AWU's Verbal Submission to Senate Inquiry into 'Work Choices'

Here is a transcript of the AWU's verbal submission to the Senate Employment, Workplace Relations and Education Committee's Inquiry into the Workplace Relations Amendment (Work Choices) Bill 2005.

Committee met at 9.02 am

HERBERT, Mr Andrew Kenneth, Legal Adviser, Australian Workers Union
LUDWIG, Mr Bill, National President, Australian Workers Union
SHORTEN, Mr Bill , National Secretary, Australian Workers Union

CHAIR (Senator Troeth)--

I declare open the resumption of these hearings on the Workplace Relations Amendment (Work Choices) Bill 2005. I welcome our first witnesses this morning. Do you have any comments to make on the capacity in which you appear?

Mr Herbert--I am a barrister in private practice based in Queensland. I have been acting for the AWU, amongst others, for about 15 years. I have been advising the union in relation to these matters.

Mr Ludwig--We took the advice of the minister when he said, 'Bring your lawyers and your accountants with you.'

CHAIR--The committee notes that, Mr Ludwig. Thank you for your submission. I invite you to make a brief opening statement before we begin our questions.

Mr Shorten-- In its submission the Australian Workers Union has recommended the committee reject the bill in its entirety. Having had a little more time to consider the provisions of the bill since putting in our submission, the AWU is now even more aware of the detrimental effect this legislation will have on Australian workers. Therefore, we strongly recommend that the committee should reject the bill in its entirety and we urge all senators to seriously consider rejecting this bill in the Senate.

We are gravely concerned by the way the Prime Minister has misrepresented the purpose and effects of this bill to the Australian public. The Prime Minister has spoken time and again about the rights of employers and employees to determine the working arrangements that best suit their needs. He has spoken time and again about choice, and has gone so far as to call this bill Work Choices. I am sure the Australian Workers Union is not alone in noting the irony of the bill's title. This legislation will not provide choices. For example, the provisions of this bill will deny employers that are constitutional corporations and their employees the choice of remaining in a state system or moving to the federal system. It will deny workers the right to choose to be covered by a collective agreement where an employer makes the acceptance of an Australian workplace agreement a condition of employment and it will severely limit the terms and conditions that employers and employees can include in a workplace agreement.

The legislation, however, will abolish the award safety net; erode workers' conditions; enable employers to solely dictate the terms and conditions of employment; remove the job security of employees of a business employing 100 or less employees; significantly curb the right of unions to represent effectively the interests of their members and the public and workers in general; and completely undermine the role of the Australian Industrial Relations Commission. Indeed, in the state systems we believe this bill will have a negative effect on strong state economies currently working under the state industrial relations system.

Furthermore, in conclusion to this opening component, we believe the drafting of this law has been rushed
through at a breakneck pace, and we believe there are unintended consequences--even unintended by the
government--arising from the poor drafting. Specifically, we are very concerned that with the 'take it or leave
it' approach of Australian workplace agreements there is no protection for employees against the duress of their
employers. The proposed section 104(5) says that a person must not apply duress to an employer or an
employee in connection with an AWA. However, section 104(6) states:
To avoid doubt, an employer does not apply duress to an employee for the purposes of subsection (5) merely because the employer requires the employee to make an AWA with the employer as a condition of employment.
The explanatory memorandum behind this subsection means that the employer may make an AWA as a condition of the person becoming an employee, but the drafting is so poor and ambiguous it conceivably applies to all current employees. Hence, under the current wording of your legislation a current employee can be told that they have to enter an Australian workplace agreement as a condition of ongoing employment. In
other words, it is 'take it or leave it'.

Furthermore, there are some other clauses to do with accident make-up pay which I cannot believe that the
government intends to remove. At present, section 89A(2)(j) provides for allowances to be an allowable award
matter. Item 17 of schedule 13, the transitional arrangements for parties bound by federal awards, changes the scope of the current section 89A(2)(j). Under the proposed amendments, only certain types of allowances will
be allowed to be dealt with by awards: monetary allowances for expenses incurred in the course of employment, responsibilities or skills not taken into account and rates of pay for transitional employees or disabilities associated with the performance of particular tasks or work in particular conditions or locations.
Some senators may not be aware that under the current section 89A accident make-up pay was determined
to be an allowable award matter-- the Commonwealth Bank officers case, 1997. The effect of the proposed
change in the current law, if it remains unamended, is that accident make-up pay will cease to be an allowable
award matter. In many awards there are more generous accident make-up pay provisions than currently exist
under state legislation. The effect of not amending the current draft bill will mean that all injured workers who
currently receive make-up pay will lose that as an entitlement.

Finally, I draw the committee's attention to issues surrounding termination of agreements. It is proposed
under section 103L that a workplace agreement be terminated after its nominal expiry date on 90 days written
notice. This is a change from the current law, where an enterprise agreement remains in existence until a new
agreement is achieved. The proposed section 103R, following on from section 103L, provides that employees'
terms and conditions are to be protected under the Fair Pay Commission's standards--which are a lot less than
those in all enterprise agreements--after an agreement is terminated. What concerns us is that, where an
enterprise agreement refers to the award, once the agreement expires the enterprise agreement ceases to be in
place and therefore any relationship to the award stays in place. What the new legislation means is that, where
we have members, right or entry for union officials is being removed by virtue of this section. We think this
section needs clarification.

CHAIR--Thank you. I should point out a technical error in your submission. You say in paragraph 3.4 that the committee has only allocated four days for public hearings. The committee has allocated five days for public hearings. We are working Monday to Friday this week, and all of that time will be occupied in public
hearings.

Mr Shorten--With no disrespect, Senator, to give five days is still a complete joke. We have only got an hour or so. You will have plenty of opportunity to comment. We would like to talk about our problems, without technical objections, with your legislation.

