C2003/652, Transcript of Proceedings [2003] AIRCTrans 775 (11 March 2003)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 4, 179 Queen St MELBOURNE Vic 3000
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TRANSCRIPT OF PROCEEDINGS

O/N VT10229
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER BLAIR

C2003/652

HEALTH SERVICES UNION OF
AUSTRALIA

and

YARRAMAR AGED CARE SERVICES

Notification pursuant to section 99 of the Act
of an industrial dispute re consultation and
negotiation with the union regarding proposal to
contract out cleaning and proposed redundancies
at Lumeah Homes for the Aged

MELBOURNE

8.40 AM, WEDNESDAY, 19 FEBRUARY 2003

Continued from 22.1.03

PN49

MR C. HEUSTON: I appear on behalf of the Health Services Union of Australia. With me is MR M. MAY and MS P. FEGAN.

PN50

MR P. EBERHARD: I am from the Victorian Employers Chamber of Commerce and Industry together with MR D. BOYD from the employers.

PN51

THE COMMISSIONER: All right, Mr Heuston, would you like to lead off?

PN52

MR HEUSTON: Commissioner, since the previous hearing there has been some discussion and negotiation between the HSUA and Yarramar regarding the proposal to contract out cleaning services, and if the Commission pleases, I would just like to tender a time line of events which has occurred since our previous hearing.

PN53

Commissioner, as you can see, there has been a number of discussions between the parties and I think it is fair to say that the stumbling block from the HSUAs perspective has been the information which has been supplied by Yarramar. Since our first meeting on 28 January, we have requested detailed information about the nature of the contract and what was actually being contracted out. We have been provided with some information about the services which are currently being provided and the cleaning which is being done under the current arrangements, but we haven't been provided with any information about what has been contained in the draft contract which has been drafted by Yarramar and the proposed contractor.

PN54

Through this period, Commissioner, Yarramar has refused outright to provide us with the information of the details of the specifications of that contract and the contract itself, and they are claiming that they can't provide it to us because of reasons of commercial-in-confidence.

PN55

Commissioner, based on the information that they have provided us, a proposal was submitted by the staff of Yarramar on or around 4 February, and that was as detailed as possible given the information which was provided by Yarramar,and detail as to draft rosters, some broad duties which would be contained in those draft rosters. However, the intricacies of that proposal have not been included because we haven't been provided with sufficient detail about the nature of the contract.

PN56

In response to the proposal which was submitted by the staff, Mr Boyd has costed that proposal and provided a response which I would tender a copy of, Commissioner.

PN57

THE COMMISSIONER: Thank you.

PN58

MR HEUSTON: And that was dated 7 February. Commissioner, in this memorandum which is addressed to Doreen Taylor, who is the HSUA shop steward who submitted that proposal, the costing has been put as 109,000 per annum which is roughly in line with, I believe, what Yarramar was hoping to achieve in terms of cost savings with the contracting out. What has been requested by Mr Boyd, the CEO of Yarramar, is further information about, and the dot points include, proposed cleaning schedule, what will get cleaned and how often and what will get cleaned on weekends.

PN59

Now, this is information which we believe that the employer should be including in the specifications of the contract, and requiring us to fix a price on rather than requesting information from our proposal about how we intend to - or how in our proposal the cleaning will be performed. This is information which I expect would have been included in the contract. I think it is a case here, Commissioner, of the cart before the horse in that how can we provide information based on their proposal when we actually don't know what they are contracting out, when, what will occur, what are they wanting to occur.

PN60

So based on that information, we have provided as much detail in our proposal as is possible and we believe it fits well within the framework of the type of cost savings which Yarramar are hoping to achieve.

PN61

There has been some further attempts at discussion, but I think that is probably the end of any productive discussions between the HSUA and Yarramar. There were some further meetings which were scheduled following 7 February when this memorandum was detailed, but I have been informed that those meetings didn't go ahead as planned. Thank you, Commissioner.

PN62

THE COMMISSIONER: Thank you. Yes, Mr Eberhard.

PN63

MR EBERHARD: A couple of things, Commissioner. Can I just take you to the time line of events that Mr Heuston had provided to you. In regards to the meeting that is down there on 12 February at 12 pm, it has got "Yarramar management failed to attend." I think there was actually confusion between whether it be between Yarramar and the HSUA or the HSUA and Yarramar in the sense that the HSUA were waiting in the staff dining room downstairs whereas Yarramar management were waiting in the meeting room upstairs, and when - - -

PN64

THE COMMISSIONER: Where were the staff? Where were the staff?

