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Fair Work Commission Transcripts |
TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1050013-1
DEPUTY PRESIDENT GOSTENCNIK
B2013/1264
s.242 - Application for a low-paid authorisation
United Voice
and
SECOM Australia Pty Limited T/A SECOM Security; Sydney Night Patrol and Inquiry Co Pty Ltd T/A SNP Security; MSS Security Pty Limited;
Wilson Security Pty Limited; The Trustee for the Secom Australia (ACT) Unit Trust
(B2013/1264)
Security Services Industry Award 2010
(ODN AM2008/11)
[MA000016 Print PR985126]]
Canberra
10.05AM, TUESDAY 20 MAY 2014
Continued from 19/05/2014
PN1321
THE DEPUTY PRESIDENT: Yes, good morning. Mr McDonald, I understand you wish to deal with the question of a confidentiality order.
PN1322
MR McDONALD: If it pleases, the parties have had some discussions about evidence that might be regarded as confidential. There is a draft order which I would seek to hand up. In general the reason for seeking the order is we submit that this industry is a particularly competitive one, some of the information that is contained in the statements go to details about matters that the companies see as commercial-in-confidence in terms of their tendering positions. Then there is also some information as to salaries which aren't necessarily in the public domain, over-award salaries and the like.
PN1323
So it's in relation to those matters generally that we seek a confidentiality order. There is also a confidentiality order sought in relation to evidence about the negotiations for a new agreement in relation to MSS, including a copy of the draft agreement which was attached to Mr Cheatham's statement.
PN1324
THE DEPUTY PRESIDENT: That's attachment B, is it?
PN1325
MR McDONALD: Attachment D, your Honour.
PN1326
THE DEPUTY PRESIDENT: D or B?
PN1327
MR McDONALD: B was I think the proposed multi-employer attachment.
PN1328
THE DEPUTY PRESIDENT: I see, yes.
PN1329
MR McDONALD: Attachment D was the draft agreement that the commission's approval was being sought for.
PN1330
THE DEPUTY PRESIDENT: So attachment D is a document which is a statement prepared by David Cheatham, together with a number of annexures.
PN1331
MR McDONALD: Yes. Those annexures generally all have to do with those bargaining arrangements and the communications about the content of the draft agreement and so forth, which because it was not subsequently made or approved, then meant that it never actually became in the public domain.
PN1332
THE DEPUTY PRESIDENT: Yes. Presumably you also wish to amend this order to include exhibits R1 and 2?
PN1333
MR McDONALD: Yes, your Honour.
PN1334
THE DEPUTY PRESIDENT: This is an agreed document?
PN1335
MR McDONALD: I'm sorry?
PN1336
THE DEPUTY PRESIDENT: Is this an agreed document?
PN1337
MR McDONALD: It is, your Honour.
PN1338
THE DEPUTY PRESIDENT: Ms Cresshull, do you have any objection to the draft order being amended to include exhibits R1 and R2?
PN1339
MS CRESSHULL: No, your Honour. The only comments we would make would be with the document attached, attachment D, it is actually made up of a series of documents.
PN1340
THE DEPUTY PRESIDENT: Yes.
PN1341
MS CRESSHULL: The first few pages of that are a statement which was used in previous Fair Work Commission proceedings, which is a public document anyway.
PN1342
THE DEPUTY PRESIDENT: Was it the subject of a confidentiality order?
PN1343
MR McDONALD: I would have to get some instructions on that. I am not instructed - - -
PN1344
THE DEPUTY PRESIDENT: The order is sought not in relation to attachment D, but the documents attached to attachment D.
PN1345
MR McDONALD: Yes.
PN1346
THE DEPUTY PRESIDENT: So perhaps just by way of clarification, we should amend that so that it reads, "annexures 1 through 19". Is that right?
PN1347
MR RUSSELL-UREN: My apologies, your Honour, the only serious issue we have got is page 2 of annexure 1 to attachment D, that's a notice of representational rights.
PN1348
THE DEPUTY PRESIDENT: That could hardly be confidential.
PN1349
MR McDONALD: Yes, we would have a claim in relation to that.
PN1350
THE DEPUTY PRESIDENT: So if we say in relation to paragraph 1, the documents marked annex 1, annex 3 to annex 19 attached to attachment D, would that be sufficient.
PN1351
MR McDONALD: Could we just have one moment please, your Honour?
PN1352
THE DEPUTY PRESIDENT: Yes.
PN1353
MR McDONALD: I am sorry, your Honour, in relation to annexures 1, 3 and 19, was it proposed that they not be included within the confidentiality order?
PN1354
THE DEPUTY PRESIDENT: No, it would read, "The following parts of blah is confidential", and then para (a) remains the same. "Paragraph (b) is the document marked annex 1 and annex 3 to annex 19 attached to attachment D." So they are the confidential bits. At the moment it catches all of the documents attached to attachment D, but not attachment D itself, which as I understand it is not intended.
PN1355
MR McDONALD: Yes.
PN1356
THE DEPUTY PRESIDENT: I'm just excluding annex 2. The other way of doing it is to simply say, "The documents other than annex
2 to
attachment D - - -"
PN1357
MS CRESSHULL: Sorry, your Honour, I think it's page 2 of annex 1.
PN1358
THE DEPUTY PRESIDENT: Sorry, I see. Perhaps we will do it on that basis, other than the second page of annex 1. So it would be, "The documents" I will add and S, "(other than the second page of annex) attached to attachment D".
PN1359
MR McDONALD: Sorry to be difficult, but all of annexure 1 can indeed not be confidential.
PN1360
THE DEPUTY PRESIDENT: Okay, other than annexure 1. Then if we insert a new paragraph 4, "Exhibits R1 and R2 are confidential," and then renumber 4 to 5. Is that satisfactory?
PN1361
MR McDONALD: Yes, thank you, your Honour.
PN1362
THE DEPUTY PRESIDENT: Do you want the order to take effect from today?
PN1363
MR McDONALD: If it pleases.
PN1364
THE DEPUTY PRESIDENT: Yes. Is that satisfactory?
PN1365
MS CRESSHULL: Yes, your Honour.
PN1366
THE DEPUTY PRESIDENT: Thank you. I will make that order and I will publish it later today. Are there any other housekeeping matters?
PN1367
MS CRESSHULL: Your Honour, United Voice will be seeking to tender into evidence a bundle of petitions that were attached to our submissions. I understand that the respondents have some difficulty with us tendering this evidence and have made some comments about wishing to have the ability to cross-examine each person who filled out one of those petitions. We say that they should be able to be tendered into evidence, otherwise it would frustrate the operation of the tribunal to have to hear from 186 further witnesses.
PN1368
We have managed to show four of our witnesses yesterday these documents and provide the respondents the ability to examine those witnesses on those petitions. Thank you, your Honour.
PN1369
THE DEPUTY PRESIDENT: Yes, Mr McDonald.
PN1370
MR McDONALD: Your Honour, we say in relation to those petitions that if they are to be tendered as evidence of the facts that are sought to be set out therein, that we should have the cross-examine those people in relation to those petitions. Where the union has brought evidence from the people concerned who made the petitions, we have taken no objection to that. We say that also there is a procedural fairness aspect in being able to cross-examine those people, but there is also the issue of the confidence that the commission can have in terms of relying upon those petitions.
PN1371
There are not only issues about authenticity, but issues about whether the employees concerned are even covered by the application. We say there is a real mix of people within that. There are for example some that seem to fall clearly outside the application, such as who work on foreign government embassies, but we can have no confidence that what is being said in those petitions necessarily is the truth, or none of the usual rights in relation to examining those people. So we say that we object to them being admitted at all.
PN1372
If they were admitted we would submit that no weight could be attached to those as reflecting the views of the employees. What is clear just on the face of the documents is that they are all exactly the same and haven't been written by the people who are purported to be making the petitions. Just on the procedural fairness point, your Honour, we would refer your Honour to a decision to support that contention, if I can get my folder sorted out.
PN1373
THE DEPUTY PRESIDENT: Yes.
PN1374
MR McDONALD: Sir, a decision of Ramsay v Australian Postal Corporation [2005] FCA 640, this case deals in part with the issue of whether there is a right to cross-examine. We submit it finds that if documents are to be tendered, there is a right of the opponent to cross-examine that person. In particular there is a helpful quote at paragraph 26 of the decision on page 10 in Australian Postal Corporation v Hayes, that emphasises that procedural fairness is important in the tribunal's processes. Then it goes on over at paragraph 11, it refers to the principle that:
PN1375
A party must be given a reasonable opportunity to present its case and they meet the heart of the requirements of natural justice which it is obliged to observe.
PN1376
I particularly rely on the quote at paragraph 289, his Honour Wilcox J is quoted as saying:
PN1377
The testing of opposing relevant material by cross-examination is an essential feature of the opportunity to correct or contradict that material. It is not enough that the party against whom the evidence is led has the right to present evidence in reply.
PN1378
That is a position that is generally adopted by the court by Spender J at paragraph 27 of that decision. In terms of what has been put in the petition, they are matters which we say goes right to the heart of the sorts of the matters that are in contention in the case. So for example the petition seeks to assert that the makers of the petition are low-paid workers, that's something that is in dispute. They assert that they do not have a living wage, that would be something that would also be in dispute.
PN1379
They assert that they have very little bargaining power, we have disputed that. They assert they have substantial difficulty trying to bargain, we have disputed that. We say that there are in fact enterprise agreements in place and some of the makers of the petitions who gave evidence are in fact under enterprise agreements. They say that our wages are effectively set by the client, we're disputing that. Then they talk about a multi-enterprise agreement being the way to have a living wage, modernised conditions and dignity, and we have disputed that.
PN1380
So we say in relation to those issues, they're not peripheral sort of issues, they go to the heart of the case. We say that in those circumstances the right to cross-examine the makers of such petitions should be upheld, if it pleases.
PN1381
THE DEPUTY PRESIDENT: Thank you. Ms Cresshull, what is the purpose that is sought to be achieved by the tender of these petitions?
PN1382
MS CRESSHULL: The petitions were to be tendered to ascertain the views of the employees, your Honour. Naturally all the petitions were the same because that is the nature of a petition, and it was to satisfy that requirement of 243.
PN1383
THE DEPUTY PRESIDENT: Again, let's break this up into chunks. The documents are intended to show that the relevant employees support the application, that's one thing. If it's sought to be established that they all regard themselves, or assert that they are low-paid workers, they all say that they don't have a living wage. They all say that they have little bargaining power and the rest of it, they're mixed questions of fact and law which I will need to at least consider, if not determine.
PN1384
The respondents seem to me are entitled to an opportunity to explore with each employee at least some of those assertions, not least
of which the living wage prospect, and the question of whether or not the person is a low-paid worker.
Mr McDonald, I don't think it's terribly controversial that assuming these persons are employed by the relevant employers who are
the subject of this application, that they would support the union's application.
PN1385
MR McDONALD: Your Honour, we would suggest otherwise with respect. A number of the witnesses yesterday didn't really - - -
PN1386
THE DEPUTY PRESIDENT: Understand the application.
PN1387
MR McDONALD: Yes, your Honour. When tested about it, I could only take it so far, but it was very unclear to them in relation to what their existing employment arrangements for some of them. For example, Mr Sankey didn't know whether he was under an award or an agreement, or an individual contract, or how they fitted together. He didn't seem to be aware of - hopefully I'm quoting the right person in terms of the MSS supervisor - - -
PN1388
MS CRESSHULL: On that, sorry, your Honour, I think he was very aware to the extent that he could be. He was very well informed as to the extent that he could be about his employment obligations. I think it's not truthful to his evidence to be say that, Mr McDonald.
PN1389
THE DEPUTY PRESIDENT: You can gave an argument about that in submissions. The difficulty that I have, Ms Cresshull, is the one that I foreshadowed the other day, and that is that to the extent to which assertions of fact are made in these petitions and you make a submission that I should rely on them, then the respondents should have an opportunity to test it. It's a matter for you, as I indicated the other day, about how you want to run your case. I am not bound strictly by the rules of evidence and I may well admit the petitions.
PN1390
But I have to say to you now that if I admit them and I rely on them, in the absence of an opportunity to cross-examine is a very
significant factor in my assessment of what weight I give the document. So if all you want to do is admit the document, you can
make submissions about the weight I should give it, but in fairness to you and the members that you represent, I would not be inclined
to give petitions which assert factual matters a great deal of weight at all, absent an opportunity to the respondents to cross-examine
persons who signed the petition.
MR RUSSELL-UREN: The applicant would seek to make two very brief points. The first point that we would seek to make is this. As
Mr McDonald has pointed out, a right to cross-examine the witness is critical to procedural fairness in many cases. We would only
note that while the duty to accord the parties procedural fairness remains the same, the content of that duty or how it is given
its effect, changes according to the circumstances. In consequence a right to cross-examine in the circumstances of a review of
a decision under the SRC Act within the AAT, occurs against a different statutory context, than a right to cross-examine within the
context of the Fair Work Commission.
PN1391
That is in part because of the subject matter of the dispute and the type of evidence which may come before it. May I address this point in more detail shortly. It is also in part because we say that the duty to give effect to procedural fairness is informed by the statute within the commission or which the relevant tribunal operates. Relevantly, your Honour, the applicant would direct the commission's attention to section 577A of the Fair Work Act. Relevantly that provides:
PN1392
PN1393
The point I would make is this. That 577 on our reading of it gives form to the powers that might otherwise be exercised by the commission. Relevantly, it has the capacity, and we say does in fact, to structure the way in which the tribunal makes procedural decisions. If I may go on to say that were the commission put in place or give effect to a procedure which required hundreds of witnesses to be called to verify, authenticate or reiterate, stand by or disclaim statements in the form of a petition that they had previously made, we say that that would have the practical effect of creating a procedure which was neither fair nor just.
PN1394
It would accord some degree of fairness to the respondent, but it would not give fairness or justice to the applicant in the circumstances. If I may briefly depart to a related point. In an industrial context where disputes are meted out between unions which represent large collective groups, and employers particularly in the circumstance of a low-paid application where there are a number of employers, there would be extensive documentary evidence. The aim expressed by 577B relevantly to have a procedure which is quick, informal and avoids unnecessary technicalities has greater import.
PN1395
That is a section which has been created by the legislature with full knowledge that the commission will be dealing with massive groups of people. If the legislature had intended the commission to operate in accordance with the procedure that had that type of requirement, it would made that position clear. In consequence what we say is that if on our preferred interpretation of the Act and the rules that apply to the commission, has the effect that for the commission to hold the 180 or so witnesses need to be called to verify a petition, what we say is that in our view that would be in error in the context of the statute.
PN1396
THE DEPUTY PRESIDENT: Mr Russell-Uren, I think you are misunderstanding the point that I'm making. It's not a question of admissibility, it's a question of weight. Let me finish. Ultimately I am not sure what use I can put, or what weight I should give, to a document which is prepared by somebody else other than the person who signs it, which says, "Our wages are effectively set by the client for a process of competitive tendering," when the person who signs that document may or may not know what that means.
PN1397
There is no explanation as to how that judgment was formed, whether it's based on information or direct knowledge, whether it's based on dealings, or whether it's based on discussion with a delegate. All those things go to questions of weight, not admissibility. All I am saying to you is, if you want to rely on these documents and you don't want to call the people, then that will necessarily have an impact on the weight that I give the document.
PN1398
MR RUSSELL-UREN: I do understand that, your Honour. If I may go on very briefly to address that point?
PN1399
THE DEPUTY PRESIDENT: Yes.
PN1400
MR RUSSELL-UREN: The documents are tendered, as my colleague said, to address the question of whether or not the employees are low paid. The question then becomes what weight is given to them, I do follow that. The point that I would make is that if the procedure that the commission has outlined required something which is quick, informal and avoids unnecessary technicalities, then we say it follows that to give document which are admitted or tendered through that procedure minimal weight, is really depriving the procedure which is required of the commission by 577 of its content. That is an argument directed directly with the question of weight. I say nothing further at this point, your Honour.
PN1401
THE DEPUTY PRESIDENT: If your submission is that the procedural rules with which the commission must comply so far as they concern speed, informality and so forth, mean that I must or should give substantial weight to documents which are in a pro forma form, without giving the other side an opportunity to cross-examine on those, then that submission is rejected. What I am saying to you clearly, and you have got time to fix this up if you wish, if you rely on those documents as a basis to establish the facts asserted, because of the generalised nature of the statements made without any factual foundation, without the opportunity to cross-examine, they will be given low weight.
PN1402
It's a matter for you how you wish to proceed. I can tell you this, that if I were to give them substantial weight, an appeal tribunal would justifiably, justifiably overturn me.
PN1403
MR RUSSELL-UREN: We certainly don't say that they should be given substantial weight, but we do say that the weight which is accorded to them should not of such a level which would deprive them of any meaning.
PN1404
THE DEPUTY PRESIDENT: You can make submissions about that in the final analysis.
PN1405
MR RUSSELL-UREN: Of course, your Honour.
PN1406
THE DEPUTY PRESIDENT: My present inclination is, it's your case, if you want to tender these I am not going to not allow you to tender them, but I have made my position on questions of weight I think pretty apparent. You have got an opportunity to bolster your case in relation to those matters if you choose to. That is all I am going to say about it. Mr McDonald, I am going allow the union to tender the petitions. I have made my position clear on what weight I will give them.
PN1407
MR McDONALD: If it please.
PN1408
THE DEPUTY PRESIDENT: On that basis, Ms Cresshull, shall I tender them as a bundle or mark them as a bundle?
PN1409
MS CRESSHULL: Yes, your Honour. We have pulled out some of those petitions, but as a bundle - - -
PN1410
THE DEPUTY PRESIDENT: I understand that, but for the purposes of working through them, I will tender them as a bundle.
PN1411
MS CRESSHULL: Yes, your Honour.
PN1412
THE DEPUTY PRESIDENT: I will mark the bundle of documents which are annexure C to - are they to the application?
PN1413
MS CRESSHULL: Your Honour, they are annexed to the outline of submissions.
THE DEPUTY PRESIDENT: Annexure C to the outline of submissions filed by United Voice in these proceedings as exhibit UV10.
EXHIBIT #UV10 ANNEXURE C TO THE OUTLINE OF SUBMISSIONS FILED BY UNITED VOICE
PN1415
THE DEPUTY PRESIDENT: Are there any other preliminary matters?
PN1416
MS CRESSHULL: Not for today, your Honour.
PN1417
THE DEPUTY PRESIDENT: Is your next witness here?
PN1418
MS CRESSHULL: Yes, both our witnesses for today are here, your Honour. I call Robyn Hardy.
PN1419
THE ASSOCIATE: Could you please state your full name and address?
MS HARDY: My name is Robyn Mary Hardy, (address supplied).
<ROBYN MARY HARDY, SWORN [10.41AM]
<EXAMINATION-IN-CHIEF BY MS CRESSHULL [10.41AM]
PN1421
MS CRESSHULL: Could you please repeat your name and address for the record?---My name is Robyn Mary Hardy, (address supplied).
PN1422
For the purpose of your evidence in this proceeding did you cause to be prepared a statement? Is that right?---Yes.
PN1423
Do you have that with you there in the witness box?---I do.
PN1424
I tender that statement into evidence, if it please, your Honour.
PN1425
THE DEPUTY PRESIDENT: Any objection, Mr McDonald?
PN1426
MR McDONALD: No objection, your Honour.
PN1427
THE DEPUTY PRESIDENT: I will mark the witness statement of Robyn Mary Hardy, which comprises 14 paragraphs, together with - is it just the one annexure, annexure A to C. Is that correct?
PN1428
MS CRESSHULL: Yes, your Honour.
THE DEPUTY PRESIDENT: Together with attachments A to C, as exhibit UV11.
EXHIBIT #UV11 WITNESS STATEMENT OF ROBYN MARY HARDY WHICH COMPRISES 14 PARAGRAPHS, TOGETHER WITH ATTACHMENTS A TO C
PN1430
MS CRESSHULL: Thank you.
PN1431
Ms Hardy, you have written a statement about procurement. Could you please explain how value is addressed by procurement officers in government?---Yes, value for money essentially is one of the major principles that all governments in Australia use in their procurement. It's actually not just an Australian methodology, now it has become sort of a world-wide trend. The principle essentially of good value for money is to secure the best procurement outcome. That does not mean necessarily the lowest price. It is processed in the procurement process in a couple of ways. In the ACT government, for instance, value for money is defined in the Government Procurement Act, and if I may refer to ACT Government Procurement Framework and Overview. The document states that, "The territory entity must pursue value for money in undertaking any petition activity. In pursuing value for money, defined in the Act to mean the best available procurement outcome, the entity must have regard to the following: probity and ethical behaviour, management of risk, open and effective competition, optimising whole of life costs and anything else prescribed by regulation." The Commonwealth has a similar kind of framework, and I have to say all other states and territories have the same sort of thing. Achieving value for money in the Commonwealth for instance, "Approvers must be satisfied after reasonable inquiries that the procurement achieves value for money and it requires encouraging competition, efficient, effective, economical, ethical manner, making decisions in an accountable, transparent manner, considering the risks." The implementation of those guidelines and guidance in the policy and legislation is reasonably complex. But procurement officers tend to ensure that their processes are transparent and hence often it's usually there are rules about open tendering. That means open and effective competition is also covered from the value for money. But it is also secured in terms of the selection criteria that are established for procurements, and through the evaluation methodology. Essentially the evaluation methodology for services industries, which this one is, tends to cover three criteria. Mandatory criteria, which is about licensing and possibly holding certifications appropriate to whatever industry; assessable criteria which is about experience, knowledge of the job, track record, that sort of thing; then a pricing criteria. In evaluating the respondents to tenders the officers in a tender evaluation team evaluate the tenders first by the mandatory criteria, and tenders which don't pass the mandatory criteria for licensing are generally not considered further. Then they look at the assessable criteria and they rate them usually in a numerical scale, sometimes one to five, sometimes one to 10, it differs but usually it's some sort of numerical scale. Then they will rank all of the tenders in that scale. They having done that, they will often open the pricing envelope, because usually there's a two-envelope system of tendering and that's so that officers give due consideration to the non-price criteria before they look at the price criteria. Then they will open the price criteria. Then they will do a comparison and often it's essentially a comparison between the non-price and price criteria. Often the non-price are weighted, so some of the criteria are given more weight than others. Sometimes price is also weighted, and then they will make a calculation, usually in this particular case because these are of the less complex variety of procurements, they will make a calculation which is to do a ratio of the tendered price to the outcome of the scoring that the tenderer received for assessable non-price criteria. Then they will come up with essentially a winning tender. The winning tenderer is the that provides best value for money, meaning the greatest assessable level of criteria, for the least money outlay.
PN1432
**** ROBYN MARY HARDY XN MS CRESSHULL
PN1433
Thank you, Ms Hardy. Is this different from how it would work in the private sector?---In the private sector they would tend not to tender, they are not compelled to tender. They would often probably ring around for a couple of quotations, that's maybe how they would do it, they might also have a set of criteria against which they would seek quotations, depending on the size of the service required. But in all probability they just would seek quotations on price.
PN1434
Could a company increase the wage pricing component and still be able to get a tender?---If their pricing was higher they would tend to be disadvantaged. They would have to do really well in the non-price criteria. As I said before, the non-price criteria in service industries, there's not a lot to it, but there generally would be knowledge of the procurement, there would be experience and capability. So they would have to get nine out of 10, eight of 10, 10 out of 10, to be able to win a tender with a high price, because that's how the comparison goes. It does happen. It certainly does happen where higher-priced tenders win, but they have to do really well in the non-price, because it is the case that a seven out of 10 and a good price is still an acceptable tender. Seven out of 10 is quite good, five out of 10 - - -
PN1435
THE DEPUTY PRESIDENT: I suppose the influence of price depends upon the differential. So that marginal differences in price then
the fact the assessable criteria would play a greater role than whether there is a stark difference in price?
---That's correct, your Honour, yes.
PN1436
MS CRESSHULL: Could you just go into a bit more detail, Ms Hardy, as to how tenders could score higher on a non-weighted criteria?---How they would score higher on a non-weighted, essentially the statement of requirements for a service like this would tend to be dependent on the site and whether or not, for instance, it's just a labour requirement to sort of man a security, or whether or not there are some vehicles required, where there travel required. So the price that would be put in for a tender like this would go to overhead costs that the company would have, and every company has overhead. You know, someone runs the financial department and the HR department, et cetera, and that is always factored into these, as well as the manpower, as well as some equipment or some say fleet. It's very difficult for companies to differentiate in these kinds of industries because there is little point of difference, other than say a small company may lack experience in looking after a really large establishment. For a very stark example, say a detention centre, it would be very difficult for a small company to mount a case that they would have experience and case that they would have experience an capability to manage the security operations for a detention centre. So they would likely rank very lowly in their criteria against a very large, you know, sort of multinational security company which has lots of experience in this. So essentially the market as it is, it's very difficult for people to differentiate other than in capability and size. So if everyone is roughly around the same size in terms of their corporate structures, it would be very difficult for one company to poke its head up and charge a higher price, unless they were by far more capable, far more experienced, et cetera.
PN1437
**** ROBYN MARY HARDY XN MS CRESSHULL
What if each tender put in the same wage price?---Pardon?
PN1438
What if there was two competing tenderers and they both put in the same wage?
---I mean, it's likely that if the wages are struck anyway according to whatever the appropriate wage is for that category or labour,
the difference in the price then, as I said to you before, is likely to only be in things like overheads, such as office costs, finance
costs, et cetera. So the bulk of these kinds of services are in labour and then there would be some for a fleet requirement, if
it had a fleet requirement, and then there's some overhead costs. So it would be quite likely that you would get a bunching of pricing,
because they're all quite similar, mostly because they want to win the tender, so in order to win the tender they would have to be
fairly in line with the pricing of the rest of the industry. The industry will talk to each other. They know what their pricing
structures are. I have certainly had experience of that from when I was working in government that they seem to all know where they're
all at in terms of their pricing.
PN1439
Ms Hardy, do you think the tender system results in government, be it the state government or ACT government or the Commonwealth, essentially controlling the wages of these types of contract workers?---Not directly, but indirectly perhaps. In places where there are large government establishments and a security requirement, it would be that the market can be set of course by very large clients always. Certainly governments tend to be very large clients for these kinds of services, and they are the ones who are commonly seeking tenders. If in Canberra we had other kinds of industries requiring security it might be different, but in Canberra, for instance, the largest industry is government, the second-largest is construction. So in that it is the largest client, it perhaps does that indirectly.
Thank you. I have no more questions for Ms Hardy. She is available for cross-examination.
<CROSS-EXAMINATION BY MR McDONALD [10.56AM]
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1441
MR McDONALD: Prof Hardy, can I ask you what the reason is that governments use the value for money principle in tendering?---I think it goes to the fact that it's public money. The government needs to lead by example in terms of procedural fairness, as well as securing goods and services which are getting the maximum value to a taxpayer's dollar I think. It's a complex thing because governments are not about making profit, but about doing more than just buying goods and services. The goods and services go to assisting community and other things, so it's a complex public policy issue.
