And that’s it for 2018, but here’s some good advice

It’s always good to get a compliment about the effectiveness of depa from someone who has spent 30 years on the receiving end. So, it was a pleasure to see the former GM of the former Canterbury Council, Jim Montague, being quizzed in the ICAC about his relationship with depa, and saying this on Thursday 13 December:

I expected Spiro to approach the union. I mean that’s what I would have done and I know how energetic Mr Robertson is ... my dealings with Ian Robertson were such that I knew he wouldn’t let it drop. He’d pursue it very vigourously as he does. He’s quite an unusual individual in that sense but he represents his members very well so we would have gone on with it.

Thanks Jim, and to all our members, we wish you a happy Xmas and New Year (or however you like to describe it) with your loved ones, family and friends. We commit ourselves to continuing our usual quite unusual levels of vigour and energy representing you all in 2019.

We’re closing the office on Friday 21 December and will open again, in a relaxed and try-not-to-ring- us-until-the-following-week kind of way, on Thursday 3 January.

What about the High Court challenge?

The Full Bench of the High Court heard the challenge of the Combined NSW Unions on 5 and 6 December. The case was adjourned, the Court has now risen, as they say, for the end of term and there is no chance now for any resolution to the challenge before the Court resumes in the first week in February.

As the challenge was mounted against a 50% reduction in the amount of money third-party campaigners can spend in the six months leading up to a New South Wales election, and the election will be on 23 March, it looks like Gladys and her lot who wanted to “silence the voices of working people”, as Unions NSW Secretary Mark Morey so graphically puts it, may well get her way. At least for this election…

Richmond Valley is the winner

How can it be any other way? A young trainee goes to HR to ask questions and is threatened, immediately, that if the thing went to court she would lose, and the threat is repeated. depa raises the issue on her behalf, the GM responds that this is a great program and we are wrecking it and wrecking opportunities for young people in the area, begrudgingly agrees that she should have been paid on the T scale all along and that she has been underpaid, accepts this is breaching the Award but then wants her to pay half her university fees, another breach of the Award. Come on, Vaughan, we expected better of you.

We may not have awarded this prestigious trophy to Richmond Valley had they recognised their arrangements are illegal, young people were being underpaid and it was really wage theft. But there are people at Richmond Valley, including the GM and People and Culture (!) who still mutter that it’s a shame we removed their capacity to pay people less than their legal entitlement.

Of the six “scholars”, who are really trainees, four are women. At the same time as the Council wants to defend ripping these employees off, they are busy boasting in a report by Women & Leadership Australia on the hundred days for change initiative that they want to “empower our women”. On the evidence, they’re more likely to cheat them.

They also say that women need to have “the power and access to speak up and connect with each other in order to continue to develop personally along with our organisation” but when a young woman does that, they threaten her that if it went to court she would lose. Leaving aside that threat was made without proper advice and it was wrong, it should not have happened.

And we don’t want to ever hear again that there are advantages in wage theft.

How's HR been this year?

This is a time of goodwill and, while it’s very easy to make jokes about HR (we’d know, we’ve done it ourselves for years) there have been some real positives in the industry in 2018.

Not the least of which is a couple of councils picking up on the health and wellbeing provisions in the Award and doing something seriously about it. This was one of our claims that went into the 2014 Award and allows for employees to claim two days from their sick leave each year for health and wellbeing activities. Unfortunately, traditional HR practitioners and local government management is reluctant to set up arrangements that require independent judgement and discretion. Far better to have a rigid list of options so the decision-making isn’t very difficult. Can’t blame me.

So the early responses to having a proactive approach to health and wellbeing were to focus solely on preventative health measures, normally provided by doctors and health professionals. It’s okay to have your skin check, but if you need a day off to clear you heard - go for a bushwalk, do a meditation course or read a book - that provided too many challenges.

Last year The Hills embraced the concept of removing restrictions on the sort of things that employees could apply to do in their two days. But The Hills example was too confronting for most councils with rigid approaches to things that you can often use sick leave for anyway.

This year we failed to convince those believing themselves to be progressive and game-changes at Lake Macquarie to introduce broad access to health and well-being activities in their Enterprise Agreement. The Council does have an arrangement that frees up the taking of sick leave but were reluctant to embrace this specific targeted health and well-being initiative. Disappointing to say the least.

Not so Newcastle City which, predominantly because of initial pressure from the three unions in the negotiations and a developing appetite in management to do something demonstrating their preparedness to trust the workforce, the EA, made at the end of this year, provides the option to be fleshed out with some guidelines later.

But, if there was ever going to be a Council where a GM would have an appetite for embracing and demonstrating trust in the workforce, it would be Liverpool City. CEO Kiersten Fishburn was always going to be open-minded and when proposals were developed by her HR team and Director of Corporate Services, she grabbed it with two hands.

Liverpool City ends the year with what is clearly best practice in the industry – a twelve month trial to “enable employees to undertake health and well-being activities that lead to positive health outcomes.” There is no prescriptive list as long as the days “fit generally within the concepts of health, fitness, exercise, improved health benefits, as well is preserving mental health in times of stress.”