PN65

MR EBERHARD: I think they would have been downstairs in the staff dining room, and when Mr Boyd went down after waiting about 10 minutes in the meeting room upstairs, he was then contacted by reception and told the HSU are waiting for you. He then went to attend the staff dining room and found that the HSUA had left the building at that instance.

PN66

With regards to the specifications, Mr May, who is the organiser for the particular facility concerned, has received correspondence from Mr Boyd, and if I can read that to the Commission. I don't have a copy of it. It details the tendering process and I quote:

PN67

The tendering process began with the identification of three well regarded contract cleaning companies experienced in the provision of cleaning services in the aged car industry. Each company was invited to visit the Lumeah site where they were provided with the following information: the current cleaning manual, detailed site plan and current staffing profile. A full tour of the facility was undertaken with each company representative under the direction of the DON/Manager where specifics of their requirements were discussed. Each company was then asked to prepare a proposal for the conduct of the cleaning services including a detailed specification.

PN68

On receiving the three individual proposals, the Director of Nursing/Manager, Business Manager and the CEO undertook a detailed evaluation process. Clarifications between the various specified items was obtained through meetings with the company representatives. An evaluation report, including recommendations, was prepared and considered by the Yarramar Board of Governance which identified the preferred provider. A draft contract has been prepared.

PN69

In regards to the second point which is in Services Provided:

PN70

Services provided under the contract are those outlined in the cleaning manual previously provided to you.

PN71

So there was no actual specification provided, but people were asked to attend and to provide details in regards to the services with respect to the provision of the cleaning services of the particular facility. I think that the situation has been that there has been discussions that have now taken place in accordance with the time lines that has been provided to the Commission. We would submit that in accordance with 170GA of the Act that those discussions and the proposal that has been submitted by the staff itself in regards to the proposed cleaning provision has satisfied the requirements of GA of the Act. And with respect to that, the position of Lumeah is that they would now like to proceed towards finalising the position that they had previously adopted. If the Commission pleases.

PN72

THE COMMISSIONER: Do you say that the three tenderers simply provided a tender each based on the current cleaning schedule?

PN73

MR EBERHARD: My understanding is that it was based on the current cleaning manual, so the requirements, and from that there was also discussions undertaken between the Director of Nursing/Manager of the facility, and from that they provided their proposed contract - proposed specifications.

PN74

THE COMMISSIONER: So is the union aware of the details of the conversation between the Nurse Unit Manager and the contractors, because there may have been something differently put.

PN75

MR EBERHARD: I have just been advised what has been put to the union had been put to the contractors in the same vein.

PN76

THE COMMISSIONER: So the letter to Doreen Taylor says the proposed cleaning schedule, what will get cleaned and how often and what will get cleaned on weekends. What is the understanding of the employer in how the proposal was actually calculated from the employees and given to the employer?

PN77

MR BOYD: The proposal presented by Ms Doreen Taylor included a staff roster, but at the time it was presented had no indication of what the staff were going to be actually doing in that proposed roster. So at the time of preparing the memorandum of 7 February which was - I must also say that was the date the submission was received from the staff, they didn't have any indication in that submission just as to what was actually going to happen on the proposed roster. In that subsequent discussion after giving Doreen Taylor this memorandum, she proposed another three pages addendum to the original proposal - - -

PN78

THE COMMISSIONER: Right.

PN79

MR BOYD: - - - which outlined clearly what they were intending happen on each of the shifts in the roster they were proposing.

PN80

THE COMMISSIONER: And does that coincide with the current cleaning manual and what the discussions were between the - - -

PN81

MR BOYD: It does, yes. It picks up all of the current cleaning requirements of the current manual.

PN82

THE COMMISSIONER: Right. And where does that fit then with what the tenderers are proposing?

PN83

MR BOYD: As far as the specification, it is pretty much in line with what the provider is intending to provide.

PN84

THE COMMISSIONER: Right. So what - - -

PN85

MR BOYD: The key differences are that the staff have not included any on-costs for chemicals and equipment and consumables and the like within their proposal whereas the contractors have all included the on-costs, consumables, etcetera, in their costings.

PN86

THE COMMISSIONER: Has any assistance been provided to the staff in putting together their tender?

