Michaelia Cash (WA, Liberal Party, Shadow Parliamentary Secretary for Immigration) Share this | Link to this | Hansard source

Before the interruption, which was brought on of course because the Labor Party got together with the Greens to guillotine debate for the rest of the week, I was referring to the positions of the vice-presidents of Fair Work Australia or, as has been put by several people, the jobs for their union mates. Since the announcement of these two additional positions there has been widespread community concern, including from within Fair Work Australia. Indeed, the Australian Financial Review reported recently:

In an email obtained by the Weekend Financial Review, Senior deputy president Les Kaufman wrote to Fair Work president Iain Ross on Wednesday questioning the need for two positions, which reintroduces a level of seniority at the tribunal that was removed under the Fair Work Act in 2009.

He said the appointments would “further erode the standing” of the tribunal and “gives rise to the perception it is being stacked.

That was Senior Deputy President Les Kaufman of the Fair Work panel.

In addition, many of the submissions to the relevant Senate committee also expressed deep reservations about the inclusion of these two positions, including one submission that stated as follows:

This was not recommended by the Panel. It is unclear why these amendments are necessary or required.

The coalition has concerns that there has been an overwhelming number of people who have been appointed to Fair Work Australia with a trade union pedigree. You only have to look at the last round of appointments by the Labor government to see that of Mr Bernie Riordan, who is a former Electrical Trades Union official and who, lo and behold the day prior to his appointment, mysteriously had civil proceedings against him settled. That is right: the day before his appointment he mysteriously had civil proceedings that had been taken out against him sent away. The coalition, in relation to this particular provision of the act, trusts that the resourcing of these positions will not come at the expense of Fair Work Australia's newly established branch to oversee the financial accountability and transparency of trade union bosses. We will be opposing the provisions of this bill that create these two additional positions.

I turn to the fair work panel's recommendation:

… The Panel recommends that the FW Act—

Fair Work Act—

be amended to change the name of Fair Work Australia to a title which more aptly denotes its functions. It is recommended that the new title contain the word 'Commission' and that it no longer contain the words 'Fair Work'.

That was a recommendation from the government's own hand-picked fair work review panel, so what does the government do with this particular recommendation? They reject it outright. The coalition was somewhat surprised that the legislation seeks to change Fair Work Australia's name to 'Fair Work Commission', which is in clear contradiction of the recommendations made by the expert panel. Time and time again, day after day, when it comes to border protection we are criticised by those on the other side for not accepting every single recommendation that was set out in the Houston panel's report. The Houston panel's expert findings are now the Labor Party's bible when it comes to border protection. But when it comes to the report of their own hand-picked fair work review panel, they pick and choose, cherry-picking the recommendations, and we all know why, because once again when you are held accountable by union bosses—when you are the Labor government and you are held accountable to union bosses—you need to be very careful which recommendations of the fair work review panel that you do implement. The coalition notes in addition that there is wide stakeholder support for the name being changed to 'Australian Workplace Relations Commission' and Senator Eric Abetz will be moving an amendment in relation to this.

In relation to other recommendations from the fair work review panel that have surprisingly not been taken up by the government because they would have very serious consequences for the behaviour of union bosses in Australia, I refer to the Barclay v Bendigo TAFE case. The High Court's unanimous judgement in the Barclay v Bendigo TAFE case found that union bosses should not be an untouchable class in the workplace. This decision provides much-needed comfort to the employers who have had to put up with unacceptable behaviour from some union bosses, often on a daily basis. However, it is highly disappointing and emblematic that the Labor government intervened in the High Court case on the side of the union boss, Mr Barclay, arguing that it actually was the intention of the Fair Work Act to make union bosses untouchable even if they did the wrong thing. That was the submission that the Labor government put to the High Court, that it was the intention of the Fair Work Act to actually make union bosses untouchable if they did the wrong thing! The High Court issued a damning statement in relation to Minister Shorten and stated that Mr Shorten had acted as a union boss first and as a minister of the Crown second after foolishly intervening on the side of the Australian Education Union in the Barclay v Bendigo TAFE case.