A bold and courageous move we hope to see flow through other councils in 2019.

We’ve had a few issues with consultative committees, and arguments about their composition but while HR issues are a weekly phenomenon in enquiries to our office, things haven’t been too bad this year. While the private sector has been sprung ripping people off vigourously in hospitality and franchises, to the extent that the union movement is pursuing the criminalising of wage theft, we didn’t think we’d ever see anything quite like that. Wage theft, let’s not beat around the bush.

There are some usual suspects in the list of nominations and a couple of stellar performers who, with hindsight, should have been dealt with earlier. Here are the nominations:

Campbelltown City

How could Campbelltown not get a mention in 2018 when the year began with substantial display ads in the Sydney Morning Herald and employment websites for an entire “HR Team”? The chronic mismanagement and neglect of staff over recent years had led to departures from people in HR unhappy about the way GM Lindy Deitz thought the business should be run.

At last some proper recruitment in the planning area (we starting agitating for this more than two years ago) saw more than a dozen new appointments and, as we publish this, only two vacancies left to fill, the exit of people unhappy from HR makes life harder for everyone else.

And, we witnessed one of our member’s brutal and unwarranted treatment in a minor restructure. Here was a person doing substantially the work of a newly created position, everyone in the organisation from her Manager, Director, HR people, Director Corp Services and Acting GM, all endorsed her direct appointment to the job - until the GM returned to work and decided there should be an external advertisement. In terms of overriding a chain of recommendations already signed off, this has to be some kind of record – five people!

In the end, our member was appointed, offended by the process, unnecessarily worried and concerned about her job, and rightly so, in an example that just continues the litany of bad HR decision-making and ignoring the rights of employees who are long-serving and deserving of better.

Richmond Valley

Richmond Valley has flown under the radar for a long time. Former GM John Walker had set up a “scholarship” program for local young people to bring them in, try to indenture them, put them through university and have them work for the Council at the same time.

All well and good, but one young trainee planner was concerned about the rates of pay and how they didn’t appear to coincide with the T scale in the Award. So she asked to meet with the Manager People and Culture (!) for an explanation. And, for good reason, took our delegate with her to help.

Now you would think, wouldn’t you, that in a Council that talks up its commitment to gender equality and empowering women, that the Manager People and Culture’s immediate response would be helpful and empowering. And when you think about it, a trainee, with no tenure beyond the traineeship, has to be about the most vulnerable person in the place.

“If you took this to court, you would lose”, said three times during the course of what wasn’t a very helpful meeting, revealed a lot about People and Culture but more about the way the Council itself wanted to deal with the issues raised. Considering that neither the GM Vaughan MacDonald, nor the Manager People and Culture (!) were responsible for these arrangements, it should have been an easy matter to resolve. But it wasn’t.

So, as a member of ours, we pursued it and found that there had been substantial underpayments made over the entire course of the “scholarship” (which was nothing more than another name for a traineeship, under the terms of the Award) but where the Council built their scholarship program by intentionally underpaying Award entitlements – by a massive $241.70 a week in the first year.

On the face of it, getting kids from school to sign a contract that’s built upon rates of pay below those provided in the Award is taking advantage of those least able to contest it - the enthusiastic but vulnerable, keen to get a job. GM Vaughan MacDonald defended the “scholarship” arrangement because it gave kids opportunities they would not ordinarily have and that it would be our fault, pursuing this, to remove that opportunity. Funnily enough, that’s how all of those bosses guilty of wage theft in hospitality and franchising describe it as well.

There are always more opportunities if you underpay people because your money goes further. But isn’t it funny, they don’t think about ripping off their Manager People and Culture, or their other staff by trying to pay them under the Award.

In the end, we can only talk about our own member, but her underpayment, which we remedied, cost the Council around $30,000. We understand they have made adjustments to all those other traineeships as well.  No wonder they were distressed and no wonder when a begrudging general manager accepted that they were trainees under the Award, and would need to be paid based on the T scale, and adjusted every year consistent with that scale, he then thought that she could pay half her university fees.

No, Vaughan, that’s another breach of the Award. And we made sure that didn’t happen either.

Shoalhaven


Shoalhaven was one of a number of councils where the unions struggled to reduce the number of so-called “workplace” representatives on consultative committees but where we were able to reach some agreement after a difficult period of unpleasantness. Not with the GM, mind you, who has been a beacon of wisdom and tolerance since winning the Golden Turd in 2014 and 2015.

But then, someone in HR (who should know better) had a quiet word to our delegate and member of the consultative committee to tell him that providing emails from HR in the argument about the composition of the consultative committee to his union for advice may have breached the Code of Conduct because this was “Council information” and should not have been sent outside the Council!

In all the years of ludicrous and bad HR judgement, this was a first. How can a member of the consultative committee take advice from the union if they can’t supply the documents?

In the end, that advice was acknowledged as being wrong. Still, it shouldn’t have happened.