CHAIR--Yes; I felt, though, that I should point that out to you.

Senator JOHNSTON--Mr Shorten, you say you have got how many members--120,000, was it?

Mr Shorten--More than that, Senator.

Senator JOHNSTON--How many?

Mr Shorten--We have 126,000.

Senator JOHNSTON--I should say that I was once a member of your union.

Mr Shorten--We will check if you owe us back dues!

Senator JOHNSTON--I had them automatically removed from my salary, you would be pleased to know.
It was a very convenient system for me when I was a student.

Mr Shorten--Did you say it was a convenient system to have payroll deduction?

Senator JOHNSTON--It was.

Mr Shorten--We agree. That is why it should be an allowable matter.

Senator JOHNSTON--But I gave specific consent for that to happen, you see.

Mr Shorten--All our forms do that.

Senator JOHNSTON--Good. The point I want to ask you about is that in Western Australia in the last five years, maybe even longer, we have seen a substantial movement away from collective bargaining in the mining industry. What has been the track record of membership in your union across Australia? I think it has gone down, hasn't it?

Mr Shorten--No, it has held steady and in some states gone up and in some states gone down.

Senator JOHNSTON--Enterprise bargaining commenced in 1992-93 or perhaps 1991--around then--and my understanding is that your numbers have gone down substantially since that time. In the same time, individual workplace agreements, particularly in the mining industry, have been at large.

Mr Shorten--Can I answer your question in the following manner: do you believe in God, do you go to church?

Senator JOHNSTON--Yes.

Mr Shorten--Apparently the attendances at the traditional organised religions are down. Do you therefore think that God does not exist?

Senator JOHNSTON--I've got to tell you that if there is a great big black cloud coming over the horizon with as much fire and brimstone as you suggest this bill has, mate, I'd be going to church, let me tell you!
They are not going to your church. Why is that?

Mr Shorten--Senator, I think the reason why you are raising your voice at me--

Senator JOHNSTON--I am not.

Mr Shorten--Well, the reason why your body language is shifting is because you understand that values remain relevant regardless of the number of people participating in organisations. I would not suggest, to pick a less controversial example, that Rotary or Lions or Kowanis or all sorts of community groups, merely because they have fewer people participating in them, become less relevant in the community. So why is that you are justifying these terrible laws--indeed, these black cloud laws, as you correctly characterise them-- merely on the basis that our membership is static? Let us talk about mining in Western Australia. In fact, you are a senator from Western Australia and you should be standing up more for states' rights, as a matter of observation. But you know that the mining industry was given a free kick under the state laws that were introduced by your conservative colleagues. Let us to talk about--

Senator JOHNSTON--It is the most efficient in the world.

Mr Shorten--And do you know who makes it efficient? It ain't your laws. It is the workers. Why on earth
are you wasting your very valuable Senate mandate on these sorts of laws? Why don't you do more to build two train tracks in the Pilbara? Why don't you do more to challenge BHP Billiton and Rio Tinto's duopoly in extracting?

Senator JOHNSTON--I take it you accept the proposition--

Mr Shorten--I accept nothing you have said.

Senator JOHNSTON--I know you do not--that your workers and your members are not bashing down our doors here in parliament complaining about AWAs. The system is on foot, and no-one is complaining.

Mr Shorten--Senator, three to four per cent of Australians are on AWAs. Thirty-five per cent are on enterprise agreements. If you want to claim that AWAs are so good based on three or four per cent, why on earth don't you give the same credit for 35 per cent of the Australia work force that is covered by collective
agreements?

Senator JOHNSTON--You see, Mr Shorten, I would expect, with Mr Combet telling us this is going to bring greater deaths in the workplace and with Mr Della Bosca saying it is an act of fascism, that you would have your membership going through the roof. The fact is that the average employee out there--indeed, the Boeing situation brings it right home--is very comfortable negotiating privately with his or her employer. All of this beat-up that you are going through has no relation in fact to what is happening in the workplace.

Mr Ludwig--Senator, it is obvious that you have been sitting around Canberra here for some time and you have not been out in the work force and you do not know what is going on out there. In terms of the AWAs, there is no choice. At Century Mine in Queensland if you do not sign an AWA you do not get a job. There is no choice--no choice at all.

Senator JOHNSTON--That is precisely my point.

Mr Ludwig--So you think that is fair and equitable in our society?

Senator JOHNSTON--No-one is complaining about that.

Mr Ludwig--As I said, you have been sitting down here.

Senator JOHNSTON--I am out in Kalgoorlie, I am in Karratha, I am in Port Hedland, I am in Tom Price, I am in Paraburdoo and I am in Newman. No-one is complaining to me.

Mr Ludwig--We are getting plenty of complaints. I suspect they would not complain to you because you
would not take any notice of them--would you?

Senator JOHNSTON--I would. I am out there talking to them.

Mr Shorten--Senator, how many complaints would it take to make you change your mind seeing as you are saying that it is the complaint register meter which is obviously going to decide what you do?

Senator JOHNSTON--Let me explain my measure of that to you because I am running out of time. I get about four or five complaints a day about child support and the Family Law Act. I cannot remember, prior to the introduction of this bill, when I had someone complain to me about the fact that in order to have a job they had to sign an AWA. I have never, ever had someone come to me--and I get about 175 proper emails, not spam, a day. All of my colleagues are the same. I ask them.

Mr Shorten--Let me invite you to visit the Boeing picket line because we can give you your week's quota
of complaints. The reality is that 46 out of 62 Boeing mechanics were on individual contracts for nearly four
years. They tried for a year to change the contracts themselves. They failed. For five months after they joined
our union we tried to negotiate with the company. The problem with your legislation is that it does not provide
a level playing field. If a company does not want to negotiate with the representatives of workers, it does not
have to. You should not draw any consolation from the fact that Boeing--

Senator JOHNSTON--Ninety-three per cent of Boeing employees are very happily employed.

