS BENCHES; TO REFUSE TO CONTEMPLATE OR RULE OUT CHANGES TO THE FAIR WORK SYSTEM WHICH WILL ENHANCE FAIRNESS, EFFICIENCY AND PRODUCTIVITY.” PETER ANDERSON, ACCI’S CHIEF EXECUTIVE. SPRING 2010 ACCI | 15


COMMERCE & INDUSTRY ECONOMY

POLICY DISCIPLINE NEEDED TO MANAGE RECOVERY BY GREG EVANS Following the turbulence of the past two years and the pronounced slowdown in the pace of growth, the Australian economy has commenced a sound, but to some extent patchy and uneven, recovery. Australia’s proximity to Asia and our capacity to supply bulk quantities of those resources required for their expanding economies have shortened the downturn and now underpin our economic recovery. That said, in the early days of recovery not all sectors have seen immediate improvements in overall demand conditions, including many retail areas, tourism and hospitality, non-residential construction and multi-level residential building. These latter areas have been particularly affected by difficulties in accessing finance for expansion and new projects. Moreover many trade exposed sectors of the economy have lost relative competitiveness due to the appreciating currency. It is clear that prompt fiscal and monetary policy responses and a resilient financial system allowed Australia to escape the worst impact of the global recession. As the economy recovers, the focus of policy now needs to shift to restoring the budget position and implementing a program of tax and micro economic reform that will enhance long run productivity growth in economy. ACCI supported the use of timely, targeted and temporary stimulus to support the economy and protect of Australian jobs in the eye of the storm caused by the global financial crisis. The Government’s fiscal policy response was timely, substantial and has since proven to be successful.

A RETURN TO BALANCED BUDGETS As move through the next stage of the economic cycle, fiscal discipline has to be a core priority for future Federal Budgets. In this regard, the business community welcomes the Gillard Government’s commitment to a return to a balanced budget in 2012-13. We also endorse the Government’s immediate concern to pursue a credible deficit reduction strategy. The Government’s fiscal strategy contains

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laudable objectives for fiscal policy including restraining real growth in spending to 2% a year until the budget returns to surplus and keeping taxation as a share of GDP well below the 2007-08 level of 23.6%. Business will now be focussed on seeing how the broad outline of the deficit reduction plan will be implemented. The real challenge will be delivering on those objectives in practice and not allowing spending pressures to claw back efforts toward fiscal consolidation and a return to budget surplus. There are compelling reasons for why the budget repair task must be tackled as a key national priority. The capacity to respond with discretionary fiscal policy (i.e economic stimulus) is a key factor, as recent history has demonstrated.

starting position to deal with the long run fiscal pressures associated with economic and other structural changes. A temporary budget deficit during the downturn was an acceptable price for avoiding much greater economic pain, providing the resulting budget deficits don’t become entrenched. In a recovering economy, a credible government fiscal strategy will avoid additional pressure on government borrowing costs and avoid concerns about a potential overall increase in tax, which would dampen the willingness of business to invest and employ. The IMF has also stressed the importance of adopting credible deficit exit strategies.

Following the turbulence of the past two years and the pronounced slowdown in the pace of growth, the Australian economy has commenced a sound, but to some extent patchy and uneven, recovery. Australia’s proximity to Asia and our capacity to supply bulk quantities of those resources required for their expanding economies have shortened the downturn and now underpin our economic recovery. But it also important is the International Monetary Fund (IMF) research which shows the contribution that larger deficits and higher debt levels make to increasing interest rates and, in turn, crowding out private sector investment. Further, it is also imperative that the budget is in a strong

FULL EXPENDITURE REVIEW – NOT JUST TAX Significant fiscal discipline will be needed to restore the budget to surplus and government spending cannot be exempt. Recent trends in real government spending suggest that a two per cent real cap in

real expenditure will be hard to achieve. The scale of the budget repair task facing the nation may require more than just a proposed limit on real growth in government expenditure. ACCI believes the government should consider a ‘root and branch’ review of all current budget outlays with a view to identifying waste and inefficiency for reform or rationalisation. Rationalising existing government spending and moving toward a smaller government approach will also enhance the scope for meaningful tax reform and reduce the tax burden.

TAX REFORM The Henry Tax Review provides a once in a generation opportunity for fundamental taxation reform. Australian business recognises the need for ongoing review of the tax system and is supportive of reform that will deliver better economic outcomes for the private sector and the community. Elements of Australia’s taxation system are without doubt in need of reform but it is imperative that incentives to work, save and invest remain central components of the tax system. Changes to the tax system have the potential to improve economic growth in the long term but only if they enhance these core fundamentals. Successful tax reform will be measured by how it provides incentives to invest, encourages workforce participation and rewards entrepreneurship. In the short term, reform also needs to support a return to private investment in the period of economic recovery. Business will ultimately rate the reform process by its commitment to reducing income tax rates, maintaining capital gains tax relief measures for small business and the extent of progress toward abolishing inefficient state based transaction taxes. ACCI has welcomed some measures in the government’s initial response to the Henry Review such as reductions to company tax rates and enhanced depreciation benefits to small business.

We also opposed the design and intended implementation of the proposed Resources Sector Super Profits Tax and remain deeply concerned about the current Mineral Resources Rent Tax. The government must also commence dealing with the unfinished business of tax reform and the Henry Review. Any tax reform agenda must include action on the Henry Review recommendation for the abolition of Payroll Tax. The scrapping of this burden on business and tax on the employment of Australians assumes greater importance in seeking to alleviate the increased costs resulting from increasing the Superannuation Guarantee Levy from 9% to 12%. Payroll tax, in addition to its other sins, is levied without regard to a firm’s ability to pay. ACCI’s survey evidence shows that the detrimental impact of this tax is significant. If the priority of the government is to ensure sufficient job creation to achieve full employment, it must consider the Henry Review’s recommendations that the abolition of Payroll Tax be funded by a more broadly based tax. Aside from considering sizable reductions in spending, using the existing mechanism of the GST to fund the abolition of inefficient taxes needs to be debated.

IMPROVING OUR PRODUCTIVITY Increasing productivity is essential if Australia is to effectively address the challenges ahead, including the fiscal pressures caused by an aging population. The government’s focus needs to be on reasserting a strong commitment to productivity enhancing reform. All levels of government need to embark on a program of ongoing micro economic reform. ACCI’s Reform Agenda For Jobs And Growth sets out ten priorities in this area including less intrusive regulation, competition and free trade, quality infrastructure provision, investment in skills and retaining some flexibility in labour markets.

INFRASTRUCTURE Meeting Australia’s infrastructure needs will also be critical to maximising growth. ACCI welcomes the infrastructure spending initiatives outlined in the 2010 Federal Budget. However, it is essential that projects pass a publicly transparent, robust and objective cost benefit analysis if value for money is to be maximised. The private sector also has an important role to play in delivering infrastructure projects and the government needs to consider options to maximise the scope and attractiveness of public private partnerships.

ACCESS TO FINANCE FOR SMALL BUSINESS Since the onset of the global financial crisis in 2007, Australian banks have become more risk averse, further tightening their lending criteria and increasing risk margins especially for SME borrowers. The banks have also experienced significant increases in the costs of borrowing, with negative flow on effects for their lending rates for Australian borrowers. As a result small businesses continue to face difficulties accessing finance from Australian banks even when a solid lending platform exists. Unlike larger businesses, SME’s do not have the capacity to raise external finance through equity or issuing corporate bonds and therefore rely heavily on the banks for their working capital and new funding to expand their business activities including finance of plant and machinery. Many SMEs are therefore prevented from taking advantage of opportunities for expansion. Small business employs around 50% of Australia’s private sector employees and produces nearly 40% of industry value added and they are a vital engine for productivity. There is a real a risk that the limited access to credit will have negative impact on employment and growth. ACCI was a strong advocate of the Senate Economics Committee’s Inquiry into Small Business Access to Finance in March 2010. ACCI and the members of our national member network made submissions to the Inquiry. Subsequently in October 2010 another Senate inquiry was announced looking into banking competition issues, ACCI will again be participating in this process. It is likely that the situation will not improve until greater competition returns to credit markets. Policy adjustments which can encourage more business lenders should be explored by a Productivity Commission Inquiry to robustly assess the level of bank competition and make policy recommendations.