Sydney City


The City, as they like to be known, always gets a run. Their attitude to HR and employment, through a very old-fashioned Award, with the flexibilities and improvements that we have been able to introduce by agreement in the State Award ignored, with the rejection of introducing any flexibility for things like health and wellbeing access to sick leave because they failed to manage sick leave anyway, and simply didn’t trust their employees to have access to it in any other form, means they will always get a nomination.

But for one of our members, who found that their boasts about caring for the wellbeing of employees were not honoured when she presented authoritative medical evidence that her health required shorter days, and required them immediately. This request was ignored for three weeks, making that, and whomever was responsible for that decision, a clear record holder in the industry.

Medical evidence is medical evidence, if you don’t like it, you have the employee examined yourself. If the Council wants to do this, they should still comply with the medical evidence until they are in a position to inform themselves.

We fixed it. But it shouldn’t have happened.

Tweed

Tweed was our winner last year. It was the most hazardous workplace for our members in NSW and of our two members with workers compensation claims accepted, one has now left the organisation but is still receiving treatment by the insurer and the other has returned to work, albeit in a different office to the problem manager and after a great deal of suffering.

But at last, another union got involved after a member of theirs was reduced to tears by the same problem manager and his lack of empathy and incapacity to tell if people are upset.

It was enough for us that we have members reporting that the problem manager spend more time in his office, and there was not a risk of bumping into him in the tea room, so things could have been worse. But GM Troy Green, while finding it relatively easy to ignore us, hasn’t been able to find it quite that easy ignoring the USU. Ask not for whom the bell tolls at Tweed these days...  

Willoughby


GM Debra Just was appointed in 2015. A difficult time admittedly, as Willoughby looked at the prospect of merger with Mosman and North Sydney, but a staff turnover of 22% in 2015/16 is a serious effort. We’ve never seen worse. In recent years it settled in around 17% which, in itself, will be hard to be beaten by other councils.

In 2015 the first restructure provided opportunities for three of our members, having seen the writing on the wall and understanding that it read “get out of here if you can”, took redundancies. This approach, of restructuring under the guise of being more productive and efficient and providing better services, really just meant ending up with fewer people at the end of the process.

Again in 2018 the Council proposed to rationalise EHO’s into one area. We had a member who was an EHO who, when the Council provided the notice required under clause 39 of the Award, they provided us with documents about the current structure which were wrong. We think it’s probably because HR is as understaffed as everywhere else, but we knew that the current structure had a position of senior EHO and an EHO but the Council, doing something they do as a corporate philosophy and strategy, had our EHO member acting in the senior job, but really being required to do both.

The Council was apologetic about the inaccuracy (we accept it was a mistake but there remain suspicions in the workplace that it wasn’t) but it revealed a lot about a Council that should have been brought to our attention earlier.

Willoughby Council has more vacancies unfilled than any other Council we’ve dealt with this year. And, as we’ve seen from this example above, the Senior EHO position was vacant for four years! This compounds the Council’s problem because it also means that they breached that provision of the local government act preventing temporary appointments for more than 12 months. Come on Debra, have a look at section 351 (2)

There’s a lot of money to be saved by not filling jobs and having other people, often working for nothing, picking up the slack. Willoughby should do a survey of unpaid overtime...  It’s not just happening where we have members.

The USU is now agitating against the Council’s failure to advertise and fill positions, also having tolerated for too long this deliberate management strategy to have people working harder and covering the gaps, rather than filling the vacancies.

Sick leave is at unprecedented levels and they have a consultative committee that has never properly complied with the provisions of the Award - something the three unions are now involved in trying to remedy.

The current constitution was developed in 1996, it provides for a “chairman” but a “spokesperson”, so obviously in 1996 only blokes could chair the committee but any gender could be a spokesperson.

More importantly it ignores the compulsory requirements of the Award for a minimum of union representation from the USU, LGEA and depa - preferring to have operated for all these years, contrary to the Award, with ten employee representatives from distinct areas of the Council and a cursory note that the structure with the ten employee representatives “requires that at least one elected representative from unions party to the award.” How have they ever got away with that?

Not a happy place to work, chronic understaffing, a corporate approach to leaving positions vacant as long as they can, unprecedented levels of sick leave and industry-leading figures for staff turnover.

How has HR gone this year?

 

Yes, it’s that time of year again. The time when we consider all those poor examples of HR that we’ve had to deal with: the ignorance of Award obligations, the bullying, the lack of care for employees, neglect, absences of compassion, hostility even, partial investigations, clumsiness, illegal activity and bullying. Did we mention bullying?

A time of excitement for GM’s and HR/OD managers by whatever name, as much as our members. (Please note, OD is Organisational Development, not Overdose)

This is your chance, in case we’ve missed anything, to let us know over the next two weeks how things have gone and whether you have a worthy nominee. You can respond to This email address is being protected from spambots. You need JavaScript enabled to view it., but do so by Friday 14 December.

Speaking of issues of principle, the Government appreciates us, but doesn’t want to meet with us

 

Over the past couple of months we made two submissions in response to invitations from the Department of Finance, Services and Innovation. Or something anonymously described as the “Regulatory Policy” part of that department. They love anonymity.