Mr Shorten--I am sorry--

Senator JOHNSTON--You have 20 out on strike at the moment.

Mr Shorten--I am sorry. What you actually fail to understand is that we have offered a secret ballot to
Boeing to see how happy all these people really are. The company you are backing publicly in this dispute will
not allow us to have a secret ballot. When you are afraid of the ballot box, you should not get up in the
morning.

Mr Ludwig--Chair, I would like to make some comments on this process and the extraordinary
circumstances that prevail.

CHAIR--Yes, Mr Ludwig.

Mr Ludwig--We have never had legislators determine industrial outcomes in Australia. What we had was
legislators that gave us a system, an institution through the commissions of the state and federal acts, that we
could go to and argue for positions. That system took us from a situation where our kids were going to school
with bare feet because their parents could not afford shoes. The submissions that we made over many years for
justice in terms of disruption to families, allowances, overtime--all of those things--took long and hard
submissions to an independent tribunal to achieve. Now, through legislation, you are going to wipe away all of
those allowances--all of that justice that was delivered over a long period of time.

Senator JOHNSTON--How?

Mr Ludwig--How? Read the legislation.

Senator JOHNSTON--You tell me the sections. Do not tell me to read the legislation; give me the facts.

Mr Shorten--If I may, I will give you a fact. Proposed section 100B is what I call the Anzac Day massacre
clause. What happens is that proposed section 100B would have the effect of protected award conditions being
read into a workplace agreement unless the agreement expressly modifies or excludes them. That is what it
says. There was an illustrative example set out in the explanatory memorandum to the bill. It states:
Matt is employed by Frances Furnishings Pty Ltd as a curtain cutter. Frances Furnishings Pty Ltd operates in NSW. It is a respondent to the federal Home Furnishings and Interior Decorators Award ... The award provides for, among other things,
entitlements to public holidays in accordance with NSW legislation and penalty rates for work undertaken on public
holidays. On 1 July 2006, Frances Furnishings makes a collective agreement with its employees. When the agreement
comes into operation, Matt and other employees to whom the award would apply will receive entitlements to public
holidays and penalty rates in accordance with the award unless the agreement expressly removes those entitlements or changes them and the majority of employees approve the agreement.
Five years later, Frances Furnishings Pty Ltd makes a second collective agreement with its employees. It turns out that the first collective agreement expressly excluded the award. Note: 'expressly excluded the award'. It continues:
Even so, public holidays and penalty rates in accordance with the award would be included in the agreement unless the
second agreement expressly removes or changes those entitlements and the majority of employees approve the agreement.
That is a nice example. It makes clear that the so-called protected conditions--Christmas Day, Anzac Day, all
of the public holidays; when you no doubt get out and put your badges on and celebrate--can be expressly
excluded in an agreement, and there is no obligation under your proposed laws to compensate employees and
to ensure that their wages and conditions are, on the whole, no less favourable under the agreement than they
were under the award. Can I just suggest that something called the law of unintended consequences applies here. I do not like your law. But if you are interested--especially those senators listed at No. 3 who are interested in getting returned next time, because I actually do not believe all the Liberal senators privately agree with all of this legislation; I suspect that some of you are worried about the haste and the detail--can I
suggest for your own political stability, your own political job security, that some of the protected award
conditions be moved into the fair pay and conditions standard. It is possible for employers to take away public
holidays and penalty rates, and your own example proves it. That is what Bill Ludwig is talking about.

Senator JOHNSTON--You obviously have not read section 92 and all of its subsections which guarantee all of these provisions. You have not read section 98. You are taking one section completely out of context, because it is a workplace agreement. In order to have a workplace agreement, there are embedded guarantees that you just do not want to refer to. You do not want to address what the bill does. Some of us understand that.

Mr Shorten--If you are right, that is fine. The problem is: if you are wrong, will you pay out of your own wallet for all the public holidays that people do not get because of your poor drafting. If you are so certain that that is the intention, be wise enough to pick up the lack of clarity in the drafting so that some of the scallywags
out there do not take unfair advantage of it.

Senator JOHNSTON--I accept that, and I think that is a reasonable position. I am interested in your right
of entry problem. Could you take us through that.

Mr Shorten--Sure. It is tied up with all of your termination of agreement stuff. Proposed section 103L
provides for a workplace agreement to be terminated after its nominal expiry date--that is, 90 days.

CHAIR--Before you go on, right of entry is not one of the provisions that is being considered by this
committee and was excluded by the Senate motion.

Mr Ludwig--How did we get in here?

Mr Shorten--That is no doubt true, but I am not actually referring to that. I am referring to section 103L.
Are you telling me that I cannot talk about section 103L?

CHAIR--If it is about right of entry, no. That was excluded.

Mr Shorten--It is about section 103L.

CHAIR--Would you tell me what section 103L is?

Senator JOHNSTON--'Unilateral termination with 90 days written notice.'

CHAIR--Go ahead.

Mr Shorten--'When an agreement is terminated under proposed section 103L, an employee's terms and conditions of employment will be derived from the fair pay and conditions standard'--that is proposed section
103R. Section 103R provides for an employee's terms and conditions to be protected under the fair pay and
condition standard after an agreement is terminated. Section 103R(1) provides: 'An industrial instrument
mentioned in 103R(3)'--that is, an award or workplace agreement--'has no effect in relation to an employee
if the workplace agreement that operated in relation to that employee was terminated.' That is the first bridge.
Once an agreement expires, you cannot refer to the award which underpinned that agreement. This means
an employee would not fall back onto another industrial instrument but would only be entitled to the fair pay
commission standard--that is, those five fairly dodgy matters--and the voluntary undertakings. That is under
section 103M. It should also be noted that, as a result of this clause, termination of a collective agreement may
also impact upon the right of entry of union officials. The thing is that, whilst you can pretend not to talk about
the right of entry, the consequences of section 103 mean that you can take away, through the back door, the
ability of union members to represent existing members and existing organised work sites.