In relation to the Grocon issue in Victoria, up until a few months ago I do not think there were too many Australians, other than those that lived in Melbourne, that actually knew that Myer was developing a new emporium. However, thanks to the absolutely despicable behaviour of the CFMEU in relation to this, the whole of Australia now knows about it. The Grocon dispute witnessed the deployment of hundreds of police, at great expense to taxpayers, just so people could get to work. The violent attacks on police and police horses in Melbourne are to be condemned in the strongest possible terms. This is something that, unsurprisingly, Minister Shorten was unable to do and has been unable to do to date, apart from a very non-specific statement that he gave saying 'I condemn illegal activity'. When asked if the CFMEU was engaging in illegal activity, he lamely said that this was 'for the courts to decide'. But we all know who Minister Shorten is accountable to. When you are accountable to union bosses, as Minister Shorten is, quite frankly that is about the extent of the explanation that you are going to give. Make no mistake, the scenes that were witnessed by Australians in Melbourne were a direct result of the CFMEU being emboldened by the abolition, by the Labor government, of the Australian Building and Construction Commission. We on this side of the chamber have been very clear in relation to our commitment on the Australian Building and Construction Commission. If we are given the opportunity to again govern, one of the first acts of a coalition government will be to restore the ABCC with all of its former powers. We on this side are very clear that families should not have to live with the worry of their breadwinner being attacked and victimised by union thugs when they go to work.

In relation to the JJ Richards case, the decision in this case is very significant in that it showed that the Fair Work Act did not faithfully embody what Labor promised before the 2007 election. The then opposition leader, Kevin Rudd, pledged hand on heart that the Fair Work Act would not allow the return of 'strike first, talk later'. Yet the decision in the JJ Richards case shows that is exactly what the Fair Work Act does.

The Federal Court's judgement confirmed that the argument advanced on behalf of JJ Richards was understandable and reasonable but for the specific wording in the Fair Work Act which entitles unions to obtain protected action ballots in circumstances where most reasonable people would argue they should not be allowed. In relation to the findings of the Federal Court, Labor are yet to tell the Australian people whether this was simply a drafting error or whether the Labor government, once again, deliberately misled them. I have to say that, given Mr Shorten's refusal to include a response to the JJ Richards recommendation in the review in the first tranche, it is now becoming clear that JJ Richards was just one in the same series of broken promises to the Australian people, along with the carbon tax.

In concluding my comments, whilst the coalition have some serious concerns with this bill, which coalition senators have outlined in their speeches, we will not be opposing it, albeit we will move amendments in the committee stage. We would suggest the government give consideration to those amendments because they will enable the government to do what the Fair Work Act review panel has done in its recommendations. We support the majority of the recommendations from the fair work review but note— (Time expired)

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I will talk about a particular subset of the Fair Work Amendment Bill that is before us, which relates to default superannuation funds. One of the very bad aspects of the Fair Work Act as it was introduced by the now Prime Minister, Ms Gillard, and passed by the parliament is the way that default funds are selected under modern awards. It was so bad that even the Labor Party in the lead-up to the last election were shamed into promising that they would fix it. Even the Labor Party were ashamed of the process that they had put in place to select default funds under modern awards.

Just let me make very clear what we are dealing with: if workers across Australia do not make active choices in relation to the superannuation fund to which they want their superannuation contributions to be transferred by their employers, those funds are transferred into a default fund. One of the changes that the current government made when introducing the Fair Work Act was to make default funds and the selection of default funds an 'allowable matter under modern awards', which is the way it is technically described. Essentially that means that Fair Work Australia decides which superannuation funds are allowed to be listed as default funds under various modern awards. Mr Acting Deputy President, it will not surprise you that the process that this government designed was specifically with a view to providing a competitive advantage—we would argue an inappropriate competitive advantage—to union dominated industry funds.

Union dominated industry funds provide an important service to many Australians, and there is nothing wrong with industry funds being eligible and being part of the options that people have available to them when it comes to default superannuation arrangements. But they should not be available to them as part of a locked-up, closed shop anti-competitive arrangement organised through a non-transparent, secretive process through Fair Work Australia, which is littered with inherent conflicts.

That is exactly the process that we currently have. We have an anti-competitive, closed shop arrangement whereby Fair Work Australia, inside of a black box, makes decisions on which superannuation fund should be listed in a particular award as the default fund for workers under that award. Whoever is listed in any such award does get a significant advantage from that in the marketplace. It is quite valuable for those funds that are selected to be selected in that way, and you would want to know that the criteria by which those funds are selected as default funds under modern awards are objective, transparent and evidence based and that there is competitive tension in the way that that selection occurs. But the current government was not interested in getting the best deal for employers and employees. The current government was only interested in providing a competitive advantage for one segment of the financial services market, which just happens to be close to its friends in the union movement.