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COMMERCE & INDUSTRY FEATURES

U.S. STYLE LITIGATION MEANS LESS LAW & ORDER By Daniel Mammone

Daniel Mammone, ACCI’s Manager of Workplace Policy & Legal Affairs, highlights the dangers that US style legal tactics pose for our civil justice system and efforts to reduce sexual harassment and discrimination in the workplace. A recent case involving an employee of David Jones, Ms Kristy Fraser-Kirk, who took legal action against David Jones, its board and members of the senior management team including its former Chief Executive Officer, Mark McInnes, has highlighted employers’ duties to prevent and deal with allegations of sexual harassment in the workplace. The matter, colloquially known as the ‘DJ’s case’, was recently settled out of court during conciliation proceedings in the Australian Human Rights Commission with Ms FraserKirk receiving approximately $850,000. It has been widely reported in the media that this was a sexual harassment claim, bought under discrimination legislation which proscribes unwelcome conduct of a sexual nature. Some readers may be surprised to know that the claims pursued before the Federal Court were not based on alleged breaches of discrimination or Occupational Health & Safety (OH&S) legislation, nor was it founded in the potent new provisions in the Fair Work Act 2009 under the Part 3-1 “general protections” regime. Whilst Ms Fraser-Kirk concurrently pursued action under the federal Sex Discrimination

18 | ACCI SPRING 2010

It has been widely reported in the media that this was a sexual harassment claim, bought under discrimination legislation which proscribes unwelcome conduct of a sexual nature. Some readers may be surprised to know that the claims pursued before the Federal Court were not based on alleged breaches of discrimination or Occupational Health & Safety (OH&S) legislation, nor was it founded in the potent new provisions in the Fair Work Act 2009 under the Part 3-1 “general protections” regime. Act 1984 and reserved her rights under the Fair Work Act, her statement of claim indicated that she alleged breaches of the federal Trade Practices Act 1974, the New South Wales Fair Trading Act 1987 (misleading and deceptive conduct through representations made by the company and its officers), breaches of contract (express and implied terms, including workplace policies on OH&S and harassment), tort (for breaches of the duty of care to provide safe work and trespass), and equity (detrimental reliance on a representation). Arguably the most controversial aspect of the case was the nature and quantum of damages sought.

Ms Fraser-Kirk claimed general damages and costs, plus punitive damages based on 5% of the company’s profits and 5% of the Mr McInnes’ salary during the time he was the CEO of the company (estimated to be approximately $37 million in total). At a media doorstop announcing her multi-million dollar law suit, Ms Fraser-Kirk promised that all of the punitive damages would be donated to a charity “assisting persons in the area of sexual harassment and bullying as nominated by the Applicant”. This was clearly an unprecedented moment in Australia’s legal history, falling squarely into a US style litigation strategy not seen before in sexual harassment or discrimination cases.

Many legal commentators quite rightly indicated that an Australian court would be unlikely to award anything near the amounts sought by the plaintiff. Litigation outcomes under the Sex Discrimination Act reveal that the highest damages awarded by the federal courts has been in Poniatowska v Hickinbotham where the Court awarded Ms Poniatowska $463,000 in 2009 (this is subject to an appeal to the High Court). The employer terminated Ms Poniatowska’s employment purportedly for unsatisfactory performance, but Ms Poniatowska was awarded damages after the court found that she was subjected to sexual harassment which included colleagues sending her emails and text messages sexually propositioning her, and another work colleague sending her a sexually explicit image on her mobile phone. Prior to the Poniatowska case, the highest damages awarded for sexual harassment under the Sex Discrimination Act was $400,000 in a 2007 case of Lee v Smith & Ors. Ms Lee worked in an administrative position for the Department of Defence and alleged the Department was vicariously liable for the unlawful actions of three employees. The breaches alleged by Ms Lee ranged from displays of pornography at the workplace and unwanted touching and sexual advances, to a sexual assault that occurred after working hours at her colleague’s home. Ms Lee alleged this conduct caused her to suffer significant injury, including posttraumatic stress disorder and depression. She also claimed she was unable to work and her relationship with her partner had broken down. Neither of these cases involved any element of punitive or exemplary damages which is essentially designed to punish the wrongdoer, rather than compensate the victim.

Prior to the federal election, ACCI met with officials from the Department of Finance and Deregulation, and the Attorney-General’s office on the overall approach to developing a consolidated Commonwealth antidiscrimination Act, particularly around the regulatory impacts on business. Officials at the time indicated that it would conduct a series of meetings with key industry stakeholders to inform the development of the legislation, with the aim of publicly releasing draft legislation in 2011 for comment. ACCI will take a keen interest in the development of exposure draft legislation and continue to promote a discrimination law framework that balances the interests of both employees and employers. dedicated website fishing for other aggrieved persons to come forward with past and present allegations against Mr McInnes (not isolated to events at David Jones but further back in his career) and using Trade Practices legislation to sue the directors personally. This strategy appears to have been targeted to have maximum impact on the company at a number of different levels, not least of which was to threaten its brand and standing in the community. As the case has now settled, it is unclear what the court would have determined had it progressed to a full trial based on the allegations of misconduct and the legal duties breached.

claims of sexual harassment in the workplace. This particular case aside, there are a number of difficulties that all employers must confront that make allegations of sexual harassment a difficult but important space to navigate. Firstly, it has always been genuinely difficult for employers to prevent misconduct occurring between co-workers in the first place. No amount of education, training, manuals or sophisticated anti-sexual harassment system can ultimately prevent unlawful conduct between employees 100 per cent of the time.

Contrast this with the United States, and you find that bigger than Texas law suits are not uncommon, with a jury this year in a New York sex discrimination case awarding over US$3 million in compensatory damages to 12 employees and $250 million in punitive damages against drug company Novartis representing about 2 percent of Novartis’ gross revenues for 2009.

Companies do not readily admit legal fault when entering into a deed of settlement and it will never be known whether the company would be found liable and if so, the extent and type of damages that would be awarded against it. Usually, the reputational damage inflicted by these types of cases for a large corporate citizen is often far worse than any pecuniary damages that may be awarded by a court. For a smaller firm, both reputational damage and large pecuniary pay-outs are equally crippling.

Employers and employees are not robots – at least not yet – and it is axiomatic that hundreds of complex social and personal interactions occur during and after ordinary working hours. Technologies, such as the internet, mobile phones and email, have only compounded this problem. Whilst employers should be encouraged to put in place robust systems and procedures to prevent misconduct occurring and ensure that all employees are provided with a safe working environment, there will be times when an employer cannot stop unlawful behaviour happening.

Many elements of the David Jones case make this atypical in the Australian context. It included many hallmarks of sensational US style litigation including the unprecedented quantum of damages sought; media strategies used by all parties in the case and the plaintiff’s claim to have developed “psychiatric harm” from the resulting intense media coverage; the creative “cocktail claim” featuring many different causes of action; creation by the plaintiff’s legal team of a

What is clear in this case, is the damage to the company and former CEO’s reputation was largely inflicted prior to substantive hearings and determination by the court. No one had their day in court to either defend or prosecute. The ink was barely dry on the deed of settlement when media reports surfaced suggesting the settlement had encouraged others to use Ms Fraser-Kirk’s statement of claim filed in the Federal Court as a type of legal template for existing or new

Secondly, employers often find themselves in a difficult position when investigating and taking disciplinary action which may not satisfy the alleged victim or the wrongdoer. The alleged victim will almost always pursue the employer under “accessory” or “vicarious” liability provisions (given that the company always has the deepest pockets) and not the alleged wrongdoer personally. This doesn’t look like changing any time soon when the pressure remains on an employer

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COMMERCE & INDUSTRY FEATURES

to settle out of court as much as possible, regardless of the legal strength of the aggrieved person’s case.

all employers in dealing in the incidence of workplace sexual harassment and discrimination?

Thirdly, employers then face the prospect of “double jeopardy” legal scenarios when handling complaints and making subsequent decisions as a result of investigations (such as terminating the alleged wrongdoer’s employment or moving them on to another worksite, division or team as the case may be).