The other point I should make about termination of agreements is that, once an agreement expires, under the
current system the two parties have to reach a new agreement or one party has to make an application to the
commission to resolve the matters. You are going to reward lazy corporate behaviour because, once an
agreement terminates, there is no point in negotiating with your workers ever again, if you can simply refer
them to the Fair Pay Commission standard. Not all employers will do that. My problem with your legislation is
that you are rewarding bottom-feeding corporate behaviour.

Senator JOHNSTON--Can't that happen now at the expiry of a collective agreement?

Mr Shorten--No. We had this problem with Esso in Bass Strait where, after the expiry of an agreement,
the largest oil company in the world tried unilaterally to move workers from a one-and-one roster to a two
and-two roster for 600 days. By legal means, we were able to prevent that and now Esso has come to its senses
and the world oil prices are at a record high.

Senator JOHNSTON--Was that after the expiry of the EBA?

Mr Shorten--Yes. This is the real world.

Mr Herbert--As a matter of law, what happens at the moment is when an enterprise agreement expires it continues--that is, when it passes its nominal expiry date in the agreement it continues to operate until it has
been set aside. That happens in the state jurisdictions as well as the federal jurisdiction at the moment. After
the nominal expiry date, one party can have it terminated, but they need to approach the commission and have
it done by the commission; it does not happen automatically.

Senator MARSHALL--Mr Shorten, you are probably aware that Senator Abetz, on a regular basis in the Senate, has used some of your criticisms of the existing industrial relations processes and legislation as justification and support for this bill before us today. I have always found it a very long bow to draw, and I think it is a ridiculous connection to make that, simply because people have a criticism of the existing system, somehow they are supportive of what this government is putting before us. I think your presentation today makes that fairly clear, but I would invite you to respond to those specific comments, if indeed you are awareof them.

Mr Shorten--The comments to which this senator refers were taken from the building industry royal commission and something like 160 pages of statements and cross-examination. The senator has kindly borrowed at least one sentence out of all those words. We do have multiple jurisdictions when it comes to occupational health and safety, and the harmonisation of state laws is always a logical idea. However, there is no case made for robbing state jurisdictions of the provinces upon which they have regulated for many years and have improved laws over that time. It is intellectually flaccid to misquote selected pieces of people's testimony in a royal commission and simply say that this, therefore, makes the case. If Eric Abetz is keen about my opinion--

CHAIR--Senator Abetz.

Mr Shorten--If Senator Abetz is keen about my opinion, then what I would say to him is do not cherrypick.
What you should actually do is take my opinion on this legislation, and then I might the inclined to hear
what he has to say on other matters.

Senator GEORGE CAMPBELL--Mr Ludwig, I want to ask you a number of questions about state awards and state coverage. When we had the six state and two territories industrial relations ministers here, their description of this proposed unitary system was that it would finish up as a dog's breakfast--which is probably an apt description. But we have had an issue raised in relation to councils. I know in Queensland your organisation covers most council workers up the coast. Have you had any discussions with the various councils in Queensland as to whether they have a capacity to incorporate and whether they will seek to move over into the federal award? What is the intention of those councils?

Mr Ludwig--Their preferred position would be to stay in the state industrial relations system. I have had discussions with them on this issue, and they are very confused because since the system of contracting and tendering started some councils have actually won jobs in other councils' jurisdictions through the competition
policy--so they think they are traders but they are not sure. Whether or not they are incorporated is going to
cause them an immense amount of difficulty, and they are seeking a lot of legal advice now. We have only had
this bill for a very short period of time. There were a few explanatory notes earlier that they took on board to
try and get some clarity in the situation. But not only is it the councils; the majority of employers that I deal
with in Queensland want to stay in the state system. They do not want to move. They have had the option. We
operate in the two systems, both federal and state. If they had wanted to do this, they could have done it at any
time, but their preference is to stay with the state system because, to be quite frank, in their view it is a more accessible system than the federal system. It is easier to get settlement of disputes and easier to get to the commission with industrial issues. They have never been counselled on this.

Mount Isa Mines, which is fairly important to the state's economy, want to stay in the state system. They said: 'We've never asked to go into the federal system. Why would we be dragged there?' That is the thing, particularly for a lot of businesses in Queensland.

The government have never made the case for why we have to shift from a system that has been working well, as I said earlier, a system that has put shoes on our
children's feet. It has come about through submissions, not through legislation. The legislators did not give us
the money to buy shoes; the commission did through long and hard submissions. This is to take away all of those hard-won benefits--which, if you like, are going to be omnibus--in one hit. Those benefits are going to be put at risk in one hit. They certainly did not get there in one hit. Over many years all of those issues and the effect that they would have on the economy were taken into account through submissions to the commission. All of those issues have been dealt with. Now, through legislation, with no commitment to the system that got us there, we are just saying: 'We're going to change the rules now. We've changed the goalpost. We've taken the referee off the field and you're on your own.' I am sorry, Senator, Queensland is as one. Even your National Party colleagues in Queensland--and I have discussed the issues
with them--want to support the state industrial system. They cannot find a reason why the state industrial
system in Queensland should be gutted.

Senator GEORGE CAMPBELL--Mr Ludwig, have you done any analysis? Mr Herbert, you operate in Queensland. Has the union movement in Queensland done any analysis of what percentage of the work force in Queensland would remain under the state system, even if this law is enacted?