The first was a submission on proposed changes to regulation of certifiers by the BPB through the Building and Development Certifiers Bill 2018. We had sought significant changes and discussions with them and encouraged members to make their own submissions supporting our proposed changes and our request to meet. After all, we never meet with these people and they never meet with us. Nothing in the last five years until this year when we were trying to find out what “intelligence” meant when it led to a member being investigated when no-one had complained.

Members responded enthusiastically with more than 100 submissions supporting our proposals and our request to meet. Thank you all for doing so.

But few of our suggestions made it into the Act. And they certainly didn’t want to meet with us.

At some stage they need to come to grips with the reality that we represent more people accredited by the BPB than any other organisation and that rejecting that request was thoughtless at best, and contemptuous at worst. There were 100 submissions, the overwhelming majority, calling for them to meet with us.

They did agree that it made no sense to require a contract between a client and an individual Council employee and that the contractual arrangement should be signed by “the Council”; that it made no sense to impose too much control in smaller organisations to prevent a generalist “certifier” providing other professional services; and that it did make sense to remain “registered” and not “licensed” as they had proposed.

They ignored the overwhelming number of submissions calling for a reduction in the proposed severity of the penalties for knowingly issuing a false certificate, in particular the fine of $10,000 and up two years jail, and our concerns about how to manage the parallel accountability of a Council employee with responsibilities to their employer and, at the same time, also to the BPB. We will keep working on these issues.

What their decision does is reveal an insensitivity to the good management of what they still like to call “certifier” services by councils and a contemptuous attitude to the industry.

In an email from “Regulatory Policy” to everyone who put in a submission we were thanked, and they appreciated our “interest”. Signed by no-one, with no-one identified as being responsible, these people have the luxury of anonymity while they construct hostile regimes for Council employees/certifiers without that protection.

And in an equally impersonal note, on 22 November they thanked us for our submission on the ludicrous options paper “Improving Certifier Independence”, but this time noted that they appreciated our “comments”. On the first submission, they appreciated our interest but clearly not our comments and they certainly didn’t want to talk to us, and on the second submission they clearly appreciated our comments. If that second submission meant that the mysterious “Regulatory Policy” understood what had happened in the past, then it was worthwhile.

High Court to hear union challenge to electoral funding laws next week

There are so many things going wrong, and so many unpopular decisions, it’s no surprise that the NSW Government, alarmed about the State election in March, wants to gag third-party campaigners. Media campaigns by unions like the NSW Nurses and Midwives Association about hospital funding, the NSW Teachers Federation about education and general campaigns against selling off our assets like Unions NSW' “NSW Not For Sale” are always damaging.

The “Your Rights at Work Campaign”, vigourously championed by Unions NSW highlighting the attacks on employees in WorkChoices was one of the most successful campaigns, significantly contributing to bring down the Howard Government, and as a bonus, having the sitting PM tossed out of his seat of Bennelong - only the second time this has ever happened.

The Electoral Funding Act 2018 reduced by half the amount third-party campaigners could spend in State elections - down from $1 million to $500,000 and even if a number of third-party campaigners get together, as they have done to oppose selling community assets, slashing the public sector, or removing rights at work, the $500,000 remains the cap.

The High Court challenge, organised by Unions NSW (to which we are affiliated) has eight plaintiffs - Unions NSW, the Nurses, the ETU, the Australian Education Union, the USU, the HSU, the PSA, Australian Salaried Medical Officers as well as funding from seven other unions who, like us, don’t do third-party campaigning, the Australian Services Union, the Shop Assistants, Rail, Tram and Bus Union, and our colleagues in APESMA. All the local government unions are involved.

The Electoral Funding Act criminalises campaign practices and introduces two-year jail terms for third parties acting in concert, whether they be unions, churches, community groups, charities are industry groups. Lovely.

Unions NSW Secretary Mark Morey has said, “if this legislation had been in place in 2011, or 2015, unions’ officials would have gone to jail for doing what they always do: campaign.”

The High Court in Canberra will hear the constitutional argument about the implied freedom of political communication on Wednesday 5 and Thursday 6 December where it will be fought by the NSW Government, the Commonwealth Government, the Government of South Australia and potentially other States as well.

Only tyrants oppose the right of people to campaign in elections. It’s great to be involved in an issue of principle as important as this.

Pictured above is a demonstration organised by Unions NSW when the case first came on for directions in the High Court in Sydney.

Neither snow nor rain nor heat nor gloom of night stays depa from the swift completion of depaNews …

 

Preceded by severe storm and wind warnings, Sydney is being smashed by the worst November storm in 44 years. Chaotic public transport with massive delays, twelve flood rescues and counting, more than 8000 homes without power, the November average of 84.6mm by 7am, past 100mm by 8.30, and still being hammered, police have labelled road chaos the “worst ever”, and the SES, NSW Government and the Police warning everyone to stay home if they can. Stay home? We’d rather send you depaNews.

Slowly getting somewhere on “superable salary” dispute

 

depa’s dispute with LGNSW on behalf of New South Wales councils about whether or not councils have been including a value for private use of a car in the Superable salary of those in the two closed defined benefit schemes within LGS rolls on but, getting closer to a solution.