As I said, even the Labor Party were embarrassed by what they had done, which is why in the lead-up to the last election in August 2010 they made a promise that they would fix it. They made a promise that they would ensure that there is an open, transparent and competitive process to select default funds under modern awards. That came after an unsuccessful attempt by former senator Nick Sherry, the then Assistant Treasurer and Minister for Superannuation and Corporate Law, to try to get Fair Work Australia to do the right thing. He wrote to Fair Work Australia some time back in 2008 and said, 'You really should select default funds under modern awards through a more open, transparent and competitive process.' Fair Work Australia told him, 'You've got absolutely no authority to give us directions in this area.' Those were not the words they used but that was the effect of the letter that went back from Fair Work Australia to the minister. So, in the end, the Labor government in the lead-up to the 2010 election said: 'If we are re-elected to government at the 2010 federal election we will fix this. We will get the Productivity Commission to do a review into the way that default funds are selected under modern awards and other industrial instruments.'

Minister Shorten was very unenthusiastic about that commitment. That was very clear right up-front. It took him forever to get around to calling the actual review. He eventually got around to it, early this year, more than two years after he became the minister. He commissioned the Productivity Commission to conduct a review into the selection of default funds under modern awards. The initial draft report from the Productivity Commission was a very good report which made very good and very sensible recommendations. They recommended that the default fund market be opened up to competition. Competition is the only way that ultimately you maximise value across all aspects of the superannuation value proposition for people with superannuation, making sure that net returns are maximised, which means making sure that your returns are maximised, your fees are minimised and that you have good quality service.

A number of the industry funds who come to see me from time to time say: 'We perform so much better. We are the best in the market, so we should be chosen to be default funds under modern awards. It shouldn't even be a question.' But the truth of the matter is that if you are the best in the market, you have nothing to fear from competition. You have nothing to fear from an open transparent process which makes merit based decisions. But just because you are the best today does not mean you are going to be the best tomorrow, and even if you are the best today, if there is a risk that somebody else is going to be more innovative or come up with a cheaper, better way to provide the service that you are providing, that will keep you on the toes, which means that ultimately people in superannuation will have the value of their retirement savings maximised.

The closed shop, anti-competitive arrangement that has been in place for the best part of five years now, introduced by this government, has been a national disgrace. It was shamelessly and deliberately put in place to give a competitive advantage to the union movement in Australia at the expense of the public interest. And this government was deliberately slow to act even when in the lead-up to the last election they had been shamed into fixing it. And now here we are. The Productivity Commission were finally asked to conduct this review, and they came out with their interim report making very sensible recommendations to open up this process to genuine competition. What does Minister Shorten do? He attaches his name and the status of his office to a joint submission by his two departments—the Treasury and the Department of Education, Employment and Workplace Relations. By attaching his name to the submission, by endorsing it, by publicly supporting it, he gives it the authority of government. He effectively responded to the Productivity Commission review before they had finally reported, putting a complete stop to any attempt to ensure genuine competition in the default fund market.

It is very important for the Senate to note that while all of this is happening, the government is progressing legislation to enshrine in law the consumer protection mechanisms the government judges are necessary to protect people in default super by legislating the conditions for MySuper default products. As of 1 July 2013 Australia will have, if the legislation passes through the parliament, legislated default MySuper products with the conditions of registration ensuring that all of the consumer protection requirements and all of the accountability requirements that are necessary for default products are complied with before particular products can qualify for registration of such a product.

If any provider is able to register a product which complies with all of the conditions of registration to be a MySuper default product as prescribed by this government, why shouldn't any such product be able to compete freely in the default fund market? Why should there be another level of government intervention based on a process that is inherently conflicted?

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Cormann, excuse me for a moment. Could I ask the senators at the back of the chamber to keep their voices down in their conversation.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I think my colleagues are just amazed that the government would not have been more forthright and more determined in fixing this absolutely terrible national disgrace which is the current process by which the default funds are selected by Fair Work Australia under modern awards.

Here we have a government which at the same time are legislating what they say are the conditions that are required to ensure that a particular default product complies with all of the consumer protection requirements that the government judge are necessary, but then they say, 'We don't really trust the criteria that we have determined in legislation because we think that, after all that has happened, and even though some products are adequate enough and are so good that they comply with all of these conditions of registration, we think that there is a desperate need for another process, still through Fair Work Australia, to run another ruler over it.' Additional costs, additional inefficiency, additional red tape. What for? If you think that your MySuper legislation is inadequate, fix it. Do not come in here and say, 'Once you are able to register your MySuper products, we think you are still not good enough to be able to provide default fund products under modern awards.'