Firstly, the use of sophisticated US style litigation tactics is regrettable because its goal of achieving an out of court settlement prejudices the chances of all sides having the opportunity to put their case before the courts where allegations are tried and tested according to the established legal norms. This should continue to apply to sexual harassment law suits, no matter how salacious the facts may be.

Thirdly, and most importantly, the case reinforces the need for employers, line managers and supervisors at all levels, to take allegations of sexual harassment seriously and act quickly, fairly and decisively to investigate and deal with the issue. Employers should obtain external advice from legal advisors or Chambers of Commerce and Industry Associations at the first sign of an allegation, before proceeding internally with any actions. Policies and training also need to be up to date, relevant and followed through. Once again, external assistance from professional advisors is essential.

Extravagant punitive damage claims and the use of the media to threaten

Finally, all parties in the workplace share a responsibility for reducing the incidence of

Only recently, an example emerged in proceedings before the federal Industrial Tribunal, Fair Work Australia. The matter involved a casual worker at very large and well known food manufacturing company. The worker is serving a period of incarceration for serious criminal offences and was found guilty of a number of charges related to stalking, child pornography and using the postal service to harass. There were a number of complaints made against the worker, including harassment and stalking female co-workers as well as drawing a penis on a piece of cardboard and hiding it in a box of food products. The employer deactivated a security entrance pass to ensure the safety and welfare of the largely female workforce and removed him from the casual roster so as not to offer subsequent shifts of work. Whilst the Tribunal noted that the worker’s convictions related to conduct of a sexual nature and the company’s obligations to provide a safe workplace supported a valid reason for the termination of his employment, the worker was awarded compensation because his termination was deemed to be “harsh, unjust and unreasonable” based on procedural flaws in the way it was carried out. This is a highly invidious position for an employer to be in. Employers should be able to take a zero-tolerance approach to such misconduct, particularly to protect other employees from sexual harassment. However, in attempting to comply with discrimination, OH&S and other legal obligations, employers may soon find themselves in considerable legal risk (and cost) due to the operation of other laws. ACCI has consistently highlighted this problem to successive Governments and specific inquiries, including a detailed submission to the 2008 Senate Standing Committee on Legal and Constitutional Affairs Inquiry into the effectiveness of the federal Sex Discrimination Act arguing for more certainty for employers in these situations. In the aftermath of the David Jones case, what challenges potentially lie ahead for

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Extravagant punitive damage claims and the use of the media to threaten reputations before a case has been heard also undermines both the confidence of the community in the legal framework governing sexual harassment, as well as the genuine efforts of employers over the previous two decades to reduce the incidence of sexual harassment in the workplace. reputations before a case has been heard also undermines both the confidence of the community in the legal framework governing sexual harassment, as well as the genuine efforts of employers over the previous two decades to reduce the incidence of sexual harassment in the workplace.

sexual harassment. Employers and employees have constructively worked together to ensure everyone is a partner in this laudable goal and will continue to do so in the future. In the aftermath of the Djs case, it is clear that US style litigation tactics make this goal harder to achieve.

Secondly, employers need to consider and be aware that this case may generate future claims based on multiple sources of law and not the obvious statutory causes of action. This includes breaches of company policies that are incorporated into contracts of employment that can be legally enforceable. Other obligations may also derive from duties or obligations that are verbal or “implied” by the law and are not necessarily expressed or set out in a written document.

Employer’s appropriately and responsibly managing sexual harassment issues now face a real possibility of being confronted by hyperbolic claims for punitive damages, PR agencies staging media events and the airing of damaging allegations of misconduct before ever having a genuine opportunity to defend themselves before the judicial court system and the court of public opinion.

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COMMERCE & INDUSTRY FEATURES

TIME FOR A SOUTHERN & WESTERN LODGE PM’S RESIDENCES IN MELBOURNE & PERTH

part of the proposed Federation Square East project, which would cover over the unsightly Jolimont railway yards. “Building over the Jolimont rail yards site is probably the best option, as it sits between our business and sporting precincts and showcases Melbourne brilliantly,” said VECCI chief executive, Wayne Kayler-Thomson. While a new building would not provide the historical context that I believe is fitting for a Prime Ministerial Residence, it would offer something else: an exciting new landmark in Melbourne. If done well, this could add a new dimension to the city’s architectural landscape, inspiring citizens and attracting tourists.

By Gillian Carr www.melbournecurious.blogspot.com.

Above: Bishop Hales House, Perth, Western Australia. that befits her station.” My only reservation is that this would necessarily involve the removal of the currently publically accessible Como House (and similarly Rippon Lea) from the public domain. Surely, it should remain the right of all Victorians to access such historically significant sites; not just prime ministers and other elites when they are in town.

Canberra has the Lodge. Sydney has Kirribilli House. And Melbourne has, well, nothing of the sort. With the first Victorian PM since Hawke, now is the time to consider an official Melbourne Prime Ministerial residence. Melbourne is one of Australia’s major commercial and cultural hubs. It boasts a rapidly growing population that will likely see it become the nation’s largest city by 2020. The need for an official residence for the Prime Minister in Melbourne is only going to become increasingly apparent.

An elegant solution with historical resonance could be provided by one of Melbourne’s

ministerial residence but, by virtue of the fact that it has always been private, would not deprive Victorians of an historical site they have grown accustomed to visiting. Airlie Mansion was home to a young Stanley Melbourne Bruce, Prime Minister from 1923-29, and was restored beautifully in 2009. Assuming that security would not be hindered by the Blackman Hotel building that towers over it, Airlie Mansion could make a perfect prime ministerial home.

Melbourne is missing out on significant investment opportunities by not having its own PM’s Residence, as important events naturally take place at Kirribilli House. An official residence would help to entrench Melbourne’s status as a major commercial, political and cultural hub.

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Gillian Carr is a final year Arts/Law student at the University of Melbourne. Her passion for Melbourne’s heritage began when she was a young girl, exploring the city with her grandmother who would recount stories from her past. Gillian’s blog, Melbourne Curious, celebrates Melbourne’s architecture in a fresh, young and fashionable style. www.melbournecurious.blogspot.com.

Despite Julia Gillard’s contentment to lodge in Altona – an Altona Lodge is out of the question. In any case, security issues have since compelled her to begin staying in hotels. Traditionally, many of our Prime Ministers have done the same, with Edmund Barton, Robert Menzies and Paul Keating staying at the Windsor, Bob Hawke favouring the Hyatt, John Howard preferring the Langham and Ben Chifley dying at the Kurrajong in Canberra. Hotels may do the trick, but an official residence, like Kirribilli House, is necessary for formal occasions including hosting foreign dignitaries, trade and business delegations and Cabinet dinners.

Whether housed in a magnificent heritage mansion or a beautiful new building, it is important for Melbourne to have an official prime ministerial residence. Not only would such a residence enhance Melbourne’s political status, it would also compliment its importance as one of Australia’s most important commercial and cultural centres.

Western Lodge With the Western Boom forecast to continue for many years to come, Perth should become a more important city in Australia’s political firmament. A Prime Ministerial Residence would be step in this direction and acknowledge the importance of the state which is contributing so much to our national prosperity.