PN1442
THE DEPUTY PRESIDENT: Prof Hardy, it's not uncommon for governments through procurement to determine wages of contractors that it chooses to engage, for example in the cleaning industry where minimum standards of employment are required as part of the tender process, or particular conditions are required to be met for example in the construction industry through the code and guidelines, that's not uncommon?---No.
PN1443
Are you aware of whether there are any such procurement requirements in relation to this industry, the industry?---No, I'm not aware that there are any. I agree with you, your Honour, that in procurement social outcomes are also a part of the value for money mix. You know, social, environmental, economic, it's quite a complex question and procurement officers find that really difficult to implement essentially because there are so many variables in terms of procurement to get this outcome. But, yes, I certainly am aware of the Clean Start program which I believe when I was working in the ACT cabinet they had for the cleaning industry, but I'm not sure about the security industry.
PN1444
Thank you.
PN1445
MR McDONALD: Just on that point, there is no particular price that is fixed by government for security companies to tender upon?---Absolutely not, no.
PN1446
**** ROBYN MARY HARDY XXN MR MCDONALD
There's an expectation of course that they comply with the industrial laws and the like?---Yes, and the tender documents would actually say that in the statement of requirements in the tender documents and then the contract would certainly enforce that as well. It would be part of the contract management system for the contract manager to make sure that those were companies were obeying the law. There are times I know when there's reporting through contracts about how things are going and meeting with contractors to make sure they're doing the right thing and, you know, checking on that, particularly in the construction world - - -
PN1447
THE DEPUTY PRESIDENT: That's our lie detector?---Yes. There's an audit process, but there wouldn't be in service industries.
PN1448
Do the best you can. Yes, keep going?---So definitely not a set price, no. There is an expected competition and part of the process is that government goes to tender so that there is competition, so that every company can have a fair go at essentially what is a government contract and that's part of the good value for money process as well, but certainly not a fixed price, no.
PN1449
MR McDONALD: In terms of tenders, if a tenderer has an enterprise agreement with their employees or doesn't have an enterprise agreement with their employees, does that make any difference to tendering? Is that a factor that will be considered as to whether they can be successful or not?---Only if it's a part of government policy. For instance, in the cleaning sector it was ACT government policy that the company had to have signed up to Clean Start essentially. So that was part of the mandatory criteria, and so they had to show certification about that. If they weren't then essentially they were no longer considered in the tender process, so only if a government policy requires that. So if instance there is a certain requirement under any labour law, it would be expected that they would comply.
PN1450
In the absence of such a requirement such as the ACT government had in relation to Clean Start though, it would make no difference as to whether someone had an enterprise agreement or not, it would not come into the decision-making about whether they should be given a tender?---No, it would be about compliance with the law. Certainly no tenderer would be considered if in the past that they had unfairly dealt with employees and had through the courts in relation to inappropriate activity in not paying workers, et cetera.
PN1451
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1452
In terms of the types of contracts that are issued as part of procurement by the Commonwealth government let's say for services, there would be security, cleaning, can you think of any other areas that are subject to government procurement and the tendering process?---I mean, there's thousands.
PN1453
THE DEPUTY PRESIDENT: Legal services, defence contracts?---Legal services, consultancy, the largest procurement in the Commonwealth government I think is consultancy services, and that's professional consultancy services. In the state governments it would be - - -
PN1454
MR McDONALD: Could I just ask you in relation to the Commonwealth, could you maybe indicate a number of other services that you are aware of that go through that process?---They go through all the same sort of process, exactly the same sort of process. If they are really large complex consultancy contracts, they may have a slightly different process. But in general the procedures for tendering, the procedures for evaluation are pretty much the same. You get into a different kind of process when you're procuring things like warships and fighter planes, when you have separate tender evaluation teams evaluating separate aspects, but not in these types of procurements.
PN1455
What about other services that are subject to procurement? You mentioned legal services, consulting services, what other services would there be?---For instance, there might be health services to indigenous communities. There might be - - -
PN1456
Printing services?---Yes, which is not so much these days, nobody seems to print very much but, yes, you're right.
PN1457
Maybe IT services?---Yes, if they're not in-house, but generally, yes. There would be photocopying type services, sometimes they're equipment plus a service, it depends on what it is actually. So with photocopiers you may actually just procure a service, the service is that you will have a printing service available, otherwise you might lease printing machines and then you would have a cleaning and maintenance service with the photocopiers. The same with computers, you might have a computer maintenance service.
PN1458
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1459
THE DEPUTY PRESIDENT: Ms Hardy, isn't it the case that wherever government seeks to procure a good or service externally, that there is usually a value over which there must be a tender?---A threshold?
PN1460
Yes?---Yes. The Commonwealth as well as all the states and territories have thresholds, for instance, when officers must either seek quotations for low-value ones, or over that public tender, unless there are good reasons not to public tender. The thresholds are all - - -
PN1461
Such as urgency or something like that?---Yes, there would have to be a very good reason, and that would be actually approved at very senior level to actually go to a single select tender, or to direct negotiation.
PN1462
Specialist skills that aren't available?---That aren't available, yes.
PN1463
MR McDONALD: In attachment A to your statement you set out procurement rules which give you value for money. At paragraph 4.4 you refer at (a) about "Value for money in procurement requires encouraging competitive and non-discriminatory processes." In terms of competitive and non-discriminatory processes, can I suggest to you that a particular of industrial instrument that an employer might be a party to would not be factored in to the procurement process because it would otherwise be discriminatory?---The process basically of the evaluation would be whatever the criterias were set out in the tender. As I said to you, if government policy was such that, for instance say in the cleaning industry, government required that the procurement officers procure from businesses who had signed up to that, then that would be part of the criteria.
PN1464
But if it was not?--If it was not, it would not, no, and it would be - - -
PN1465
As far as you're aware in security - sorry?---It would then just be straight competition between, yes.
PN1466
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1467
You are aware that security doesn't have any such guideline?---Not that I'm aware of, no.
PN1468
Were you involved in the particular contracts to which you give the case studies, the ACT government tender for locks and gates and - - -?---No, not at all. I am semi-retired now and I left the ACT government public service in 2001. Since then I have been a sessional lecturer at the ANU and the University of Canberra. So, no, essentially because I'm teaching construction procurement I actually keep an eye on a lot of the procurement web sites to get case studies for my students in construction. These were brought to my attention as typical examples of security tenders, that's really all, no, not involved at all.
PN1469
Say with the first case study about the provision of security services and to lock gates and toilets, do you know to what extent price was an important factor in that?---I wouldn't know, no, I'm sorry. As I say to you, I have no knowledge of the thing, other than actually downloading it and seeing it essentially as a tender, so sorry, no.
PN1470
But the importance of price in tenders will perhaps vary depending on the type of contract?---As I said before, price always figures in the tender, because it's one of the major criterias. Essentially the mandatory criteria, assessable criteria and pricing - - -
PN1471
THE DEPUTY PRESIDENT: It seems to me on the basis of case study 1, the pricing was weighted at 50 per cent?---That was only my giving you an example.
PN1472
I see, okay?---Because in the tender it did not actually say what the weighting is, and that's often the case. It just seemed because it had a heading which showed that these were the weighted criteria and price was sitting underneath, that was just my interpretation of what that tender said. Any tenderer would actually try to interpret that, but they probably would have asked the question of the principle, "Is price weighted in this?" They did not reveal their weightings and their methodology.
PN1473
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1474
MR McDONALD: Could I suggest to you that maybe price will be a more important factor in some tenders than others? For example, it might be more of an issue in terms of case study 1 than case study 2, being the security of the National Library?---I don't think I could say that, because as I say to you, I don't know what the criteria was behind either of them, other than what was published. I actually don't think so, price figures where what is being procured is very vanilla. For instance, if what we were procuring was silver jugs and there were no other criteria other than it would be a silver jug of that size and that description, et cetera, then all the jugs are silver, so therefore the lowest price, right.
PN1475
Yes?---In other procurements more complex than that price and other criteria come into play.
PN1476
Let's say with the locking of gate and toilets, I would suggest to you that that is in that vanilla type category that you mentioned. I understand it's essentially a two-step process, check whether anyone is in the toilet and if they're not, then lock the gate.
PN1477
THE DEPUTY PRESIDENT: No, checking whether someone is in the toilet is an extra cost, this is just for locking the toilet.
PN1478
MR McDONALD: But a very important step, your Honour?---They might actually require them to have training in terms of I'm talking about finding people who are in distress in those sort of situations, because from my background knowledge I know that that could be an issue in relation to public toilets. So I wouldn't say it would be necessarily vanilla because public toilets are places where there are often distressed people. It might be that that particular tender might actually require them to have specific training in relation to the checking and what they would have to do if they found someone whatever and - - -
PN1479
**** ROBYN MARY HARDY XXN MR MCDONALD
But that's really something you're speculating about though, isn't it?---Exactly, yes. As I say to you, I'm not involved with either of these tenders, and so the detail of them I don't know.
PN1480
I suggest to you though that what might be expected from a security company who has got the capacity to lock toilets and gates, might be quite different to what might be expected of someone who was going to be responsible for the security of the National Library?---Possibly, but as I said, I wouldn't know.
PN1481
That's fine. I think in answer to Ms Cresshull's question you gave an example of detention centres and I think you said it might be that the security for a detention centre, if it was going to be contracted out, it might be difficult for a small company to meet the criteria to be able to do that work, as compared to maybe a large multinational security company. That's correct, isn't it?---Yes. It goes to the criteria which is experience. Companies as they pick up specific tenders and contracts gain experience of guarding the National Library, guarding the prime minister's residence, guarding prisons, et cetera. Hence as they do that, they gain experience and capability. So it's a bit of a difficulty, sort of if you haven't got the contract, you haven't got the experience. It's like young people coming out of school, they can't get a job because they haven't got the experience, and no-one will give them a job to give them experience, it's a little the same. Companies tend to grow as they get more and more contracts of different types, but gain experience. So it's always one of the criterias in most procurements that the company has experience in the type of activity that you are requiring them to do.
PN1482
A contract like that, that's advertised fairly widely?---Of the type of?
PN1483
For say to contract for security work for a detention centre?---Yes, they're all advertised on the Internet and that sort of makes them almost internationally advertised. All of the governments have web sites for their tenders.
PN1484
**** ROBYN MARY HARDY XXN MR MCDONALD
It may be that a contract like that would attract the attention of companies not only located in the ACT, but perhaps internationally companies that operate detention centres in Europe, for example?---Yes, essentially they tend to be large multinational companies. But I used that as sort of an outlier example to show the difference between the level of experience of companies in the range and the market. Yes, you could actually have a small localised company compared to a huge multinational company, but whether they are interested in tendering for jobs, they would have to actually establish themselves, secure the labour to do it, et cetera.
PN1485
A major contract like a detention centre might attract tenderers from throughout Australia and perhaps internationally who have experience
in that sort of work?
---Specialist experience, probably.
PN1486
One company that I have read in the paper about that operates detention centres is G4S, for example. Are you aware of that company?---I've only heard of them, yes.
PN1487
Are you aware as to whether they are part of the application here?---I have no idea who is part of the application, I'm sorry.
PN1488
In a circumstance let's say where one of those international companies has a particular expertise in running detention centres, and they are competing against a local player if you like, an Australian company who may not operate the same number of detention centres overseas, it may be the case that in terms of the first part of the process in terms of rating, it may be difficult for the local companies to establish a higher score than the international company for securing that contract for the detention centre? Not impossible, but difficult I would suggest?---It basically would depend on their experience as well. I know there are privatised prisons in Australia and so therefore those sorts of security companies - I'm not sure whether they're Australian or not running those - but certainly there is Australian capability in this market. I haven't studied the market for security.
PN1489
**** ROBYN MARY HARDY XXN MR MCDONALD
I would suggest to you that even if they could match the international company in terms of the first part of the process in terms of getting the ratings, then it would come down to what would happen in relation to price, as to whether they were price competitive with the international company?---Yes, as with any tender really. That's quite correct.
PN1490
Saying that a tender for security, I'm not sure whether it was in your evidence or other evidence, I think you say that the overwhelming
cost is going to be labour?
---Labour.
PN1491
So that if the labour cost base, for example, is going to be higher for the local companies compared to say the international company,
let's say it's G4S, then the chances are that it's going to put the local company at a disadvantage, isn't it?
---But my question would be that, "Wouldn't the international company be required to secure local labour?" Particularly
I would think if it was a government contract - - -
PN1492
Could I ask you to assume for the purpose of the question that they have different cost bases, so that they're not subject to the same industrial arrangements?
PN1493
THE DEPUTY PRESIDENT: I'm not sure that that is a fair assumption or that's helpful. Unless you are going to lead evidence that there are competitors to the clients that you represent who have lower cost bases because they're overseas based, I'm not really sure how relevant this question is.
PN1494
MR McDONALD: Your Honour, what we are saying is that in terms of the four companies that would be subject to low-paid authorisation and for whom there is the claim of the multi-employer agreement, that they will have - if the union is successful - different arrangements or a higher cost base.
PN1495
THE DEPUTY PRESIDENT: That may well be so, but not because they are overseas corporations as such, it's because they have lower labour cost bases, that's what we're talking about in relation to their Australian employees.
PN1496
**** ROBYN MARY HARDY XXN MR MCDONALD
PN1497
MR McDONALD: My suggestion is though that a company that wasn't part of the authorisation, whether they be international or located in the ACT or elsewhere in Australia, will be in a different position to those who would be subject to the low-paid authorisation if successful.
PN1498
THE DEPUTY PRESIDENT: Not because of the authorisation, because of any subsequent agreement they agree to presumably.
PN1499
MR McDONALD: Yes, your Honour.
PN1500
THE DEPUTY PRESIDENT: Okay, proceed.
PN1501
MR McDONALD: Yes.
PN1502
So in the detention centre example, and I'm operating on the basis of a two-stage process. The first stage is looking at whether the companies can meet the particular criteria, whether they have the experience in that sort of work and the like. If say a company from outside the ACT who is a company that is not subject to the low-paid authorisation is able to fulfil those criteria as well as the company that is subject to the low-paid authorisation, then it would really come down to price that they're charging in terms of who might ultimately win the tender, or at least it will be a strong influencing factor?---If that was the case, I have to say I'm not an expert on low-paid authorisation, I would think that government policy generally tends to go to comparing apples and apples. For instance, in the case where government business enterprises are able to tender for works, they are required to be considered on exactly the same basis as everyone else is. I would think that if the government was procuring and was aware that there were tenderers who could be in the mix who were subject to different rules than others, there would be a levelling in the assessment in relation to that. That's my consideration, I mean, I have to say as I said to you, I'm fully aware that with government business enterprises they are required to compete on exactly the same basis. So I think the procurement officers would be concerned if they were procuring from an industry where some of the potential contractors had some sort of advantage over others, because I certainly haven't seen a situation where that has ever been permitted before, or they have allowed it within the procurement, if you know what I'm saying.
PN1503
**** ROBYN MARY HARDY XXN MR MCDONALD
Are you aware of any procurement process where a security contract has not been given to anyone in the ACT, other than the company with the lowest price?---Not knowing the detail of every tender, it's not the lowest price, it's the - - -
PN1504
In any tender that you have been involved in?---Not in my memory, but unfortunately I never used to actually be in detail into any of those. The value for money calculation has always been done, and as I said to you before, that is not always the lowest price because - - -
PN1505
Can I ask you just in terms of your long experience in government tenders, are you aware of any security contract that hasn't been awarded to the lowest price tenderer?---Not a security, but certainly of other tenders.
PN1506
Thank you. Could I come back to your point though in relation to costs. So assuming that there are two security companies that rate the same on the first part of the process in terms of capability to do the work. The second part of the process is one to evaluate price. If it's the case that both companies get seven out of 10 in the first process, and one company is say 10 per cent cheaper on price, in all likelihood that company is going to win the contract?---Absolutely.
PN1507
Have you ever come across a situation where in any procurement process there has been an employer that is part of a multi-employer enterprise agreement?---Not that I can recall.
PN1508
THE DEPUTY PRESIDENT: Do you know what an employer multi-enterprise agreement is?---I assume that they might have them in construction and a few industries, I don't know.
PN1509
I think there is an active effort to discourage that in the construction industry?---Is that right? Okay.
PN1510
**** ROBYN MARY HARDY XXN MR MCDONALD
But let's put that to one side?---Yes.
PN1511
Do you know?---Only I'm just assuming what it means.
PN1512
Perhaps it might be more helpful, Mr McDonald, if you just explain the supposition of your question to the witness and then ask her the question again.
PN1513
MR McDONALD: Perhaps I could ask the question a different way. Perhaps I will just leave the question I think.
PN1514
THE DEPUTY PRESIDENT: I'm not sure that there are any in existence to make the analogy helpful in any event, are there?
PN1515
MR McDONALD: Except perhaps under a different statutory scheme, your Honour.
PN1516
THE DEPUTY PRESIDENT: Yes, but not for security.
PN1517
MR McDONALD: No, your Honour.
PN1518
THE DEPUTY PRESIDENT: No.
PN1519
MR McDONALD: Excuse me for a moment, your Honour.
PN1520
THE DEPUTY PRESIDENT: Yes.
PN1521
MR McDONALD: Can I ask your Honour's indulgence for a five-minute adjournment, please?
PN1522
THE DEPUTY PRESIDENT: Yes, certainly.
**** ROBYN MARY HARDY XXN MR MCDONALD
<SHORT ADJOURNMENT [11.28AM]
<RESUMED [11.43AM]
PN1523
MR McDONALD: Thank you, your Honour.
PN1524
Prof Hardy, say with using the National Library case study where the tender is set out at your attachment C, could you explain what the process would be for evaluating that tender?---Yes, it would be similar to the way that I had outlined it before. Essentially a tender evaluation team would be formed, it would be experienced in evaluating tenders, not necessarily security tenders, but tenders. There would be a chair. Generally speaking each individual member of the tender evaluation team would first of all look at the - I'm fairly sure it was a two-envelope tender but I can't be certain, but I'm pretty sure it would be. It would have first of evaluated the tenders according to the mandatory and assessable criteria. They generally have a computer program like a spreadsheet or something like that, so that they then would go through an evaluation process of each tenderer against each criteria and give them a numerical scoring or whatever. As I said, it's not said what it is there, but that would be how it would be. The tender team then would convene as a meeting and then as a consensus they would then look at the scoring. They would then open up the envelope for pricing and then they would do the calculation of value for money against assessable criteria, scoring against the pricing. Then come up with a recommendation to a delegate of who they believed best met the criteria and would provide best value for money. They would set out the reasons for that argument.
PN1525
In terms of the weighting that might be given to price, that's not necessarily disclosed in all tenders?---It's not disclosed in many tenders, weighting to price or to any of the criteria. The argument is often that tenderers then will perceive that they will concentrate on a particular criteria and not answer the others. So there are arguments for and against. I think sometimes if you actually tell a tenderer that this particular criteria is very important to you, then they would surely give some attention to that. But there are arguments for and against, and often they're not declared.
PN1526
**** ROBYN MARY HARDY XXN MR MCDONALD
The weighting given to price might depend on such factors as say a risk assessment?---Absolutely, yes.
PN1527
If something is highly valued you might be prepared to pay more for security in those circumstances?---The risk assessment covers not just price, but also the company. Essentially the company's past experience, behaviours, for instance whether or not they have been a good corporate citizen, et cetera. For instance in some tenders, but generally not in these because their financial security is not generally a concern, but in some tenders the risk assessment goes to whether or not the company is financially capable and whether or not they are likely to still be there in five years, because these contracts can sometimes be three, plus two, plus two or something like that. So they may go on for quite some time. Longevity is part of the consideration as well. So the risk assessment goes to the company's reputation, capability, experience. But where price is considered in terms of risk, is more about whether or not a company seems to be undercutting and buying the contract, or generally in the lower side a very high priced one would be considered an outlier and therefore not in touch with what the procurement was about. But where they are really underpricing, often the tender evaluation team would look at that and consider why they are doing that. That doesn't tend to happen in these sorts of contracts, because the cost structures are fairly similar. That happens more in construction projects where contractors will often attempt to buy their next contract and then through claiming recoup their profit that they have lost in winning the contract essentially.
PN1528
THE DEPUTY PRESIDENT: Or alternatively it might be a means, for example in some services contracts, where the bidder doesn't have the substantial experience, but it's a way in which it might attain that experience by providing an exceptionally low cost?---Yes.
PN1529
They have generalised experience, but not specific experience in relation to government work, for example?---Possibly. In some services contracts, I can't see that happening in these sorts of ones, no.
PN1530
**** ROBYN MARY HARDY XXN MR MCDONALD
No, I understand that?---But possibly.
PN1531
The services is one example where that might be the case?---Exactly. It still would be considered risky in the terms of the client because they would be looking and saying, "Well, they don't appear to have experience to be able to do this contract, and they are very low priced. So therefore the consideration would be, "Is that of concern to us? Will we get the service we are after?"
PN1532
It also might depend, for example, on whether it's an exclusive contract or to become a member of a panel?---Yes.
PN1533
MR McDONALD: It may be that a company has a better, more efficient way of doing the work and therefore can charge a lesser price for the work?---In some procurements, yes. I think it would be difficult to see how that would be played out in a security situation. Essentially - - -
PN1534
Can I ask you, do you have any expertise in relation to that?---No. I'm
basically - - -
PN1535
Can I say, in terms of going back to the looking of the gates example, I suggest to you one situation might be that there might already be a company that has mobile patrols, who are already in the areas where the toilets are to be locked. They may have a bit of down time and it may not cost them really any more to have the guard go and lock a gate. That company might be able to tender at a cheaper rate, for example, than a company that might say, "I will tender for that. I will engage someone for a four-hour shift to lock that toilet." That would be quite conceivable?---That would be a possible scenario, a rare one, but possible.
PN1536
Isn't that what the value tendering is all about, to really try and see whether there are ways that within the limits of the law, the government can best utilise its taxpayer dollars?---What I could say to you is that would be a lucky coincidence for a contractor, to actually be able to utilise if they had a contract in a similar geographical area, and therefore another contract came up in an overlapping geographical area where they could use the same labour force, if that was possible within the statement of requirements to be able to use the same labour force. I mean, the issue would be to ensure that the specifications of the tender were met. Yes, it would be a lucky coincidence in terms of a company tendering I think. It does happen certainly in other procurements, in construction for instance. It may be that a construction company is working on this building and next door there's a requirement for some sort of upgrade. Certainly a private sector company might ask them, but again it's a happy coincidence.
PN1537
**** ROBYN MARY HARDY XXN MR MCDONALD
For example, in that construction example, the construction company who is building next door might already have the infrastructure and labour there and could easily do the job at a cheaper price?---Perhaps, but not necessarily.
PN1538
But isn't that part of the tendering process I suppose to tease out, not only who might do it a best price, but who might do it in the most productive and efficient way?---Efficiency comes into consideration in construction with program. Essentially that the contractor will meet the construction deadline that the client wishes to have. In terms of services contracts efficiency tends to come in to providing the service to the standard that's required. So the efficiency dividends therefore go to the contractor not to the client, if you see what I'm saying?
PN1539
Yes?---The standard is that you will supply a guard 24 hours a day. They will do X. They will walk around such and such, and that's the standard and that's the requirement. The requirement isn't that the guard be there for 18 hours, it's 24 hours and that they do X, Y and Z. In a construction project it's programmed to be built over a long period of time and things happened which changed that program, weather and all sorts of stuff. So in these sorts of services the specification is supply this standard.
PN1540
Companies have got to I suppose think hard about pricing, whether it be a security contract or another other contract to government in terms of what they are prepared to offer. That might be how much they really want that contract, are they prepared to take that contract at a loss or at a small margin? It may depend on whether they think that there are ways that they can make more out of the contract and are prepared to factor that into their pricing. There can be a range of factors that we're not necessarily going to know about in terms of how they work out the price for a tender for a contract?---Absolutely. Their profit margin, each contractor will have a slightly different profit margin of course. I mean, each one of them wants to cover all of their costs and make a profit. There will be times when, yes, contractors will attempt to buy contracts. Through a previous example, of actually gaining some experience in that field and therefore getting a foothold in and therefore having that experience, and then being able to go on. Their capacity to maintain that for a long time, it would be difficult though to maintain a contract for the years that these kinds of contracts are, they're often three, plus one, plus one, this sort of thing. So it could be a five-year contract. So to look at not making a profit on a substantial contract for a long time would be fairly difficult.
PN1541
**** ROBYN MARY HARDY XXN MR MCDONALD
But the company makes a decision in terms of what price they're going to tender for?---Of course, and that's what they tender in their price, yes.
PN1542
It may be that whatever price they put on that contract, results in them winning or losing the contract?---Absolutely.
PN1543
It's not that the government says, "You must tender at this particular price." You would agree with that proposition?---Absolutely.
PN1544
The government is not controlling what the price is of security services?---No, and certainly not the price margin that security services or any contractor is making for any procurement.
PN1545
Nothing further. Thank you, Prof Hardy.
PN1546
THE DEPUTY PRESIDENT: Thank you. Ms Cresshull, any re-examination?
PN1547
MS CRESSHULL: No, your Honour, thank you.
THE DEPUTY PRESIDENT: Ms Hardy, thank you very much for your evidence, you're excused?---Thank you.
<THE WITNESS WITHDREW [11.56AM]
PN1549
THE DEPUTY PRESIDENT: Yes, Ms Cresshull.
PN1550
MS CRESSHULL: Your Honour, I'm not sure how you wish to proceed for the rest of the afternoon. Ms Ryan is the next witness that we have to call and she will take a considerable amount of time. If you want to push through or - - -
PN1551
THE DEPUTY PRESIDENT: We will sit until 1 o'clock and see how far we get.
PN1552
MS CRESSHULL: I call Lyndal Ryan.
PN1553
THE ASSOCIATE: Could you please state your full name and address?
MS RYAN: Lyndal Ryan, (address supplied.)
<LYNDAL RYAN, AFFIRMED [11.58AM]
<EXAMINATION-IN-CHIEF BY MS CRESSHULL [11.58AM]
PN1555
MS CRESSHULL: Thank you, Ms Ryan. For the purpose of your evidence in this proceeding you have caused to be prepared two witness statements. Is that correct?---I did.
PN1556
Do you have them with you in the witness box?---I do. One of the attachments is missing.
PN1557
I believe there was an attachment to the first statement, which is this document here. If that could be provided to our witness.
PN1558
I understand that there is a few corrections that you would like to make.
PN1559
THE DEPUTY PRESIDENT: Just before you do, Ms Cresshull, I only appear to have one statement on the file, which is the one that dated 9 December 2013.
PN1560
MS CRESSHULL: There was a supplementary statement filed on the date that the union reply submissions, your Honour.