Here we have Minister Shorten—having commissioned a review eventually, after a lot of pushing and shoving, after it is recommended in his initial draft report that there should be genuine competition—bullying them into a position where they back away from it and make a watered-down recommendation. But then even that watered-down recommendation, after the bullying from Minister Shorten, he still does not go along with. Here we have a situation now where the government has introduced legislation into the parliament, in the form of these bills, which instead of ensuring genuine competition will impose an additional layer of government intervention in the default fund market. The government is also seeking to limit the number of MySuper products in modern awards to just 10, contrary even to the clear but weakened recommendation of the Productivity Commission, which was that there should be an unlimited list of default funds.

In fact, the government has ignored the Productivity Commission's final weakened recommendations in a number of other areas. The Productivity Commission's proposed default superannuation panel will not be created, as recommended. Rather it will be subsumed into the existing minimum wage panel. The new panel is not the final decision maker under this bill, as recommended. The full bench of Fair Work Australia will approve default funds in each award after recommendation from the expert panel. There is the process of including funds in awards occurring every four years, starting in 2014, when modern awards are due for review, as opposed to an ongoing application process. All awards must have default funds, when currently there are 13 awards that do not list default funds at all.

Genuine competition in the default fund market, as I mentioned, is critically important to ensure that efficiencies and value for Australians in default super are maximised. Instead, this bill, if passed by the parliament, would see the continuation of a process where conflicted parties within Fair Work Australia will continue to select default super funds under modern awards. That is completely unsatisfactory, which is why the coalition will be moving a number of amendments to ensure that there is genuine competition between any eligible MySuper default products in the market.

Bill Shorten has been so desperate to protect the vested interests of his friends in the union movement that in our view he has lost sight of his responsibility as a minister of the Crown to act in the public interest, which is why we on the coalition side have said that, if the government will not do what needs to be done to right the wrong, the coalition will. We are moving these amendments in order to give the Senate the opportunity to join us in doing the right thing. If the Senate does not go along with us today, because the Labor Party continues to persist with its conflicted ways, seeking to provide competitive advantages that are close to them in the financial services market, then we in government will do the right thing and we will move to ensure that there is genuine competition in the default fund market.

There are many other problems with this bill. It does not go far enough in a number of areas. But other colleagues of mine who have direct responsibility for these areas have spoken on these matters very eloquently—of course led by our leader, Senator Abetz, who has portfolio responsibility in this area. But as far as my area of policy responsibility in relation to superannuation is concerned, let me just make very clear that this legislation provides an opportunity for us to ensure that there is genuine competition between default funds under modern awards, which is something that is manifestly in the public interest, which is something that the Senate should pursue today, because today is the opportunity when we can make it happen. In years to come, if we get it wrong today, people will ask the question: 'Why did you not vote to ensure that I had genuine choice and had the benefits of genuine competition in the default fund market? Why did you vote to not allow me to have all of the benefits that come from a genuine competition in this market?'

With those few words, I will be moving a series of amendments on behalf of the coalition in this area. I am hopeful that the Senate will see fit to support them. I will leave all other matters in relation to this particular bill to Senator Abetz and my other colleagues.

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

I thank senators for their contribution to this debate. This bill delivers on a number of significant commitments made by the government. First, we made a commitment to undertake a review of our Fair Work Act within two years of its full implementation. On 22 December 2011 the Minister for Employment and Workplace Relations announced an independent panel of three experts to review the Fair Work Act. The independent panel reported to the government in June. The panel concluded that the Fair Work Act is working well and is meeting its objectives and that the economic outcomes under the Fair Work Act have been favourable to Australia's continuing prosperity. Fifty-three recommendations were made to the government by the review panel. Since receiving the panel's report, Minister Shorten has been discussing the recommendations with employers, employer organisations, unions, Fair Work Australia and the Fair Work Ombudsman, state and territory governments, and small business representatives. This has encompassed both formal consultations through bodies such as the National Workplace Relations Consultative Council as well as informal consultations with individual stakeholders. It became clear from these consultations that there was broad support for around one-third of the panel's recommendation. This bill implements these recommendations.