This has been a massive research exercise preceded by significant information and assistance to councils earlier this year to ensure that councils did include a figure for private use of a Council car in superannuation calculations. Now that everyone was focused on the question, it was important to get 2018 right.

The dispute will resume in the IRC before Chief Commissioner Kite on 5 November where we will be able to advise the Commission of progress, in particular, with those 153 members of ours who provided an authority for depa to pursue the matter for them and have access to what might be regarded by either LGS or councils as private information.

It’s true to say that LGS, after changes to the Trust Deed in 2003, didn’t pursue councils to ensure that they were calculating a proper value to be included in the salary of employees in these two closed defined benefit schemes. We all make our best decisions with hindsight, and it would have helped for LGS to have been more vigilant to ensure councils were complying with obligations under the Trust Deed, LGNSW should have pursued it to ensure councils were doing the right thing, so should the unions and importantly, members of the defined benefit schemes have learned an important lesson about individual responsibilities.

Everyone else was assuming that it would all be done properly but it would have been a good idea for members of those schemes to pay attention to what was written into their annual superannuation statement and to check for themselves.

What we now know is that a minority of our 153 members (and therefore other relevant employees at those councils) received a positive value in their superable salary calculations for 2018. Ranging from an improbable low of $41 up to a luxurious figure beyond $14,000. We don’t yet know whether those councils did similarly in preceding years, and this is still being pursued.

But because all a council needs to do is to put a figure on the value, most councils which have considered the position have concluded that the value is net zero dollars, the private value to the employee of the car being equivalent to pre-tax leaseback payments made for the use of the car.

We have emailed all our 153 members in this group so they all know where they fit in the three options: namely, a positive dollar value to increase the superable salary, a “net zero dollar” value based upon calculations cancelling out the leaseback fee and sadly, a do-nothing group of councils which didn’t bother to do anything. And because it’s a discretion for the employer to put in a figure, putting in zero counts.

And there’s really no point running a dispute to move members from the category where councils ignored it entirely and concluded it was zero dollars into the category of “net zero dollars”.

The dispute continues, LGS is continuing to pursue whether those councils that did include a positive net value in 2018 have also done it in the past and are moving onto reviewing those who may have left the fund to see if there are implications for them.

(Please note this dispute applies only to members of the defined benefit schemes that have been closed for close to two decades.)

NSW unions challenge NSW Government in the High Court

Unions are collectivist organisations which recognise the value and strength that flows from membership and action. Similarly, unions affiliate to peak bodies like the ACTU federally or, like us, Unions NSW, primarily focused on NSW unions and branches. Some NSW unions, like us, don’t make political donations but many, almost, do.

Everyone will have seen campaigns run by the NSW Nurses, or the Teachers Federation or the PSA about privatisation, staff numbers, beds, class sizes or whatever. All usually damaging television and media campaigns against whichever government may be in charge.

The Electoral Funding Act 2018 was introduced by the NSW Government to restrain unions and other third-party campaigners from participating in election campaigns. Previously, third-party campaigners could spend up to $1 million but the 2018 legislation reduces that limit by half, to $500,000. It also changes arrangements so that if a number of unions combined together, the $500,000 limit still applies. Clearly this is censorship, a political attack against unions participating in an election process and, based upon legal advice, probably unconstitutional and illegal. So it’s off to the High Court.

In 2013 Unions NSW ran a similar case in the High Court securing a declaration that the O’Farrell Liberal Government’s restrictions on political donations by individuals were unconstitutional. Unions NSW has resolved to launch a similar challenge to the 2018 legislation because it squarely targets unions and union members, to gag them and make them less effective in protecting the interests of their members.

The depa Committee of Management resolved unanimously to participate in the funding of the challenge. $5000, to be precise, estimated as our share of the cost of a successful challenge. Or $10,000 if it’s lost. The other local government unions are also supporting the case.

Unions NSW arranged a demonstration of affiliates gagged outside the court when it first came on for directions before the High Court in Sydney on 26 September. The case resumed on 23 October, with the High Court confirming that it will refer the Unions NSW challenge to a full hearing in December, with South Australia the first of several states expected to intervene. Unions NSW has sought an expedited hearing to have the matter resolved before next year’s State election.

You may have already seen media about this important challenge but now you know you have skin in the game.

Oh no, now the NSW Government has asked whether we think "there is a greater risk for conflicts of interest to arise in private certification work and result in poor certification …"

It’s always nice to have a wide vocabulary, having just the right word, or words, ready to be plucked out for every circumstance. Serious, business-like, charming, funny, kind, amusing, technical, professional, assertive, aggressive, robust, respectful, disrespectful and colourful words from which to choose the right one. It’s all about appropriateness and place, so you need a good range for all the different places and circumstances you find in life.

In the depa office, we love the concept of evidence-based research, so we also loved Emma Byrne’s book, “Swearing is Good for You: The Amazing Science of Bad Language”, which scientifically and thoroughly demonstrates that bad words, obscene or profane, or generally unacceptable language has many positive virtues - a wide range of benefits from promoting trust and teamwork in the office to increasing our tolerance to pain. Even some great research on not holding back during childbirth. You have to listen to the scientists, don’t you.