Above: Airlie Mansion, Melbourne, Victoria. It is surprising to think that Melbourne has gone for so long without an official residence, given that Melbourne was the nation’s capital immediately following Federation and when we have so many buildings that would be perfect for the role. Melbourne’s Lord Mayor Robert Doyle has suggested that “a house from 1901 might be appropriate as it is the year of Federation.” This is a lovely sentiment, but it would be better to choose a location based on historical significance, facilities and centrality, rather than being restricted to a

particular year for the sake of symbolism. To me, Rippon Lea in Elsternwick (built 1868) and Como House in South Yarra (built 1847) would both provide the grandeur and dignity befitting a prime ministerial residence. Both mansions would accommodate official events perfectly, with their glorious ballrooms, dining rooms and gardens. Chief Executive of the National Trust, Martin Purslow, has commented, “I’d love [Ms Gillard] to use Como House. We would move heaven and earth to make her comfortable, and it would be nice to see her in a residence

Above: Indiana @ Cottesloe, Perth, Western Australia. privately owned heritage buildings. Currently on the market is Airlie Mansion (built 1891) in St Kilda Road. This mansion would provide the historical context befitting a Prime

Alternatively, a brand new prime ministerial residence could be purpose-built in Melbourne. Victoria’s Chamber of Commerce and Industry, VECCI would like to see it form

Building a new Western Lodge would stimulate the West’s creative talent and encourage Perth’s leading lights and mining industry elite bequeath us a permanent legacy of the Boom. However, Perth also has its of grand historic mansions ideal for the job such as Bishop Hales House and Indiana at Cottesloe C&I

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COMMERCE & INDUSTRY FEATURES

GOOD FAITH BARGAINING & DIRECT EMPLOYER EMPLOYEE COMMUNICATIONS By Michael Tamvakologos It is apparent from the decisions in this area to date that the Australian tribunal is likely to take a different approach on this issue to its US counterpart, reflecting some important differences between the US and Australian legislation.

The US Legislation The good faith bargaining provisions in the Fair Work Act 2009 (Cth) (FW Act) have now been operating for over 12 months. In that time over 100 applications for bargaining orders have been made to Fair Work Australia (FWA) in addition to over 500 applications for dispute resolution in the bargaining context. Cases to date have considered a plethora of factual and legal issues that have arisen including when bargaining for a collective agreement is at an impasse, such that the agreement can be put to a ballot of employees without the agreement of a union bargaining representative (CFMEU v Tahmoor Coal Pty Ltd [2010] FWAFB 3510); whether an employer must allow workers to hold paid mass meetings for the purpose of discussing wage negotiations (LHMU v Fosters [2009] FWA 750]); whether the implementation of a workforce restructure during negotiations that will affect the scope of an agreement undermines bargaining (LHMU v Coca Cola Amatil (Aust) Pty Ltd [2009] FWA 153; and when an employer’s unilateral improvement in terms and conditions of employment during bargaining will be considered to have undermined bargaining (FSU v Commonwealth Bank of Australia [2010] FWA 2690). Whilst it is still early in the life of the new regime, discernable trends and issues are beginning to appear. One is whether, and in what circumstances, employers are able to communicate directly with employees (rather than through a bargaining representative) during the bargaining process. In the United States, there are significant restrictions on an employer’s ability to communicate directly with employees about bargaining once the processes for the designation of a bargaining representative have occurred.

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An important feature of the National Labor Relations Act (NLRA) is the “exclusivity principle”. This principle makes a bargaining representative designated by the National Labor Relations Board (NLRB) (the US equivalent to Fair Work Australia) selected by the majority of employees in a bargaining unit the exclusive representative of all the employees in that unit for collective bargaining about rates of pay, wages, hours of employment, or other conditions of employment. That is, each bargaining unit has a single representative with an exclusive right to represent the employees in that bargaining unit. Employees within a bargaining unit who do not vote for union representation will still be bound by the vote of the majority. Minority groups of employees (including groups of highly skilled workers) have in some cases complained that this rule unfairly disadvantages them in bargaining. The first avenue to challenge this position is to persuade the NLRB that the bargaining unit is not appropriate because not all employees share a “community of interest” (a broadly similar concept to a “scope order” under the Australian legislation). Another option is to take legal action against the union for breaching the implied obligation to represent employees fairly, and without hostile discrimination. The United States Supreme Court first articulated this duty as inherent in the principle of exclusive representation in Steele v Louisville & Nashville Railroad, 323 U.S. 192 (1944). In the United States, the concept of exclusivity has been broadly interpreted to require employers to communicate with employees about bargaining matters only through a bargaining representative.

For example: • in Medo Photo Supply Corp v NLRB 321 U.S. 678 (1944) it was held that an employer could not avoid the union bargaining representative and deal directly with employees, even where employees initiated the dealings and informed the employer that they were dissatisfied with their union representation and would abandon the union if the employer was open to unilaterally increasing their wages. • in Master Window Cleaning Inc., v Service Employees Union Local No. 18 302 NLRB No. 63 (1991) an employer had unilaterally implemented certain proposals previously made to the union during bargaining. It was held that with limited exceptions “an employer’s obligation to refrain from unilateral changes extends beyond the mere duty to give notice and the opportunity to bargain, it encompasses a duty to refrain from implementation at all, unless and until an overall impasse has been reached in bargaining as a whole”.

The Australian legislation The good faith bargaining requirements include recognising and bargaining with other bargaining representatives for an agreement. Bargaining representatives have a number of rights and obligations which are set out in the legislation. However, it is unlikely that the considerable restrictions on dealing directly with employees rather than through a bargaining representative which have developed under the NLRA will become a feature of decisions under the FW Act. One reason is the different legislative scheme and the absence of any parallel to the exclusivity principle which has developed under the NLRA. For example, under the FW Act a union is the default bargaining representative for employees who are members. But each employee is free to choose another bargaining representative, including him or herself. An employee dissatisfied with his or her union representation can simply

revoke that appointment, or appoint a different bargaining representative. There may be industrial practicalities which prevent this occurring often, but there are no legal impediments. Further, in Australia, the parties to an agreement made under the FW Act (other than greenfields agreements) are the employer and employees. Whilst unions can apply to be covered by the agreement at the time it is approved - and their status or role is otherwise recognised by the legislation – the union is not a party to the agreement. The Australian legislation does not give a bargaining representative the primacy given to such a representative in the United States. These legislative differences (quite apart from historical, cultural and other differences) are an important basis to distinguish the US experience. In FSU v CBA [2010] FWA 2690 an FWA Commissioner expressly declined to deal with United States decisions partly on the basis that “… there are a number of extra factors which may bear upon the establishment of the US jurisprudence in relation to good faith bargaining, including the establishment of exclusive bargaining rights, which do not find legislative parallels in Australia….”.

Some decisions to date The rulings of FWA to date, though not all one way, indicate a general reluctance to accept US decisions as highly relevant or persuasive and specifically indicate that the United States restrictions on “direct dealing” with employees are not likely to find favour in Australia. For example, in LHMU v Mingara Recreation [2009] FWA 1442 the LHMU applied to FWA for bargaining orders that the employer recognise the LHMU as the bargaining representative of employees, and that the LHMU have the right to attend all meetings between management and employees about a new agreement. The catalyst for the application was a meeting between management and employees which the LHMU’s area organiser had asked to attend, but from which she was excluded. Vice President Watson was not satisfied that holding a preliminary information meeting directly with staff without a bargaining representative was inconsistent with the FW Act good faith bargaining obligations. His Honour stated: 18] In my view, communicating with staff is good management practice. If such communications are not accompanied by a refusal to meet and communicate with a bargaining representative, then in my view there is no breach of the good faith bargaining requirements of the Act.

[19] The obligations under the Act relate to genuine recognition and genuine bargaining activities with other bargaining representatives. They do not preclude concurrent communication and discussions with the employees who may be requested to approve the agreement. In my view, an employer is free to meet with its employees to discuss employment issues, including matters relevant to enterprise bargaining in the absence of bargaining representatives. Widespread communication is to be encouraged – not regulated, diminished or monopolised. In CFMEU v Tahmoor Coal [2010] FWAFB 3510 the CFMEU applied for bargaining orders to prevent the employer from meeting with employees without their bargaining representative, and to prevent the employer giving employees any written material about bargaining unless it was agreed to by the CFMEU. A Full Bench of FWA held that the Commissioner at first instance was entitled to conclude that after a very long period of negotiation the parties were simply unable to agree as to the terms of a new agreement. It was not capricious or unfair conduct for Tahmoor to seek to explain its negotiating position to employees directly, given the lack of progress in negotiations. The Full Bench stated: Tahmoor may have been trying to influence employee views, but it does not necessarily follow that its conduct undermined freedom of association or collective bargaining or that it acted capriciously or unfairly. The proposals put to the employees were the same as those put to the employee representatives at the bargaining meetings. The meetings themselves do not appear to have been oppressive for employees and the slides and other material used in the presentation were not deceptive or otherwise objectionable. Indeed, there is no evidence that any of the material provided to employees was misleading or that employees were threatened in any relevant way.