PN1561
THE DEPUTY PRESIDENT: Yes, I see. It's attached to that. I have it.
PN1562
MS CRESSHULL: There are a few corrections to the statement that Ms Ryan wish to make.
PN1563
I will take you through those, Ms Ryan. I believe that you wish to delete the whole of paragraph 8.
PN1564
THE DEPUTY PRESIDENT: Of the first statement?
PN1565
MS CRESSHULL: Of the first statement, sorry, of the witness statement of Lyndal Ryan, your Honour.
**** LYNDAL RYAN XN MS CRESSHULL
PN1566
THE DEPUTY PRESIDENT: Yes, so paragraph 8 is out. Is that right?
PN1567
MS CRESSHULL: Paragraph 8 is out. The second sentence of paragraph 10.
PN1568
THE DEPUTY PRESIDENT: Yes.
PN1569
MS CRESSHULL: There are some changes to some dates. This is a substantial change because the year has been incorrectly inserted.
PN1570
THE DEPUTY PRESIDENT: This is paragraph 15?
PN1571
MS CRESSHULL: Paragraph 16.
PN1572
Correct me if I'm wrong, Ms Ryan, but that should be April 2010, or is that remaining 2011 that one?---No, sorry. Paragraph 16?
PN1573
Yes?---No, I think that's the correct date. It's over the page actually.
PN1574
Paragraph 19 and to paragraph 22 the dates should read "2010" rather than "2011".
PN1575
THE DEPUTY PRESIDENT: What about the date in paragraph 18?
PN1576
MS CRESSHULL: Ms Ryan, is the date in paragraph 18, 14 June the correct date there, or is that as is the date 28 July 2011? Just
have a brief look at that?
---Yes. The meeting was held on 14 June 2011, so that's a correct date. The July 2011 date, 28 July I wrote, to ask each company
that they formally respond to our members.
PN1577
The date in paragraph 19, Ms Ryan, is that the correct date about 29 September 2010 and then at paragraph 20, 13 October 2010?
**** LYNDAL RYAN XN MS CRESSHULL
PN1578
Your Honour, we have a series of letters that go with these dates which may provide some news.
PN1579
THE DEPUTY PRESIDENT: The letters which are not attached presently?
PN1580
MS CRESSHULL: They are not attached presently, but I can take the witness to them now.
PN1581
THE DEPUTY PRESIDENT: Why don't we do it on that basis?
PN1582
MS CRESSHULL: Yes.
PN1583
THE DEPUTY PRESIDENT: Why don't you show the witness the letter and then make the necessary correction to her statement?---Thank you, that would be very helpful.
PN1584
MS CRESSHULL: Ms Ryan, is that the letter referred to in paragraph 19?---Yes, it is.
PN1585
THE DEPUTY PRESIDENT: I don't have a copy of that.
PN1586
MS CRESSHULL: Sorry, your Honour.
PN1587
Is that correct, Ms Ryan?---On 19, that's fine.
PN1588
29 September 2010 is at paragraph 19?---Yes, that's right, on paragraph 19.
PN1589
THE DEPUTY PRESIDENT: 29 September 2010, yes.
PN1590
MS CRESSHULL: The letter that is attachment A, is that the correct reference for 13 October 2010, rather than the - - -?---Yes, that is.
**** LYNDAL RYAN XN MS CRESSHULL
PN1591
The dates in the - - -
PN1592
MR McDONALD: Sorry, your Honour, I missed that.
PN1593
THE DEPUTY PRESIDENT: 13 October.
PN1594
MS CRESSHULL: 13 October 2010, being the letter that was attached to Ms Ryan's statement originally as attachment A.
PN1595
THE DEPUTY PRESIDENT: Paragraph 20.
PN1596
MS CRESSHULL: At paragraph 20, yes.
PN1597
MR McDONALD: 13 October 2010. Thank you.
PN1598
MS CRESSHULL: We apologise, your Honour, there has been a lot of correspondence in this matter.
PN1599
THE DEPUTY PRESIDENT: No, that's all right. The bundle of documents that you have me, there's a letter to David Cheatham dated 29 September 2010 and that's one of the letters that is referred to paragraph 19.
PN1600
MS CRESSHULL: That's correct, your Honour.
PN1601
THE DEPUTY PRESIDENT: There is also a letter to Mr Smallwood also of that date.
PN1602
MS CRESSHULL: Yes.
PN1603
THE DEPUTY PRESIDENT: That's another letter that is referred to?
**** LYNDAL RYAN XN MS CRESSHULL
PN1604
MS CRESSHULL: They are not referred to in the statement, but we will be putting those letters to the witness.
PN1605
THE DEPUTY PRESIDENT: It says, "On 29 September I wrote to each of the companies."
PN1606
MS CRESSHULL: Yes, you're quite correct, your Honour.
PN1607
THE DEPUTY PRESIDENT: So there is that one, there is 29 September of Mr Smallwood, 29 September to Mr Georgio and 29 September to Mr Bjorlo, perhaps the J is silent, so they are four letters. In amongst that bundle there is also a letter of 8 October.
PN1608
MS CRESSHULL: Yes. You will notice that's another incorrect date on the actual letter this time, your Honour.
PN1609
THE DEPUTY PRESIDENT: Right.
PN1610
MS CRESSHULL: If you read the first paragraph of that letter, it's in answer to questions posed in the letter of 13 October.
PN1611
THE DEPUTY PRESIDENT: Maybe it's a mistake in the text in answer to questions, "I anticipate you are posing your letter that you are going to write to me on 13 October."
PN1612
MS CRESSHULL: That may be.
PN1613
THE DEPUTY PRESIDENT: So that letter is the letter which is meant to be what date?
PN1614
**** LYNDAL RYAN XN MS CRESSHULL
MS CRESSHULL: That may be a mystery to us at this stage, your Honour.
PN1615
THE DEPUTY PRESIDENT: It's not one of the letters that is - - -
PN1616
MS CRESSHULL: It's not one of the letters that's referred to in Ms Ryan's statement. It is a letter that we will show to the witness in due course.
PN1617
THE DEPUTY PRESIDENT: Okay. For present purposes then there are four letters, each of which are dated 29 September, respectively to MSS Security, Wilson Security, SNP Security and ISS Facility Services. Those are the letters to which reference is made in paragraph 19. Yes?---Yes.
PN1618
MS CRESSHULL: Is that right, Ms Ryan?---That's right.
PN1619
THE DEPUTY PRESIDENT: So just for clarity will just put a note there, "See correspondence attached and marked as attachment B," and incorporate that into the document. Paragraph 20 is amended so that the date is 13 October 2010. Any others?
PN1620
MS CRESSHULL: Is that correct?---That is correct, 20, yes.
PN1621
MR McDONALD: Which date has been changed to 13?
PN1622
THE DEPUTY PRESIDENT: Paragraph 20.
PN1623
MS CRESSHULL: Ms Ryan, would you be able to clarify as to that date?---I can clarify. There was a series of letters written on 29 September 2010 and that's at paragraph 19. We have now noted that they are correspondence marked as attachment B. At paragraph 20, "On 13 October MSS advised United Voice", et cetera.
PN1624
**** LYNDAL RYAN XN MS CRESSHULL
So in paragraph 24, Ms Ryan, is the date 29 July 2011 a correct date there?---At paragraph, I'm sorry?
PN1625
24?---Yes, sorry. Yes, it's a letter from David Cheatham rather than a letter to them, yes.
PN1626
Is that the same letter?
PN1627
THE DEPUTY PRESIDENT: Yes, is that the same letter as the letter referred to in paragraph 20?
PN1628
MS CRESSHULL: The quote that I indicate are slightly different letters. So it may not be that it is actually attachment A, your Honour, it may be another that we haven't actually attached there?---So the difference on paragraph 24 then is that it is not attachment A, but it is a letter received from Mr Cheatham, but it is not attached to the statement.
PN1629
We will produce that letter when we can.
PN1630
THE DEPUTY PRESIDENT: In anticipation of that, I will tentatively change "A" to "C", but will need to revisit that if you can't produce the letter.
PN1631
MS CRESSHULL: Thank you, your Honour. I apologise for the confusion, if it please, your Honour.
PN1632
THE DEPUTY PRESIDENT: What is to be done with the letter of 8 October, the incorrectly dated letter?
PN1633
MS CRESSHULL: I will show that to our witness in due course, your Honour.
PN1634
THE DEPUTY PRESIDENT: Okay. Are there any other amendments to the first statement?---No.
**** LYNDAL RYAN XN MS CRESSHULL
PN1635
MS CRESSHULL: We would like to tender that statement.
PN1636
MR McDONALD: Your Honour, if I may say, just so that I have got the amendments correct, it was in paragraph 19 that the date is 29 September 2010 and those form attachment B?
PN1637
THE DEPUTY PRESIDENT: That's right.
PN1638
MR McDONALD: Then in paragraph 20 the date should be 13 October 2010.
PN1639
THE DEPUTY PRESIDENT: Yes.
PN1640
MR McDONALD: I'm sorry, I didn't quite work out paragraph 24.
PN1641
THE DEPUTY PRESIDENT: It's different correspondence.
PN1642
MR McDONALD: Yes.
PN1643
THE DEPUTY PRESIDENT: So at this stage we're not changing the date, but when the correspondence is produced we will alter the date to reflect the correspondence, and in anticipation of it being produced I have just tentatively marked the document as attachment C rather than attachment A.
PN1644
MR McDONALD: I see.
PN1645
THE DEPUTY PRESIDENT: But we will need to revisit that in the event that it's not produced.
PN1646
MR McDONALD: If it please, your Honour. Just in relation to those letters, could I simply reserve my rights in relation to maybe listening for the examination about our witnesses in relation to that material?
**** LYNDAL RYAN XN MS CRESSHULL
PN1647
THE DEPUTY PRESIDENT: You mean in chief?
PN1648
MR McDONALD: Yes.
PN1649
THE DEPUTY PRESIDENT: Yes, of course.
PN1650
MR McDONALD: Your Honour, I understand that - - -
PN1651
THE DEPUTY PRESIDENT: Given that they weren't produced.
PN1652
MR McDONALD: Yes.
PN1653
THE DEPUTY PRESIDENT: I understand that, and the confusion with the dates. You will need to get some instructions on all that, yes. But you will do that in normal course when you call your witnesses.
PN1654
MR McDONALD: Yes, your Honour.
PN1655
THE DEPUTY PRESIDENT: Do you have any objection to the text of - - -
PN1656
MR McDONALD: I do, your Honour.
PN1657
THE DEPUTY PRESIDENT: Yes.
PN1658
MR McDONALD: In paragraph 3 in the second line it says "despite many attempts by United Voice", there is nothing in the statement which indicates what those attempts are. There is no endeavour to specify - - -
PN1659
THE DEPUTY PRESIDENT: You can cross-examine on that. I don't think that's an objectionable point.
**** LYNDAL RYAN XN MS CRESSHULL
PN1660
MR McDONALD: May it please the court. In paragraphs 7 to 12 various allegations are made in relation to Secom Australia and their agreement. For example, there is a reference in paragraph 7 to an investigation, but there is no evidence of any such investigation. There is evidence in paragraph 9, it is said that, "Secom Australia was awarded the contract for Centrelink," but there is nothing in the way of documentary evidence that sets that out. It's a question about what the validity of the agreement is in paragraph 10, despite it being an agreement approved by the commission.
PN1661
MS CRESSHULL: I'm sorry, to interrupt, we have struck that bit out, Mr McDonald.
PN1662
THE DEPUTY PRESIDENT: The second line.
PN1663
MR McDONALD: I'm sorry. So was it the last sentence or the second sentence as well as the last sentence?
PN1664
MS CRESSHULL: Yes. Sorry, we may not have struck the last sentence out as well. I'm sorry for the confusion, Mr McDonald.
PN1665
MR McDONALD: That's all right.
PN1666
MS CRESSHULL: We struck out I think from the second sentence to the end of that paragraph. Is that how you - - -
PN1667
THE DEPUTY PRESIDENT: You only mentioned the second sentence, but if you are now saying it's the second and third sentences - - -
PN1668
MS CRESSHULL: Yes, that would be right, sorry.
**** LYNDAL RYAN XN MS CRESSHULL
PN1669
THE DEPUTY PRESIDENT: So the objection to paragraph 7 is it provides no foundation. Is that your objection?
PN1670
MR McDONALD: It is, your Honour.
PN1671
THE DEPUTY PRESIDENT: Ms Cresshull, are you able to tell what the nature of the Fair Work Ombudsman's investigation was and whether it prosecuted?
PN1672
MS CRESSHULL: It was prosecuted and we are able to provide the decision from that prosecution.
PN1673
THE DEPUTY PRESIDENT: Is there a decision on it?
PN1674
MS CRESSHULL: There is a decision.
PN1675
THE DEPUTY PRESIDENT: That's the best evidence.
PN1676
MS CRESSHULL: There is a decision and we are able to provide that.
PN1677
THE DEPUTY PRESIDENT: Just produce the evidence. So paragraph 7 will simply indicate that the witness is aware of a decision of whichever court in relation to this matter.
PN1678
MR McDONALD: Your Honour, we think that the decision will not reflect the evidence contained in there. We would rather the decision - - -
PN1679
THE DEPUTY PRESIDENT: That's why I am saying that paragraph 7 be replaced with something to the effect that, "I am aware of a decision of the Federal Circuit Court in XVW, attached marked D, a copy of the decision."
**** LYNDAL RYAN XN MS CRESSHULL
PN1680
MR McDONALD: No difficulty with that approach, your Honour.
PN1681
THE DEPUTY PRESIDENT: Is that satisfactory?
PN1682
MS CRESSHULL: Yes, it is.
PN1683
MR McDONALD: Your Honour, I should indicate in relation to these objections - - -
PN1684
THE DEPUTY PRESIDENT: Perhaps rather than rewriting this statement, why don't we do this, just tender the decision. Is there any objection to that?
PN1685
MR McDONALD: No, your Honour.
PN1686
THE DEPUTY PRESIDENT: You can make submissions about what it means. The witness doesn't have to give evidence about the decision itself, does she?
PN1687
MS CRESSHULL: No.
PN1688
THE DEPUTY PRESIDENT: No, so perhaps we might do it that way. Is that satisfactory?
PN1689
MR McDONALD: Your Honour, I should indicate I did put the union on notice of these matters in case they did want to provide some foundation in relation to them. In relation to 11, we say there is no foundation in relation to this application that she refers to, whether it was a formal application, nothing is produced in relation to that. Then it is suggested that there some undertaking, there is nothing to substantiate that. I'm not even sure whether Ms Ryan had any involvement in these matters at all.
**** LYNDAL RYAN XN MS CRESSHULL
PN1690
THE DEPUTY PRESIDENT: These would all be public documents, would they not?
PN1691
MS CRESSHULL: They would all be public documents. I'd have to ask Ms Ryan if that was in conciliation or within an actual decision of the Fair Work Commission.
PN1692
THE DEPUTY PRESIDENT: Well, paragraph 12 seems to suggest that the Fair Work Commission accepted an undertaking. I see, it's to negotiate an agreement. Is it suggested that Ms Ryan was involved in those?
PN1693
MS CRESSHULL: Yes, it is, your Honour.
PN1694
THE DEPUTY PRESIDENT: Okay.
PN1695
MS CRESSHULL: And she can give evidence on that.
PN1696
THE DEPUTY PRESIDENT: That leads me to the second question: what were the nature of the discussions and whether it was confidential. Given that Secom are not on notice about these things, it kind of raises some questions. Perhaps we might have a discussion about these without the witness being here. It might be easier?---That's fine.
PN1697
Ms Ryan, if you'd just step outside for a minute?---No problem.
And perhaps just shut the door behind you. Thanks.
<THE WITNESS WITHDREW [12.21PM]
PN1699
THE DEPUTY PRESIDENT: What is sought to be shown by the evidence in paras 9, 11 and 12?
PN1700
MS CRESSHULL: It goes to the history of the negotiations.
PN1701
THE DEPUTY PRESIDENT: In the industry?
PN1702
MS CRESSHULL: In the industry. That one, in particular with Secom Security. Secom Australia is one of the respondents to this matter.
PN1703
THE DEPUTY PRESIDENT: Well, presumably it implements it through a combination of - if I grant you permission - to provide a foundation for those statements and what you don't get out of this witness, you'll presumably have to do through cross-examination. Yes, I'll allow those statements. What else is there, Mr McDonald?
PN1704
MR McDONALD: Again, in paragraph 15 it's said that "MSS is committed to exploring the possibility of a new agreement that would resolve an industrywide settlement." A copy of that letter is an attachment to Mr Cheatham's statement. We say that it doesn't, as I say, and the document can speak for itself. We have no problems in tendering the document to which it should refer to and we say her spin on it is different to what the document says.
PN1705
THE DEPUTY PRESIDENT: Well, it purports to also speak to the motivation of MSS, which I think this witness can. Is the notice of employee representational rights in evidence or going to be in evidence?
PN1706
MR McDONALD: It is, your Honour. It was annexure 1 to attachment D to Mr Cheatham's statement, which was one of the ones that was carved out of the confidentiality order.
PN1707
THE DEPUTY PRESIDENT: I see, yes.
PN1708
MR McDONALD: Being a memorandum, dated 27 October 2010, attaching the notice of employee representational rights. That letter is expressed to be a letter suggesting that the company wanted to explore an industrywide settlement, whereas what the letter, we say, says is that the union wanted to explore an industrywide settlement and it says that the intent of the LHMU is to "have an agreement applicable to all our major competitors." It's not something that MSS was seeking. We say, with these things, it would be preferable to have the document in evidence rather than a view of the document - - -
PN1709
THE DEPUTY PRESIDENT: First of all, the words "In response to this campaign" suggest a particular motivation which the witness isn't in a position to give, so I wouldn't allow those; and "committed to exploring the possibility," well, the documents - unless the witness is going to say that there was some meeting at which somebody gave that commitment. Is that what the witness is going to say?
PN1710
MS CRESSHULL: I believe so, your Honour.
PN1711
THE DEPUTY PRESIDENT: All right. Well, perhaps I might allow you to ask for clarification about those words before I - but the first words are out. That is, "In response to this campaign." The witness will have to provide a foundation for the words after "2010", otherwise I'll strike that, as well. Anything else, Mr McDonald?
PN1712
MR McDONALD: Yes. In paragraph 17, it's asserted that each company was sympathetic to the union's view.
PN1713
THE DEPUTY PRESIDENT: Only somewhat.
PN1714
MR McDONALD: Yes. Either way, I don't think the extent of sympathy or otherwise is something within the knowledge of Ms Ryan.
PN1715
THE DEPUTY PRESIDENT: Well, she can give evidence about her perception of what was said. I mean, again, if the witness is able to give evidence about what happened in the meeting and her take on those words, I'll allow it. I'll allow you some leeway, Ms Cresshull, to ask questions of the witness about that issue.
PN1716
MR McDONALD: In paragraph 23, the first sentence, "Security officers face numerous barriers to collective bargaining," that's in the nature of submission.
PN1717
THE DEPUTY PRESIDENT: Yes, it is, and I'll take it as that but I'm not going to strike it from the statement. It is what it is. It's a statement. Presumably the factors that are enumerated thereafter are the factors which this witness calls into aid in support of that proposition. Ultimately whether or not any of those factors are barriers to bargaining is another matter and something that I'll need to give consideration to, but each of those propositions will need to be established.
PN1718
MR McDONALD: Yes.
PN1719
THE DEPUTY PRESIDENT: And presumably most of it will have to be established through cross-examination of your witnesses.
PN1720
MR McDONALD: Similarly, in that paragraph she makes the assertion about company's with extensive market share having fear about - - -
PN1721
THE DEPUTY PRESIDENT: I accept the proposition that she's not qualified possibly to make that assessment and you can cross-examine her about that.
PN1722
MR McDONALD: Yes.
PN1723
THE DEPUTY PRESIDENT: I'm not going to strike it out.
PN1724
MR McDONALD: Similarly, at paragraph 24, she talks about the dilemma for the companies, being that higher wages would offer a number of improvements to productivity, and the implication is that the companies are accepting that proposition.
PN1725
THE DEPUTY PRESIDENT: Yes. I don't think she can give evidence about what's in the companies' minds or what dilemmas they face. You can seek to put those propositions in cross-examination, so I'll strike that sentence.
PN1726
MS CRESSHULL: Yes, your Honour.
PN1727
MR McDONALD: In paragraph 25 - just being the last objection in relation to the first statement - she talks about the sentiments expressed in the letter being similar to other conversations.
PN1728
THE DEPUTY PRESIDENT: Well, this falls into the similar category to earlier ones where the - expressed commitment in paragraph 15. Ms Cresshull, you can ask her questions about that. All right. Shall we deal, before we recall the witness, with the objections to the second statement?
PN1729
MR McDONALD: Yes.
PN1730
THE DEPUTY PRESIDENT: All right.
PN1731
MR McDONALD: In relation to paragraph 3, the second and third sentences, she talks about what security employers raise in discussions. She doesn't say who those employers are. She doesn't say what those discussions were. It's really in the nature of hearsay.
PN1732
THE DEPUTY PRESIDENT: Yes, it is. That obviously will affect weight. Even if you're able to elicit particular details during your examination-in-chief about those discussions, which I'll allow you to do, it's still hearsay.
PN1733
MS CRESSHULL: Yes, I understand.
PN1734
THE DEPUTY PRESIDENT: You understand that, so I'll allow it subject to those comments.
PN1735
MR McDONALD: Your Honour, if I may particularly press a further aspect of the objection that I raise.
PN1736
THE DEPUTY PRESIDENT: Yes.
PN1737
MR McDONALD: In relation to the last sentence of this, it is without foundation, we say. It goes further and talks about discussions about industry template agreements, single agreements, et cetera. There's no foundation that there was ever a discussion in relation to a single agreement. In fact, we'd suggest the evidence is otherwise.
PN1738
THE DEPUTY PRESIDENT: Well, it's also interpretive in the sense that it's suggested that they raised the objection and then adds the interpretation - that is, whether it's a single agreement or otherwise - without providing any material which would support that there have been single industry discussions at which those concerns were raised and that there have been multiple employer agreement discussions at which those things were raised, so I'll strike that; but I'll allow you, if you think that particulars of those discussions have been provided, to lead some evidence-in-chief about that from this witness.
PN1739
MS CRESSHULL: Thank you.
PN1740
THE DEPUTY PRESIDENT: They're also matters you can explore in cross-examination. The last sentence is out, of paragraph 3.
PN1741
MR McDONALD: Your Honour, the last objection is in relation to paragraph 4 on a similar basis to that in relation to paragraph 3. Again, in the second sentence, for example, it says about the employers raising these objections irrespective of the type of agreement being contemplated by the union.
PN1742
THE DEPUTY PRESIDENT: That's the second sentence?
PN1743
MR McDONALD: Yes, subject to the first sentence - - -
PN1744
THE DEPUTY PRESIDENT: Yes, all right. On the same basis, I'll strike that.
PN1745
MS CRESSHULL: Excuse me, your Honour, was that the whole paragraph?
PN1746
THE DEPUTY PRESIDENT: No, just the second sentence.
PN1747
MS CRESSHULL: The second sentence. Thank you.
PN1748
THE DEPUTY PRESIDENT: The last sentence. All right. That's it?
PN1749
MR McDONALD: Yes. Thank you, your Honour.
PN1750
THE DEPUTY PRESIDENT: Perhaps we'll recall the witness. Mr McDonald, do you have any inkling as to how long you might take in cross-examination?
PN1751
MR McDONALD: Somewhere in the order of half an hour to an hour, your Honour.
PN1752
THE DEPUTY PRESIDENT: And presumably, Ms Cresshull, you'll want the next 15 or 20 minutes to lead some evidence-in-chief?
PN1753
MS CRESSHULL: Probably about 20 minutes.
PN1754
THE DEPUTY PRESIDENT: Yes, that's fine. What we'll do is we'll continue and allow you to finish your examination-in-chief of this witness and then we'll adjourn, then we'll deal with cross-examination after the break. As I understand it, Mr Cheatham is able to give evidence after the break, as well.
PN1755
MR McDONALD: He is, your Honour. It has perhaps moved a little bit slower perhaps than I anticipated.
PN1756
THE DEPUTY PRESIDENT: I'm not being critical. Don't concern yourself about that.
PN1757
MR McDONALD: Would you still like to proceed with Mr Cheatham this afternoon?
PN1758
THE DEPUTY PRESIDENT: Yes. We may as well, if he's available. On present estimates, we're likely to be finished with this witness by no later than 3.00.
PN1759
MR McDONALD: Yes.
PN1760
THE DEPUTY PRESIDENT: So we'll call Mr Cheatham. Do you have any idea, Ms Cresshull, how long you might be in cross-examination of Mr Cheatham? Again, I'm not going to hold you to it, but just - - -
PN1761
MS CRESSHULL: Between about half an hour to 50 minutes.
PN1762
THE DEPUTY PRESIDENT: Okay. As I said, don't feel bound by it, but I'm happy to sit until whenever, subject to the availability of the parties, to finish Mr Cheatham tonight.
MR McDONALD: Thank you, your Honour.
<LYNDAL RYAN, ON FORMER AFFIRMATION [12.36PM]
PN1764
THE DEPUTY PRESIDENT: While you were out, we talked a lot about you. Have you got your witness statements in front of you?---I have.
PN1765
Well, if you go to the first one - the combination of concessions and rulings that I've made - paragraph 7 as such is out. I think you were here for that discussion. Paragraph 8 is out. The last two sentences of paragraph 10 are out. In paragraph 15, the words "in response to this campaign", comma, are out. Ms Cresshull will ask you some questions about the remainder of that paragraph and she'll do that in relation to other matters, as well. Paragraph 19, the date is 29 September 2010. At the end of that there is a notation, "See correspondence attached and marked attachment B." Paragraph 20, the date is now 13 October 2010. Paragraph 24, the first sentence is out and provisionally the fifth line, "Attachment A", becomes, "Attachment C." I think that was all for that statement. In relation to that statement, Ms Ryan, are the contents of that statement as amended true and correct?---Yes, thank you.
I will mark the first witness statement of Lyndal Ryan, comprising 52 paragraphs and signed on 9 December 2013, with the amendments as recorded in the transcript, as exhibit UV12 - and annexures A, B and possibly C.
EXHIBIT #UV12 WITNESS STATEMENT OF LYNDAL RYAN WITH AMENDMENTS SIGNED 09/12/2013 PLUS ANNEXURES
PN1767
THE DEPUTY PRESIDENT: The supplementary statement. Do you have that in front of you?---I do.
PN1768
Again, a combination of concessions and rulings. In relation to paragraph 3, the last sentence commencing "They have raised" is out. Likewise, in paragraph 4, the last sentence commencing with "Again the employers" is out. Ms Cresshull will ask you some additional questions in relation to other matters on that statement, but for present purposes are the contents of your supplementary statement, as amended, true and correct?---They are, your Honour.