So, after vigorously opposing the introduction of private certification from as early as the 1980s and without ever compromising, constantly and consistently for almost three decades, when the NSW Government’s Improving Certifier Independence - Options Paper arrived in our office, we were not lost for words.

Seriously, don’t these people ever look back at history? How could anyone think that an organisation like ours, which has steadfastly criticised private certification for three decades because of the unavoidable underlying conflict of interest of a developer paying their own certifier, think it made sense to ask us?

With proper reverence to Monty Python, our office was the right room for an argument:

Policy Kiddie:  Is this the right room for an argument?

depa:               I told you once.

Policy Kiddie:  No you haven’t!

depa:               Yes I have.

Policy Kiddie:  When?

depa:               Just now.

Policy Kiddie:  No you didn’t!

depa:               Yes I did ...

in the 1990s, among other things, including being briefed by the Commissioner of the Victorian Building Control Commission who said “this sort of half-baked system will involve massive headaches”,

and with an unprecedented group of local government, union and community and environmental activists,

in publishing posters like this as part of our campaigning,

in the 2000s in a succession of enquiries, investigations, the setting up of the Building Professionals Board, the establishment of a process fruitlessly attempting to create independence of private certifiers who could never be independent,

inevitable fine-tuning of that, FOI applications against the Minister for Planning because he was telling us porkies, and the information we received in response proved that Cabinet had adopted lots of things before it went out for consultation but no-one told those involved in consultation that the decision was already made and we made them fess up,

in arguing against the accreditation of council staff from the mid-2000s and continuing, how the BPB wanted to accredit them and, in the famous Neil Cocks white board story, the BPB relishing the prospect of an income stream from 800 more accredited certifiers,

the 2015 Independent Review of the Building Professionals Act 2005,

and this year arguing about the proposed Building and Development Certifiers Bill 2018 …

Policy Kiddie:  Um, I’m not feeling safe ...

It’s an interesting Options Paper. In its early pages it contains concessions like:

“there are community concerns about certifiers, particularly private certifiers, being unduly influenced by the builders and developers they work for, given the certifier as being paid by the same party that they are supposed to be independently overseeing”, and

“the certifier has the potential to be affected by the inherent conflict that exists between maintaining a private certifier’s regulatory responsibilities and fulfilling their own commercial interests”, and

“certifiers can become reliant on the same entities for work, and these financial relationships may, over time, impact on the ability for the certifier to make impartial decisions” and

“this is particularly the case where the decision of the certifier may result in a substantial negative impact on one of the parties involved”, and on and on it goes.

Seriously, FFS. We don’t blame new generations of policy people having a bit of a go at things the previous generations have had a bit of a go at, but one of the costs of downsizing the public sector in the last couple of decades has been that there is no-one left to remember, to know where the files are, to know who was involved in consultation and policy-making in the past, how extensive or superficial considerations may have been, or even to know whether records are kept.

It’s all now in the hands of kiddies in policy without access to the past, compromised further by 30 second news cycles and bloody focus groups driving political decision-making. It’s not their fault, they just assume they are doing it for the first time and don’t give sufficient regard to Mr Garrison’s maxim “there are no stupid questions, just stupid people”.

(If you are interested in this phenomenon and the degradation of the public sector, check out Laura Tingle’s Quarterly Essay issue 60 in 2015 “Political Amnesia: How we Forgot How to Govern” for a superb analysis of the betrayal of the capacity of the public sector to develop policy by a succession of governments.)

In the 1990s an unprecedented group of organisations came together to oppose the NSW Labor Government’s plans, chiefly through Planning Minister Craig Knowles, to introduce the option of a private certifier instead of a proper regulator employed without a financial interest. We were part of that - together with the Australian Consumers Association (publishers of Choice), the Australian Conservation Foundation, the Total Environment Centre, the Nature Conservation Council, the other local government unions, LGNSW, Unions NSW and even the predecessor of the Local Government Managers. It was local government united, without dissent, unprecedented and never has such a broad coalition been assembled since. But it lost.

But the Labor government pushed through, it was waived past by the Coalition Opposition with a few observations expressed about community concern, “flaws but the government has failed to address them in spite of the fact that there’d been many months of consultation” and “the Opposition shares local government and community concerns that private certifiers employed directly by developers could have their capacity for independent decisions compromised.”

The ICAC submitted “private sector consultants to act as inspectors on behalf of local councils could raise new opportunities for corrupt conduct to occur. The ICAC believes these issues need to be addressed in the proposed legislation”. They weren’t, of course.

To summarise a long history, the Director-General of the Department of Local Government at the time famously said that the system would collapse within five years. He was wrong, it was collapsing after three and agitated members of the Legislative Council were moving to set up their own investigation where the government wouldn’t have the numbers. This forced the government to pre-empt and control the emerging calamity by setting up the Campbell Enquiry into the Quality of Buildings.

And relentlessly, consistently on message, strident when we needed to be, we hated a system that, regardless of what steps could be taken to manage risks, propriety and independence, the developer still paid the certifier. And nothing has changed.