Issues and lessons for employers • US restrictions on employers dealing directly with employees during bargaining have not found favour in Australia.

Australian case law to date indicates that the good faith bargaining requirements under the Fair Work Act 2009 are likely to be interpreted differently to their US equivalents.

• Employers can meet with their employees in the absence of bargaining representatives to discuss employment issues, including matters about bargaining.

At the same time, employers should be careful to acknowledge the status and role of bargaining representatives and otherwise observe the good faith bargaining requirements.

• It is important that communications with bargaining representatives, on the one hand, and employees, on the other, are consistent and that any “direct dealing” with employees does not undermine the role of bargaining representatives or the bargaining process generally. • The good faith bargaining obligations cut both ways. Employers are entitled to expect unions and other bargaining representatives to represent the employer’s bargaining position to employees accurately, fairly and in a manner which does not undermine bargaining.

Where this is not occurring, employers should consider using the good faith bargaining provisions to ensure that bargaining is proceeding efficiently and fairly and that all bargaining representatives are behaving appropriately.

Nor is there any reason to believe that the employee representatives did not themselves have adequate access to the workforce in relation to the bargaining process. It is also relevant that the bargaining meetings continued during and after the employee meetings and that Tahmoor took various steps, referred to above, to facilitate consideration of its proposals by the employee representatives. In the circumstances of this case holding the employee meetings and sending material to the employees’ homes was not capricious or unfair conduct that undermined freedom of association or collective bargaining.

Michael Tamvakologos is a Partner of Blake Dawson. He has a broad employment and industrial relations practice and has represented employers in employment and industrial relations litigation in the Federal Court, FWA and other relevant Tribunals.

SPRING 2010 ACCI | 25


COMMERCE & INDUSTRY FEATURES

RETENTION OF THE BUILDING INDUSTRY WATCHDOG IS ESSENTIAL

The unions accepted liability for more than 50 breaches of building laws over a series of unlawful strikes and coercion of people. It is emphasised that this is the sort of conduct that occurs even with a well empowered, independent regulator in place. Attacks have been made on the ABCC because it is able to compel people to provide evidence relevant to its investigations.

By Richard Calver

Investment in the building and construction industry was $152.5 billion in 2009. At May 2010 the construction industry employed over one million people. Master Builders Australia estimates that the investment in the industry

This power is held by a number of other

Prior to the 2007 election, the Australian Labor Party promised that it would retain the ABCC until 31 January 2010, when it would be replaced by a specialist Fair Work inspectorate. This did not occur. Labor promised that the inspectorate was to be a “strong cop on the beat.” But the Bill that was introduced into Parliament to bring in the new regulator would have delivered an agency that was weakened by cumbersome

will reach $2.2 trillion over the next decade.

Richard Calver goes the behind the political sloganeering to outline why the retention of the Australian Building and Construction Commission should be retained. The building and construction industry is an important part our economy. It contributes to jobs, economic growth and Australia’s productive capacity. Investment in the building and construction industry was $152.5 billion in 2009. At May 2010 the construction industry employed over one million people. Master Builders Australia estimates that the investment in the industry will reach $2.2 trillion over the next decade. But the capacity to deliver on this construction investment is jeopardised when self interest dominates, when union in-fighting results in unjustified delays and breaches of civil and criminal law and when building participants act as if the laws of the land need not apply to construction sites.

A culture of lawlessness in the commercial sector of the building and construction industry was identified by the Cole Royal Commission in 2003. The major recommendation arising from that Royal Commission was the establishment of an independent, well empowered watchdog to enforce the rule of law in the industry. The then Government’s response to the recommendations of the Royal Commissioner was to pass the Building and Construction Industry Improvement Act, 2005 which, amongst other things, created the Australian Building and Construction Commission (ABCC). 26 | ACCI SPRING 2010

The role of the ABCC is to monitor and promote appropriate standards of conduct throughout the building and construction industry. In fulfilling this role, the ABCC is charged with ensuring that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole. In the building and construction industry adherence to the rule of law is a factor that directly affects labour market risk and hence productivity; this is why it is one of Master Builders’ main policy priorities to reinforce the application of the rule of law. The rule of law must be observed by all citizens.

AS SINGLETON FROM THE CATO INSTITUTE HAS SAID: (L)aw in our society serves an essential practical function - that is, to supply the ground rules so that businesses, investors, and individuals can plan their actions to avoid disputes with one another. Disputes and the risk of disputes vastly raise the risk and cost of new ventures. That is, the most important function of the law is to lower the risks of uncertainty in making long term plans. Lack of certainty drives up costs in every part of the system, making time lines and expenditure harder to predict. As a result, risk factors attached to cash flows will be higher and effective net present values of projects lower. When that uncertainty is deliberately and unlawfully generated by any stakeholder in the system which seeks an unjustified economic rent, then governments are obliged to act. This action protects the community by ensuring that the cost of infrastructure including schools and hospitals is not inflated

by this factor. Unfortunately, despite the presence of the ABCC, serious unlawful behaviour continues to occur in the industry;

Unacceptable behaviour remains despite the existence of a tough watchdog. Unlawful behaviour would only get worse without this strong regulator. One example from many is illustrative. The Victorian Wholesale Market is scheduled to open in 2012. The project is one of the largest current infrastructure projects of the Victorian Government, at a cost of approximately $291 million. The matter is currently before the courts but the ABCC alleges that the Construction Forestry Mining and Energy Union (CFMEU) attempted to coerce a subcontractor to make an industrial agreement, discriminated against them because of an industrial agreement they had entered with a competing union, the AWU, and engaged in unlawful industrial action. This is on top of defiance by the CFMEU of a court order to stop a blockade of the site. This is not new; union infighting has marred other vital community projects. For example, similar unacceptable conduct was displayed at the Westgate Bridge strengthening site where union demarcation issues cost the State millions of dollars. As a result of the unacceptable conduct associated with the Westgate dispute the CFMEU’s construction and general division and two of its officials paid $1 million in court imposed penalties and the Australian Manufacturing Workers Union and one of its officials paid $325,000, after they settled the ABCC’s prosecution.

investigatory bodies such as the Australian Competition and Consumer Commission, the Australian Taxation Office and the Australian Securities and Investments Commission. And whilst the right to silence is removed when evidence is compelled to be provided in confidence to the ABCC, the legislation states that examinees have immunity from prosecution unless they have lied. The ability of the ABCC to use the power of compulsory examination has been labelled by those who oppose the ABCC as a breach of civil liberties. That is not the case but Master Builders would not be averse to seeing a transcript of any interview provided to the Commonwealth Ombudsman as an additional protection for witnesses. This step combined with the enduring right of immunity from prosecution would adequately protect the rights of witnesses.

bureaucratic procedures, and was defeated in the Senate. Under the Bill acts of union thuggery would have cost unions a lot less making it more viable for them to be involved in unlawful industrial action. The maximum fines that could be levied against those who breach the law would have been substantially reduced to less than a third of current levels. This would be an unacceptable lowering of the fines.

AT LEAST FIVE AREAS OF THE BILL ARE DEFICIENT:

• the “switching off” mechanism that would permit the information gathering powers of the new agency to be “turned off” like a light switch through an overly bureaucratic process that would involve yet another agency is unwarranted; • business having the right to take immediate action to stop unlawful industrial action should not be removed; and • safeguarding the independence of the new body, particularly from Ministerial interference would be compromised. The Bill lapsed when the forty second Parliament was dissolved on 19 July 2010 ahead of the 2010 election.

The greatest deficiency of the Bills that it would remove the laws that are tailored to the industry’s circumstances.

However, recent comments by the Minister for Jobs and Workplace Relations, the Hon Senator Evans, indicate that it is the intention of the Government to reintroduce this ineffectual Bill. As well, the Greens party has, on the first day of the new Parliament, introduced legislation in the Senate to abolish the ABCC.

• tough penalties for unlawful industrial action would be unacceptably watered down;

Calls to abolish the ABCC ignore the adverse consequences to the community if Australia’s building sites are allowed to return to an environment where the rule of law does not operate.