Mr Herbert--It is very difficult to say. In answer to the question you asked earlier about the local authorities in Queensland, I think the respectable legal opinion in Queensland is that Queensland local authorities are probably constitutional corporations and will probably be covered by this legislation because, as Mr Ludwig said, apart from anything else, most local authorities engage in commercial trading activities of all kinds. They sell water, power and other commercial services. So they would fit the constitutional definition of a constitutional corporation, and they are presently incorporated. In that sense, under this legislation the current regulation of all blue-collar workers in all local authorities in Queensland will be transferred automatically into the federal system. That will create the difficulties that are adverted to in the submissions-- that is, you then have to bring the unions with you.

In respect of those that will remain behind, there are a number of statutory authorities which it is, shall we
say, doubtful are constitutional corporations. Over the last 10 or 15 years there has been a high level of
corporatisation of public sector functions in Queensland and there are a large number of what are called
government owned corporations, GOCs, and there is legislation to cover them. They are corporations. The
question is whether they are trading or financial corporations for the purposes of the Constitution. In some
cases they may be, in some cases they are not and in some cases they are. Litigation is probably in front of us
to determine that.

The Queensland government probably has the capacity to alter that equation a bit by rearranging the
functions or even deincorporating some of the GOCs, because the government owns them all. In that sense
there can be a bit of manipulation. What I am leading to is this. It is very hard to measure the size of the field
to understand how many are going to be left in and how many are going to be left out. When one looks at the
health sector, for example, there has been a lot of corporatisation of health sector functions--public sector
functions--so the resulting entities in some cases could be said to be trading corporations or not. Depending
upon the attitude of the employer as to whether or not it wants to be brought under this legislation, the
employer, being the state government, has the capacity to pull back functions and to alter the nature of the
corporation.

Because this legislation is pinned upon the employer who is not already under the federal legislation being a
constitutional corporation, and because that is a fairly narrow test in many respects--particularly when you are
dealing with public sector or quasi public sector entities--it is able to be manipulated by governments to a
large extent. When I say 'manipulated' I do not mean that in any pejorative sense. It is able to be altered and
changed. As I say the size of the fields that we are measuring is very much up for debate until all of the issues as to who is in and who is out have been settled.

The best measure that I have heard--and it is really only
folktales--seems to be that about 30 per cent to 35 per cent of workers currently covered by the state
jurisdiction in Queensland will stay covered by the state jurisdiction in Queensland.

Senator GEORGE CAMPBELL--I think your state minister said it was 40 per cent. I wondered why that was a bit higher.

Mr Herbert--He may well be right. I think his sources are better than mine. He has a bigger staff than I have.

Senator GEORGE CAMPBELL--Have you had a chance to examine the transitional provisions for people who move across from the state system into the federal system in terms of the preservation of their awards--the three-year time frame?

Mr Herbert--In relation to awards, that is an extraordinarily complex system. I have to say that a lot of my colleagues who work in this area are rubbing their hands together and ringing their boatbuilders and their
brokers because there is going to be an extraordinary amount of litigation and legal work to be done out of all
of this.

Every single corporation in Australia is going to have to sit down now and work out what its industrial
regulation is going to be, because from the commencement of this legislation industrial regulation is going to
be different from what it is today effectively. That may not happen immediately, but certainly for those who
have ongoing agreements their rights in relation to those agreements will have changed and the future of their
negotiations after those agreements expire will be completely different. So every corporation in this country is going to have to sit down and assess where they are.
There are extraordinarily complex and difficult paths in front of corporations which currently are 100 per
cent regulated in the state jurisdiction. Their agreements and their awards are both going to be in effect
deemed to be transitional federal agreements and will then be preserved, even though they are awards which
currently have an ongoing life and can be amended at any time in any way by the commission. That will all
stop; they will cease to be awards. They will then become locked-in-place agreements.

There is a massive flurry of activity in the state jurisdiction--in Queensland at least--of people rushing
around to get their awards all tidied up and to cram everything they can into their awards before they become
frozen in time. The difficulty with that is that the majority of employers in the rural and farming sectors--I
think you heard from the NFF the other day that the rural sector consists of a very great mix of corporations
and private employers--as I understand the evidence you heard from the NFF, are in fact unincorporated.

I instance the sugar industry award. Sugar is still the largest rural commodity in Australia and is all state
covered in the state of Queensland. The sugar industry award, as it applies to corporate employers, will be
frozen in time and will be deemed to be a federal agreement. That same award, so far as it applies to the noncorporate employers, will be amenable to being constantly amended and updated by the state commission--
and all the other things the state commission does to it now. So there is going to be a very great temptation on
corporate employers, particularly in those sorts of industries, to transfer the business over to non-corporate
entities for the purpose of employment.

Senator GEORGE CAMPBELL--So what you are saying is that, because some sugar producers are corporations and some are not, at some time in the future there will be a divergence from the current award-- some will go into the federal system and some will go into the state system--and, in fact, you could finish up with two different sets of conditions?

Mr Herbert--By definition, that is what has to occur so long as the AWU does what the AWU has been doing for 100 years--that is, religiously bring the sugar industry award up to date on a very regular basis. If the AWU continues to do that, the sugar industry award in its home base--that is, in the Queensland state commission--will continue to march forward as it has done for 100 years. But if you are Joe Farmer Pty Ltd-- a corporation--your award will be frozen in time as a transitional federal agreement. Those award conditions will be subject to being stripped down and subject to prohibited conditions, preserved conditions and protected conditions. Once you have worked out that alphabet soup, that will be your regulation, but the core of that regulation will be a preserved state award.

As I say, Joe and Mrs Farmer next door--an unincorporated
partnership--will remain covered by the sugar industry award, which will evolve with time as the AWU and
the other unions that have respondency to that award continue to move it up. So, side by side, those two
farmers will have different terms and conditions over time as a matter of inevitability.

Senator STERLE--Mr Shorten, I am mindful of the time, but I have a couple of very quick questions.
When I listened to the minister launch the bill in the other house last week, my ears pricked up when I heard
about the transition of business clause and I had visions of alsatians and balaclavas. I would be interested to
know what effect that clause could have on your union and your members if this bill were to pass through the
Senate.