Second, before the election the government made a commitment to have the Productivity Commission inquire into and develop an open, transparent and competitive process for selecting default superannuation funds in modern awards. The Productivity Commission conducted its inquiry this year and reported to the government in October. This bill reflects the government's response to the Productivity Commission's inquiry.

I note that the Senate Education, Employment and Workplace Relations Legislation Committee conducted an inquiry into the bill. The Senate committee noted that the evidence before it indicated broad overall support for the bill and that what has been proposed by the government is the product of lengthy consultations and reflects an appropriate balance of the needs of both employer and employee groups. The committee recommended that the bill be passed, and I thank the committee for its considered report on the bill.

Before concluding I want to make a few brief comments in response to some of the issues raised during the debate on the bill. Firstly, with respect to the Fair Work Commission, the government proposes the name 'Fair Work Commission' for the national workplace relations tribunal. We consider this name reflects both the nature of the work of this important tribunal but also its place within the Fair Work system. The government considers the name 'Fair Work Commission' is entirely appropriate for an independent umpire overseeing the Fair Work system.

Regarding vice-president positions, it is important to clarify for the benefit of senators that the Fair Work Act does not provide for statutory vice-president positions within the Fair Work Australia structure. During the minister's consultations with stakeholders, the President of Fair Work Australia, Justice Ross, recommended that two vice-president positions should be created within the commission. Justice Ross recommended this change to ensure that senior legal specialists with high-level expertise are attracted to Fair Work Australia to assist him in the administration and management of the tribunal. Fair Work Australia deals with important and complex matters of industrial law and the government is of the view that it should be structured accordingly. It is the government's policy that appointment of members to the Fair Work Commission be through an open, transparent and merit based process. The criteria for appointment—

Senator Abetz interjecting—

Senator Abetz scoffs at this point, and perhaps this is my time to reflect on some of Senator Cash's comments. Certainly Senator Abetz was around during the period I recall when Minister Reith was the minister. Indeed, some of the appointments such as that of registrar and others during that period included his senior advisers and in fact his chief of staff, so I do not think the opposition is in a particularly good place to scoff on this matter.

The criteria for appointment of vice-presidents will be set out in the Fair Work Act and are reflected in the bill. This reflects the approach taken in respect of other members of Fair Work Australia and previous iterations of the legislation. The criteria for appointment are the same as those for the president. The process of selecting the two vice-presidents will be open and transparent. It will be merit based. The positions will be advertised publicly. Anyone, including current members of Fair Work Australia, will be able to apply for the positions. An advisory panel consisting of senior officials from the Department of Employment, Education and Workplace Relations and the ASPC will recommend a shortlist of applicants, and the incumbent minister will then seek cabinet's endorsement for the appointments, as is the usual practice. The endorsed candidates will then be recommended to the Governor-General and Executive Council. Again this is the usual practice.

With regard to default fund superannuation, the government acknowledges points raised by organisations such as Qantas, BHP and ANZ in relation to the treatment of corporate funds under this bill. The government recognises that these comments are made in the interests of employees of those organisations and the government will ensure that there are appropriate arrangements in place so that funds operated by organisations like these can continue to receive default contributions within the parameters of MySuper and the expert panel arrangements set out in the bill. The government commits to introducing any required amendments in the first sittings next year to ensure appropriate arrangements are in place before the commencement of the new provisions in early 2014.

In conclusion, I note that in the public and parliamentary debates on this bill some have characterised the government as going too far and others have criticised the government for not going far enough. Others have raised reasonable policy points of difference. The government has clearly stated that we will continue to work with all stakeholders on the remaining recommendations of the review panel and that, where there is clear policy justification which reflects the government's policy principles, we will make appropriate amendments. Stakeholders want to get on with discussing other policy matters that are important to them.

This bill is largely uncontentious. This was the clear and consistent evidence to the Senate committee. This bill does not represent the last step in workplace relations reform. The government has referred to it as 'the first tranche'—and I note some senators opposite adopting the same language—because that is what it is. The government retains an open mind on all remaining recommendations from the Fair Work Act Review Panel, and none of them have been ruled in or out. We look forward to debating the opposition on workplace relations through the coming months. We are looking forward to hearing their views on unfair dismissals, on protecting the take-home pay of working Australians, on what they intend by way of reintroducing Australian workplace agreements and of providing support and protections for those balancing their work and family commitments. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.