• sunset provisions on compulsory information gathering powers would remove an essential aspect of the ABCC’s investigatory structure;

The building and construction industry is undergoing a period in which industrial relations has not been the negative influence it has been in the past.

Benefits of the Australian Building and Construction Commission (ABCC) to industry and the community

But, unfortunately, Master Builders Australia’s recent national survey shows that builders are becoming increasingly concerned about the way in which workplace relations is tending to dominate their project manager’s time, with negative sentiment rising. The Bill should not further undermine the certainty necessary to provide confidence post the global financial crisis.

· CONSUMERS BETTER OFF BY $5.9 BILLION ANNUALLY · 0.7% REDUCTION IN INFLATION · 0.6% INCREASE IN GDP · 9.4% REDUCTION IN LABOUR COSTS TO CONSUMERS · 9.4% GAIN IN PRODUCTIVITY ACROSS THE BUILDING AND CONSTRUCTION INDUSTRY Source: KPMG/Econtech Analysis of Building and Construction Industry Productivity 2010

The ABCC is a necessary institution that assists with the task of building the nation’s infrastructure. It should be permitted to get on with that job.

En is, et puloctu escides bonDirector Etre te Richard Calver is the National quemo C. Iquis, vatumuris nos notandi Industrial Relations & Legal Counsel for simihilium intem. Master Builders Australia. SPRING 2010 ACCI | 27


COMMERCE & INDUSTRY FEATURES

WHERE IS PRODUCTIVITY BARGAINING IN AUSTRALIA?

By Chris Gardner

Productivity bargaining: enterprise bargaining with productivity gain. Yesterday’s story. Indeed, it was only in the 1990’s that Australia saw the shift towards enterprisebased bargaining away from centrally arbitrated awards.

Australian Manufacturing Workers Union, Dave Oliver observed that ‘the bargaining agenda should be about real productivity’ and that ‘unions are leading the debate on this issue’. He offers this advice for employers:

But yesterday’s story needs to be today’s story. By its own admission, the Rudd Government was elected with a plan to increase Australia’s productivity. Such desire finds its way into the Government’s regulatory analysis to the Fair Work Bill which stated:

“The companies that are genuinely engaged in the productivity agenda, and in good faith bargaining as prescribed by Julia Gillard’s laws, will clearly reap the rewards”.

“Enterprise agreements can ensure that increases in pay and entitlements are linked to productivity increases of the enterprises. This is due to negotiations at the level of the enterprise better reflecting the financial situation of enterprise. Furthermore, collective bargaining will shift the focus of negotiations towards boosting productivity.” The Deputy Prime Minister noted that: “The Bill aims to achieve productivity and fairness through enterprise–level collective bargaining underpinned by the guaranteed safety net, simple good faith bargaining obligations, and clear rules governing industrial action. The Fair Work Act itself includes in its objects the desire to “promote productivity and economic growth”. Then we have union leadership pronouncements about productivity. In September last year at a Workforce conference, the National Secretary of the 28 | ACCI SPRING 2010

Mr Oliver’s union is a key player in Australian manufacturing. His quest for bargaining for productivity are clearly laudable. So there must be a disconnect between such thinking and what happens on the ground. For there would be few employers in the

Most employers complain that such concerns are given short thrift by union negotiators. The good faith bargaining laws go someway to ensuring that an employer’s position here is considered – just as much as it requires an employer to properly consider union demands. But beyond the obligation to consider and respond to respective claims there is nothing to compel a focus on improving the well-being of the enterprise. To be fair, when it comes to the regulation of collective bargaining in Australia, there has never been a legislative solution to the need to focus on productivity. So apart from a brief foray in the early 1990s most enterprise negotiations have focussed

Productivity bargaining: enterprise bargaining with productivity gain. Yesterday’s story. Indeed, it was only in the 1990’s that Australia saw the shift towards enterprise-based bargaining away from centrally arbitrated awards. manufacturing industry (if elsewhere) that can boast having been able to embark upon a negotiation where the productivity and efficiency interests of the enterprise are seriously considered in any enterprise bargaining negotiation.

little on productivity gain. Most set out with unions making claims on employers for a wage increase and for other benefits. Some demands are directed towards increasing the economic benefits of the employees. Others are concerned with the employer having less control over its right to manage.

The employer typically responds with reasons why it cannot agree to some or all these demands but often falls short of responding with its own claims (at least with any real fervor). Indeed whether out of a lack of skill, or because of a focus on short term needs (and the desire to avoid a bargaining dispute and industrial action), the employer is often complicit in outcomes which are ultimately not sustainable in the medium to long term. The per unit cost production is increased. Unless something changes, the value of the business will be eroded. The labour cost is, of course, often the biggest line item in a company’s operating expenses.

“The companies that are genuinely engaged in the productivity agenda, and in good faith bargaining as prescribed by Julia Gillard’s laws, will clearly reap the rewards." In part, anecdotally, this has seen employers respond over time with action to reverse what becomes an unsustainable mediumlong term trend. Redundancy programs, increased casualisation, outsourcing to a third party labour supply, and other means of restructuring become an invariable

“For the record… none of the offshore employers proposed any specific productivity improvements at the bargaining of or during the current bargaining round, so the union has therefore not rejected new proposals for productivity improvement …”. consequence of the need to stem the unsustainable trend. The need for a focus on genuine productivity bargaining underscored by a genuine desire by all parties has never been greater. The 30% pay increase over 3 years (to offshore oil and gas employees of Total Marine Services) without productivity gain represents a recent stark example of current failings. So too does the Victorian desalination plant deal where, it seems, the desire for “industrial peace” saw an outcome of approximately 25% above industry standards. When commenting on the negotiations with offshore employers, the Maritime Union National Secretary, Paddy Crumlin offers this view: “For the record … none of the offshore employers proposed any specific productivity improvements at the bargaining of or during the current bargaining round, so the union has therefore not rejected new proposals for

productivity improvement …”. According to AMMA who negotiated on behalf of these employers, productivity improvements were sought. The MUA refused to address them. True it is that many employers pursue a productivity agenda independent of any bargaining outcome. Indeed there are sound reasons for this – and bargaining ought not interfere with this as many an employer might fear. The best thinking here, and perhaps internationally, needs to be harnessed in order to stimulate a necessary fundamental shift in the approach to collective bargaining in this country. Our nations future prosperity demands it.

Chris Gardner is a Partner in Employee Relations at Freehills specialising in workplace relations. He features in Best Lawyers Australia and Chambers Global. SPRING 2010 ACCI | 29


COMMERCE & INDUSTRY GLOBAL ENGAGEMENT

HOW APEC CAN ASSIST BUSINESS GROWTH IN ASIA-PACIFIC By Nathan Backhouse and Paul Gallagher

The 21st Century has increasingly been called the ‘Asia Pacific century’. The increasing integration of East Asia’s economies was critical to kick-starting recovery from the Global Financial Crisis (GFC). The global economic thunder-storm also highlighted the benefits Australian gains from our close geographic and economic ties to Asia, including our continuing integration in the regional economy. However, strong economic growth in Asia should not lead to complacency in the pursuit and facilitation of trade liberalisation. Rather, efforts to strengthen the integration and liberalisation process should be reinforced. While our national living standards ebb and flow based on domestic policy and bilateral trade, our collective economic interests are deeply aligned with the Asia Pacific region. The Asia Pacific Economic Co-operation Forum (APEC) is a key expression of that integration. Established in 1989, APEC has become the premier forum for facilitating economic growth, cooperation and trade and investment in the region. APEC’s core goal is to achieve free and open trade and investment in the region, as set out in the “Bogor Goals” adopted by APEC Leaders in 1994. These goals gave developed economies until 2010 and developing economies until 2020 to assess their progress. In 2010 the chairmanship of APEC is held by one of Australia’s largest and most important trading partners, Japan. Multilateral forms such as APEC are not without critics. Consolidating APEC’s relevance, so that APEC is a framework capable of addressing the many challenges and great diversity of cultures and economies in the region in the 21st century within the framework of “free and open trade and investment”, is a key challenge for Japan, and for APEC. However, while political structures are important, they provide only part of the solutions required to strengthen regional

30 | ACCI SPRING 2010

processes and addresses emerging challenges. It is vital for the future of the region that the voice of the private sector in APEC continues to grow in strength. It is difficult to understate the private sector in the process of regional integration and providing guidance on the required structures and agenda for APEC. In the aftermath of the GFC it is vital that governments speak loudly and clearly in support of the private sector and the proper function of the free enterprise system. For the Asia Pacific century to fully mature, the private sector in Asia must be given a

including more business representatives and regional grouping in the ABAC structure, would provide more resources and assist in developing constructive mechanisms for the organisation.