Mr Shorten--In answer to that question, I make this observation to the coalition senators in particular,
because I think the Labor senators and senators of the other parties understand these issues: be careful of what
you are wrecking if you put through this bill unamended. What happens in Australia at the moment is that,
when one business is sold to another, either the workers get made redundant or they transfer on existing terms
and conditions. Under your proposed new bill, you could see some dreadful outcomes. To give the government
senators the benefit of the doubt, they would be unintended outcomes, but you need to fix this loophole.

What could happen 12 months after the transmission of business in the new bill is that, for example, company A sells to company B and company B can unilaterally vary the conditions of the employees. You might say that perhaps the Australian Workers Union suffers from a negative view of employers, but you just have to look at the North American experience in insolvency law, and indeed in Australia from Ansett to Pasminco, to see a
range of corporate collapses that have been high profile. Unfortunately, some companies behave badly, from
HIH to FIA. If you put in a legislative formula, a system that rewards corporate avoidance, then what you will
get is corporate avoidance behaviour.

The transmission of business laws is dreadful. I freely concede that I do not support these laws--the economic case for them has not been made out. Having said that, you have an opportunity to prevent at least one atrocity. If you vote for the bill in unamended form on this issue of transmission of business, what you are saying is that in the future you cannot guarantee to all Australian employees that companies will never, after 12 months of purchasing the old company, simply vary workers conditions. But, if you think that it is possible
for some directors and corporations to buy an old company and then 12 months afterwards unilaterally simply
vary the terms and conditions of employment, you should remove and excise the transmission of business
sections. If you do not, whenever there is a transmission of business and this behaviour occurs, there is no
question that Senator Johnston will get plenty of emails and they will not be spam.

Senator STERLE--In your submission you mentioned the accident make-up pay, obviously representing a
large swag of blue-collar workers, who I would assume are subjected to physical injury more than other
groups of workers. Could you let the committee know what the implications would be for working men and
women in Australia if that clause or right is removed?

Mr Shorten--Senators may or may not be aware that awards contain provisions for accident make-up pay.
Under the state workers compensation systems, when you get injured you get certain benefits. Negotiated over
100 years in a range of awards is a provision called a gap payment--make-up pay--where for a longer period
you get an amount, supplemented by the employer, higher than the workers compensation system for injured
workers.

Take, for instance, the metal industry award, which is 39 weeks. The point about this is that the gap
payment is not a high-gap payment. If you are off work after 26 weeks and up to 39 weeks, more often than
not the chances are that you have suffered a serious injury. It was established in the 1997 Commonwealth bank
officers case that accident make-up pay is an allowance. Under your proposed legislation--the wording is
ambiguous and you can clarify this--accident make-up pay is not guaranteed. To my way of thinking, there
can be no economic case for trying to rob injured workers in that zone between 26 and 52 weeks of 30 per cent
of their pay. These are the people least able to protect themselves, and by not making it an allowable matter
you are punishing literally tens of thousands of Australian workers who have generally been injured through
no fault of their own. To remove that make-up pay clause when you could simply sit by and amend the
definitions you have in there, to me, would be reckless indifference to injured workers.

CHAIR--Thank you. That section has expired.

Senator BARNETT--Mr Shorten, firstly, congratulations on your preselection efforts as a Labor candidate
for the electorate of Maribyrnong.

Mr Shorten--Was that seriously a question or were you just trying to demonstrate you read newspapers,
somewhat indifferently? We are here on a serious matter. If you cannot take your responsibilities seriously,
then I think the voters of Tasmania need to have a good look at you.

CHAIR--Thank you for that. Please proceed, Senator Barnett.

Senator JOHNSTON--He has obviously struck a nerve.

Senator BARNETT--Yes, it has obviously hit a point. It is in the context, Mr Shorten, that you are a
member of the national executive of the Labor Party.

Mr Shorten--Yes.

Senator BARNETT--You are aware that the union movement in Australia has donated $47 million to the Labor Party since 1996. You have made comments similar to Greg Combet's where he said that this campaign is all about a change of government. You have said on a number of occasions that you want to get rid of not only these laws but the people who make them, so I am wondering today which hat you are wearing--that of a hopeful federal member for the Labor Party or a member for the union movement today?

Senator STERLE--Chair, really this is just pathetic.

CHAIR--That is a question and I expect that Mr Shorten will proceed to answer it.

Mr Shorten--I agree it is a question; it is just not a terribly clever one. What I would say about this is that I
represent the Australian Workers Union. Every day AWU officials from Cooktown down to Tasmania get out and represent people. They all do that job first and foremost.

In terms of your proposition about what has been
said by Greg Combet or me, I think that your legislation is a challenge of the most serious nature. I do not
believe that laws in Australia should simply be based on a 39-37 majority. I think Australians expect the
people in government to make their laws based on foundations of fairness. Simply relying on a two-vote
majority and saying all reform is good reform to me is insufficient. I do not accept that your government
deserves to remain in government if it treats as incurable diseases economic anxiety and job insecurity. That is
not the basis for legitimate government or legitimate policy.

Therefore, I believe that the only strategy that can involve reforming this legislation, if we are unsuccessful
in persuading the open-minded government senators here to try and reform their legislation--not presuming
that you had already made up your minds before you came here and that therefore this whole process is a
complete farce but assuming that in fact you still, despite what you hear, persist with this legislation in its most brutal form as put forward--is six words, Senator Barnett: the removal of the Howard government.

Senator BARNETT--We have got the message, Mr Shorten. I think you have made that clear. I am interested in your views on AWAs. You have expressed your castigating views on the effect of those today in this committee. Many in the union movement support the abolition of AWAs. I am interested in your views, particularly in the context of the electorate of Maribyrnong, where 1,464 people are on AWAs and where, in the September quarter, 196 AWAs were signed. So do you support the abolition of AWAs?