I will mark the supplementary statement of Lyndal Ryan, dated 11 April - which, for the record, is my birthday - 2014, comprising eight paragraphs, as exhibit UV13.
EXHIBIT #UV13 SUPPLEMENTARY STATEMENT OF LYNDAL RYAN DATED 11/04/2014
PN1770
THE DEPUTY PRESIDENT: Yes, Ms Cresshull.
PN1771
MS CRESSHULL: Thank you, your Honour, and thank you for your patience with the statements.
THE DEPUTY PRESIDENT: That's all right.
<EXAMINATION-IN-CHIEF BY MS CRESSHULL [12.40PM]
PN1773
MS CRESSHULL: Ms Ryan, you're the ACT branch secretary of United Voice. Is that right?---I am.
PN1774
Do you have the first statement in front of you, which was filed on 23 September last year?---Yes, I do.
PN1775
I take you to paragraph 2 of that statement?---Yes.
PN1776
Can you explain your familiarity with the security services industry in the ACT?
---Certainly. Whilst I wasn't initially responsible for our union's work in the security industry after becoming the secretary of
the branch, I took on that role, as well. In that role, I became familiar with the contracting practices in the industry, particularly
because they were similar to work that I had done in the cleaning industry previously. I became familiar with the legislative requirements,
particularly as we were attempting to make some changes to those legislative requirements; so I became familiar with those. I became
familiar with the general operations of the industry through contact with our members.
**** LYNDAL RYAN XN MS CRESSHULL
PN1777
Thank you, Ms Ryan. Would you say that you have some expertise in the operation of the security industry in the ACT?
PN1778
MR McDONALD: Your Honour, I object. I have no difficulty in relation to those matters that were the subject of objection and liberty was given to clarify matters, but in terms of opening up the matter generally in terms of this examination, we would object to that approach, if it pleases.
PN1779
THE DEPUTY PRESIDENT: Are you going much before trying to establish some sort of expertise?
PN1780
MS CRESSHULL: No, your Honour. I'm merely drawing out paragraph 2 of Ms Ryan's witness statement and the fact that she's familiar with the security industry in the ACT.
PN1781
MR McDONALD: I don't press it, if that's the - - -
PN1782
THE DEPUTY PRESIDENT: Yes, all right.
PN1783
MS CRESSHULL: Thank you.
PN1784
Ms Ryan, do you speak to many members that are security guards?---Yes, I do.
PN1785
In your experience, what is the main concern for the security guards that are your members in the ACT?---Low wages. The absolute one concerns low wages.
PN1786
In your experience, do the guards rely on overtime and penalty to make a living?
---They do. In fact most of them say they couldn't manage if they didn't work quite long hours and hours which attract penalty rates.
**** LYNDAL RYAN XN MS CRESSHULL
PN1787
Does United Voice have a strong membership in the security services industry in the ACT?---We don't have a large membership, but we have strong people within that membership.
PN1788
In paragraph 22, which I think was safe to a degree, you state that United Voice members focused their efforts on obtaining portable long service leave?---Yes, we did.
PN1789
Was this achieved through the bargaining power of security guards?---No. In fact, quite the opposite. What had happened is that our members had become really frustrated during the course of that year because all their activities to try and encourage their employers to bargain with us had failed, and so they were feeling fairly despondent at that point. When we suspended that campaign, it was effectively to focus on portable long service leave which didn't require them to have any bargaining strength, so to speak. We already had a government that was predisposed to portable long service leave schemes. We already had a scheme in place for the cleaning industry and a lot of the arguments that had made the government attracted to the portable long service leave in relation to - - -
PN1790
MR McDONALD: Your Honour, I think the witness's answer is going well beyond the question that was asked, in my submission.
PN1791
THE DEPUTY PRESIDENT: That's fine, but I'll allow it.
PN1792
MR McDONALD: If it pleases.
PN1793
THE DEPUTY PRESIDENT: Yes, continue?---Well, I was just going to conclude in saying that in fact it required a petition and some submissions in order to encourage the government to create a portable long service leave for security. It didn't require any bargaining strength as such.
**** LYNDAL RYAN XN MS CRESSHULL
PN1794
Can I just ask you this: I think as part of your answer you said that all attempts to have the employers bargain with you had failed?---Yes.
PN1795
Now, in paragraph 22 you say that you took the difficult decision to suspend the campaign for an industrywide agreement?---Yes.
PN1796
Do I take it your evidence is that all attempts to bargain with employers on an industrywide level had failed?---And also we considered two models of agreement, your Honour. One, we proposed - in the first instance we proposed a multi-employer agreement.
PN1797
Yes?---That was rejected by employers. We went back with a proposition around single template agreements and we weren't even able to get a response to that proposition, so we were doing - - -
PN1798
Is that a distinction without a difference?---In my discussions with employers about a multi-employer agreement, they had said, no, that they didn't want that approach; but in other states I knew that they had agreed to effectively template agreements with some changes, so I thought that that might be easier for them to agree to and put that proposition to them. We couldn't even get them to respond at that point.
PN1799
But in relation to individual discussions within the - - -?---They didn't actually come back to me in any way at all in relation to the template document or our log of claims, if you like. They didn't respond to that in any way. Had they responded in that way saying, "Well, look, we don't like a template approach, but we are prepared to negotiate a single agreement for our business," we could have considered that, but it was never put to us, so we didn't actually get the opportunity.
PN1800
All right. Yes, Ms Cresshull.
**** LYNDAL RYAN XN MS CRESSHULL
PN1801
MS CRESSHULL: Thank you. I suppose it's prudent now to go to that very matter. There was a bundle of documents that have now been attached to your statement and another document that I would like to show you, Ms Ryan. This is the document which says 8 October - it's a letter that says 8 October up the top of that. Do you recognise that letter, Ms Ryan?---Yes, I recognise it.
PN1802
Do you have the bundle of documents that was attached to your statement there with you in the witness box? The letter is dated 29 September, Ms Ryan. I'm sorry, I'm not sure if you - - -?---I don't have the bundle, but I understand that they are all identical to a letter sent on 29 September to - - -
PN1803
I just ask the witness be shown - sorry for interrupting, Ms Ryan?---That's fine. Yes, I recognise these letters.
PN1804
Would you be able to tell me what type of agreement the union was trying to negotiate when it wrote these letters?---In the first instance, as I've described, in relation to the last question we had thought that a multi-employer agreement might be the way to encourage employers to - that was our first idea, I suppose, in terms of trying to improve wages for the security industry. Then when that became clear to me from my discussions with them that that was not going to be acceptable, I wrote again specifically to questions raised to me by MSS where I clarified that we were no longer seeking a multi-employer agreement. That's the letter dated 8 October under the heading Collective Agreement. In that month we had moved away from our original idea of having a multi-employer agreement to saying that we're no longer suggesting a multi-employer agreement; our members wish to negotiate a model collective agreement.
PN1805
Can you explain what you mean by "model collective agreement", Ms Ryan?
---Well, we had had some success in relation to template agreements that we've used in an earlier campaign in the cleaning industry
and that's what we were proposing, but I had also been aware that in Victoria where we had - where there had been some agreement
struck, that it was possible to have very common - a set of common conditions, if you like, and some variations around the outside
of it. I remember particularly saying to employers, "Look, if you really love your particular grievance procedure, I'd be happy
for that to be in the document," but, you know, in terms of wages and some major conditions, we saw them being standard across
the industry.
**** LYNDAL RYAN XN MS CRESSHULL
PN1806
In the letter dated the 8th, which may possibly have been the 18th or the 28th, who knows, as a response to the 13th - so this letter is - and you're just considering - - -?---Yes.
PN1807
On the second page under the heading Current Agreements, you've made some comments about the VOT system, which I think was previously in evidence as the voluntary overtime system?---Yes.
PN1808
Was United Voice prepared to make similar concessions to other companies as outlined here?---We understood that the voluntary overtime system in the Chubb agreement was problematic for our members because it actually creates an overtime penalty of 15 per cent rather than 50 per cent; so what had been possible under the previous Act would not have been possible under the current Act in any event. Our objective in the whole agreement-making was to improve wages and conditions, not diminish them, but if people had come back with a proposal, of course we would have considered it.
PN1809
Thank you, Ms Ryan. The wage increases in the letter dated the 29th - - -
PN1810
THE DEPUTY PRESIDENT: I'm sorry, Ms Cresshull, what would you like me to do with the - - -
PN1811
MS CRESSHULL: Sorry. Would you mind tendering that letter, dated 8 October 2013, your Honour.
PN1812
THE DEPUTY PRESIDENT: Any objection?
PN1813
MR McDONALD: No objection, your Honour.
PN1814
**** LYNDAL RYAN XN MS CRESSHULL
MS CRESSHULL: Thank you for the reminder, your Honour.
THE DEPUTY PRESIDENT: I will mark the letter, incorrectly dated 8 October 2010, which is responsive to a letter that had been sent to the then Liquor, Hospitality and Miscellaneous Union of 13 October 2010, as exhibit UV14.
EXHIBIT #UV14 LETTER TO LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION INCORRECTLY DATED 08/10/2010
PN1816
MS CRESSHULL: Ms Ryan, in the series of letters dated 29 September - - -?
---Yes.
PN1817
- - - could you turn to the second page of those letters. The second dot point, which is the same for all those letters, it talks about a wage increase of 20 per cent above the award upon commencement of two further annual increases of 5 per cent. That's correct?---That's right.
PN1818
Was that wage increase sought then maintained by the union in subsequent attempts to negotiate?---No, it wasn't. It was a claim. It did include some ambit.
PN1819
You say in your statement that an agreement was attempted with MSS Security?
---That's right.
PN1820
What was the wage increase sought or negotiated for that agreement, Ms Ryan?
---I'm referring to the agreement that we finalised, balloted and sought approval for. The wage increase in that, that was proposed,
was a 7 per cent wage increase and, from recollection, 4 per cent in subsequent years.
PN1821
Just turning to some other matters now, in your opinion and having spoken to many security guard members in the ACT, is it easy for security guards to take industrial action?---No, not at all.
**** LYNDAL RYAN XN MS CRESSHULL
PN1822
Why is that?---They work in small workplaces. They don't have as much contact with each other as in places where industrial action is more prevalent. They have such low wages that they just cannot do without the pay. That's some of the reasons why industrial action is very difficult for security officers.
PN1823
In paragraph 15 of your statement - - -?---Yes.
PN1824
- - - you've spoken about a commitment by MSS. Could you provide some further clarification about that. Were you in a meeting with MSS or was there another way that you wanted to sustain a commitment?---No, what happened was that we had wanted all the companies to send out a notice of representational rights at that time as a part of our attempts to bargain an agreement. We decided to conduct a protest at the Magistrates Court, which was a contract held by MSS at the time, and MSS were aware of that and contacted me and said, "You don't have to run your protest. We'll sign it and we'll send out a notice of representational rights," which they did.
PN1825
THE DEPUTY PRESIDENT: But what you say there is that they sent it out "and committed to exploring the possibility of an agreement that would result in an industrywide settlement"?---Yes.
PN1826
How did they give that commitment?---Just verbally.
PN1827
Who gave it?---David Cheatham.
PN1828
At a meeting?---No, it was simply in response to that immediate situation of a protest being imminent and him contacting me and saying that there was no need to do that; they would give that commitment.
PN1829
This was sometime in November 2010?---Yes.
**** LYNDAL RYAN XN MS CRESSHULL
PN1830
Presumably before the notice was sent?---Yes.
PN1831
MS CRESSHULL: In paragraph 17, you've alluded to companies being somewhat sympathetic to union members' views that their wages were low and that it didn't adequately reflect their responsibilities and training. How did you ascertain those views of the company?---So in informal conversations that certainly was the case, but also in the meeting where we had - all the companies came to a meeting at our office and we had a number of security guards in that office. Initially the companies tried to say - or said, "We don't think you're low paid. We don't think there's any need for an agreement." They were pointing to other industry problems that they were having, like sham contracting, cash in hand payments, underpayments and so on, but finally because our members kept on pressing their point, the companies conceded that, "Yes, you are low paid. We'd like to pay you more, but we can't pay you more because our clients won't fund it."
PN1832
Do you remember which companies were at that meeting, Ms Ryan?---Yes, I do. ISS was present, Wilson's - - -
PN1833
THE DEPUTY PRESIDENT: Perhaps it might be more helpful, to Mr McDonald in particular, that you identify who was at the meeting?---Okay, so - - -
PN1834
By name?---Okay. Martha Travis was at that meeting, I believe in the company of David Cheatham, but I could not be completely sure; but the company was represented. ISS was represented by Adrian Bjorlo and his then boss who came down from Sydney for the meeting. John Rogers from Wilson Security was at the meeting. Tammy Inswet from - I actually sent some notes out there so I could really refresh my memory on this, because I'm not quite sure whether it was Tammy Inswet or Darlene Winton from SNP.
PN1835
**** LYNDAL RYAN XN MS CRESSHULL
So you have notes of this meeting?---I do have notes of this meeting.
PN1836
Do you want to call for the notes? It's a matter for you.
PN1837
MR McDONALD: I do, your Honour, except to say that I understand there was an attempt to get the companies to agree to the notes being an accurate record of the meeting, which wasn't successful.
PN1838
THE DEPUTY PRESIDENT: Yes, sure. They're things that you can put to this witness.
PN1839
Do you have your notes with you?---No. I'm sorry, I don't.
PN1840
Are they readily accessible?---Yes, I believe so.
PN1841
MR McDONALD: I don't necessarily call for them. If the witness wants to produce them, that would be - - -
PN1842
THE DEPUTY PRESIDENT: Well, she hasn't produced them to date. If you call for them, I'll make her produce them. If you don't, I won't.
PN1843
MR McDONALD: I'll leave it to the applicant, if it pleases.
PN1844
MS CRESSHULL: Thank you, your Honour.
PN1845
THE DEPUTY PRESIDENT: All right. Those were the personnel in attendance?---That's correct.
PN1846
And when you say each company was sympathetic - - -?---Slightly sympathetic, I suppose.
**** LYNDAL RYAN XN MS CRESSHULL
PN1847
Somewhat?---Somewhat, yes.
PN1848
Okay. Who said what? Who led you to that view?---Initially ISS had started a very hard line on wages just in the general discussion. It was the person who had come from Sydney - and I cannot recall his name, but he was the New South Wales/ACT manager at the time - and he said, you know, initially, "Oh, there's no problem here. If people have got low - we don't concede that there are low wages. We don't believe what the guards are saying," essentially, and the guards were talking about their personal circumstances and how they felt that they were low paid. Finally, and to the best of my recollection, it was John Rogers from Wilson who said, "Look, we do concede that there may be a problem here around wages. We're not unsympathetic to you. We understand it's hard for you to live, et cetera, but we've got these other problems with subcontracting, cash in hand," and he specifically mentioned Secom at that time as one of the companies that were problematic to him, and he was concerned about SNP winning work in Victoria.
PN1849
MS CRESSHULL: Ms Ryan, since 2013, what information has been provided to security members of the union in relation to the direction that the union wanted to take to campaign for wages?---Since 2013?
PN1850
Yes?---We had run into this difficulty with the MSS agreement and it not meeting the approval - with approval of the commission - - -
PN1851
THE DEPUTY PRESIDENT: Didn't meet the BOOT?---The BOOT test, yes - or the BOOT, sorry. I was still determined that we needed to do something in this space to lift the wages for our members in security and looked for a mechanism that might allow that to happen, given that, you know, one of the major employers in the industry had given us their best offer and it still wasn't good enough, so we looked at - examined this section of the Act and thought that this really was designed to fit the circumstances of this industry. It is about contracting industries and so I thought this would be a good way to go, so we held meetings with our members to talk to them about that and walked them through the process. I recall at those meetings they were particularly relieved to think that there was a legal process that they could enter, too, that would help them in this situation, because strike action wasn't a realistic possibility for them and they found protesting awkward and difficult. So we had those meetings and then we went and - our organiser spoke to them about a petition to - was the vehicle for having a discussion with them about what was intended.
**** LYNDAL RYAN XN MS CRESSHULL
PN1852
MS CRESSHULL: Was an application for a low-paid authorisation explained and the process explained to union members at these meetings?---Yes, actually in very clear PowerPoint presentations, as I recall.
PN1853
Is it your view that United Voice members had an understanding of what the process was and where it was going?---Yes, I'm sure that they did. I'm sure that - they didn't understand every aspect of the legislation. You know, that's not their area of expertise of course, but they understood that by going into this process there may be a way of recognising the fact that they're low paid and lifting their wages through negotiations. They understand that this is stage 1, if you like, and stage 2 would actually involve further bargaining, but with the assistance of what we say is the funder for these agreements. So I'm pretty confident that they understood that process, but they were also very relieved to be out of a process that required them to continually campaign.
PN1854
Ms Ryan, in your view were United Voice members or other security guards that you may have spoken to - were they supportive of the low pay application that United Voice was making?---Absolutely. In fact even yesterday when I was catching up with a few of our members, they were saying to me, "Well, this is our chance. This is great. This is our chance at getting this issue resolved."
PN1855
Just a couple of further questions about the security guard members, Ms Ryan. Is it your understanding that these members - and I'm just talking in general, not for specific people - that the majority of these members have an understanding of the difference between an award and an agreement?
PN1856
MR McDONALD: Objection. I don't think the witness can - - -
PN1857
THE DEPUTY PRESIDENT: I think that's probably a fair objection. I'm not sure this witness can give that evidence about what a particular member or group of members understand. I think the evidence thus far given by the persons employed in the industry shows variable understanding, if that's the point you're trying to make.
**** LYNDAL RYAN XN MS CRESSHULL
PN1858
MS CRESSHULL: That's fair enough, your Honour.
PN1859
THE DEPUTY PRESIDENT: That has been made.
PN1860
MS CRESSHULL: Just a couple of further questions, Ms Ryan. Have any of the respondents in this matter ever disclosed any confidential information to you about their businesses?
PN1861
MR McDONALD: Well, that's - - -
PN1862
THE DEPUTY PRESIDENT: It's a pretty broad question. Confidential in what sense? In whose eyes? You might try and focus the question a bit more.
PN1863
MS CRESSHULL: We'll rephrase that question, Ms Ryan. Have any of the respondents imparted any information to you that they would want to keep secret from their competitors?
PN1864
THE DEPUTY PRESIDENT: The answer to that is self-evident given that I've made some orders of confidentiality this morning; so the answer to that is yes.
PN1865
MS CRESSHULL: I suppose this is in relation - seeking information that Ms Ryan might have had in meetings with employers.
PN1866
THE DEPUTY PRESIDENT: Where is this going? The fact that she's able to get confidential information without disclosing it to somebody else, is that perhaps the question?
PN1867
MS CRESSHULL: That's where I was going with it, but I'm happy to leave that there.
**** LYNDAL RYAN XN MS CRESSHULL
PN1868
THE DEPUTY PRESIDENT: There's no real way of testing that. Are you going to make an allegation, Mr McDonald, that this witness might breach confidentiality?
PN1869
MR McDONALD: That would be our concern, but it sort of opens up a whole line of inquiry and for us to be able to test that - - -
PN1870
THE DEPUTY PRESIDENT: Well, it might be a concern, but are you going to put an allegation to this witness that she is unable to keep confidence if asked to do so? If you're going to put it, then I'm going to allow the question. If you're not going to put it, then I won't.
PN1871
MR McDONALD: We're not putting that allegation.
PN1872
THE DEPUTY PRESIDENT: Okay. Well, there's no need to put the question.
PN1873
MS CRESSHULL: Your Honour, where we were going was towards the bargaining process - - -
PN1874
THE DEPUTY PRESIDENT: Yes, and I think it's not going to be put, as I understand it, that this witness is unable to keep a confidence if asked to do so. Presumably the employer wouldn't disclose sensitive confidential information during bargaining without such an undertaking.
PN1875
MS CRESSHULL: Thank you, your Honour. I have no further questions of this witness.
PN1876
MR McDONALD: Your Honour, I would just maybe add one thing. I don't mean to confuse the situation - - -
PN1877
**** LYNDAL RYAN XN MS CRESSHULL
THE DEPUTY PRESIDENT: No, that's all right.
PN1878
MR McDONALD: - - - but we will certainly be putting the position that in bargaining there are sensitive commercial competitive matters that will generally be discussed and we believe it's inappropriate that they be discussed in a forum between the major competitors and their different employees.
PN1879
THE DEPUTY PRESIDENT: But that's a different proposition to whether or not this witness can keep confidence.
PN1880
MR McDONALD: I think it is, your Honour.
PN1881
THE DEPUTY PRESIDENT: But, yes, I understand you'll put a proposition that a factor that should be taken into account is that sensitive confidential information which normally is disclosed in bargaining shouldn't be disclosed in what amounts to a collective forum if there's an authorisation granted.
PN1882
MR McDONALD: That's right. It would have the effect of compelling the company to - - -
PN1883
THE DEPUTY PRESIDENT: Yes, well, it may have that effect. I understand the submission, but that's not an allegation that this witness can't keep a confidence.
PN1884
MR McDONALD: That's right.
PN1885
THE DEPUTY PRESIDENT: Is there anything arising from that?
PN1886
MR McDONALD: No, there's nothing further, your Honour.
PN1887
THE DEPUTY PRESIDENT: All right. We'll adjourn. I'll make sure everyone gets the full one hour, so we'll adjourn until quarter past 2.
**** LYNDAL RYAN XN MS CRESSHULL
PN1888
Ms Ryan, given that you're still giving evidence, obviously I'm not going to prevent you from having lunch with your colleagues but I'd ask you not to discuss your evidence?---I understand that, your Honour. Thank you.
PN1889
We're adjourned.
<LUNCHEON ADJOURNMENT [1.14PM]
<RESUMED [2.23PM]
PN1890
MS CRESSHULL: When the witness is in again, your Honour, we have the document in question and of course it's convoluted like the rest of the process with this document has been.
PN1891
THE DEPUTY PRESIDENT: All right. Bring her in and get her to identify it.
PN1892
MR McDONALD: Can I see the document?
PN1893
MS CRESSHULL: Yes, you can. Sorry. If I can just show you this document - and I'll hand one to the bench in just a moment - to Ms Ryan. It's dated 29 July 2011.
PN1894
Ms Ryan, is this the document that you're referring to in paragraph 20 that would have been marked attachment A to your original witness statement?---Yes, it is.
PN1895
If I could hand this document up to the bench. This document is a document that should have been attachment A, your Honour, with the corrected date as is on the document. The document that was attachment A perhaps now could be attachment C, which was waiting to claim this document.
PN1896
MR McDONALD: Your Honour, I've only just seen this document. I could fairly quickly get some instructions on it. Would you mind if I just left the court for about two minutes?
**** LYNDAL RYAN XN MS CRESSHULL
PN1897
THE DEPUTY PRESIDENT: That's all right. I'll stand the matter down, but before I do and just so that I'm clear, Ms Cresshull, what is now being put is that the letter that you just handed to me, dated 29 July 2011, is in fact the document marked attachment A in the original statement?---I don't believe so, actually.
PN1898
MS CRESSHULL: You don't believe so, Ms Ryan?---I quote directly from this letter at paragraph 24 and I can see the quote in the letter under "Improved wages and conditions".
PN1899
Can I take you to paragraph 24. About halfway down it says, "See attachment A."
PN1900
THE DEPUTY PRESIDENT: Is this paragraph - - -
PN1901
MS CRESSHULL: 24?---Yes.
PN1902
It refers to attachment A?---I'm sorry, I had already deleted that.
PN1903
THE DEPUTY PRESIDENT: I've confused the witness.
PN1904
MS CRESSHULL: I think we've confused everyone.
PN1905
THE DEPUTY PRESIDENT: I thought I heard you say paragraph 20, but, no, 24. The letter that you say was sent to you by Mr Cheatham on 29 July is the letter you just handed up?---Yes, that was the letter that we just searched our offices before in the break.
PN1906
Okay. That is attachment C, or what will be attachment C?
PN1907
MS CRESSHULL: I think that's the same letter that is referred to in paragraph 19, which has been re-dated and - sorry, paragraph 20. Sorry, your Honour, paragraph 20?---No, it's not.
**** LYNDAL RYAN XN MS CRESSHULL
PN1908
Is that the same letter - - -?---No. Can I provide some clarification? Paragraph 19 - - -
PN1909
THE DEPUTY PRESIDENT: I can see the quote. This is the letter from which you quote?---This is the quote, yes, and the other letter referred to in 19 is the letter dated 29 September, but there were several letters.
PN1910
Nothing changes other than you've now found what was described as attachment A, which we'll renumber as C in paragraph 24?---C.
PN1911
Which is this letter.
PN1912
MS CRESSHULL: That's correct, your Honour.
PN1913
THE DEPUTY PRESIDENT: Do you want a few minutes?
PN1914
MR McDONALD: Yes, I only need a couple of minutes. Thank you.
PN1915
THE DEPUTY PRESIDENT: Yes, all right. Is there anything else we need to raise with this witness before we start the cross-examination?
PN1916
MS CRESSHULL: I believe that we have already given another document the title of attachment A, your Honour.
PN1917
THE DEPUTY PRESIDENT: No, that's why I renumbered this one "C".
PN1918
MS CRESSHULL: Right. Sorry?---They've been renumbered.
PN1919
THE DEPUTY PRESIDENT: I did that earlier in anticipation of - - -
**** LYNDAL RYAN XN MS CRESSHULL
PN1920
MS CRESSHULL: I have an idea I'm now confusing myself with all these documents.
PN1921
THE DEPUTY PRESIDENT: No, that's all right.
PN1922
MS CRESSHULL: So thank you, your Honour.
PN1923
THE DEPUTY PRESIDENT: Yes. This is the document which is now marked "C" and there's an amendment to paragraph 24, so the words in brackets read "attachment C"?---That's right.
PN1924
MR McDONALD: Your Honour, could I just - - -
PN1925
THE DEPUTY PRESIDENT: No, I don't want an attachment D or E or anything.
PN1926
MR McDONALD: It's all right. I'm getting back to "A". Attachment A will now be annexure 1 to David - annexure 1, attachment D, to David Cheatham's statement.
PN1927
THE DEPUTY PRESIDENT: Attachment A to this witness's statement is attachment A.
PN1928
MR McDONALD: I don't think there is a - - -
PN1929
THE DEPUTY PRESIDENT: Yes, there is. I have it. It's a letter dated 13 October 2010. It was attached to the witness statement originally.
PN1930
MS CRESSHULL: That's right.
PN1931
MR McDONALD: I see, yes. Sorry, your Honour. Thank you.
**** LYNDAL RYAN XN MS CRESSHULL
PN1932
THE DEPUTY PRESIDENT: That's all right. It was also separately handed up in the bundle of material.
PN1933
MR McDONALD: Yes.