We’ll lodge a brief submission in response to the Options Paper but really who cares whether it’s Option 1, the wheel of fortune rotation scheme, or Option 2 the cab rank scheme, surely to be joined later by the Uber scheme, or Option 3 the time limit scheme? Why not all of them?

In the end, the fundamental and compromising conflict of interest - the developer paying/paying off their own certifier continues. It was the fundamental problem identified 30 years ago and it continues. It always will.

Put in a submission if you like, there are 27 questions to answer!

Submissions close at 5pm on 30 October to This email address is being protected from spambots. You need JavaScript enabled to view it.

But what do the regulators do?

 

The Australian Prudential Regulation Authority is charged with the responsibility of regulating superannuation funds and ensuring their compliance with the Superannuation Industry Supervision Act 1993.

As I’ve spent 16 years as a director on the LGS Board from its inception in 1997 to 2013, I’ve enjoyed a good relationship with APRA and what can be their personal views pushed as government policy, or the “house view” of the regulator.  To an extent, that relationship continues.  depa is one of the shareholders of LGS Proprietary Limited.

In recent years APRA has published their own assumptions about the benefits which flow to industry superannuation funds by including purportedly “independent” directors on the board to complement the normal “equal representational model” of equal numbers of employers and employees.  They regard it as best practice even though there is no evidence yet published to support that view.

It’s hard to talk about the regulator when every meeting or discussion begins with their disclaimer. Not a financial disclaimer about all the risks you take in dealing with them, but a reminder that so much of what they do, and so often spoken of only in a general and non-specific sense because that’s how you get the best responses, is subject to section 56 of the Australian Prudential Regulation Authority Act 1998 “Secrecy-general obligations”.

This section provides a series of offences which involve criminal penalties including imprisonment for up to two years. Not for me the risks of the showers, thanks!

And it is a strange irony that the SIS Act requires “a general flavour of disclosure” by superannuation funds supervised by it.  When a fund’s commitment to disclose clashes with a regulator’s potential restrictions on confidentiality, and is fraught with risk of imprisonment, it’s hard to disclose and be transparent on things members have a right to know about.  Or to know what can be said and can’t be said, and the reason why.

So, say no more, as they say, maybe next issue...

Don’t think banks should be involved in Super?

 

Given the Royal Commission, who would? But sometimes, while it’s been hinted Government needs to do something about separating off financial planning and superannuation from banks, these things do need a bit more encouragement to give them momentum.

The ACTU, now rebranded as Australian Unions, has a petition calling for precisely that.

If you’d like to sign the petition, use this link.

No wonder this lot didn’t want a Banking Royal Commission

 

Pressure for a Royal Commission into banks had been building up since 2014 when a Senate report called for one and the big banks started apologising for giving poor financial planning advice. Former PM Malcolm Turnbull had rejected the idea repeatedly, the banks themselves were horrified at concepts of transparency and disclosure and the politicians of the Coalition were doing all they could to kill off the idea.

But a threat by a number of Coalition members to move a private members bill to bring it on forced the Government’s hand. Supported by the ALP, the Greens and other independents, the Government would have lost the vote.

Queensland Senator George Christensen talked about the Government “having to be dragged” into a Royal Commission and if there is a senator capable of dragging people anywhere, it would have to be Christensen.

All the usual suspects defended their institutions. The Coalition had for decades opposed compulsory superannuation and industry superannuation funds because, in their view of the world, only bankers, people just like them and traditionally aligned to their side of politics, should have a monopoly on managing that kind of money.  Their hostility to industry super, the not-for-profit model and equal representational boards representing employers and employees in the industry, was venal and borderline psychopathological.

Former Financial Services Minister Kelly O’Dwyer, pictured above, had opposed it and called the faintest suggestion “reckless and ill-conceived” in 2016, opposing it all the way until it was inevitable and then, even after it was announced, unlike many others from her side, not accepting it had been a mistake to delay it so long.

Former PM Turnbull, himself a banker in a former life, after accepting the political reality acknowledged it had been a “political mistake” and it would have been good to start investigating the banks’ wrongdoing much sooner.  One of the great understatements of the last 10 years.

And Former Treasurer (and still PM this week) Scott Morrison refused to support it. In 2016 be dismissed calls to have an inquiry a “populist whinge”, and later described those wanting his apology for opposing and delaying it as “political point-scoring”.  Not a bad point though eh, Scott.

Former PM John Howard, a vociferous supporter of the banks and opponent of industry super called the idea of a Royal Commission “rank socialism” in encouraging his side to oppose it. 

Former Immigration Minister at the time Peter Dutton responded to the announcement of the Royal Commission that it was a chance to scrutinise industry super. He told Ray Hadley (a Sydney radio blowhard) hours after the announcement that the Royal Commission was “regrettable” but it would be a chance to investigate industry super funds “which have union members and whatnot on the board.”

Dutton said “I think people lose a lot of their super through fees and through donations and all sorts of support for unions. So I think it’s a good opportunity in that sense to have a look at the detail and people can put all of that information forward and we can see the recommendations from the commission.”