PN87

MR BOYD: Every assistance has been offered to the staff in doing that. In putting this proposal together, they had proposed a roster which on their calculations was going to cost $88,193. In doing full costings on that same roster, Yarramar's costs were in the order of $109,000. So there is certainly some miscalculations in the staff's input which I was more than happy to talk to them about and did. And certainly at our meeting on 28 January, all staff were fully informed of the process and offered any assistance with making applications for alternate employment, in seeking redeployment opportunities within and outside the organisation which no-one has come forward with.

PN88

THE COMMISSIONER: So where do the major cost savings come from with your tenderers?

PN89

MR BOYD: I think the major cost savings come from the purchasing power and the experience of those providers in working through the specification.

PN90

THE COMMISSIONER: What is the difference between tenderers' price and your employees' own price?

PN91

MR BOYD: $15,000 a year.

PN92

THE COMMISSIONER: Right. So you are saying the purchasing power of a big contractor amounts to $15,000 a year simply in the purchase of materials?

PN93

MR BOYD: Look - and I think there is also the possibility of improved efficiencies in the time allocation to do the job.

PN94

THE COMMISSIONER: And probably the reduction in staff and greater use of casuals rather than permanent employees and a range of other factors that would into consideration, I would have thought. Is that right?

PN95

MR BOYD: Most likely. I don't know the detail of the staffing arrangements for the contractor; that is a matter for the contractor.

PN96

THE COMMISSIONER: You may end up like Kingston. Introduced new cleaning schedules. Public meetings now of clients' relatives saying that the place is filthy. There is a range of reasons why that is happening. The experience of the Commission is that whenever an organisation decides to outsource simply based on costs, nine times out of 10 it turns round and bites them because there is always issues regarding contractors not being able to keep up with the appropriate standards because they have cut back too much on staff, or greater use of casuals who really don't care because they are not permanent employees.

PN97

It seems to the Commission at this point - I mean, you have to make the judgment in the end - what the Commission is concerned about is if the staff are to be given a proper opportunity in order to tender, it has got to be apples and apples, it can't be apples and oranges. You say that the staff have been made aware of the conversations between the Nurse Unit Manager and the proposed contractors; is that true?

PN98

MR HEUSTON: Commissioner, we are not aware of the content of any conversations between the Nurse Unit Managers and the contractors. What we have been provided in terms of information has been a number of documents, but there has been no further verbal information provided about the information that I suspect may have already been passed on to the contractors.

PN99

THE COMMISSIONER: Right. Mr Eberhard, you told me that there was.

PN100

MR EBERHARD: My instructions are that the information that has been provided from Yarramar to the HSUA is the same information that has been provided from Yarramar to the potential contractors. Now, whether that be done in writing or in a verbal sense, that is the instructions that I have received, Commissioner.

PN101

THE COMMISSIONER: Well, can I say to you that the Commission is not going to do anything in terms of 170GA, I think it was you mentioned, and I would assume it is GA(2), is that right, in terms of the public interest?

PN102

MR EBERHARD: It is really GA and GA(1) and GA(2) in the sense that that was the - if you remember at the previous hearing, the HSUA were seeking an order from yourself in respect to consultation under those provisions.

PN103

THE COMMISSIONER: Yes. Well, can I say to you that the Commission at this stage is not prepared to do anything in terms of declaring that it should have no further involvement. What I think needs to occur is the staff need to understand exactly where those savings are coming from in terms of the tendering process. This commercial-in-confidence stuff is nonsense. Staff need to be on an equal footing so that they understand exactly how a tenderer's process is going to impact upon their jobs and they should be on an equal footing in terms of saying, okay, if this is where you say your savings are coming from, then we either can match that or we can't, but they need to understand it.

PN104

Now, let me say to you that most organisations that have gone through the outsourcing process where they have welcomed an opportunity for their own staff to apply, have provided expertise, information and back up to that staff so that they are on an equal footing in tendering for their own jobs. They simply don't say, here is a document, here is what the tenderers provided for, and here is some information, now you go away and do the costings. And as Mr Boyd has said, some of those costings haven't even included on-costs in terms of materials and so forth. Well, the staff need to have some expert advice on how all that is to be calculated. They simply can't be left on their own because that is not their field. Their field is to be able to perform the functions that are required.