PN1934
THE DEPUTY PRESIDENT: But I've put that to one side because it has already been attached as attachment A to the statement.
PN1935
MR McDONALD: Yes, I've got it.
PN1936
THE DEPUTY PRESIDENT: So out of an abundance of caution, attachment A is the letter from Mr Cheatham to Ms Ryan, dated 13 October 2010.
PN1937
MR McDONALD: Yes.
PN1938
THE DEPUTY PRESIDENT: Attachment B is the bundle of letters to the four employers, dated - I think it was 29 September 2010.
PN1939
MR McDONALD: Yes.
PN1940
THE DEPUTY PRESIDENT: And attachment C is the letter which has just been handed up, dated 29 July 2011.
PN1941
MR McDONALD: Yes. Thank you, your Honour.
PN1942
THE DEPUTY PRESIDENT: On that basis, I'll quit while I'm in front and adjourn for five minutes.
<SHORT ADJOURNMENT [2.30PM]
<RESUMED [2.38PM]
PN1943
**** LYNDAL RYAN XN MS CRESSHULL
MR McDONALD: Thank you, your Honour.
PN1944
THE DEPUTY PRESIDENT: Yes, Mr McDonald.
PN1945
MR McDONALD: We raise no objection to the letter dated 29 July 2011.
THE DEPUTY PRESIDENT: It will form part of exhibit UV12. All right. Cross-examination, Mr McDonald.
<CROSS-EXAMINATION BY MR McDONALD [2.38PM]
PN1947
MR McDONALD: Ms Ryan, you talk in paragraph 2 about your experience in the industry as a union official and so forth. Do you ever get actually personally involved in any tenders for security?---I've looked at them, I've examined them and I've been on the Commonwealth procurement board which is giving questions about tenders and the construction of tenders, and I look out for it when RFTs go out to tender. I'm currently on something called the accountability framework, which is discussing the development of tender documentations with Jones Lang LaSalle, AMP, quite a large number of large corporations that have been brought together under a desire to improve tendering practices.
PN1948
Just on that, those are, what, property management-type companies?---And Commonwealth government-type.
PN1949
Are you aware that some government departments have actually contracted out their property management?---Yes, that's right. Mainly to Jones Lang LaSalle or United Group Services.
PN1950
Yes?---Or whatever they're called now. They change their names frequently.
PN1951
Can you give examples of some of the government departments or agencies that have contracted out in that way?---Centrelink particularly, because I spoke to them around the awarding of the contract to Secom Australia.
**** LYNDAL RYAN XXN MR MCDONALD
PN1952
Do they simply get quotes for security services or do they go out and tender for security services?---They tender.
PN1953
And then Jones Lang DeSalle with contract with the successful tenderer?---That's right. Sometimes they're the agent on behalf of the department and sometimes the department will actually sign the contract and they'll just arrange the actual contracting process.
PN1954
They may be the contracting party or they may just be an agent for - - -?---That's right.
PN1955
In paragraph 22 of your statement, you talk about the campaign for an industrywide agreement. Could I ask you what companies you've attempted to have an industrywide agreement with?---The major companies that were in the market at that time: MSS, SNP, ISS and Wilson.
PN1956
Any other companies?---No.
PN1957
I notice the company SSDP, I think was referred to?---SSDS.
PN1958
What is that?---It's a garrison support organisation. They only do garrison support work. They are a combination of Serco Sodexo and - sorry, Serco and Sodexo combined, to only tender on garrison support. They had a collective agreement, but it covered more than security. It covered cleaning rounds, maintenance, a whole range of services that they perform, but they only provide services to defence.
PN1959
But they do provide security services which would otherwise be covered by the modern award in the absence of an agreement?---Actually it's not covered by the modern award. Their underpinning agreement is a greenfields agreement that was done many years ago.
**** LYNDAL RYAN XXN MR MCDONALD
PN1960
In the absence of any agreement though, it's security work that would otherwise fall within the coverage of the modern award?---If it wasn't covered by something else, yes.
PN1961
THE DEPUTY PRESIDENT: It's still covered by the modern award. It's just that the modern award doesn't apply.
PN1962
MR McDONALD: Would there be many security personnel under that?---Yes.
PN1963
Do you know how many?---I'm trying to recall, but I can't. It's a substantially sized contract.
PN1964
I think you say the only agreements that there are in the ACT is the Chubb Protective Services/Liquor, Hospitality and Miscellaneous
Union Australia (ACT) Enterprise Agreement and the Secom Australia (ACT) Enterprise Agreement?
---That's right.
PN1965
In coming to that view, did you go through a process of looking at all the companies say that are registered as master contractors in the ACT and looking at whether they have an enterprise agreement?---No, I didn't, because the master companies - there are many more master companies than there are that hold a master licence and ever get work, so often they apply for a master licence but they never actually get a contract.
PN1966
How many are there?---I think there are hundreds. I think they actually list in the number of hundreds, but those who actually perform work is a smaller number and the long service leave authority when they were trying to establish who actually had employees and who didn't, found it was a much smaller number than what's registered with the Office of Regulatory Services as a security licence.
**** LYNDAL RYAN XXN MR MCDONALD
PN1967
How many do you establish operate as security companies in the ACT?---I don't know. Look, I would guess at 80, but that's just a wild guess.
PN1968
But when a tender comes up for a government contract, you're not precluded by being based in the ACT from tendering for that contract
as a security company?
---No, but there are exclusions and so whilst there might be 80 companies that operate in the ACT, very few of them would be able
to meet the standards required to provide services to the Commonwealth. That's why there has been such a concentration of big companies
in the Commonwealth realm, because these other small companies might be bouncers or providing services to events or something and
don't necessarily have the infrastructure and the financial records to provide services to the Commonwealth.
PN1969
But there would be many companies in New South Wales - I think nationally, what, there would be about maybe 4000 security companies that are fully operational?---There might be, but in all the years that I have been an official with the union, there has been a predominance of five to six companies in Commonwealth work forever.
PN1970
In terms of those other companies - let's say it's 80 - how would you know whether those companies have an enterprise agreement or not?---I don't necessarily know.
PN1971
With the agreements that are currently operating - you identify the two, being the Chubb and Secom agreement - you refer to them as Work Choices agreements. In paragraph 3 you say, "Those agreements are inferior WorkChoices instruments." What do you mean by that?---Well, I guess I'm saying inferior because they were not made under the Fair Work Act.
PN1972
You're not suggesting, are you, that the Chubb agreement was made under the Work Choices - - -?---No, look, I know that they were made before even WorkChoices, but what I meant by that was actually they were inferior and they weren't subject to the BOOT requirements.
**** LYNDAL RYAN XXN MR MCDONALD
PN1973
There have been tests of a similar kind for sometime, whether it be - you're not saying, for example, that there was not something in the nature of a no disadvantage test even in 2004 when you agreed to the Chubb agreement?---There was a test and in fact the Commissioner making the agreement at the time was very reluctant to make the agreement, and felt that it only just passed the requirements of the Act at that time.
PN1974
But presumably the member of the commission approving the agreement was satisfied that it complied with the requirements of the Act?---That's right. It just wouldn't meet the requirements of this Act.
PN1975
And it was something that you also agreed to as the union concerned?---Yes, at the time.
PN1976
So when you say it doesn't meet the requirements of this Act, what is the difference that you're referring to?---Well, Deegan C examined a particular aspect of this - - -
PN1977
I'll maybe just ask you in relation to the Act for the moment, as to what aspect of the test do you say is different now to what it was then?---Well, because since under the new Act we have - there's less flexibility over the working of the 38-hour week and anything above 38 hours is deemed to be overtime. It's very clear that the commission has knocked back propositions where overtime is discounted if it is hours above 38, however that might be averaged in the award or agreement.
PN1978
This voluntary overtime issue is one that has been around the security industry for some years though. There have been some agreements that have succeeded in being approved and others that haven't?---And of course it's better off overall, so if the base rate of pay was significantly higher, then maybe it could somehow pass the test; but it's certainly a tougher test under this Act than it was under previous Acts.
**** LYNDAL RYAN XXN MR MCDONALD
PN1979
Can I suggest to you that there's no significant relevant difference between the tests under the Fair Work Act for the approval of the agreement and the Act as it stood in 2004?
PN1980
THE DEPUTY PRESIDENT: Ultimately it doesn't really matter what this witness thinks. There's a current test and there's a different test. This witness's view about that doesn't really matter.
PN1981
MR McDONALD: Yes, if it pleases.
PN1982
In terms of the claim about inferior WorkChoices instruments, do you make that in relation to Secom?---Yes.
PN1983
The Secom agreement was made in 2009?---The Secom agreement has been a difficult agreement, in that it was mis-applied to Secom Australia - - -
PN1984
I'm just asking you whether it was made in 2009?---Yes, it was, but didn't have application in the ACT until later.
PN1985
At that time there was the fairness test in the legislation?---Yes, there has always been some fairness test. The difficulty is that despite the fact that we have members working for the company, they were never given the opportunity to bargain - - -
PN1986
I'm just asking you though whether - - -?--- - - - so we were never able to represent their rights and never able to say anything about the making of that agreement.
PN1987
Could I direct you to the question though in terms of there was a fairness test at the time?---Yes.
PN1988
**** LYNDAL RYAN XXN MR MCDONALD
When you say an inferior WorkChoices instrument, what I'm suggesting to you is that the test that was applied to the Secom agreement wasn't the WorkChoices test for approval?---No, but I don't think it was properly approved, anyway, so - - -
PN1989
Being the commission got it wrong?---No, I actually think that the Fair Work Ombudsman in investigating realised that it had been mis-applied in the ACT and was intending to bring proceedings against the director of Secom Australia at that time, but he passed away prior to them actually being able to pursue that matter. Part of it has never been tested, but I know that it was a live question.
PN1990
I suggest to you that the commission approved that agreement?---Yes, I can accept that.
PN1991
You say the commission got it wrong in approving the agreement?---Well, the agreement was mis-applied in the ACT to a company that had no right to use that agreement, so I don't think the commission got it wrong in relation to that.
PN1992
You don't dispute that it was an agreement that could be approved by the commission, but you took issue with where that agreement was applied?---And not just that, but the guards that - - -
PN1993
Could I just ask you that though. You don't disagree that the agreement was one that was capable of approval and correctly approved by the Fair Work Commission, do you?---That may be the case, but it was mis-applied in the ACT and the problem with this - - -
PN1994
Can you answer that question?---And the problem with this is that the situation that arises for our members is that they are paid less than they would be under the modern award. Maybe it's poor language to use WorkChoices as the language there, but what I do say is that it's inferior to the modern award.
**** LYNDAL RYAN XXN MR MCDONALD
PN1995
You say that there has been no negotiation with you in relation to that agreement and that the LHMU is not negotiating with the company about - sorry, United Voice?---Yes, that's right. We're not in negotiations currently.
PN1996
I suggest to you that that's incorrect. There have been active negotiations with Secom and its employees, and also United Voice?---I am aware that after we had made an application to set aside the Secom agreement, Secom said to our advocates at the time, "We don't have to test the validity of this agreement. We will propose a new agreement," and the commission accepted that as an undertaking. They wrote to us with a document that was so defective that we wrote back to them and said, "This document is defective," but in addition to that our members - that is, those who are based in ACT - are not being represented by our New South Wales branch who have members in New South Wales. They've simply ignored that correspondence and we haven't been able to get any further.
PN1997
All these things that you've said in relation to Secom are easily supported by any documentation that might be available. You've been asked for that documentation. You know that objections have been taken to the evidence on the basis that no foundation has been - but you still haven't produced any of this documentation?---The advice I have is the last time we've communicated with Secom, we have actually sought good faith - we have sought some orders against them and that's the last piece of correspondence, which I'm happy to produce.
PN1998
In relation to paragraph 5 where you refer to the Chubb agreement, you acknowledge, don't you, that there are a number of aspects of the Chubb agreement that are superior to the provisions of the modern award?---Yes.
PN1999
That includes that employees receive a laundry allowance?---Yes.
PN2000
**** LYNDAL RYAN XXN MR MCDONALD
And there's a higher afternoon penalty?---Yes.
PN2001
25 per cent rather than the 21.7 per cent under the award?---Yes.
PN2002
You haven't taken steps to apply to the commission to have that agreement rescinded?---No.
PN2003
There are employees of Chubb who are - I'm sorry, MSS, who are under voluntary overtime arrangements which are underpinned by that agreement?---Yes.
PN2004
A number of those employees are keen to retain those provisions. Not all, but at least some of them are?---Some of them, yes.
PN2005
Have you seen the statement of Mr Gillani from Secom?---Yes, but I didn't study it, I'm sorry. I have seen it, but - - -
PN2006
Mr Gillani indicates that there have been a number of meetings with employees and to which the union has been invited, and has or hasn't attended, since 2012. Are you aware of that?---No, I've never received an invitation of any sort to a meeting with Mr Gillani.
PN2007
Are you aware of there being correspondence between Secom and Mr Vance of your union?---Yes.
PN2008
Mr Vance has made requests of Secom that the ACT be excluded from any national Secom Security agreement that's reached?---Yes.
PN2009
You're aware that there have been a number of pieces of correspondence back and forth, and a number of meetings with United Voice and Secom?---I'm not aware of the number of meetings, but we haven't been involved in any.
**** LYNDAL RYAN XXN MR MCDONALD
PN2010
But you've said that whatever agreement is arrived at, you want the ACT to be excluded from that agreement?---We said that from the outset, but they've never responded.
PN2011
Well, do you understand that Secom have sought to also have the ACT included in the national agreement?---I have, but I understand that bargaining now has completely broken down because Secom went to put the agreement to ballot without any agreement with the bargaining representatives. We're not bargaining with them in terms of the ACT branch. We haven't bee able to get an answer from them about whether we would be excluded or not.
PN2012
Yes?---But now they've taken the step of balloting an agreement that was inferior and we're now seeking good faith bargaining orders which I understand is all happening in New South Wales.
PN2013
THE DEPUTY PRESIDENT: So who is bargaining with them?---New South Wales branch.
PN2014
When you say New South Wales branch - - -?---Branch of the union in respect of members in New South Wales.
PN2015
Which is an administrative unit, not a legal body?---It is. We've clarified that by getting our national office to write - - -
PN2016
And, likewise, the ACT is an administrative unit rather than - - -?---That's true.
PN2017
So the bargaining representative is the organisation. Who is the bargaining representative negotiating?---Well, Mr Vance is speaking to the company, but trying to actually get an agreement from the company that the ACT would be excluded.
**** LYNDAL RYAN XXN MR MCDONALD
PN2018
On behalf of the ACT?---Yes.
PN2019
Is there some disputation between the New South Wales branch and the ACT branch about coverage?---No. My understanding is that the New South Wales branch has - each document that has been produced by Secom is not one that they could actually agree to because it just does not meet the BOOT.
PN2020
You say negotiations have broken down now because the company has sought to put an agreement to ballot, but before that United Voice in some guise was negotiating with them?---I say in respect to the New South Wales employees making it clear that it would not cover the - from our perspective, that the agreement would not cover the ACT.
PN2021
I think you mentioned having the national office involved?---We've had the national office clarify that, so that there could be no doubt with Secom as to the situation.
PN2022
And the national office has indicated that the position of the union is that ACT be excluded?---Yes, and the agreement that they sought to ballot was not something we'd agreed to and would not pass the BOOT.
PN2023
Is there a letter to that effect somewhere?---I believe so, although I must say that I'm at a big of a disadvantage because I didn't actually - I haven't been involved in the detail of that correspondence, but I believe that's something that Erryn Cresshull has a copy of.
PN2024
Obviously it would be helpful to me if I saw that correspondence, if it exists.
PN2025
MS CRESSHULL: Yes. We can get that to you today, your Honour.
PN2026
**** LYNDAL RYAN XXN MR MCDONALD
THE DEPUTY PRESIDENT: Yes. Yes, Mr McDonald. I'm sure it will be helpful to you, too.
PN2027
MR McDONALD: Yes.
PN2028
So you instructed Mr Vance to put the position to Secom that the ACT should be excluded from the negotiations. That's correct?---Yes.
PN2029
You understand that there have been letters and discussions back and forth about the terms of the Secom agreement between Mr Vance on behalf of the union and Secom?---Yes, but I've only seen a limited amount. If there's other correspondence that exists - I only know of two documents.
PN2030
If finally successful in terms of reaching agreement, it would have to be one from the union's point of view that excluded the ACT from its coverage?---Yes.
PN2031
Have you sought to engage in that process in any positive way? Have you put forward suggestions, met with Secom employees, about
the proposed agreement?
---The Secom employees have been excluded from this agreement largely - you know, to the most part. Their difficulty has been that
they are currently being paid less than the modern award. That has been something they've been wanting to - - -
PN2032
Yes, but I asked if you had discussions with the Secom employees in relation to the agreement that has been proposed?---No, because the only document is the one we've opposed. The only document those workers have seen is the one that we've said won't pass the BOOT and have explained to - put an application in to explain that we haven't been - finalised negotiations. We don't have an agreement document that could be balloted.
PN2033
You know Mr Vance though from United Voice?---Yes.
**** LYNDAL RYAN XXN MR MCDONALD
PN2034
And you know that he's actively involved in discussions with the Secom - - -?---I don't know that it's all that actively involved. I think they're producing - they produced a document, we opposed it and then I don't think we heard anything for a very long time; and then I think they put something out to the ballot that we hadn't agreed to and then we opposed it. I don't think there was much more to it than that.
PN2035
What you're saying is whatever is happening with Mr Vance, you want to make it clear that the ACT - United Voice is not going to bargain with Secom?---Well, Secom haven't approached me in any way to bargain.
PN2036
You're aware that they've issued the notice of employee representational rights though?---Yes.
PN2037
You're aware that they've issued those to employees in the ACT?---Yes.
PN2038
In paragraph 22 where you refer to your industrywide campaign, how many places have you had protests in support of your industrywide campaign?---We had a launch at Western Creek. We had two demonstrations in Civic. We've had two demonstrations outside of SNP. We had one in front of the Hills building and we referred to the one that we cancelled in front of the Magistrates Court.
PN2039
Is it fair to say that you found the biggest barrier to you being able to get your industrywide campaign up is that the employers who are subject to the low-paid authorisation in your claims aren't prepared to agree to them?---No, they wouldn't even respond to them. The first difficulty is that we couldn't get them to respond to them and then the second difficulty is that when we did try and negotiate a single enterprise agreement with MSS, their best offer couldn't meet the BOOT.
PN2040
You just couldn't get any agreement for a multi-employer agreement from any of the companies that you sought it with?---That's right. Well, they wouldn't respond.
**** LYNDAL RYAN XXN MR MCDONALD
PN2041
You couldn't even get a response to the - - -?---We couldn't get a response.
PN2042
I suppose if you're not getting a response to your multi-employer bargaining proposal, it's hard to have any negotiations?---There was the multi-employer proposal that I had discussions with and got some early feedback to say, "We don't want a multi-employer agreement," so then we proposed a single template agreement and we couldn't get any response to that, and then later on following a dispute that we had with MSS, MSS proposed a single agreement and we negotiated that. It took months and months to try and negotiate; and then we went to put it through the commission and then that became quite a complicated exercise, and so that failed, as well.
PN2043
Bargaining for an industrywide campaign that you wrote by way of the letters dated 29 September 2010 - - -?---Yes.
PN2044
Which are attachment B to your statement - seeking the same terms with each of the companies, a wage increase of 20 per cent above award rates upon commencement and two further annual increases of 5 per cent - - -?---Yes.
PN2045
And a number of other things that are set out there. Do you say that any of those things constitute productivity and efficiency measures?---Well, I think retention is important in terms of productivity. I think training similarly does the same, but I also think - and I know - that we would consider productivity measures proposed by the employer. In fact in the MSS draft agreement, the employer was keen to staff - - -
PN2046
Can I just stop you there?---Yes.
PN2047
I think the employer will speak for itself there?---Certainly.
**** LYNDAL RYAN XXN MR MCDONALD
PN2048
So your argument as to productivity and efficiency is if there was this 30 per cent increase, that would increase retention?---Yes, it would.
PN2049
Is that the extent of it?---I actually think there are a lot of benefits in having turnover in the industry and a better qualified security service.
PN2050
So you gave them this agreement?---Yes.
PN2051
And then starting protesting? Sorry, gave them this demand and then started protesting?---Sometime later, yes, but I believe the date of September 2010 - I don't think our protesting started until 2011.
PN2052
In paragraph 27, you talk about there being concerns in relation to voluntary overtime under the Chubb agreement. As you've already indicated, there may have been a mixture of feeling about that. There were some employees who liked the idea of voluntary overtime and wanted to retain their existing arrangements, while some employees didn't want the voluntary overtime arrangements?---Yes, that's right.
PN2053
Are you aware of other industries that tender for Commonwealth government work?---Yes.
PN2054
What industries are you aware of that tender for Commonwealth government work?---Cleaning and catering.
PN2055
In relation to catering, are there any agreements that apply in the ACT?---Not that I'm aware of, no.
PN2056
You're not aware of any catering companies that operate in the ACT that have an enterprise agreement?---Not that do - - -
**** LYNDAL RYAN XXN MR MCDONALD
PN2057
Not limited just to the ACT, but - - -?---Not that do Commonwealth work. I'm sorry, I might have misunderstood the question.
PN2058
Yes?---Is it possible there are - - -
PN2059
Are there any caterers that operate in the ACT that have an enterprise agreement?
---I would assume so, but I don't know.
PN2060
In paragraph 32, you refer to Deegan C's decision in relation to the approval of the Chubb agreement?---Yes.
PN2061
Or the MSS agreement, I should say?---Yes.
PN2062
You indicate there that Deegan C found that it didn't satisfy the BOOT. I also refer you to paragraph 5 of the decision, which is annexure A to your supplementary statement?---I don't have the decision in front of me. Are you going to read?
PN2063
I alert you to paragraph 5 of the decision?---Yes.
PN2064
The Commissioner accepts that not refusing the agreement may impact detrimentally on some MSS employees?---Yes.
PN2065
That was part of the reason why you supported the approval of the agreement?
---Yes.
PN2066
She did leave open in the proceedings the possibility that while it may not meet the better off overall test in terms of the comparison between the overtime provisions and the award, that she was open to being heard in relation to the public interest test?---Yes.
**** LYNDAL RYAN XXN MR MCDONALD
PN2067
You're aware that a number of voluntary overtime agreements have been approved over the years by the commission under that public interest test?---No, I wasn't aware of that.
PN2068
In paragraph 33 of your statement, you make a statement that in the contract security industry in the ACT, employees and employers are not free to negotiate wage increases without regard to the client?---Yes.
PN2069
I suggest to you that in any industry, whether it be security, whether it be law, most employers are going to have to have regard to their clients?---It's different though, isn't it? I negotiated agreements in other industries - particularly in baking, for example, where the companies at the end of the day have to make a decision about whether they can pass the cost on to their clients. You know, those people who buy the bread.
PN2070
Yes?---Now, obviously it's a commercial decision that they have to make, but it's very different in the contract team area, because
if your tender is being assessed only on the modern award rates of pay - and the Commonwealth itself doesn't have the ability under
the value for money principle to absolutely say, "Well, actually I like that flavour of security company or that loaf of bread
as opposed to this loaf of bread because of the confines of the value for money principle," they can only take the cheaper price.
That's why it's different. Where there might be people who can - you know, in the marketplace it's more free to make those discretionary
choices about, you know, accepting those price increases or not. It's not the situation in relation to the Commonwealth government.
If I go down and get my loaf of bread at Coles, the loaf of bread these days that I might have paid $5 for some years ago is now significantly
less. It might be $2, with a bottle of milk. Hasn't there been a fundamental overhaul of the baking industry because they had to
meet the - - -?---Absolutely. There is a fundamental change in the baking industry and, yes, we can all get very cheap bread. The
interesting thing for the government is that their value for money principle does not operate in the same way as consumer expenditure
on other services where you can put the price on.
**** LYNDAL RYAN XXN MR MCDONALD
PN2071
If you do the comparison with the baking industry, I mean, it's clear that the baking industry has had to have regard to clients' fundamental restructuring in order to do it and to bring the price of bread down?---Yes, and I'm so sorry I used that as an example now, but, look, the point I'm making is it's the client that would determine the pricing in this industry.
PN2072
Yes?---They accept a price or not accept a price and it's quite a different process than if you were - if there wasn't such a high labour component in the security industry and if the value for money exercise wasn't done in quite the way it is.
PN2073
We can't sit in the Fair Work Commission or elsewhere and simply manufacture what the market for security services are going to be in the ACT?---No, but you can - and that's the problem. This is the very reason for why we've got the application that we've got. The employees have said to me, "Every time we've sought a wage increase it's, 'We cannot you a wage increase because we'll be at a commercial disadvantage with our client'," and the client in this case is both governments in the greatest extent. So how can workers ever hope to negotiate any better wages or conditions if the employer don't feel that they can ever pass a cost onto their client?
PN2074
It seems to me as though the only bargaining that's going on seems to be at Secom and you're opposing it happening in the ACT?---Look, I would like you to look at the Secom agreement. You would disagree with it, as well.
PN2075
But Secom were seeking to bargain with its employees in the ACT, including you, and you're seeking to stop that; but then you're coming along and saying, "Oh, isn't it terrible that there isn't enterprise bargaining in the ACT"?---No-one has ever come to us with an enterprise agreement that would lift wages and improve productivity. That hasn't been put to us. If Secom or any other company came to us with a proposition that actually lifted wages and improved productivity, then we would certainly put that to our members. The only bargaining, if you like, that has taken place, is one to the employees' disadvantage.
**** LYNDAL RYAN XXN MR MCDONALD
PN2076
If we take a major employer in Commonwealth government - let's say the Tax Office?---Yes.
PN2077
Does your statement apply to them?---I'm sorry, which particular statement?
PN2078
Say in relation to the Tax Office, it's impossible to have an agreement for security services being supplied to the Tax Office?---Not one that delivers wage increases.
PN2079
But say in relation to the Tax Office, they also have very big operations in Sydney, don't they?---Yes.
PN2080
And in other states?---Yes.
PN2081
And their security offices are serviced by Wilson Security?---Yes, I know the contracts you're talking about, I think.
PN2082
Can I suggest to you that those services are provided by people that are employed under enterprise agreements with Wilson Security in all of those places, except for the ACT?---My understanding of the building that's occupied by the ATO in Victoria, if that's what you're talking about, it's actually not an ATO contract, I'm sorry, and I don't know that building; but some buildings' security services are actually organised by the commercial property owner and not the agency.
PN2083
Yes, but what I'm suggesting to you though is that the ATO everywhere else in the country in terms of their security services being provided by an external contactor, are able to have those provided by a contractor who's under an enterprise agreement. Why is it technically impossible for there to be an agreement in the ACT?---It's very difficult for there to be an agreement in the ACT because - well, it's what the employers have said to me for many years: that they cannot agree to an agreement with higher wages and still remain competitive.