Mr Shorten--I do not mean to be distracted by the disingenuous interest you display in the western
suburbs of Melbourne. What I would say to you is this: there are many thousands more people in the western
suburbs of Melbourne on collective agreements. What I want to know is why on earth you are making it harder for those many thousands of people who have chosen to be on collective agreements--

Senator BARNETT--Can you answer the question: do you support the abolition of AWAs?

Mr Shorten--My answer--

Senator GEORGE CAMPBELL--On a point of order: because he does not like the answer--

Senator BARNETT--No, I am waiting for the answer.

CHAIR--You will allow the witness to answer the question.

Mr Shorten--You may describe what we say as scaremongering. The truth of the matter is that all we are
doing is putting forward the truth--it just happens that the truth is scary. I do not see the intellectual case for
AWAs without a no disadvantage test you are proposing. You could drive a Mack truck through the standard
you are applying to AWAs. I do not believe AWAs are good at building communities--as you well know from
the north-west mining communities of Tasmania, based upon what we have done to reform irregular rosters in
the mining communities of north-west Tasmania. Ian Wakefield, our Tasmanian secretary, did that, supported
by the Tasmanian government. We know that individual contracts in the mining communities of north-western
Tasmania led to the fact that the four local football teams in Queenstown had to disappear because dad could
never get down to training because of irregular rosters. I do not see the economic case for AWAs in Australia.
Why is it that we are not having a Senate inquiry into the price of petrol?

Senator BARNETT--Thank you, Mr Shorten. Do I have one last question?

CHAIR--No, you are out of time.

Senator MURRAY--I have been distracted from where I want to go because of the previous set of
questions. I actually think you being asked about your political affiliations, and the union connection with the
ALP is an important question to be raised. I want to pursue it, because I am afraid that underpinning this bill is an improper intention of weakening unions as an indirect way of weakening the ALP. That would be a
disgraceful motive if it were true. I want to know whether you have the opinion that any of this legislation has
that motive and is improperly constructed with that motive in mind? I will address the question to you, Mr
Shorten, since you have been the prime spokesman.

Mr Shorten--I would also welcome our national president's view on this. The observation I make is that
this is an attack on the ability of unions to organise. In my view this is political legislation--it is payback
legislation--for the 30 years that the conservatives have not controlled the Senate. There has been no case
made against collective bargaining. We enterprise bargain every day. We have contributed to productivity
improvements in thousands of companies. There are thousands of workers and hundreds of companies who
have benefited from the hard work of union officials collectively bargaining. There is no case to be made for
an attack on collective bargaining. Therefore, the only rationale that can be assumed to be motivating this
legislation is the attack upon unions. Minister Kevin Andrews is buying himself a whole world of difficulty in
this legislation with the provision of the minister reserving the right to decide what an essential service is, for instance. There are so many unintended consequences in this action that in fact there will be a backlash.

To answer your question, Senator Murray, put simply, this is an attack on the base of the Labor Party, which
is the union movement. The Labor Party was formed from the union movement. This legislation is designed to
discourage activists, to penalise delegates, to fine unions and to make it very difficult for unions to represent workers. Therefore, hopefully, by damaging the roots of the tree, the parliamentary part of the Labor Party will in fact wither, which is the motivation of this legislation.

Senator MURRAY--I will have to move on, Mr Ludwig. Could you be quick, because I have not been given much time.

Mr Ludwig--I would just like to make a comment on Senator Barnett's point on the contribution that the union movement have made to the Labor Party. It pales into insignificance when you consider the amount of
money that the taxpayers pay through public funding to all major parties. The survival of the Labor Party does
not depend on how much money the unions contribute to the Labor Party.

Senator MURRAY--Thank you, Mr Ludwig. According to your item 11.15 on page 34:
Section 100(1) of the Bill provides that a workplace agreement comes into operation on the day that the agreement is
lodged.

Mr Shorten, that may seem to many almost irrelevant, because most contracts with suppliers or landlords or
with anyone in a business arrangement come into operation on the day the agreement is lodged, provided they
are subject to stamp duty. However, you know, don't you, as I know, that the reason that has not been the case
in workplace agreements is that there is no real mechanism to enforce and ensure that every agreement complies with the law? Therefore, they have always been referred to a tribunal to be examined. My question to you is this: there is no penalty in this bill, is there, if an agreement that is lodged and comes into operation on
the day it is lodged does not comply with the law? Therefore, this is just a device to allow for the avoidance of the provisions of the act, isn't it?

Mr Herbert--I might deal with that. As for the process of the agreement coming into effect on the date it is
lodged, the difficulty associated with that, from experience with the present act, is that, even when the
commission--which it does now--goes through the agreements and checks them for viability, in many cases, even where both parties have genuinely tried to make sure the content is correct, they are still found to be wanting on very many occasions. A huge number of agreements lodged for certification with the commission now are found not to have sufficient content. If an agreement comes into effect when it is lodged and then there is a process for subsequent certification or ratification offered by the OEA and things are missed, as they often are, you then have an invalid agreement in legal effect. It is given the effect of the force of law of the Commonwealth by this act, even though it may not comply with the legislation.

As I read the legislation, in order to then bring that to heel there is a complaints driven process where one
has to go to the office of workplace services--I have forgotten the name of the entity--which is now charged
with enforcement processes. But that is a complaints driven process. If somebody, being an individual or a
worker at a workplace who is not versed in these things, does not complain because they do not know, then the
agreement will never be rectified; it will never be looked at. As you say, there is no penalty for any of that.
These agreements, and experience has shown this, may in fact remain in force and effect for months or years
containing invalid content, being invalid agreements--agreements that should never have been given the force
of law of the Commonwealth. There does not seem to be a process by which that can be picked up, and there is
no penalty that applies.