PN105

So what I would like to do is for the parties to actually sit down and for the staff to understand so that they can tender properly exactly where those savings are coming from, from those outside tenderers that have tendered for the position. Now, the Commission will give you another two weeks to do that and you will have a report back in two weeks time, a date and time to be set by the Commission. Is that clear?

PN106

MR EBERHARD: Yes, Commissioner.

PN107

THE COMMISSIONER: Mr Eberhard, yes. Mr Heuston?

PN108

MS FEGAN: Can I just make it clear, Commissioner, when you say that, that we need to - so that Lumeah understands what we are seeking, is that the cleaning manual that they have given - for instance, the cleaning manual that they say they gave the contractors and that this is what they tendered on, I have had a look at this document and it goes through actual cleaning schedules about what is to be done each day, but it doesn't tell me how many times a week this is to be done. It simply says at the top:

PN109

Cleaning Schedule Hostel, for example, Day Therapy, 7 am till 12 pm.

PN110

It doesn't tell me if that is Monday to Friday, if it is Saturday to Sunday, how many times does this particular schedule get done? So how can I roster when I don't know how many times that has to be done? And what I say is if they are making all these savings, give us a look at the roster that you say can make these savings and the prices of the chemicals that you say, so that we can say whether we can meet them or not. How can we possibly put in a tender when we don't know what they want? And having the schedule doesn't give me any information here. This just tells me what they want, but it doesn't tell me how often they want it.

PN111

THE COMMISSIONER: How did the tenderers come to their figures? Is that the document that has been provided to the tenderers?

PN112

MR BOYD: The tenderers have had - have been provided with that document, and in their submissions they have given us detail of which areas will be cleaned and how often.

PN113

THE COMMISSIONER: Right.

PN114

MR BOYD: What schedule, what is a daily schedule, what is a weekly schedule, what is a monthly schedule, what is a six-monthly schedule for the whole range of cleaning services within the facility.

PN115

THE COMMISSIONER: Staff need to be provided with that same - - -

PN116

MR BOYD: Staff have been provided with that information.

PN117

THE COMMISSIONER: Have you or haven't you?

PN118

MS FEGAN: Well, we would like to ask where it is because we don't have it. We have this. This is what you have given us and you say this is what they tendered on. And I say how could they have tendered on that, because they don't know how many days a week you want that done.

PN119

MR BOYD: Sorry, the - sorry, the contractors - - -

PN120

THE COMMISSIONER: Who provided the information? Who provided the information to the staff and which member of the staff got it, do we know?

PN121

MR BOYD: The information provided is as provided there and the contractors have given us their response, what they intend to provide, in - - -

PN122

THE COMMISSIONER: Yes, but where is that information? If the staff are to tender for their own jobs, they need to understand on what basis they are tendering. For instance, the information that Ms Fegan says is, well, this is what is required, but it doesn't say how often it is to be done. You say the tenderers have put in their tender. For the staff to be able to put in their tender, they need to understand exactly what they are competing against, don't they?

PN123

MR BOYD: Well, that is - I wouldn't believe that that is open, competitive tendering.

PN124

THE COMMISSIONER: Well, Mr Boyd, what is your view of open, competitive tendering is and what mine is and what my view is of what has happened in other industries where staff have had to tender for their own job, they actually have been provided with the expertise, even outside expertise, in order for them to put a tender together properly. It appears that none of that has been provided in this instance and staff are being led blind.

PN125

Now, if I have to, I will issue a direction that all the material that has been provided by the tenderers be available to the union in order for their members to be able to put together a tender on an equal footing with those outside tenderers, and that will be evaluated on a proper basis. Now, if I have to issue those directions, I will, but I think at this stage the staff are being put behind the eight ball because I seem to get the view, whether it is right or wrong, I seem to get the view that the employer has made up their mind that they want outside tenderers and they are not prepared to do anything in a constructive manner to assist the staff to maintain their own positions. Now, I hope that that view is wrong.

PN126

MR BOYD: Well, I suggest it is wrong, sir.

PN127

THE COMMISSIONER: Okay, well, I will take that as what you say, but all the information that has been provided by the tenderers in terms of times, allocation of times, the duties to be performed daily, weekly, monthly, six-monthly basis, is to be provided to the staff, including the cost of materials that the tenderer says they can provide them for, in order for the staff to be able to tender on a proper footing.

PN128

Now, I will have a report back in two weeks and we will see where we are going. The Commission will stand adjourned.

ADJOURNED ACCORDINGLY [9.04am]