**** LYNDAL RYAN XXN MR MCDONALD
PN2084
Let's be realistic about it. You've asked for a wage increase of 20 per cent in the first year, 5 per cent in the next year and 5 per cent after that, as well as a whole heap of other things that are going to add to cost. Do you expect employers to jump through hoops?---I expected them to respond and, at that end of the day, the agreement that we proposed - the actual single-employer agreement that we proposed through negotiation - was 7 per cent with 4 per cent per annum. I actually just think it shows we have a willingness to negotiate rather than anything else.
PN2085
In terms of productivity and efficiency improvements, there's nothing, you'd agree with me, in that list which - in the standard letters in attachment B to your statement - - -?---You didn't want me to answer you in relation to MSS, where we did generally try to negotiate and did have good meetings with that company, but in the end couldn't deliver an outcome.
PN2086
Yes?---And in those discussions, MSS proposed things which they said would provide efficiencies to them and we took that on board and agreed to many of their proposals.
PN2087
Of course what will happen now, if you're successful, is that any of those efficiencies or any of the things that the MSS people enjoy which isn't agreed to by the other companies, will simply go. They'll come under the multi-employer agreement?---If we get to bargain through this process, if this is - - -
PN2088
Could I ask you in terms of what your current proposals have been. Have you ever put a proposal that said, "Look, we'll have a multi-employer agreement, but those employees at MSS that would like their voluntary overtime, can keep it?" Have you ever said, "We'll give you other productivity and efficiency - - -"?---By deed perhaps more than by word. The proposal that MSS put together, and we supported, represented negotiations that were a compromise between both the parties and that's what we put.
**** LYNDAL RYAN XXN MR MCDONALD
PN2089
Yes?---And they couldn't give us any more in terms of wages, they said, because of this external problem they have with contracting with the government. That's where we got to with it. If we were to go through this process and we need to bargain again, if this application is approved, I would expect that we would hear each other's claims and try and negotiate our way through that. I don't know whether the agreement at the end of the day would look exactly like the MSS agreement, but it probably wouldn't look completely dis-like it. I mean, I just don't know.
PN2090
Could I suggest to you that this process that you say might happen is not something that you've ever done before?---I tried.
Yes, but you've never - - -?---I'm sorry, I tried and they didn't respond.
PN2091
Isn't the truth of the matter that you've not had an enterprise agreement in security in the ACT?---Well, that's our evidence.
PN2092
But you'd agree with me that there are numerous security agreements - hundreds of security agreements, I think - that apply to security companies that operate in other places?---In other places, and the unique thing about Canberra is the predominance of Commonwealth and ACT government that use the same processes for assessing tender. That's the difference.
PN2093
THE DEPUTY PRESIDENT: But isn't it the case that in other states the security companies which have enterprise agreements contract with state governments to provide security services?---Some of them do. I think Wilson's evidence alludes to a panel system that used to exist in the Victorian state government, where actually you went through a pre-qualification process and in fact having a collective agreement under that particular type of procurement actually advantaged them. That makes sense, but you actually have to have a government that will support that policy. I think they've had some difficulties with their government since its change and the change to the policy. Unless you've got that mechanism in place - it just shows to the extent that the policies of the government influence what happens in the market and that's what - I think at different times when we've had good state governments around the country, it has been possible to have a collective agreement. What we would consider good state governments; they are probably Labor state governments. They would say, "Okay, collective bargaining is a feature we want to promote. We'll have procurement policies that support it." That's not the scenario that we have at the moment.
**** LYNDAL RYAN XXN MR MCDONALD
PN2094
You've had what you regard as a favourable government at a Commonwealth level for the vast majority of the period that this evidence goes to?---Yes, and so what happened is that we were through a lot of this period negotiating the Fair Work principles and the Commonwealth cleaning guidelines which underpin the Clean Start agreement. What was helpful in that is that we actually had a collective agreement that we could go to the government with to have recognised and embedded into the contracts. What I could never get to here with the other employers in security, although we really wanted to, is that if we could have had a model agreement that could then have been recognised in the procurement process, it would have been a lot easier, and we just never got there.
PN2095
But ultimately you did conclude an agreement with at least one of the employers that is the subject of this application?---Are you talking about - - -
PN2096
Yes, MSS?---MSS; but couldn't be approved.
PN2097
No, but you made an agreement?---We made an agreement, but in the end no-one actually got the benefit of that agreement.
PN2098
It's probably something for submissions, but the question that stands out for me at the moment is whether these provisions are directed at facilitating the making of agreements or facilitating the making of agreements which are then approved, because the provisions say nothing about approval of agreements. They talk about making agreements and that happens at an earlier point.
PN2099
MR McDONALD: Yes.
PN2100
THE DEPUTY PRESIDENT: I just put it out there as something that you probably need to address in submissions.
**** LYNDAL RYAN XXN MR MCDONALD
PN2101
MR RUSSELL-UREN: My sincere apologies, your Honour. I think I've missed every word that you've just said. I appreciate that you might have - - -
PN2102
THE DEPUTY PRESIDENT: I'm sorry. That's all right. I'll repeat myself. Arising out of the exchange that Ms Ryan and I have had, I simply raised the question to put you on notice that it's something you'll need to turn your mind to in final submissions. That is, whether the provisions of division 9 of part 2-4 are directed to facilitating enterprise bargaining with a view to making an agreement or whether they're aimed at making an agreement that can be approved by the Fair Work Commission, because under the scheme of the Act there is the making of the agreement which occurs at a point in time earlier than the approval and they're not the same thing. It's just something that has been exercising my mind and it has been enlivened because of the exchange that Ms Ryan and I have had just.
PN2103
On one view of the provisions, what is a low-paid authorisation that's given in order to facilitate negotiations that might increase the chances of making an agreement, the making an agreement in a relevant sense occurs when the majority of employees who are to be covered by the agreement approve it. In the case of MSS, that has happened, so I question whether that is all that the provisions require or are aimed at doing, in which case there's some difficulty in relation to the application so far as MSS at least is concerned; or is it the case that the provisions should be more broadly, and that is that the aim of the provisions is to facilitate the making of an agreement which is a capable of approval by the commission.
PN2104
I don't need to hear from you about it now. I don't have a view about it one way or the other. It's just a question that seems to arise from the way in which the provisions are drafted. I'm just giving you notice that it's something you'll have to turn your minds to. Yes, Mr McDonald.
PN2105
**** LYNDAL RYAN XXN MR MCDONALD
MR McDONALD: In any event, with the MSS agreement as I understand your application, it will be that even though they have an agreement in place, you see a low-paid authorisation apply to that agreement - or apply to MSS?---Apply to MSS, yes.
PN2106
So that even though they have the agreement, they would now negotiate an agreement with the other companies and their employees who are subject to the low-paid authorisation or, if they're unsuccessful, you'd seek a workplace determination to determine what the terms and conditions should be?---Yes.
PN2107
And also with Secom Security, despite them having an enterprise agreement in place, as well, you would seek a situation where the low-paid authorisation and, if you're successful at that, a workplace determination, would apply to them and override any enterprise agreement they have, too?---Yes.
PN2108
If successful, you can really knock out enterprise bargaining in the ACT where it has - - -?---Well, we can address the concerns that the employers continually raise about competition.
PN2109
Yes?---It's a way of addressing that.
PN2110
That's the effect of your application, isn't it? To the extent that enterprise bargaining has occurred on a single basis in the ACT, if you're successful you'll be able to stamp it out?---I think to characterise it as stamping it out is not the case. If we were able to successfully bargain individually with employers to lift wages, then we would do that. It's just that we haven't been able to do that and we haven't been able to do it, you know, in any - you know, in any form of agreement that we've put to them, we haven't been able to lift the wages.
PN2111
In paragraph 46, you talk about security clearances and that that's controlled by one agency. Could I suggest to you that security clearances aren't limited to simply security guards. It's anyone who works in areas where a security clearance is required, whether they be clerical, IT, administerial staff - - -?---Yes. I accept that, yes.
**** LYNDAL RYAN XXN MR MCDONALD
PN2112
In your supplementary statement, UB13, at paragraph 6 you talk about problems that your members have with the Chubb agreement, but it's correct to say, isn't it, that the Chubb agreement was voted upon by a 77 per cent majority of those who voted on the agreement?---The Chubb agreement?
PN2113
I'm sorry, the MSS agreement I should say?---The difficulty that people have is with the Chubb agreement and the voluntary overtime in the Chubb agreement.
PN2114
I see, but when the new MSS agreement was put to the vote, 77 per cent of those who voted, voted in favour of the agreement?---That's right. We encouraged a vote in favour, yes.
PN2115
But despite that, you're still seeking a low-paid authorisation for - - -?---The Commissioner considered that question when the agreement was put for approval. She understood that there was a high vote in favour of the agreement and she still felt she couldn't make the agreement.
PN2116
But you accept that the effect of your application is to prevent those types of conditions, such as voluntary overtime, from applying in favour of the multi-employer agreement?---I don't think that's our intention at all.
PN2117
With the MSS agreement, if you're successful with your application, you'd have a low-paid authorisation which would - if successful, a workplace determination which would then override the Chubb agreement - or the MSS agreement, I should say - - -?---The only agreement is the Chubb agreement, yes.
PN2118
Yes. That would have the effect of overriding the Chubb agreement in relation to government contracts with the ACT and Commonwealth?---Yes.
PN2119
**** LYNDAL RYAN XXN MR MCDONALD
But that same agreement would continue to apply elsewhere?---These are the matters that would be bargained later. That's my understanding. Once we got into bargaining, if, for example, MSS said during negotiations, "We're happy for this agreement to apply in this way to this group of buildings, but we've got a particular contract we want to have some flexibility around," or, "We need to have a different roster," they'll all those things that are bargained later in the process. They're not matters to do with whether this should be approved, but it's something that we would negotiate down the track.
PN2120
Do you expect that MSS is going to sit there with its major competitors, Wilson Security, SNP, Secom, and they're going to have those little tete-a-tetes about, "Well, look, we want to look after other sites," or, "We'd like to change things because we've got contracts over here?" They're not going to even want to reveal to you the contracts of all these competitors?---I believe the advantage of this process is that we can actually seek the assistance of the commission in those situations and so whilst some of those things they might not be happy to disclose in a full room in front of everyone, I think there is a manageable process that we could deal with those individual things.
PN2121
But, either way, isn't there going to be a standard outcome? Whether they have a particular concern, whether it's a valid concern or not, it doesn't really. The outcome is going to be what the other companies agree should be the outcome and what the employees of the other companies agree should be the outcome for MSS or for any other company?---I really don't know what's going to come out of the bargaining. All I know is that we really, really need help to do it because we have not been able to do it.
PN2122
I mean, it was even difficult, it seemed, with the MSS agreement, in that you had some splintering of employee representation and a number of different agendas being driven in that?---Yes. There was an objection, yes.
**** LYNDAL RYAN XXN MR MCDONALD
PN2123
Yes. It wasn't as though you were simply representing as United Voice all the employees of MSS?---No, but the Act operates that way and, you know, that's the reality of the Act.
PN2124
And presumably the other employees of MSS who were quite vocal in that process would also want to be quite vocal in this process?---I think you said yourself 76 per cent voted in favour of the agreement.
PN2125
Yes?---Yes.
PN2126
If so many voted in favour of the agreement, why wouldn't you be saying that aspects of that agreement, such as voluntary overtime, shouldn't be applied to all companies?---Well, when we get to bargaining, if the companies want to put that to me, we'll put it to our members and we'll consider it.
PN2127
I suppose you may run into the issue with overtime that someone who's currently getting overtime rates when they work overtime and they're getting a lot of it, may not be interested in agreeing to voluntary overtime?---That might be the case.
PN2128
So that employee, perhaps of another security company, may not want to support MSS employees having their voluntary overtime arrangements continue?---That might happen in bargaining. I don't know what will happen in bargaining.
PN2129
I mean, this is something in a way that has never been done before, isn't it?---No, but we really need the help to do it.
Nothing further. Thank you, your Honour?---Thank you.
<RE-EXAMINATION BY MS CRESSHULL [3.40PM]
PN2131
MS CRESSHULL: Just one quick question, Ms Ryan. Do you have it within your knowledge about the predominance of the government share of the market in the ACT compared to the government share of the market in Victoria?---I only have an estimate, but it would be 80 per cent of the work in the ACT and a much smaller percentage in the Victorian market. Even some of the buildings that are occupied by Commonwealth departments in other markets, the actual contracts are not let by the agency. They are let by the building owner. If ISPT is the building owner, they will organise the security arrangements, and the ATO happens to be a tenant. It's quite different.
PN2132
Thank you, Ms Ryan. I have no further questions for this witness, your Honour.
THE DEPUTY PRESIDENT: Thank you, Ms Ryan, for your evidence. You're excused?---Thank you.
<THE WITNESS WITHDREW [3.41PM]
PN2134
PN2135
MS CRESSHULL: That concludes our witnesses for today. We have one remaining witness on Thursday, your Honour.
PN2136
THE DEPUTY PRESIDENT: Yes. All right. Are we ready to call Mr Cheatham?
PN2137
MR McDONALD: Yes, your Honour. I won't seek to make an opening submission. We rely on the outline of submissions that we filed. Perhaps a further matter that hadn't been addressed in our submissions is that multi-employer agreements have been given some consideration in the public interest tests attaching to them under previous legislative regimes and that is something that we'd also seek to develop in our submissions.
PN2138
We say full bench decisions under previous regimes have suggested that where there are employers who are able to bargain for themselves, who are large employers, that it wouldn't be in the public interest for them to be part of a multi-employer agreement, but I'll seek to make those submissions at the appropriate time, if it pleases.
PN2139
THE DEPUTY PRESIDENT: Yes.
PN2140
MR McDONALD: If I could call Mr Cheatham as our first witness.
PN2141
MR RUSSELL-UREN: Your Honour, before Mr Cheatham arrives, could I take a one-minute break to allow my colleague to go to the toilet?
PN2142
THE DEPUTY PRESIDENT: Yes, that's fine. We'll adjourn for five minutes.
<SHORT ADJOURNMENT [3.43PM]
<RESUMED [3.57PM]
PN2143
THE ASSOCIATE: Could you please state your full name and address.
MR CHEATHAM: My full name is David Grimshaw Cheatham, (address supplied).
<DAVID GRIMSHAW CHEATHAM, SWORN [3.57PM]
<EXAMINATION-IN-CHIEF BY MR McDONALD [3.58PM]
PN2145
MR McDONALD: Mr Cheatham, could you state your name and your title and work address for the record, please?---Yes, my full name is David Grimshaw Cheatham. I’m the general manager of MSS Security here in Canberra and have been for four years and my work address is (address supplied).
PN2146
Mr Cheatham, did you make a statement for these proceedings which you signed on 31 March 2014?---Yes, I did.
PN2147
Do you have a copy of that statement with you?---Yes, I do.
PN2148
And that has attachments A to G?---Yes, it does.
PN2149
If I could tender that statement.
PN2150
THE DEPUTY PRESIDENT: Any objection?
PN2151
MR RUSSELL-UREN: No, your Honour.
THE DEPUTY PRESIDENT: I will mark the statement of David Cheatham comprising 44 paragraphs together with a number of attachments marked A through F as exhibit R3.
EXHIBIT #R3 STATEMENT OF DAVID GRIMSHAW CHEATHAM WITH ATTACHMENTS DATED 31/3/14
MR McDONALD: I have no questions for this witness.
<CROSS-EXAMINATION BY MR RUSSELL-UREN [4.00PM]
PN2154
MR RUSSELL-UREN: Mr Cheatham, have you always been employed by MSS?---Not always, no.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2155
You used to be a cop. That’s correct, isn’t it - police officer?---I was a member of the New South Wales Police Force, yes.
PN2156
And you dealt with criminals in that capacity. That’s fair to say?---Yes, I did, yes.
PN2157
Would you say that - - -
PN2158
THE DEPUTY PRESIDENT: Not just?---Sorry?
PN2159
Not just?---No, but predominantly, sir.
PN2160
MR RUSSELL-UREN: Would you say that past behaviour is a pretty good indicator of future behaviour?
PN2161
MR McDONALD: I don’t know what sort of question that is.
PN2162
MR RUSSELL-UREN: If I may work my way to my point?---Well, I don’t know if I’d term it as that, sir, but it could indicate future behaviour but on some occasions it may not.
PN2163
Now, you employ security guards and cover costs of employing them, don’t
you?---Yes, we employ security guards and, yes, we do cover costs of employment, yes.
PN2164
And you direct those workers to guard particular sites. That’s correct, isn’t it?
---Correct, yes.
PN2165
And those sites are typically government buildings. That’s correct?---Generally, yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2166
And those buildings have site-specific requirements, don’t they?---Yes, they do.
PN2167
There are what are sometimes called standing instructions. That’s correct?---Yes, standing operating procedures, yes.
PN2168
So you provide guards to those sites at a price accepted by the client in the tender. Is that correct?---Yes, that’s part of what we do, yes.
PN2169
And the price that you give to the client includes a percentage of profit, doesn’t it?---Yes, it does in some cases, in most cases - in some cases, no.
PN2170
Now, the profit is essentially set against the hourly charge for an employee, isn’t it?---Well, it’s a way of determining profit, yes.
PN2171
So for each guard that’s supplied to the site the company gets, you know, a small percentage of profit on most sites?---Yes, that’s correct.
PN2172
Now, the majority of Commonwealth sites are serviced 24/7, aren’t they?---I wouldn’t necessarily say the majority, sir, but certainly some. I’d have to work out whether it was more 24/7 than not but - - -
PN2173
You’re in the security business. Security is a fairly, I don’t know, perhaps the word is ubiquitous industry. It’s 24/7 in general, isn’t it?---There are a lot of sites that aren’t 24/7 and there’s a lot that are so I’m not quite sure of the percentage but certainly.
PN2174
But it is a feature of the industry. That’s correct?---Yes, sure, yes, certainly.
PN2175
So the small percentage of profit on each hour worked by each guard stacks up over the course of a contract term, doesn’t it?---Yes, it does.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2176
Now, part of the contract price includes the cost of administering the employees, doesn’t it?---Yes.
PN2177
And that cost flows from the back office functions?---Yes, the back office and also your head office in Sydney in our case, yes.
PN2178
So for example, just to inform the commission, your payroll is done out of the ACT office?---Correct. Well, most of it is but there’s a section of the payroll that’s done in Sydney.
PN2179
Most of your HR comes out of Sydney?---Yes, it does.
PN2180
So Martha and Sara - - -?---Yes.
PN2181
Okay. Now, the more efficiently that your back office function runs the lower your cost is. That’s true, isn’t it?---Not necessarily, no. No, we could have a section within our back office that wasn’t efficient which wouldn’t - which wouldn’t make any difference to the administration cost of the contract.
PN2182
But the costs of your back office functions are part of your overheads, aren’t they?---Yes, they are, yes.
PN2183
And they are costs that you need to cover, aren’t they?---Yes, certainly.
PN2184
So indirectly they would reduce your profits by a degree, wouldn’t they?---I don’t quite follow what you mean, sir. The administration costs are a percentage of our overall contract cost and that doesn’t change. Regardless of how efficient the back office is or isn’t, that percentage still exists.
PN2185
But you have a percentage of profit, don’t you?---Yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2186
And that percentage of profit would be offset by any back office costs. That’s correct, isn’t it?---No, that’s quite separate. The percentage of profit is quite separate to our administration costs or percentage.
PN2187
THE DEPUTY PRESIDENT: Just so that I’m clear, in terms of framing a particular price for a project, you would incorporate into that price the cost of the provision of labour?---Yes.
PN2188
Any additional costs such as components of administration and so on?---Yes.
PN2189
Together with a profit coming out?---Yes.
PN2190
So the total of those three broad sums would need a cost?---That’s right - the sell price.
PN2191
The sell price?---Yes.
PN2192
I think the proposition that’s been put to you is if you’re able to lower the cost of the administrative component that would then flow to the profits - increase the profit?---Yes.
PN2193
Or reduce the cost of the - - -?---I understand that, your Honour, but our administration costs are fixed so they won’t vary from one contract to the next. There is a set price and, under confidence, I could go - - -
PN2194
I understand they’re a set price but you could - I think the proposition that’s being put to you is that they’re a set price but you could do certain things that might reduce the price. For example, you might outsource human resources to subcontractors?---Yes, and certainly with the profits, sir, but not with administration.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2195
Yes?---That remains fixed.
PN2196
All right.
PN2197
MR RUSSELL-UREN: Perhaps I asked you a question before for the benefit of the commission’s clarity. If I could ask on for my own sense of clarity, you said before that there some administration costs which were fixed and there were some back office costs which were incorporated in your contract price?---All administration costs are fixed.
PN2198
I asked you a number of questions around how sites work and how profit works. You recall that?---Yes.
PN2199
It’s fair to say that MSS is a large company, isn’t it?---Yes, it is.
PN2200
And it essentially operates in a kind of economies of scale scenario. That’s true, isn’t it?---Correct, yes.
PN2201
Now, the economies of scale aspect of your operation would make it pretty difficult for a small business to take on a large contract like the Tax Office, wouldn’t it?---Just could you put the economies of scale in context here and just be clear about what you mean.
PN2202
Okay. Well, you’re an extremely large company?---Yes.
PN2203
You are able, as a consequence of that, to provide services at a cheaper price than a smaller company. Is that correct?---I would argue that that’s not the case. For example, smaller companies aren’t required to pay payroll tax which is 6.85 per cent of the contract price. On a $1 million contract per year at 6.85 per cent is 68,500 so a smaller company could undercut us by at least 68,500 per year based on that.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2204
In any event they wouldn’t be able to supply the number of guards, would they? I mean, I suppose we’re dealing in hypotheticals?---Sure.
PN2205
Perhaps I’ll move on. The contract terms for the supply of security services are typically for two to four years, aren’t they, thereabouts?---It’s generally a three-year based contract term with two single option years beyond that - is the general contract length.
PN2206
And the option, is that an option for you to renew or for the client to
renew?---Well, it’s generally for the client. I mean, it’s an option for both of us as per the contract but, if the client
offers that, rarely is it declined.
PN2207
And generally after the expiry of your contract term or after the expiry of each option to renew the contract could go out to tender?---Yes, it would.
PN2208
When a contract is put out to tender a number of companies will put in a bid, won’t they?---Generally, yes, that’s my experience.
PN2209
And when you put in a bid for a tender you need to know what it will cost you. That’s true?---Yes, correct.
PN2210
And all security firms engage some degree of expertise to evaluate their tendering practices, don’t they?---Well, I can only talk for MSS.
PN2211
For your own?---But certainly that’s a large part of what we do when a request for tender is released.
PN2212
And that bid is largely wage-based, isn’t it?---Well, there’s a great proportion of the sell cost which is labour cost related so wages and on-costs, yes. A significant part of the contract price is labour and on-cost related.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2213
And wages can be reduced through rostering arrangements, can’t they?---Are we talking about submitting a tender price, sir?
PN2214
Yes?---When you submit a tender price you submit it as per the most economical roster that you can produce.
PN2215
Legally?---Legally, yes, of course.
PN2216
And your wages can also be reduced by lower penalty rates, can’t they?---Yes, they can, yes. It’s part of the economical way of - - -
PN2217
So what - - -?---- - - cutting the roster.
PN2218
So in your scenario - I’m sorry to interrupt you - but in your scenario you’ve got the VOT That reduces your penalty rates?---Got the what, sorry?
PN2219
Voluntary hours?---Well, that’s a different thing, sir. We don’t use that for tendering purposes. If we use that for tendering purposes we could be in some strife so that’s quite separate to what we do when tendering.
PN2220
Fair enough. But is it fair to say that the use of the VOT increases your profit as against other competitors?---Yes, I think it’s fair to say that amongst a number of other things.
PN2221
Is it also fair to say that flat rate payments like Secom would reduce their
price?---Well, I’m not familiar with flat rate agreements, sir. Well, I should say that my experience with flat rate agreements
are it’s a one by 24-hour roster. You work out a cost for the week and you divide that by 168 hours and come up with an hourly
fee. So on that basis it would be no better off but that’s my understanding. I’m not sure what Secom does.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2222
So you’re not sure what Secom does?---No.
PN2223
All right. So part of the evaluation of a tenderer is figuring out what the other companies can run a contract at, isn’t it?---Well, if I try to figure out what other companies were going to run a contract at I’d go crazy, I think. I just worry about what we do, know the market fairly well and know that we’re in the ballpark with our major competitors. That’s the best I can do.
PN2224
So forgive me if I’m wrong, but you just said that a large proportion of your price for the tender is comprised by wages?---And wages on cost.
PN2225
Wages and on-costs. And you’ve also said that a number of companies have put in a bid for a contract?---Yes, that’s correct.
PN2226
Security is highly competitive?---Yes, it is.
PN2227
And those contracts are won on the margins, aren’t they?---Well, they’re not won on the margins, no. They’re won on a number of things. They’re won on value for money.
PN2228
But they’re also won on price?---Yes, well, it’s part of the value for money proposition.
PN2229
And you’ve said that you evaluate your own tendering process?---Yes, correct.
PN2230
So when you tell me and this commission that you’re not aware of Secom’s arrangement, their labour terms, are you saying that MSS just turns a blind eye to the costs to other companies?---No, we’re not turning a blind eye at all. What I’m saying is that I don’t know how other companies prepare their fee for tenders so I don’t know what part is administration. I don’t know what profit margin they’re including. I don’t know whether they pay payroll tax. For example, here in the ACT we run a 24-hour control room so our administration costs are quite high compared to those that don’t. We have after-hours inspectors as well that we have to pay. We have day inspectors that we pay. So our admin costs will be quite high and perhaps higher than any other company in the ACT so I don’t know how they structure their fee.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2231
I asked you a moment ago whether or not the security industry is highly competitive and you agreed with that?---Yes, I do.
PN2232
You didn’t have to?---Yes.
PN2233
So is it fair to say that that creates a situation where, I don’t know, for example, MSS doesn’t want to give its employees a 50 per cent pay rise on the base rate of pay?---Well, if we gave our employees a 50 per cent pay rise on the base rate of pay we wouldn’t be in business because we wouldn’t win a tender and we wouldn’t have a company so - - -
PN2234
And that’s in part because of the competition?---No, it’s mainly because our - - -
PN2235
THE DEPUTY PRESIDENT: I suggest to you that that would be a consistent response from most employers in this country to a claim of 50 per cent wage increase so perhaps you might make that a bit more realistic.
PN2236
MR RUSSELL-UREN: Perhaps we shall say 20 per cent. That’s a figure that’s been bandied about?---20 per cent, sir, doesn’t change my view. Our clients wouldn’t be prepared, in my experience, to pay us 20 per cent more to pay our people.
PN2237
That would in part though because they could get Wilson’s if they - - -?---Well, they’d get anyone else other than MSS Security if that was the case.