Senator MURRAY--If the government is determined that this particular provision goes through, isn't an appropriate amendment one which would say that, in the event of a part of the act being left out, by default it automatically applies--so that is point 1? Point 2 is that if there is a deliberate omission of any provision of the act a penalty should apply. Would that assist?

Mr Herbert--As to something of that order, it would depend on the nature of the omission. If it is an omission--that is, it is as to an entitlement that otherwise should be or something of that kind--one would think that there would be an automatic, retroactive entitlement conferred on the employees back to that date so that--

Senator MURRAY--Could I ask you to draft me an amendment along the lines of what I propose? I cannot see the government throwing it out but I do want to try to amend it so that a default provision operates and a penalty operates. Would you be willing to do that?

Mr Herbert--Certainly. That would be quite a simple thing.

Senator MURRAY--Thank you. Moving on to another major issue that concerns me: Mr Shorten, I was surprised to hear you--and perhaps it was just because you feel irritated by it all--describe the five minimum conditions as dodgy, because I think they are very substantial conditions. My concern is not that there are five but that there should be 20. Can you indicate to me why you described them as dodgy?
Mr Shorten--I certainly support having at least five measures in, but with some of them--even the five
measures--the drafting would not pass law school 101. The averaging of hours, which I know this committee
has heard about, needs to be tightened up. You just cannot have 38 hours over 52 weeks of the year. I think that
is either reckless or so sufficiently indifferent as to be reckless. The parental leave clause is also of concern to
me as to how that is going to work.
I just want to make two very quick points about the Fair Pay Commission standards. The first concerns the
parental leave provisions--in division 6 and part VA--where it is prescribed they not fall below the August
2005 family provisions test case standard. Without reading the whole lot, there is a right to request, which is
very clear. I can attach for this committee the authority's and the commission's conclusions. Also, there are the protected award conditions which I referred to earlier in terms of Anzac Day, with minimum entitlements not being embedded. Put simply, the parental leave provisions do not even meet the August 2005 standard which
exists and we need to--not 'we' because the government is not going to ask me to do it, but someone needs to--tighten up those family leave provisions. So in fact two of the five conditions are actually not even what they appear on their face to be.

Senator MURRAY--On notice could you provide some amendments or recommendations for amendments to us on those?

Mr Shorten--For you, Senator, yes. But I would just say that the best amendment I could provide to this act is to cut out everything after the first page and start again.

Senator SIEWERT--I would like to follow up on the point you raised earlier about ministerial powers and essential services but also the points you made on page 38, sections 12.3 through to 12.5, about the minister's powers to terminate bargaining periods. Can you outline some of your concerns in terms of essential services and how they relate to these provisions?

Mr Shorten--Despite Senator Barnett's encouragement, I am not a politician, but I do wonder about any politician, any minister, who would want to take upon themselves the responsibility of becoming the one person, one-stop shop for most industrial disputes. The definition of 'essential services' has been litigated over many years, but the legislation is completely woolly, or imprecise, on it. What minister of what government wants to be called upon when an employer says: 'What I do is valuable to the economy. Stop this strike'? As soon as the minister makes a decision either way, there are going to be unhappy parties. That is why we have the Industrial Relations Commission. The centralisation of decision making about essential services is far too severe a tool just to rest with a minister in terms of industrial relations. The right to strike--there is no question in my mind--is being narrowed down to an infinitesimal speck upon an easel or a picture. It is going to be very difficult for people to exercise the basic right to strike.

This is the 25th anniversary of the foundation of Solidarity, Solidarnosk. Many conservative politicians say
how good it was that Solidarnosk helped to make some of the changes it did in Poland. The reality is that with
the laws they are creating it will take Solidarnosk type action to have an effective union. It is interesting that if Lech Walesa came to Australia and tried to practise these laws he would be breaking the law. Look at what is
happening in Zimbabwe--which some senators have commented on. Why is it that in such countries the leaders of the opposition tend to be trade union leaders? We advocate for better treatment of people in Zimbabwe, yet we are not advocating for the same treatment in Australia. The East Timorese labour code on the right to strike is superior to the one being proposed in Australia. We preach to people overseas, but we don't practise it at home.

Senator NASH--I appreciate your intense enthusiasm for this, Mr Shorten, but for you to say, as you did
earlier, that the bill would not provide choices and would abolish the safety net is blatantly incorrect. How
much time do you spend in rural areas in a given month, averaged over the year?

Mr Shorten--I would probably spend two days a week visiting non-metropolitan Australia. I would not want you to characterise my comments as intense enthusiasm. They are intense disregard for these propositions. I do not think the case is well made. When I say that the award safety net is being removed, it is.

In Victoria, for instance--Bill Ludwig can speak about his experience in rural Australia--there are 20 minimum matters covering Victorian workplaces. That will go to five minimum matters. That is a reduction.

Senator NASH--Thank you again. It looks like intense enthusiasm. Your concerns are that wages will be driven down under the new bill. Is that correct?

Mr Shorten--Yes.

Senator NASH--Given the shortage of workers in regional areas--

CHAIR--Sorry, Senator Nash. We are out of time. I think your question is on the record. We will have to
leave it there. I thank the witnesses for their appearance here today.

Senator BARNETT--Chair, can we put a question on notice to Mr Shorten and Mr Ludwig.

CHAIR--Yes, we can do that.

Senator BARNETT--It relates to annual leave, Mr Shorten and Mr Ludwig. I just want to know your union's policy on cashing out annual leave in the context of views of other members of the union movement who do not support cashing out of annual leave. If you could advise the committee, that would be good.

CHAIR--If you could provide a written comment on that to the committee by tomorrow, that would be very helpful. Thank you.

Mr Shorten--I will see what I can do.