We all knew prior to the Commission that superannuation funds owned by the banks on average underperform industry super funds by 2% per year over the last 15 or 20 years. Well, all of us but Peter Dutton, but as things were revealed in Canberra last week, he does struggle to get the numbers right.

The Australian Bankers Association said the Royal Commission was “unwarranted” but the popular support for an inquiry created an “unacceptable risk” to the reputation of banks and the financial system.  Famously, the ABA said “our banks do not fear scrutiny or accountability”.  We don’t believe them.  Those who opposed the Royal Commission would have been well aware there was much to hide, but the revelations were astonishing.

We’ve all watched the Royal Commission play out. No bank has survived this unscathed.  Multiple witnesses from the big banks and insurance companies confessing to wrongdoing; fees for no services; financial planning fees for people known to be dead; NAB and CBA now at risk of criminal charges over breaches in their superannuation arms; chronic failures to reduce fees with deadlines on the introduction of My Super; conflicts of interest; a failure to have superannuation Trustees independent of the bank that owned them; misleading the regulator, tampering with financial reports and claiming they were independent; a CBA executive agreed CBA would win a “gold medal” for charging customers for financial advice services they didn’t receive, and refunding $118.5 million to customers for this conduct; “hopeless” systems so they  couldn’t identify occasions where customers were charged inappropriately for advice; CBA fined $700 million for breaching money-laundering and terrorism laws 53,506 times providing millions of dollars to drug importers; fraudulently setting up thousands of children’s bank accounts to earn bonuses and meet aggressive performance targets, with the CEO trying to trivialise the scandal by saying that the money taken from the kids “was small or loose change”; by ANZ’s figures the bank’s bad financial planning advice had increased by a multiple of 40 from 2008 to 2016 from 60 to 2499 cases; financial planning without consideration of the primary interest of the client; ANZ knew from 2013 to 2015 11% of their Millennium3 advisors and 6% of their financial planning advisors were rated at “high risk” of not providing appropriate advice; and on and on; NAB impersonated customers, forged their signatures as it drew customers’ money without their permission... Bloody hell, it never ends.

But as Adele Ferguson, writing in the Sydney Morning Herald on August 25-26 said, all “while there were few adverse findings made against the industry funds examined during the hearings earlier this month.”

It does beggar belief that anyone would voluntarily choose to pay superannuation into an account managed by the banks. Many employees have no choice in their employment but just for fun, try to Google who the trustees are in the superannuation offerings of the four big banks.  You won’t find them.

But trustees and industry funds are publicly identifiable and examinable. Not only that, their returns are so much better. All this evidence compromises the integrity of the historic antagonism of the Coalition to industry funds and their slavish defence of the banks.  This must change.

Councillors on interview panels

One of the people of interest being investigated is the former Director of Planning Spiros Stavis. Two days of evidence last week and listed for a further five days of evidence this week, Stavis is under intense scrutiny.  It was revealed that he was in serious financial trouble when he applied for the job of Director of Planning at the former Canterbury. 

As part of that process, he exchanged text messages and met with the former GM Jim Montague and the two councillors Michael Hawatt and Pierre Azzi, was provided with “sample questions” prior to the interview and was interviewed by a panel that included those two notorious fitness fanatics.

The 1993 Local Government Act dramatically drew a line between the role of councillors and Council and the role of the general manager. No longer was the old town or shire clerk the chief “administrative officer” pushed around by councillors, the general manager was the chief executive officer.

Councillors were restricted to the establishment of policy and the day-to-day operation of the Council was legislated as a clear and unequivocal responsibility for the GM.

The Council has a responsibility under section 8A(1)(i) to be “responsible employers and provide a consultative and supportive working environment for staff”.  That’s a pretty recent amendment, so if it’s not clear your Council is doing that, maybe they haven’t caught up yet? 

Other than that broad responsibility as part of the exercising of general functions, the Council is required at 332 to determine the structure but only in so far as the senior staff positions and the roles and reporting lines of senior staff. That means, the Council determines the number of directorates, or Deputy GMs or whatever.  And that’s it.  The rest of it is the GM’s call.

(As an aside, we know there are examples where councillors, particularly the Mayor, do have a role in the structures and the appointments below the senior staff level. That’s a clear breach of 332(1A) but a story for another day.)

Section 332 provides their final responsibility - to be consulted by the GM on the appointment and dismissal of senior staff by requiring that the general manager “may appoint or dismiss senior staff only after consultation with the Council.”  That didn’t happen at the former Canterbury - the two infamous councillors making contact with a candidate, meeting with him, exchanging text messages, apparently favouring their own candidate by ensuring that the GM provided questions prior to the interview and ensuring their bloke got the job by sitting on the interview panel.  Not a good look.

Councillors sometimes sit on interview panels across the industry but it should never happen again.

When we made our submission to the ICAC on 23 May offering solutions to the problems being identified in Operation Dasha, we stressed that we may have other suggestions after we see what was revealed in that investigation.  Clearly keeping councillors off interview panels and away from candidates needs to be part of our second submission as the grubby evidence continues.

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