PN2238
Yes, so in essence that wage - you know, let’s say a wage rise of 20 per cent - would remove your competitive edge, wouldn’t it?---I believe it would, yes.
PN2239
And it’s precisely because of this that every company is worried about entering into a single enterprise agreement, isn’t it?---We’re going - I can’t talk - - -
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2240
MR McDONALD: Objection?---- - - on behalf of the other companies, sir. I certainly - I can talk on behalf of ours and that’s the case with ours.
PN2241
MR RUSSELL-UREN: So your company would be worried about doing - entering into a single enterprise agreement?---Our company would be worried about being uncompetitive and not being able to provide full-time employment for our officers as a result.
PN2242
Now, we’ve spoken a bit about competition and about the structure of the industry. I’d like to know whether in this context each company - well, let’s say your company - needs to ensure its own work practices minimise costs?---Correct, yes.
PN2243
By ensuring efficient and productive work practices, the company increases its profits, doesn’t it?---Well, that’s one component of it but there are many parts of that.
PN2244
But it is a part?---Sure.
PN2245
Yes, of course. So if the terms and conditions were the same for every company it would be true to say that each of you would be reliant on work practices to minimise costs, wouldn’t it?---Well, that’s in a perfect world, sir.
PN2246
I would put to you that it’s the case under the award?---Well, certainly it’s a case with us but there are unscrupulous companies out there that don’t abide by the award so that’s another thing that needs to be considered.
PN2247
I wouldn’t go so far as to vouchsafe the integrity of each of the other respondents other than say that they’re large companies and if you’ve got an allegation - - -?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
---No, I’m not referring to the other companies as part of this application. It’s ones that aren’t.
PN2248
It’s this other thing. In your statement you mention that MSS is a collective agreement. When was that agreement made?---What paragraph are you - - -
PN2249
Would it be the Chubb Collective Agreement?---When was that agreement made?
PN2250
Yes?---Well, it came into force in 2004.
PN2251
And has it been updated since?---No, that agreement still stands to this date.
PN2252
So it’s 10 years old?---Yes.
PN2253
But it incorporates the rate of pay from the award, doesn’t it?---The modern award, yes.
PN2254
Modern award, yes, or a portion thereof?---Including the transition.
PN2255
Yes. How does voluntary overtime work?---Voluntary overtime, it’s a rate of pay that pays 15 per cent more than the base rate for that particular site and it’s offered to security officers that want to work a shift on voluntary overtime.
PN2256
Right, so they get an additional 15 per cent if they want to work overtime?
---Correct.
PN2257
Do you know how much overtime is paid under the award?---With my company?
PN2258
Well, how much - if you’re under the award how much would you pay?
PN2259
MR McDONALD: Objection. I think the evidence is that they’re not under the award.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2260
THE DEPUTY PRESIDENT: I think the question was do you know what the rate is - the penalty rate for overtime under the award?---Yes.
PN2261
MR McDONALD: I’m sorry, I must have missed it?---Yes, it’s time and a half for the first two hours on Monday through to Saturday and double time thereafter and on the Sunday it’s double time for every hour and a public holiday is double time and a half every hour.
PN2262
MR RUSSELL-UREN: So it’s true to say, isn’t it, that 15 per cent is significantly less than that?---Yes, I think it’s true to say.
PN2263
And that would make you more competitive as a company, wouldn’t it?---No, that doesn’t affect our competitiveness because, as I said before, when we’re preparing a tender price VAT doesn’t come into that. If I price something including voluntary overtime and nobody was on voluntary overtime, we would go out the back door. So that’s a quite separate proposition or component of our pricing.
PN2264
THE DEPUTY PRESIDENT: Can I ask you this, do you factor in an overtime rate at all in your tender?---Yes, sir, yes, certainly.
PN2265
And you base that on, what, the award?---On the award.
PN2266
I’ll ask you another question but I will anticipate that probably the answer will be confidential so it might be appropriate that if somebody not from MSS is in the back of the room, would they leave. We might just mark this question and answer confidential. This is the transcript.
CONTINUED IN TRANSCRIPT-IN-CONFIDENCE
CONTINUED FROM TRANSCRIPT-IN-CONFIDENCE
PN2316
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
MR RUSSELL-UREN: Now, if I can - do you have your witness statement, Mr Cheatham?---Yes, I do.
PN2317
At paragraph 23 of your statement you say that you understand the union asserts that your employees are in a weak bargaining position. Do you disagree with that?---No, I don’t.
PN2318
You accept that they’re in a weak bargaining position?---No, I say what’s in my statement. I understand the suggestion our employees are in a weak bargaining position.
PN2319
Are they in a weak bargaining position in your view?---No, I don’t believe they are.
PN2320
Between 2011 and 2013 MSS negotiated a new agreement with United Voice, didn’t it?---Yes, we did. We attempted to negotiate, yes.
PN2321
And that agreement took into account the modern award but it retained some of the aspects of the Chubb Agreement, didn’t it?---Yes, it did.
PN2322
You would’ve been disappointed that the proposed agreement didn’t get up?
---Yes, I was.
PN2323
Immensely?---I don’t know about immensely. I mean, it was disappointing but we move on.
PN2324
Yes, now, that agreement was the product of extensive negotiations, wasn’t it?
---Yes, it was.
PN2325
And concessions were made by both sides, weren’t they?---Yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2326
There were high-level meetings if I recall correctly between your CEO, yourself, Martha Travis and Lyndal Ryan?---Yes, well, there was one meeting - - -
PN2327
There was one but there were a number of meetings between you, Martha and Lyndal and Chris?---Yes.
PN2328
I think I attended one at one stage?---Maybe you did.
PN2329
Maybe I did. And you took on board what the other representatives’ concerns were, didn’t you?---The employee bargaining representatives?
PN2330
You know, other bargaining reps, you took on board what they said?---Took all that on board, yes.
PN2331
And that agreement as a whole was an attempt to lift their pay, wasn’t it?---The agreement was to increase the VOT percentage from 15 to, I think, 50, from memory. I’d have to refer to my notes. It was also to add a few other benefits as well. We talked about more employee bargaining reps, union reps.
PN2332
Right, but in part it increased their pay, didn’t it?---Didn’t increase the labour pay.
PN2333
Didn’t - attempted to?---We did increase the hourly rate of pay.
PN2334
Attempted to increase the rate of pay attracted by voluntary overtime, didn’t it, or OEP as it was called?---You’ll remember that was capped as well, so there was a bit of - the voluntary overtime or OEP was capped at 20 hours so there was a part of that in there as well.
PN2335
I do. I get that. Am I correct in understanding that VOT under the Chubb Agreement, the old agreement was 15 per cent. That’s correct?---Yes, it is.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2336
And under the proposed agreement it was 50 per cent, wasn’t it?---It was going to be 50 per cent, yes.
PN2337
Is that an increase?---Yes, it is.
PN2338
Yes, okay, and for the people who are on the voluntary VOT, OEP system, that would’ve been an increase in pay, wouldn’t it?---Yes, it would.
PN2339
And in part, and you’ve mentioned this before, in part it also improved your employees’ conditions, didn’t it?---Improved their conditions?
PN2340
Well, the proposed agreement was an attempt to improve their conditions of employment, wasn’t it?---Yes, it was.
PN2341
Yes, and in part it aimed to increase your productivity, didn’t it?---I don’t recall asking them to do any more than what they were doing.
PN2342
Okay, if you just bear with me for a second, do you recall receiving a letter dated 29 July 2011?---I’ve probably got a copy of it here. Is it part of one of the annexures, attachments?
PN2343
Possibly not. You may have a copy of it. You might recall it. A policeman’s memory is good, I’m sure - - -?---That’s why I’m no longer a policeman.
PN2344
- - - it would be emblazoned in your mind?---No, I’d have to have a look.
PN2345
THE DEPUTY PRESIDENT: A policeman’s memory is only as good as his diary?---I’d have to have a look at it.
PN2346
MR RUSSELL-UREN: I stand corrected?---I can’t - - -
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2347
That’s okay. Look, if I could pass this up to the witness.
PN2348
Would you mind having a look at that and just refreshing your memory?---Sure.
PN2349
Could you turn your attention to the paragraph numbered paragraph 1. You prepared that document, didn’t you?---Yes, I did.
PN2350
And you caused it to be communicated to Lyndal Ryan. That’s correct?---Yes.
PN2351
Can you just look at the third line down from paragraph 1?---Yes, the wages and conditions of security employees in the ACT.
PN2352
And it would increase retention, yes?---Well, before that, sir, what I’m saying, MSS Security continues to support a move towards improving the wages and conditions of security employees - support. We continue to support that.
PN2353
So it was never your intention to increase productivity as part of this agreement. Is that the case?---It would’ve been great for them to do a better job than they did, I suppose, if that’s what you’re referring to but I - - -
PN2354
Well, I mean, you have a number of employees at MSS, some of them have only been employed for a month, some of them have been employed
for seven years?
---And more.
PN2355
And more?---10 years.
PN2356
20?---Sure.
PN2357
And the ones who have been there for some time generally know their job better than the newbies. That’s true, isn’t it?---Correct, yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2358
And there’s a fairly high rate of turnover in the industry, isn’t there?---Yes, there is.
PN2359
And every time - well, the majority of times that an employee changes sites, they have to get a new clearance, don’t they?---No.
PN2360
No?---No, if they’ve got one clearance at one site that clearance is okay to work at another site. It depends on the level of clearance.
PN2361
But it doesn’t gain the level-up, does it?---If there’s a level-up required, that’s a different story but - - -
PN2362
So for example, you’ll recall Terry Caden who worked at the American Embassy?---Yes.
PN2363
Transferred eventually I think to - well, there was an intention to transfer him to AFP?---Yes.
PN2364
Do you recall that?---Yes, I do.
PN2365
So do I. And there was a need for him to get a new clearance, wasn’t there?---No, he already had that clearance - Terry. Terry had one clearance already before he went to the US Embassy so it was just a matter of having that one reactivated.
PN2366
Reactivated?---Yes.
PN2367
So he had to fill out forms as part of that?---Probably. I think he probably would’ve. I don’t recall.
PN2368
Well, which is one of your lower secured sites?---The ACT courts.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2369
ACT courts. So if you wanted to move somebody from ACT courts to the AFP you’d need them to get a clearance, wouldn’t you?---Correct.
PN2370
And because of the high turnover you do lose people who have a high-level clearance, don’t you?---We generally lose more who don’t have a clearance than that do. For example, our defence contract where they require TSPV clearances, attrition rate there is very low and that’s a clearance that can take 18 months to obtain.
PN2371
But you do lose people with high-level clearances, don’t you?---We lose people, yes.
PN2372
I might come back to that point. The clearances, who pays for them?---Clients pay for some and we pay for some.
PN2373
So in part you’ve got to pay for an employee’s clearance? Do I understand you correctly?---For some - for some contracts we do, yes. Can I just add there - I might just add there to assist you.
PN2374
Well, no, I think I might just ask another question, if I may?---Sure.
PN2375
I asked you before whether or not a new employee - well, I’ll ask you now - would a new employee work to the same standard as
an experienced employee?
---They can do. It’s not impossible. Certainly they could - - -
PN2376
It’s rare though, isn’t it?---I wouldn’t say it’s rare.
PN2377
So you would say that somebody who’s come on to the job in their first week works as well as somebody who’s been there for three or four years?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2378
MR McDONALD: Objection as to relevance.
PN2379
MR RUSSELL-UREN: Well, I’m merely going towards the point that retention yields a productivity benefit and that that was the intention of entering into the MSS agreement and that in turn goes to whether or not the parties could produce productivity benefits and increases in service delivery out of this agreement. I would have thought it would be relevant to that end.
PN2380
MR McDONALD: I don’t press the objection.
PN2381
MR RUSSELL-UREN: I’ve forgotten your answer?---And I’ve forgotten the question.
PN2382
We’re both confused. So is it the case that a new employee would work as well as an experienced employee?---Sometimes.
PN2383
And you’ve said before that you lose some of your new employees, that there’s a high turnover at the lower rates?---No, what I said before was that there’s less turnover for those clearances at the higher level. So top secret positive - - -
PN2384
It’s a different way of saying the same thing, isn’t it?---Well, what I said was that those were the top secret positive vet clearance. The attrition rate is less than someone with a lower level clearance.
PN2385
Now, if I might just turn back to the negotiations. Was the union belligerent in its negotiations?---I don’t believe so, no.
PN2386
Did it behave in a cooperative way?---Yes.
PN2387
Did you ever apply for a good faith bargaining order against the union?---No.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2388
It wasn’t necessary?---No.
PN2389
Because the union was willing to be cooperative, weren’t they?---Well, they were cooperative.
PN2390
Now, I asked you in the beginning, and you will recall this question, whether or not you thought past behaviour is a good indicator of future behaviour?---Yes, sorry, I recall you asking that question.
PN2391
So it’s true to say that United Voice participated in an attempt to negotiate a single enterprise agreement. That’s true, isn’t it?---Yes, it is.
PN2392
And it’s true that we did what we could to cooperate with you guys in the process. That’s true?---Yes.
PN2393
And so is there anything that would lead you to think that in the future, should this all fail, that that might not be the case?---Should this fail?
PN2394
Yes.
PN2395
MR McDONALD: Could the question be made clear? Are we talking about a single enterprise agreement or are we talking about the - - -
PN2396
THE DEPUTY PRESIDENT: I had understood we’re talking about a single enterprise agreement.
PN2397
MR RUSSELL-UREN: I’ll rephrase. Is it your view of the union that in the future we wouldn’t be interested in negotiating
a single enterprise agreement?
---Based on the past history with the union?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2398
Yes?---Well, some relationships haven’t been amicable. Certainly the agreement we talked about was amicable but there have been other issues between us and the union that haven’t been quite so amicable, so - - -
PN2399
It’s fair to say though, Mr Cheatham, that you’re an employer and the applicant is the union, things aren’t always going to be amicable. That’s fair to say?---Sure, yes, I agree.
PN2400
And it’s fair to say that the union participated with you, it cooperated and, you know, wasn’t obstructionist?---No, I concede that.
PN2401
We tried to negotiate a single enterprise agreement?---Yes.
PN2402
That agreement failed but, you know, should this fail we’ll still be standing?
---Sure.
PN2403
Yes, and we’d be up for that in the future. You’d have to concede that, wouldn’t you?---I suppose you would. I won’t go into that.
PN2404
All right, thank you. Now, the next question, Mr Cheatham, is that the negotiations, they were entirely smooth sailing, were they?---They were or weren’t?
PN2405
Weren’t?---In what regard?
PN2406
Well, some of the employers had very strongly held views on particular matters?
---Yes.
PN2407
Perhaps those matters weren’t so relevant to the bargaining process?---Perhaps.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2408
THE DEPUTY PRESIDENT: Sorry, have we moved to a different set of negotiations now?
PN2409
MR RUSSELL-UREN: No, the same negotiations. We’ve switched off the MSS - - -
PN2410
THE DEPUTY PRESIDENT: Okay, well, I understood we were talking about negotiations which led to the making of the agreement which ultimately wasn’t approved which was for a single enterprise agreement - yes?
PN2411
MR RUSSELL-UREN: That’s correct.
PN2412
THE DEPUTY PRESIDENT: And now you’re talking about multi-employer negotiations.
PN2413
MR RUSSELL-UREN: No, your Honour, I remain on the subject of the negotiations for the single - - -
PN2414
THE DEPUTY PRESIDENT: Okay, well, that’s what I asked. Okay, yes, because you just said, well, some of the employers - - -
PN2415
MR RUSSELL-UREN: Of course, my apologies, sir, trapped in the moment.
PN2416
Some of the employees had strongly held views on particular matters. That’s true?---Yes.
PN2417
And that was difficult, wasn’t it?---I don’t know if difficult is the correct term. It was - - -
PN2418
It wouldn’t have been easy to negotiate in those circumstances, would it?---Are you talking about difficulty in negotiating or difficulty in general?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2419
Difficulty in negotiating?---I suppose it was, yes.
PN2420
And did the union allow those negotiations to be thwarted by that difficulty?
---No.
PN2421
No, it’s true, isn’t it, that during the negotiations the parties implemented a process which took account of the difficulties
of some bargaining reps - isn’t it?
---What process?
PN2422
Well, there were some behind-the-scenes chats. The company was responsive to their claims. That’s true, isn’t it?---Well, there were certainly behind-the-scene chats so - - -
PN2423
But it’s fair to say that a difficult circumstance in negotiations are not insurmountable?---No, it’s not.
PN2424
No, and you regard multi-party bargaining as a difficult circumstance, don’t you?
---Yes.
PN2425
But it can be overcome, can’t it?---I suppose anything can be overcome.
PN2426
Thank you for that concession. Now, the idea of all of the companies providing the same terms and conditions would put the group at a competitive disadvantage, wouldn’t it?---I believe it would, yes.
PN2427
I’m just interested because you’ve objected to this multi-party agreement, haven’t you?---Yes.
PN2428
And you refer in your statement to a multi-party agreement that the union tried to get you to enter into before?---Yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2429
I think it’s at attachment B of your comprehensive statement. Relevantly I think you’ve mentioned in your statement at
one stage that we’re asking for a 20 per cent wage rise and various benefits and dinners for union delegates?
---What’s attachment B?
PN2430
Attachment B is the employer and United Voice Security Services Enterprise Agreement 2010 to 2014?---I don’t seem to have - I seem to have an attachment A. I don’t have an attachment B. I’ve got A and C.
PN2431
A and then C?
PN2432
THE DEPUTY PRESIDENT: Is yours a double-sided copy?---No.
PN2433
MR RUSSELL-UREN: Apologies, your Honour, I’m reluctant to forego my own copy.
PN2434
THE DEPUTY PRESIDENT: No, that’s all right.
PN2435
MR McDONALD: My apologies.
PN2436
MR RUSSELL-UREN: Right, now, Lyndal Ryan has drawn a distinction between a template of a single enterprise agreement and a multi-party enterprise agreement. Do you appreciate that distinction?---Yes, I know what that is, yes.
PN2437
And what’s this?---This - attachment B?
PN2438
Yes?---Well, it appears to be a multi-employer draft agreement.
PN2439
So I put it to you that the understanding which underpinned this agreement was that it would be a template agreement which each company would execute separately?---I’d agree with that.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2440
So forgive me if I’m wrong but that’s different from a multi-party enterprise agreement, isn’t it?---Well, I’m not sure. You might have to explain it to me.
PN2441
All right. Look, you’re not an expertise in this area so I won’t press you on this point. Could I direct your attention to a letter you would’ve received on 8 October 2010. Possibly you don’t have that before you but I pass up - - -
PN2442
THE DEPUTY PRESIDENT: I doubt very much he received it on that date since I think it’s been conceded that the date is incorrect.
PN2443
MR RUSSELL-UREN: Of course, your Honour, I’d be referring to UV14.
PN2444
THE DEPUTY PRESIDENT: The witness can have my copy.
PN2445
MR RUSSELL-UREN: Can you see the bold heading Collective Agreement?
---Yes.
PN2446
Can you see the sentence immediately next to that?---Yes.
PN2447
Can you see that it says, “We are not suggesting a multi-enterprise agreement”?
---Or multi-employer agreement it says.
PN2448
Multi-employer?---Yes.
PN2449
“What we wish to negotiate is a model collective agreement with major industry players”?---Yes.
PN2450
And it was always the understanding, wasn’t it, that this be a series of single enterprise agreements with common terms?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2451
MR McDONALD: I object to the question. That’s not the application that’s being made to this commission.
PN2452
MR RUSSELL-UREN: My apologies, I’m referring to the agreement dated 2010 not these proceedings. We’re at cross-purposes.
PN2453
THE DEPUTY PRESIDENT: Yes, continue.
PN2454
MR RUSSELL-UREN: Now, at paragraph 20 of the statement you prepared you say that there was a problem in the approval process of the agreement. You don’t elaborate there but could you expand on that?---Well, once the agreement didn’t get up, once it failed the test at the commission, it appeared that that was the end of the section.
PN2455
THE DEPUTY PRESIDENT: Can I just ask you this: my recollection of Deegan C’s decision is that at the end of her decision not to approve the agreement she indicated that she was prepared to hear from the applicant for the agreement about whether she should approve it despite the fact that it did not pass the better off overall test on public interest grounds. I think there’s something to that effect in her decision?---Yes, I recall that, sir.
PN2456
Did MSS give any consideration to making such an application?---Yes, we did consider it in conjunction with the union and it was decided not to make an application because it would’ve been futile or - no, that was what we believed.
PN2457
MR RUSSELL-UREN: Perhaps for first time I’ll just take you to a detour towards Deegan C’s view on this decision. Was there any sense of necessity in needing to get up the MSS agreement?---Was there any sense of necessity?
PN2458
Was it your understanding that the union would apply to terminate the old Chubb Agreement?---Well, there had been mention of that. There’s also been mention that they won’t so.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2459
In fact it’s true to say, isn’t it, that Deegan C had made it explicitly clear to you that should we have made that application it would’ve gotten up?---Yes, there was something along those lines.
PN2460
Yes, very clear. And that was essentially because the conditions under the Chubb Agreement are fairly inferior, aren’t they,
as compared to the modern award?
---Well, the Chubb Agreement allows us to pay security officers a laundry allowance which the modern award doesn’t. It also
pays a no-pen payment for public holidays which the modern award doesn’t so there’s some good things in there as well
for our people.
PN2461
I understand that but, nonetheless, the revised agreement which was substantially modelled on that old agreement fail to pass the BOOT?---Yes.
PN2462
And so it’s fair to say that, despite all of the trade-offs in negotiations, the parties still weren’t able to increase the conditions past the modern award. That’s fair to say, isn’t it?---Can you say that again, please?
PN2463
Well, it’s fair to say that, despite all of the trade-offs, the concessions, the horse trading and negotiations, the parties to those negotiations weren’t able to produce an agreement which was better off than the modern award?---Well, the commission - - -
PN2464
The commission decided that?---That’s right.
PN2465
Now, I put it to you that that failure was precisely because the guards had a pretty weak bargaining position. That’s true, isn’t it?
PN2466
MR McDONALD: Objection. What was in the commission’s mind in approving and not approving the agreement is a matter for - was in the decision.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2467
THE DEPUTY PRESIDENT: Well, the commissioner’s decision is disclosed by her reasons.
PN2468
MR McDONALD: Yes.
PN2469
MR RUSSELL-UREN: Perhaps I should rephrase that question because it could be read by players - - -
PN2470
THE DEPUTY PRESIDENT: Yes.
PN2471
MR RUSSELL-UREN: The failure of the parties to produce an agreement which was better than the award was because for employees who have a weak bargaining position?---No, I wouldn’t agree with that at all.
PN2472
Really?---No, the reason it wasn’t - the agreement wasn’t successful - or wasn’t successful - was because we didn’t pass the BOOT, nothing to do with the bargaining power of our employees.
PN2473
But the concessions and the trade-offs - rather, let me put it to you this way - the agreement was the product of the negotiations, wasn’t it?---Yes.
PN2474
And in those negotiations there were trade-offs and there were concessions, yes?
---Yes.
PN2475
And as part of that there’s a contest between the bargaining positions of the parties, isn’t there?---I suppose so, yes.
PN2476
So you know, I mean, if you’re negotiating with a neurosurgeon, they set the price, don’t they?---Do they?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2477
You tell me but the point that I make is because they have a strong bargaining position.
PN2478
THE DEPUTY PRESIDENT: If I were negotiating with a neurosurgeon, the last thing I’d be doing is worrying about price.
PN2479
MR RUSSELL-UREN: This is my point. Now, the people that you employ, they’re not highly educated, are they?---Some are.
PN2480
Some are but they can’t get work?---Well, they choose to be security officers so whether they can’t work or they’re happy with what they do.
PN2481
They can’t get work in their preferred field?---Can’t they?
PN2482
That’s correct, yes. So let’s go through this. I mean, the demographics of your employees, how many of them are tertiary educated?---I don’t know.
PN2483
How many of them require a tertiary education in order to work as a security agent?---None.
PN2484
And how many of them need to complete an apprenticeship in order to do that job?---None.
PN2485
And it’s true, isn’t it, that effectively what they need is a Cert II first aid, and an RSA?---Certificate II and first aid, yes, not necessarily an RSA but - - -
PN2486
Well, okay, we’ll set that aside?---But certainly Cert II and a first aid certificate, yes.
PN2487
And a security licence?---Well, that - that’s what they need to get the security licence, yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2488
It’s true to say that for some of them they’ve got their security clearance. That’s true?---Some have a security clearance, yes.
PN2489
And these sort of low-level qualifications are their bargaining power. That’s true, isn’t it?---Their bargaining power?
PN2490
Well, if security guards leave you can just replace them fairly quickly, can’t you?
---Not necessarily, no.
PN2491
Not if they’ve got a clearance but otherwise?---No, again, it depends on the employment market and it’s pretty tough here in the ACT and has been for a number of years. It’s not just a matter of employing someone else. They have to do the security course so it’s not a matter of just bringing someone in tomorrow.
PN2492
You win and lose contracts regularly enough?---Well, I’d like to think we win more than we lose but - - -
PN2493
No, I get that, I do, but as a result you’ve got some floaters, don’t you?---Yes, well, part-time employees or casual employees, yes.
PN2494
And people are transferred between sites?---Our sites?
PN2495
Yes?---Yes.
PN2496
If you lose a contract, you’ve got 10 people you need to reallocate to another contract. That’s true, isn’t it?---Yes.
PN2497
That happens regularly enough?---Well, it happens. I don’t know about regularly but it happens, yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2498
It happens. And so, you know, if somebody quits, you can replace them fairly quickly because you’ve got this pool of floaters?---No, well, we don’t really have a pool of floaters. There’s part-time people that are doing less than 38 hours that we might be able to give more hours to. We have very few casual employees.
PN2499
Now, I put to you before the proposition that you were unable to create an agreement which was better off than the modern award. Do you recall me putting that to you?---Well, the agreement didn’t pass the BOOT so if that’s the same thing.
PN2500
Right now your employees are on the old agreement, yes?---As well as the modern award, as well as the old award.
PN2501
So I put it to you that your guards are low paid?---No - - -
PN2502
MR McDONALD: I don’t see an issue but what is meant by low paid?
PN2503
THE DEPUTY PRESIDENT: Yes, we might have debate about that but the witness can attempt to answer.
PN2504
MR RUSSELL-UREN: How many of your guards are at level 1?---Not many.
PN2505
How many at level 2?---More.
PN2506
How many at level 3?---I would say the majority are on around level 3.
PN2507
These are estimates though, aren’t they?---Yes, they are.
PN2508
Are you aware that you were asked to produce something to qualify this claim before this hearing?---No, I - - -
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2509
MR McDONALD: I object. I’m not aware of it.
PN2510
MR RUSSELL-UREN: I think we can produce emails with repeated requests for that, if it’s necessary. If it’s not, that’s fine.