’Sustainable Growth’ is an appropriate principle on which national and regional action can be taken across the spectrum from building our cities, the environment, in financial markets, infrastructure policies, and labour markets.

National Chambers of Commerce are the logical, natural and proven source of such increased capacity and representation. Second, it is appropriate that product and capital markets be supervised with appropriate rigour, but not overly constrained if we are to encourage investment flows, including foreign direct investment. Lessons learnt from both the Asian financial crisis of 1997-98 and the GFC of 2008 should

Our Asia-Pacific region is a wonderful environment to do business, with opportunities for entrepreneurship that well and truly exceed our challenges. Regional governments need to provide facilitative economic and political structures that encourage investment, wealth creation and jobs which do not impose excessive regulatory burdens on business.

The 21st Century has increasingly been called the ‘Asia Pacific century’. The increasing integration of East Asia’s economies was critical to kick-starting recovery from the Global Financial Crisis (GFC). stronger voice. The influence of the private sector can be enhanced by harnessing private sector regional groupings in APEC such as the APEC Business Advisory Council (ABAC) and giving increased recognition to the roles of regional private sector groupings such as the Confederation of Asian Chambers of Commerce (CACCI), the ASEAN Business Advisory Council (ASEAN BAC), and the Confederation of Asia-Pacific Employers (CAPE). APEC must use its leadership credentials and imprimatur in nurturing a greater private sector voice to eschew not only border protection measures such as tariffs, but also behind the border protectionism (the unseen barriers in markets) which can be a ‘road block’ to entrepreneurship and export dynamism of the region. An expanded role for business in APEC,

underpin any restructuring. Third, APEC should aim high in the harmonisation of market regulation. This would compliment measures addressing both border and behind the border protection. Harmonisation of the proliferation of Free Trade Agreements (FTAs) and the often confusing and inconsistent Rules of Origin (ROO) should also be a high priority. Fourth, APEC can highlight the pivotal role the Asia-Pacific can play in the global economic recovery. Indeed, it is impossible to contemplate an enduring recovery of product or financial markets which does not have its source and expression among APEC member nations. APEC can give regional expression and application to the global work of institutions such as the G-20, of which Australia and a number of the larger APEC economies are a part.

A key tenet of sustainable growth is setting a firm foundation for productivity. APEC can promote broad economic co-operation and economic convergence that meets this goal. Japan already has a number of bilateral and regional Economic Partnership Agreements (EPAs) and FTAs with some of its APEC partners. Such agreements play an important part in fostering sustainable economic growth amongst the partners. Japan’s leadership, based on the power of its balanced and sophisticated economy can be demonstrated by political commitment to the further liberalisation of access to its economy required to complete the current EPA/FTA negotiation with Australia. This would establish strong credibility for the important leadership associated with the chairmanship of APEC. Infrastructure is also pivotal to the development of sustainable economies. Australia, Japan and their APEC partners all have large infrastructure catalogues which cannot be completed by national governments in acceptable budget or electoral terms without the participation of the private sector and foreign investment. Therefore, nations should be welcome

ACCI and our national member network of chambers of commerce and industry associations believe that APEC has an important role to play in encouraging member governments to support the appropriate harnessing of private capital to help deliver public infrastructure projects. foreign private sector involvement in the provision of appropriate economic and social public infrastructure. The Australian Chamber of Commerce & Industry (ACCI) welcomes the joint conclusions of the of the Australia Japan Business Co-operation Committee (AJBCC) and the Japan Australia Business Cooperation Committee (JABCC) that the similarities in the Japanese and Australian service dominated economies encourage joint ventures to deliver vital infrastructure public in the region. ACCI and our national member network of chambers of commerce and industry associations believe that APEC has an important role to play in encouraging member governments to support the

appropriate harnessing of private capital to help deliver public infrastructure projects. We are greatly encouraged by APEC’s future prospects under Japan’s chairmanship while recognising the acute challenges and strongly reaffirm our support for APEC’s interaction with the business community.

Nathan Backhouse is Director of Global Engagement at ACCI. He has previous diplomatic and business experience in Asia and is fluent in Mandarin.

Paul Gallagher is Executive Director of the AustralianJapan Business Council and the ASEAN Business Coun which are auspiced by ACCI . SPRING 2010 ACCI | 31


COMMERCE & INDUSTRY GLOBAL ENGAGEMENT

As Australia is well placed to participate in the growth of Asian economies, so must our business organisations adapt in order to maximize our influence. ACCI, as part of our modernisation and member service provision, is building new business networks with Chambers of Commerce and Industry Associations in Asia. Nowhere is more so than in China

THE MEETING OF THE NOW EXPANDED G20 IN SEOUL, KOREA IN NOVEMBER 2010, WAS THE FIRST LEADERS MEETING IN A COUNTRY OUTSIDE OF THE TRADITIONAL G8 NATIONS. THAT IT WAS HELD IN OUR ASIAN

BUILDING BUSINESS LINKS WITH CHINA 32 | ACCI SPRING 2010

REGION CONFIRMS THAT THE CENTRE OF ECONOMIC GRAVITY IS MOVING TOWARDS

Although doing business in China and with Chinese companies and organisations has its challenges, the rewards for persistence in gaining market access are considerable. In October ACCI hosted a senior delegation from the Hong Kong Chinese Enterprises Association (HKCEA), a peak business association consisting of enterprises whollyowned by the Chinese Government, private corporations, and joint ventures with Hong Kong investors. THE HKCEA represents more than 1,000 of the largest Chinese businesses operating in Hong Kong. Participants at the meeting included Ms Guo Li, former Vice-Minister from the Ministry of Commerce (MOFCOM), the Vice Chairman of China Minmetals (HK), the Vice President from COSCO (HK) Group, and senior executives from the Bank of Communications (HK), the Bank of China (HK), China Everbright International, and a number of Provincial-level government enterprises The HKCEA is optimistic about business opportunities in Australia despite concerns about capacity constraints, and ACCI and HKCEA discussed opportunities in not only in the resources sector, but also in construction, agribusiness, financial services and insurance. A number of senior representatives from the Chinese banks were interested in exploring models for providing cheaper finance to Australian businesses. In addition to ACCI’s Chief Executive Peter Anderson and ACCI’s Director of Trade and International Affairs Nathan Backhouse

“Hong Kong has a common law model familiar to Australian business and is an attractive location for signing commercial contracts with Chinese firms. International arbitral awards are enforceable in China if the seat of arbitration in contracts is in Hong Kong.” (himself a former official Australian embassy official in Bejing and fluent in Mandarin); ACCI’s national member network was represented by the incoming President of the Victorian Employer’s Chamber of Commerce and Industry (VECCI) Peter McMullan; Roger Hood - President of Chamber of Commerce and Industry Western Australia; Chris Peters - CEO of the ACT Region Chamber of Commerce and Industry; Master Builders Australia Chief Executive Wilhelm Harnisch and the Manager of VECCI Global. ACCI and National Network Member, The ACT and Region Chamber of Commerce and Industry also cohosted a dinner for the HKCEA in Canberra to meet key political business and media stakeholders. On behalf of ACCI’s national member network, Chief Executive Peter Anderson expressed optimism about mutual business opportunities between Australia and Hong Kong, “The Chinese Government’s ‘one country, two systems’ approach offers a number of advantages for Australian businesses wishing

to enter the mainland.” “Hong Kong has a common law model familiar to Australian business and is an attractive location for signing commercial contracts with Chinese firms. International arbitral awards are enforceable in China if the seat of arbitration in contracts is in Hong Kong.” In October ACCI also initiated a groundbreaking national business exchange program with the Chinese Council for the Promotion of International Trade (CCPIT), the first of its kind between our two nations. The CCPIT acts as both the Chinese national chamber of commerce and trade facilitation agency, and its staff member working for a period at ACCI builds on the Memorandum of Understanding signed by ACCI and CCPIT late last

C&I

ASIA. IT IS ASIAN ECONOMIES THAT HAVE SO FAR WITHSTOOD THE GLOBAL FINANCIAL CRISIS BUFFETING BETTER THAN IN EUROPE OR THE AMERICAS.