PN2511
MR McDONALD: Is it a request - is it to the witness or?
PN2512
MR RUSSELL-UREN: I don’t know - is it for the witness?
PN2513
THE DEPUTY PRESIDENT: There are mechanisms in place for requiring productions of documents and so if requests were made and wasn’t complied with, an application could have been made for production. I’m not sure where it’s - if you’re asking me to draw an inference in the lack of production in circumstances where there’s certainly no application for an order, I’m disinclined to draw an adverse inference.
PN2514
MR RUSSELL-UREN: Of course, your Honour, I’ll take that on board and attempt to ask questions which are more relevant.
PN2515
THE DEPUTY PRESIDENT: As the evidence presently stands, this witness has said that the majority of the guards that his company employs in the ACT are level 3?---Yes, that’s without going - that’s my best estimation.
PN2516
Are you able to produce a document which sets out the proportion of employees who are at level 1, 2 and 3 in the company?---I think so. I think we could do that without too many problems, sir.
PN2517
Do you have any difficulty producing that document?---I don’t. We’ve computer-generated records so it would take a few hours, I suppose.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2518
It’s a document that’s something you would be required to produce as opposed to an existing document that you could produce?---That’s right, yes.
PN2519
Mr McDonald, do you have any objection with such a document being prepared?
PN2520
MR McDONALD: No objection, your Honour. There may be a company - - -
PN2521
THE DEPUTY PRESIDENT: I understand that, yes.
PN2522
All right, well, Mr Cheatham, would you mind preparing such a document and, through your counsel, producing it?---Yes.
PN2523
Thank you. While we’re pausing, Mr Cheatham, do you have the letter which you signed to Ms Ryan dated 29 July 2011 in front of you?---Yes, I do, sir.
PN2524
In the second-last paragraph you say that you’re willing to develop constructive relationships supporting initiatives to improve wages and conditions and then you say, “However, without a written undertaking from our clients (government agencies), we are reluctant to agree to anything that places us in a non-competitive position,” et cetera?---Yes.
PN2525
An undertaking from clients as to what?---Well, that they would be prepared to pay - I’ll just read this paragraph, sir. If there was wage rates determined or agreed upon, we would be reluctant to enter into any agreement unless the government departments agreed in writing that they would pay us an amount of money to pay our officers the rates determined.
PN2526
Does it follow from that that there is at least some degree of influence by the government as to the rates of pay that you can pay your persons?---I think that what that follows on from, sir, is that we have current contracts with our government departments. In those contracts are rates of pay and annual increases.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2527
I see, so you’re intending to communicate that in relation to existing contracts you have a fixed price?---That’s right.
PN2528
And you couldn’t agree to increase the wages which would have the effect of increasing the actual price or, alternatively, reducing your profit?---Correct.
PN2529
Without the client agreeing to vary the existing contracts?---That’s right, interrelated. We have had issues, sir, with the introduction of superannuation guarantee rate at the moment where some government departments have declined to pass that increase on to us. Similarly with the portable long service leave legislation in the ACT as well, the increase there.
PN2530
So is the position that during the period of a contract you contract effectively to fix the wages for the period?---Sorry, sir?
PN2531
During the period of a contract, the effect of the contract is that the wages are fixed for that period?---In most cases. There are some contracts, sir, that allow a little increase, yes.
PN2532
Which would then allow you to pass on increases, so presumably if you had an agreement which was for a three-year period and during the life of the agreement wages increased, presumably that’s something that you would factor into the period at the beginning?---Yes.
PN2533
And have that reflected in the contract?---Yes.
PN2534
But once you fixed the contract then the consequence of a wage increase would be that either you’d have to have an agreed variation
by the client to the contract?
---That would be rare, sir.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2535
Yes, I can understand that. Or, alternatively, you’d take a hit on your profits?
---That’s right. Or you might make a couple of extra dollars as well if the increase wasn’t as much as what the increase
to the contract was.
PN2536
Yes, thank you.
PN2537
MR RUSSELL-UREN: Just off the back of that, what’s your understanding of productivity?---What’s my understanding of productivity?
PN2538
What’s productivity?---Productivity is producing something for a fee.
PN2539
Producing more for less?---Well, it’s a pretty broad - I mean - - -
PN2540
It’s a broad term?---Well, it is, yes.
PN2541
Okay?---Producing more for less, no, I wouldn’t have thought - no, I wouldn’t have thought that would be accurate.
PN2542
But be that as it may, is it possible that - just bear with me a second - I put it to you that as part of making an agreement you can reduce costs as well as increase them?---I suppose that’s possible.
PN2543
Well, for example, let’s take a hypothetical, you could take away annual leave loading of 17.5 per cent, if you could?---If you could.
PN2544
You can take away allowances though?---I suppose you could take away allowances. You could take away your annual leave loading.
PN2545
You can also increase rates in some places, can’t you?---Yes, you can.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2546
So it’s fair to say that as part of negotiations you can increase some benefits, reduce some others, end up somewhere in the middle?---I suppose you can, yes.
PN2547
It’s a restructuring of the payment system?---I don’t know if you’re any better off, are you?
PN2548
Well, even slightly. The point that I would make is this, that if you reduce some of your costs and you increase some of your costs, you might end up spending slightly more but the employees might end up getting slightly more?---Can you say that again, please? If you - - -
PN2549
Better yet, I withdraw that final argument. The only other point I’d make is this: I asked you before about contract changes. I specifically asked you whether or not you lost them, won them, and you said you’d like to think you won more than you lost. Do you remember that?---Yes.
PN2550
Now, when you win a contract, focus on the positive, you generally offer employment to some of the employees that have past-contracted,
wouldn’t you?
---Yes, that part of the process.
PN2551
Where you’ve got positions of course?---Yes.
PN2552
And they come on to the job. They start work?---Can I just - as long as they satisfy our recruitment.
PN2553
Yes, of course, but provided you hire them basically they turn up to work the next day and change shirts?---Yes, that happens.
PN2554
They’d get a bit of training and policies and procedures and - - -?---You get a fair bit of training on those things, yes, before they start.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2555
How much training?---Well, they do 12 on-line modules of about half an hour each with assessments.
PN2556
How intense is that training? Is it sort of, I don’t know, on a scale of one to 100, one being an on-line diploma and 100 being a PhD?---Right, well, it wouldn’t even reach the one if it’s an on-line - if we’re comparing it - if an on-line diploma is at one.
PN2557
It’s not - - -?---It’s not at that level.
PN2558
Not at that level?---No.
PN2559
But essentially they turn up to work and they change shirts and that’s what it’s called in the industry, isn’t it, changing shirts?---Is it?
PN2560
Well, I put it to you that it is. Now, the point that I’d make is that pretty much a job as a security guard with one company is the same as it is with the next, isn’t it?---Well, I wouldn’t agree with that, no.
PN2561
I asked you earlier whether or not most of the site instructions - whether or not most of the operational requirements were attached to the site and you said yes. Is that still the case or is it not?---Are attached to the site?
PN2562
Let me rephrase. When you get a tender you provide the services in accordance with the site instructions, don’t you?---No, it’s when we obtain a contract not a tender.
PN2563
Well, okay, let me rephrase. When you obtain a contract you provide the services in line with the client’s instructions, don’t you?---Yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2564
And those instructions in part are expressed through a contract and in part they’re expressed through the site instructions, the operational directions. That’s true, isn’t it?---Yes.
PN2565
So what I put to you is that in large part the work which is required of the security guards is actually directed by the Commonwealth. It’s directed by the client?---I don’t know about a large part but certainly there’s parts of it that are. We need to agree with those SOPs. Sometimes government clients want our people to do things that we don’t want them to do so there’s some negotiation around some procedures and that can happen.
PN2566
But generally?---Generally what?
PN2567
Well, generally the guards do what the clients tell - the contractor tells the guards what to do. That’s how it works?---The guards do what we tell them to do as their employers.
PN2568
And in turn your directed by the client?---No, we’re not directed. We have discussions with the client on what our people should do. We agree or disagree and we move on and then we talk about people and then standard operating procedures are prepared.
PN2569
I forget - why did Terry Caden leave the American Embassy?---Why?
PN2570
Why?---Do you forget or do you want me to remind you?
PN2571
I want you to remind me?---All right, Terry - what did Terry do? Terry - - -
PN2572
MR McDONALD: The American Embassy wouldn’t be subject to this low-paid authorisation of this application. It’s only the Australian government.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2573
MR RUSSELL-UREN: Okay, let me rephrase.
PN2574
Has a client ever directed an employee of yours located at a Commonwealth government site to leave that site?---Have they directed us to remove them?
PN2575
Yes?---Yes, they have.
PN2576
And you’ve done it, haven’t you?---Yes.
PN2577
Occasionally that’s meant that somebody doesn’t have a job or they’re redundant or they’ve gone leave?---Well, no, what it means is that if we terminate the person as a result they don’t have a job with us. Sometimes they are terminated as a result of what they’ve done but - - -
PN2578
Yes?---Do you want me to finish?
PN2579
Yes - no, please continue?---But on other - if they’re not terminated we redeploy them to another site after counselling them.
PN2580
One final matter - how many different workplace instruments does MSS administer in the ACT?---Do we administer?
PN2581
Yes?---Three.
PN2582
What are they?---Modern award, the Chubb Agreement, the 2004 agreement, and the 1988 ACT Security Award - well, I think it’s 88 or 98.
PN2583
THE DEPUTY PRESIDENT: Is that because it’s called up by the Chubb Agreement?---Yes, it’s included in the agreement so that’s why it still remains current.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2584
MR RUSSELL-UREN: How many contracts do you hold in the ACT, give or take?---Maybe 40.
PN2585
How many of those are Commonwealth contracts or government contracts?
---80 per cent.
PN2586
80 per cent?---Which is 32 or round about.
PN2587
I think you said that it’s about 5 per cent - 5 per cent of your contracts are ACT government?---5 per cent of the 80 per cent.
PN2588
Yes, okay, fair enough. So if we say 82 contracts?---82?
PN2589
Sorry, how many did you say?---About 40 contracts we have and perhaps 80 per cent of 40 is 32.
PN2590
Fair enough. How would you feel about administering 32 different enterprise agreements? Would that be easy?---Well, I’ve never thought about it, I must say.
PN2591
I have?---We do what we need to do. I mean, I know it wouldn’t be easy, I wouldn’t expect.
PN2592
Would it be more difficult than administering one?---Well, it depends what was included in the 32. It might have been 32 - the same agreements or same conditions.
PN2593
Let’s assume 32 different agreements?---Right. Yes, I think it would be more difficult, yes.
PN2594
So in principle you’d be opposed to site-by-site agreements, would you?
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2595
MR McDONALD: Well - - -
PN2596
MR RUSSELL-UREN: Let me ask this, if I may.
PN2597
In principle you would be opposed to site -by-site agreements, wouldn’t you?
---No, I would be opposed - I wouldn’t be opposed to anything that supported the employee and the employer. If it was a pain
for me to administer, that would be beside the point.
PN2598
So as long as it’s okay between the employee and the employer, that’s fine?---My concern is for the employee and the employer. If I had to do whatever I had to do, I’d have to do it, no matter how convenient it was.
PN2599
Even if it increased your administrative costs 20-fold?---It’s hypothetical. I mean, we’re talking hypothetical.
PN2600
It’s hypothetical but maybe it goes immediately to the respondent’s proposition that site-by-site agreements are a meaningful alternative which the unions failed to take up and in consequence is using the LPB for provisions - - -
PN2601
THE DEPUTY PRESIDENT: Well, I’m not sure that is what the respondents are saying. The respondents are saying that you should negotiate with them individually. I don’t think they’re suggesting that it should be in relation to individual agreements for each site they have a contract with, although that’s an alternative.
PN2602
MR McDONALD: We don’t seek to limit the alternatives.
PN2603
THE DEPUTY PRESIDENT: I understand that.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2604
MR McDONALD: That could be - - -
PN2605
THE DEPUTY PRESIDENT: That’s one of the alternatives. One option is an agreement with each individual company and another option is several agreements with each individual company. Yes, I understand. Yes, proceed.
PN2606
MR RUSSELL-UREN: We’ve got no further questions, your Honour.
PN2607
THE DEPUTY PRESIDENT: Any re-examination?
CONTINUED IN TRANSCRIPT-IN-CONFIDENCE
CONTINUED FROM TRANSCRIPT-IN-CONFIDENCE
PN2630
MR McDONALD: In relation to casual employees you had indicated that you don’t have many casual employees. How do you then deal with unscheduled peaks and lows?---We either offer the part-time employees that don’t have 38 hours or we offer it to staff on voluntary overtime or we offer it to staff on full overtime.
PN2631
So if there was no voluntary overtime under a multi-employer agreement how would you deal with unscheduled - - -?---If there’s no voluntary overtime we’d have to either offer it to part-time employees that didn’t have their 38 hours or straight overtime.
PN2632
Has the option of employing more employees on ordinary hours or casual employees been considered as a substitute?---Can you just say that again, please?
PN2633
Has the idea of employing more employees, employing them in ordinary hours, for instance, for unscheduled additional hours or casual employees been considered?---Yes, that’s been considered but that can be problematic in itself because if there’s not hours there for the individual they don’t get any work, so it’s a little unfair to employ someone and not provide them hours or provide them hours in the hope that they’re going to get a shift here or there if someone goes off sick. So that’s not very fair on the employees.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2634
Are there sufficient people to opt into the voluntary overtime arrangement to cover those unscheduled hours?---Yes, voluntary or the other - we have about 50 per cent of our staff on voluntary overtime and the other 50 per cent not so between the two of them we always get the shift covered.
PN2635
You indicated a concern about competition with other employers that are not as scrupulous as yourself?---Yes.
PN2636
Do you find that that’s an issue in the industry?---Yes, from time to time I do find that.
PN2637
Does that affect your competitive position?---It has. Yes, it does and it has.
PN2638
Any examples that you can provide?
PN2639
MR RUSSELL-UREN: My apologies. This doesn’t appear to immediately arise from any question in cross-examination from my recollection.
PN2640
THE DEPUTY PRESIDENT: Well, it arises from an answer he gave in cross-examination to you so - - -
PN2641
MR RUSSELL-UREN: My apologies.
PN2642
THE DEPUTY PRESIDENT: Yes?---In confidential?
PN2643
MR McDONALD: Yes, it is. Well, perhaps we can see it as being treated as confidential but if, for your sake, you’re concerned about confidentiality I don’t press the question?---It’s just about another company that’s part of this application I wouldn’t want to disparage the company.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2644
Yes, I don’t press the question.
PN2645
THE DEPUTY PRESIDENT: It’s best left for back channels.
PN2646
MR McDONALD: You were asked about the union’s behaviour in bargaining, were you seeking to do anything that was going to diminish terms and conditions of employment as part of your enterprise agreement negotiations?---No, I don’t believe anything to diminish the conditions and terms.
PN2647
But was the enterprise agreement going to do other than improve conditions of employees?---It was all about improving conditions and rates of pay in my view.
PN2648
Are you aware of other situations where the union has made industry claims on security companies in any other states?---Yes, I’m aware of one in Victoria.
PN2649
Was that a very amicable situation and did the union behave nicely?---I wasn’t - I wasn’t privy to any negotiations. I only know what has been said within our company so it’s - - -
PN2650
THE DEPUTY PRESIDENT: It’s unhelpful if he can’t give direct evidence about it which is I assume your objection.
PN2651
MS CRESSHULL: Your Honour, I’m not sure if this actually does arise out
of - - -
PN2652
THE DEPUTY PRESIDENT: In any event I’m not sure that he can give any direct evidence and if it’s not direct evidence it’s not going to particularly helpful to me.
PN2653
MR McDONALD: Are you aware of whether industrial action was taken by the union in support of its campaign - well, its campaign for safeguarding
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
Victoria?---I’m aware of recent industrial action. Well, when I say recent, in the last 18 months.
PN2654
THE DEPUTY PRESIDENT: Can I just raise this issue. Is it suggested that the industrial action was not protected because if it was protected then the union is simply doing that which it’s permitted to do under the Act. What do I do with that? I say that that’s unhelpful. I mean, the Act permits it. It’s a policy decision.
PN2655
MR McDONALD: Yes, the pretext of the cross-examination seemed to be that the union’s behaviour in the past was a predictor of - - -
PN2656
THE DEPUTY PRESIDENT: Sorry, I mean, I’m not sure that that’s particularly helpful either. I mean, ultimately the union behaved in a particular way in relation to a particular negotiation and that was his evidence. I’m not sure I necessarily subscribe to that theory because circumstances change which result in differential behaviour, but so what? I’m not sure how much of a factor the prospect that the union will behave in a particular way in the future is relevant. The question that I have to determine is to what extent does - or is the union as the applicant prepared to respond reasonably to claims and to respond to particular matters raised by employers named in the application? The evidence of the assistant secretary of the union - sorry, the branch secretary of the union - is that she was prepared to consider any proposal from the employers within limits. That’s the evidence.
PN2657
MR McDONALD: Yes, I think she also indicated that this was being modelled somewhat on the Safeguard Campaign - - -
PN2658
THE DEPUTY PRESIDENT: And I noted that her view about failure was that it didn’t deliver wage increases in the base rate, so that evidence cuts both ways.
PN2659
MR McDONALD: Yes.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2660
THE DEPUTY PRESIDENT: I understand that.
PN2661
MR McDONALD: We do seek to assert that the bargaining process in a multi-employer environment is not a manageable one and, indeed, fairly fractious. I think the union has sought to suggest otherwise basically in the past.
PN2662
THE DEPUTY PRESIDENT: Well, it’s sought to adduce evidence that it behaved in a particular way. It also sought to adduce evidence through cross-examination that managing employees with differing views can be difficult and presumably that is likely also to be the case where you have multiple employers. It’s multiple employees, some of whom will be represented by bargaining representatives in the form of United Voice, some of whom will be represented by persons who are nominated by the employees and there will be employers who will have different bargaining representatives but I don’t think there is any direct evidence about that.
PN2663
MR McDONALD: I don’t press it, your Honour.
PN2664
THE DEPUTY PRESIDENT: Yes.
PN2665
MR McDONALD: You were asked about whether it was difficult to replace staff when they left. Is there any particular difficulty there or is employment of security guards a dime a dozen?---No, they’re not a dime a dozen, no. It’s a constant source of a problem for us in the ACT. We have a person employed full-time to recruit our officers and, in my eight years with the organisation, I don’t think we’ve ever been in a position where we’ve had too many security officers. It’s always - we’re always short in numbers.
PN2666
Yes, is that a factor of the ACT labour market?---Well, it’s part of that. It’s also a part of the - a part of the problem is that there’s not a lot of people out there want to be security officers.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2667
Yes, and you were asked about what was described as changing shirts in people if you lose a contract. Is that something that when you lose a contract - is that something that’s a fairly easy process for security guards? Is it something that doesn’t cause any concern?---No, it’s a cause - degrees of concern from we’ve only had someone for a short time and we lose a contract and they’re there and they transition across. It’s easier for those people than for someone we’ve had for 20, 25 years where they have to work for another employer, so there are a number of human resource issues around that sort of thing. Luckily, we’re from the other side. We bring people across to us from other companies and I believe I like to think we’re an employer of choice and that people will come and work for us but the other way around is much more difficult.
PN2668
Will there be instances where the contractor isn’t prepared to take on MSS employees?---Will there be instances where?
PN2669
Well, the incoming contractor may not be prepared to take on MSS’s employees?
---Well, that’s theoretically possible. Yes, it is. I can’t think of any but we don’t - as I said, we don’t
lose too many to have that problem.
PN2670
If they take on former MSS employees is it necessarily the case that they’re bound to retain them in the long term?---No, in fact I’ve seen cases where they’ve taken over our employees for a short time to get their own people trained up at that particular site and then in the industry (indistinct) after they’ve got people up and trained and cleared to work at that site so that can be an issue for them.
PN2671
If the union was successful in its case and you lost contracts that you had, do you think your employees would care?---For sure.
PN2672
THE DEPUTY PRESIDENT: I suppose in fairness if the union is successful in this application it doesn’t follow that there will be an agreement so I think that the question tends to make particular assumptions that there will be an outcome in the form of an agreement which had higher rates of pay and it doesn’t follow. I mean, all that an order will do will be to allow bargaining on a multi-employer basis with some additional rights to the union and some additional capacity for the commission to intervene. It won’t result in an agreement necessarily. I’m not sure that the answer is helpful unless the context is explained so the question, “Will your employees care if the union is successful in its application,” the application will simply be a licence to pursue a particular form of negotiation. It won’t determine an outcome?---Well, on that basis they may or may not - I’m not real sure.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2673
MR McDONALD: But we’d be putting a submission, your Honour, that the evidence the union has given as to what its claims are - - -
PN2674
THE DEPUTY PRESIDENT: Yes, look, I accept that, that if their claim were to translate into an outcome that might have consequences or very likely have consequences.
PN2675
MR McDONALD: Yes, and either way there’s likely to be a very fractious process that would result from those types of claims to where the situation is now.
PN2676
THE DEPUTY PRESIDENT: Yes, although there is evidence before me that the union is prepared to adopt a much more modest approach.
PN2677
MR McDONALD: Yes, it would be, your Honour, but the evidence, I think in our submission, would be that the union has not ever been prepared to do so.
PN2678
THE DEPUTY PRESIDENT: Well, the MSS agreement which was not approved is evidence to the contrary, isn’t it, that that was a modest approach? You can’t get any more modest than agreeing to an agreement that doesn’t pass the BOOT test. I suppose you can but it’s hardly extravagant either.
PN2679
MR McDONALD: I mean, we might make the suggestion that there was a 7 per cent increase and two 4 per cent increases.
PN2680
THE DEPUTY PRESIDENT: And it still failed the BOOT test.
PN2681
MR McDONALD: Yes, in relation to - yes.
PN2682
THE DEPUTY PRESIDENT: I haven’t looked at the agreement in detail but the decision of Deegan C seems to suggest that the rates of pay, the minimum rates of pay, were the same as the award which is a significant factor in it not passing the BOOT test.
**** DAVID GRIMSHAW CHEATHAM XXN MR RUSSELL-UREN
PN2683
MR McDONALD: That’s my understanding, sir.
PN2684
THE DEPUTY PRESIDENT: And I’ve be in the unfortunate position of having to not approve an agreement because of one classification that provided a rate of pay which was less than the award - which was the same as the award - but that’s the nature of the better off overall test. But anyway I’ve had that conversation with you without having examined the agreement in particular detail.
PN2685
MR McDONALD: No, I appreciate that.
PN2686
THE DEPUTY PRESIDENT: It just, looking at the reasons for the Commissioner’s decision, seems primarily based on the fact that the agreement rates of pay were the same as the award and she couldn’t be satisfied on the basis of the reduction in particular penalties when compared to the award and the voluntary overtime scheme that employees were better off overall or at least some of them. That seemed to be the sum of her reasons.
PN2687
MR McDONALD: Sure.
PN2688
THE DEPUTY PRESIDENT: All right, I’m sorry, have you finished your - - -
PN2689
MR McDONALD: I have, your Honour.
PN2690
THE DEPUTY PRESIDENT: Okay, Mr Cheatham, thank you very much for your evidence and apologies for the lateness of the hour?---Pleasure.
You’re excused.
<THE WITNESS WITHDREW [5.49PM]
PN2692
THE DEPUTY PRESIDENT: Now, tomorrow we have three witnesses. I’m assuming the way in which cross-examination proceeded today that they’re likely to occupy the bulk of the day?
PN2693
MS CRESSHULL: Yes, your Honour.
PN2694
THE DEPUTY PRESIDENT: Is Mr Georgio available at all tomorrow?
PN2695
MR McDONALD: He’s not, your Honour.
PN2696
THE DEPUTY PRESIDENT: He’s not, okay, that’s fine. Then there’s no need to put him on notice. And does Dr Horton have any particular difficulties with morning or afternoon?
PN2697
MS CRESSHULL: On Thursday, your Honour. I think he’d prefer morning but I’m sure he can be somewhat flexible. I know he has - - -
PN2698
THE DEPUTY PRESIDENT: All right, so we’ll program, just to give people certainty because I know they have other things to do, we’ll program Dr Horton to give evidence in the morning and shall we say for Mr Georgio 2 o’clock?
PN2699
MR McDONALD: Yes, thank you.
PN2700
THE DEPUTY PRESIDENT: And that way he doesn’t have to sort of hang around.
PN2701
MR McDONALD: Yes.
PN2702
THE DEPUTY PRESIDENT: All right. And perhaps before we begin tomorrow’s evidence we might just have a discussion about the programming of submissions. The parties might give some consideration overnight to whether they want to review the transcript before making submissions or whether there’s a preference to proceed to submissions on Friday. All right, so we’ll have that discussion tomorrow. All right, thank you very much, we’re adjourned.
<ADJOURNED UNTIL WEDNESDAY, 21 MAY 2014 [5.51PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
EXHIBIT #UV10 ANNEXURE C TO THE OUTLINE OF SUBMISSIONS FILED BY UNITED VOICE PN1414
ROBYN MARY HARDY, SWORN PN1420
EXAMINATION-IN-CHIEF BY MS CRESSHULL PN1420
EXHIBIT #UV11 WITNESS STATEMENT OF ROBYN MARY HARDY WHICH COMPRISES 14 PARAGRAPHS, TOGETHER WITH ATTACHMENTS A TO C PN1429
CROSS-EXAMINATION BY MR McDONALD PN1440
THE WITNESS WITHDREW PN1548
LYNDAL RYAN, AFFIRMED PN1554
EXAMINATION-IN-CHIEF BY MS CRESSHULL PN1554
THE WITNESS WITHDREW PN1698
LYNDAL RYAN, ON FORMER AFFIRMATION PN1763
EXHIBIT #UV12 WITNESS STATEMENT OF LYNDAL RYAN WITH AMENDMENTS SIGNED 09/12/2013 PLUS ANNEXURES PN1766
EXHIBIT #UV13 SUPPLEMENTARY STATEMENT OF LYNDAL RYAN DATED 11/04/2014 PN1769
EXAMINATION-IN-CHIEF BY MS CRESSHULL PN1772
EXHIBIT #UV14 LETTER TO LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION INCORRECTLY DATED 08/10/2010 PN1815
CROSS-EXAMINATION BY MR MCDONALD PN1946
RE-EXAMINATION BY MS CRESSHULL PN2130
THE WITNESS WITHDREW PN2133
DAVID GRIMSHAW CHEATHAM, SWORN PN2144
EXAMINATION-IN-CHIEF BY MR MCDONALD PN2144
EXHIBIT #R3 STATEMENT OF DAVID GRIMSHAW CHEATHAM WITH ATTACHMENTS DATED 31/3/14 PN2152
CROSS-EXAMINATION BY MR RUSSELL-UREN PN2153
THE WITNESS WITHDREW PN2691
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