SPRING 2010 ACCI | 33


COMMERCE & INDUSTRY MEMBER PROFILES

NATIONAL ELECTRICAL AND COMMUNICATION ASSOCIATION (NECCA)

NSW BUSINESS CHAMBER

insulation scheme and most recently on the National Broadband Network. best advice and the most comprehensive range of targeted products and services, NSW Business Chamber also influence government to remove the broader economic impediments to growth.

New South Wales (NSW) Business Chamber is the premier business organisation in the premier state. Their mission is to empower business to maximise their potential. In addition to providing members with the

NSW Business Chamber plays a crucial role in highlighting the policy solutions needed to strengthen the New South Wales economy , which has been under performing for some time. On the foundation its NSW Reclaiming 1st initiative to reclaim New South Wales’ position in the engine room of the Australian economy, NSW Business Chamber developed and launched 10 Big Ideas to Grow NSW, a comprehensive policy blueprint for tackling

the challenges facing the state. 10 Big Ideas to Grow NSW is positive in outlook and shifts debate away from negativity and focuses on the opportunities which emerge when dealing with the challenges. The Chamber have now expanded the 10 Big Ideas platform and launched blueprints for New South Wales key cities and regions. NSW Business Chamber’s responsiveness and support of NSW businesses is greatly enhanced by its network of regional offices, 13 centres across NSW which makes it the most decentralised business organisation the state.

National Electrical and Communication Association (NECA) The National Electrical and Communications Association (NECA) is the national voice of the electro technology contracting industry. NECA is the only association that represents the interests of electrical and communications contractors Australia-wide, from employers and business people to technicians. NECA’s advocacy in 2010 has focussed particularly on the government’s aborted

NECA’s services are tailored to the unique needs of contractors working in the electro technology industry. We save members time and money by providing timely information, advice and practical tools to make business easier, safer and more cost-effective. More than 5,000 members across Australia now recognise and enjoy the benefits of membership of NECA. With offices in every state, NECA employs specialists in industrial relations, occupational health and safety, management, education and training, human resources and technology who are on-hand to offer

advice on a range of topics and provide representation and support in industrial relations matters. NECA has representatives on many Standards Australia technical committees and is also a registered organisation in federal and state industrial jurisdictions. The Association actively represents the needs and entitlements of contractors at all levels of government and industry, ensuring members’ needs are heard. We regularly provide our national member base with up-to-date industry-relevant information including current training, occupational health and safety, industrial and legislative requirements. NECA employs more than 2,000 apprentices in joint Group Training Companies.

AUSTRALIAN PAINT MANUFACTURING FEDERATION (AMPF) advocacy to government and regulatory bodies such as NICNAS, research and education of our consumers.

Australian Paint Manufacturing Federation (AMPF) represents the surface coatings industry. AMPF represent and advance the interests of our members to ensure the sustainability of the Australian paint industry

34 | ACCI SPRING 2010

Paint manufacturing in Australia can broadly be divided between architectural and decorative paints which accounts for 52% and industrial paints comprising 48%.

is reducing unnecessary regulatory burdens on the industry. In common with other industries, a goal is for Australian regulatory agencies to recognise the work of regulators in western economies such as the United States and not duplicate the approvals process for the Australian market.

In 2010, AMPF launched its Strategic Directions 2010-2011. One its key objectives

SPRING 2010 ACCI | 35


COMMERCE & INDUSTRY EVENTS

ACCI GENERAL COUNCIL DINNER, 15 JULY 2010 Hosted by Business SA @ the National Wine Centre, Adelaide

David Michaelis (President ACCI), Richard Holyman (Deputy President ACCI), Peter Anderson (Chief Executive ACCI)

Vincent Tremaine (CEO Flinders Port) SA

Peter Evers (Managing Director - Australian Central Credi Union)

CORIOLE Mark Lloyd (CEO )

Wilhelm Harnisch (CEO Master Builders Australia), Greg Evans (ACCI's Director of Economics & Industry Policy) 36 | ACCI SPRING 2010

James Pearson (CEO CCIWA) Senator Mary Jo Fisher

Megan Motto (CEO Consult Australia)

SPRING 2010 ACCI | 37


COMMERCE & INDUSTRY EVENTS

ACCI GENERAL COUNCIL DINNER, 15 JULY 2010 Hosted by Business SA @ the National Wine Centre, Adelaide

Jeremy Johnson ( President VECCI)

Nick Begarkis AM (ACCI Board), Allen Bolaffi (President Australia - Israel Chamber of Commerce SA & NT) Peter Anderson (Chief Executive ACCI), Peter Vaughan (CEO Business SA)

Hon Tom Koutsantonis MP, SA Minister for Industry & Trade

Hon Jing Lee (MLC), Vincent Treman (Flinders Ports)

David Michaelis (President ACCI), Laura Anderson (Business SA), Vanessa Black (Business SA)

Chris Young (CEO NT Chamber) James Pearson (CEO CCIWA) Robert Wallace (CEO TCCI) 38 | ACCI SPRING 2010

Peter Anderson ( CEO ACCI), Mike Terlet AO (Board Member, Business SA)

Peter Anderson ( CEO ACCI)

Mary Hicks (ACCI), David Eynon (AMCA) SPRING 2010 ACCI | 39


COMMERCE & INDUSTRY EVENTS

LAUNCH OF COMMERCE & INDUSTRY MAGAZINE

ACCI GENERAL COUNCIL, 16 JULY 2010

@ ACCI General Council in Adelaide, July 2010

Megan Motto (Consult Australia), Leyla Yilmaz (VACC)

ACCI’s President David Michaelis launching Commerce & Industry

Philip Anderson (CEO Printing Industry Association), Peter Anderson (ACCI Chief Executive), Jim Atkinson (President Printing Industry Association)

Stephen Cartwright (CEO NSW Business Chamber) 40 | ACCI SPRING 2010

The Hon Anthony Byrne MP (fmr Parliamentary Secretary for Trade)

Ian Harrison CEO Australian Made, Australian Grown Campaign

Peter Anderson (ACCI), Hon Anthony Byrne MP, Nick Begakis AM, David Mickaelis (ACCI) SPRING 2010 ACCI | 41


ACCI NATIONAL MEMBER NETWORK Master Builders Australia Australian Food & Grocery Council Australian Mines & Metals Association ACT Chamber of Commerce & Industry Consult Australia Tasmanian Chamber of Commerce & Industry Plastics and Chemicals Industries Association New South Wales Business Chamber National Electrical & Communications Association Business SA Australian Federation of Employers and Industries Australian Paint Manufacturers Association Chamber of Commerce & Industry Queensland ACCORD Chamber of Commerce & Industry Western Australia Australian Retailers Association Victorian Automobile Chamber of Commerce National Retail Association Chamber of Commerce Northern Territory Oil Industry Association Victorian Employers’ Chamber of Commerce & Industry Air Conditioning & Mechanical Contractor’s Association Australian Airlines & Operations Group Live Performance Australia Australian Dental Industry Association National Fire Industry Association Australian Made, Australian Grown Campaign National Baking Industry Association Master Plumbers & Mechanical Services Association of Australia Restaurant & Catering Australia Beverages Australia Printing Industry Association of Australia Bus Industry Confederation Agribusiness Employers Federation The Pharmacy Guild of Australia Australian Hotels Association. 42 | ACCI SPRING 2010

SPRING 2010 ACCI | 43


www.acci.asn.au

44 | ACCI SPRING 2010

Commerce & Industry Vol 1, N0 2, Spring 2010  

Quarterly magazine of the Australian Chamber of Commerce and Industry

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