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Category Archives: Fair Work bill in the Senate

Ben Schneiders and Misha Schubert
April 3, 2009

AUSTRALIA needs an industry watchdog with legal powers to haul building workers into forced interrogations due to persistent “industrial unlawfulness” — especially in Victoria and Western Australia — a report for the Federal Government recommends.

The report by former Federal Court judge Murray Wilcox, to be released today, largely supports weakening the powers of the watchdog that will replace the Howard government’s controversial Australian Building and Construction Commission from next February.

But it says the power to compulsorily interrogate workers, which unions argue violates the right to silence and basic human rights, should remain, albeit with more safeguards in place.

Last night, the national construction secretary of the Construction, Forestry, Mining and Energy Union, Dave Noonan, said unions would “oppose any discriminatory laws that treat construction workers differently to other Australians”.

Mr Noonan said he was yet to see the report and was disappointed it was released to the media before being given to people in the industry.

Victorian Trades Hall Council secretary Brian Boyd said unions remained committed to abolishing the Building and Construction Commission.

Workplace Minister Julia Gillard is meeting state industrial relations ministers in Adelaide today and will ask them to respond to the Wilcox report by June, before she decides on the future building watchdog. Ms Gillard last night stressed she wanted to maintain a strong industrial policing presence in the sector and a zero-tolerance attitude to law-breaking.

“It is the intention of the Rudd Labor Government to always have a tough cop on the beat in the building and construction industry,” she said.

But in concessions to unions, the report recommends that the current Building and Construction Commission should give up much of its independence and have a semi-autonomous role within the new Fair Work Ombudsman’s office. If building workers did break the law, they would risk only the same penalties as other workers — not the existing huge fines and jail terms — under the proposed overhaul.

In a well-publicised case, senior CFMEU officer Noel Washington last year faced up to six months’ jail for not answering questions from the commission. The case was eventually withdrawn.

The executive director of the Master Builders Association of Victoria, Brian Welch, welcomed the review’s validation of industry concerns about unlawfulness but was concerned how effective the watered-down powers would be. “There are elements of this which we are unhappy with; there are elements that prove and vindicate the things we have been saying,” he said.

He said it was a “shame” that the Building and Construction Commission was recommended to become part of the new Fair Work Ombudsman’s role. He said that would only harm its operations.

When it comes to compulsory interrogations, the proposed safeguards would include staff of the new specialist building division having to meet a number of tests before an interview would be allowed.

Senior staff would have to be present at the video-taped interviews, which would be approved by an independent person.

http://www.theage.com.au/national/interrogation-powers-should-stay-20090402-9l5d.html?page=-1

Malcolm Maiden
March 21, 2009
The Government is moving to rein in what an angry public see as excessive executive payouts. Here, four key players debate the issues, and look for answers, with BusinessDay’s MALCOLM MAIDEN.

MALCOLM MAIDEN The question that people outside the business world are asking is – in this environment, is executive remuneration too high?

MARTIN LAWRENCE There are certain cases where pay is just too high.

CEO pay – Sir Rod Eddington
Sir Rod Eddington, Chairman JP Morgan Australia and NZ and a director of News Corp and Rio Tinto explains what boards must do to regain community confidence.

We don’t see it happen very often in Australia. There was a case with Adelaide Bank two years ago where the termination payout to their managing director was so large that they had to issue a profit warning. Everyone, I think, would quite happily say that that is too high.

The better question is: is executive pay linked to performance? Is it actually a fair reward for what’s been achieved?
We’re finding that out right now because we’re starting to see the first disclosures made after things have really started to turn down.

In some cases it’s looked pretty disproportionate.

SIR ROD EDDINGTON Historically, it’s a debate you only have when markets are turning down. It’s not usually a big issue when markets are ramping up, shareholder values increasing, businesses are doing well.

The key question is: is executive compensation linked to the right things? And does it deliver the right behaviours? Linking compensation to medium and longer-term shareholder return is a good thing. You get some strange outcomes – because there’s a lead and a lag effect, you’ll perhaps have rather bigger incentive payments at a time when the market is going down.

You need to make sure that the incentives for senior executives are aligned to the objectives of the company – that the relative salary packages of senior people in a company are appropriate.

In Japan, senior executives get a much smaller premium over the packages of what I would call front-line staff. In America, that difference is substantial. Australia is sort of in the middle.

MAIDEN Are the Government’s moves to cap golden handshakes, and inquire into executive remuneration, the right ones?

JOHN COLVIN With the benefit of hindsight, it would seem there have been mistakes made by some companies. But we believe that education is better than legislation in fixing whatever problems exist. On the termination payments changes – we’re disappointed that legislative action is being taken without prior consultation and ahead of the expected Government discussion paper.

LAWRENCE The changes will allow shareholders to protect the company against huge payments to departing executives and should help boards in their bargaining with executives. If boards respond by simply increasing salaries – again – it will be clear whose interests they are protecting.

MICHAEL O’SULLIVAN The inquiry’s timetable will mean that the Government will not be taking any further steps to intervene in the remuneration issue for at least 12 months.

MAIDEN Well, should shareholders get the power to determine executive pay packages?

O’SULLIVAN I think it’s a foolish proposition to ask shareholders to make detailed judgements when they don’t have – they simply can never have – the information. You need the degree of disclosure you would have in a takeover situation, where you’re in a locked room, in order to make those kind of judgements in any sensible way.

We think that the Opposition policy of a compulsory shareholder vote is foolish. We do think that shareholders should vote on issues of shares, including shares bought on-market for executives. But other than that, we don’t want a compulsory vote.

We’ve done a longitudinal study looking at the movements in chief executive officer payments. From ’01 to ’07, the consumer price index has increased by 17.7 per cent; average weekly earnings have done quite well, 32 per cent; but CEO fixed remuneration – not bonuses, not rights issues, not options – 97 per cent.

It just seems to me that what used to be the work value of any job hasn’t increased in that kind of proportion.

Now that the tide’s gone out and a lot of “boats” are left a long way from the water, people are in some cases going for short-term cash bonuses (that are) not in any way transparent – described to us privately as “if we don’t retain this fellow, he’ll walk”. We really don’t think that is credible: where’s he going to walk to?

COLVIN In the US, in ’84, Congress brought in a law saying that you can’t get a tax deduction for more than three times pay for a termination payment. Everybody (then) rose to that level because that was a norm which the Government had set, as opposed to leaving people to say “well, is that right?”.

I think it was Bill Clinton who brought in a law, in ’93, that said you can’t have a tax deduction for anything more than $1million. Short and long-term incentives just shot off.

So you’ve got regulation distorting the market, making it much worse. We have some of those distortions in Australia. Squeeze the balloon at one end and it goes somewhere else.

O’SULLIVAN It’s hard to say that those regulations caused the egregious behaviour.

COLVIN It doesn’t drive it, but it does distort it. Boards must take control of executive remuneration, particularly the CEO’s. You’ve got to get that absolutely spot on.

Ironically, you probably should be paying more money because they’re actually working harder (now) that the numbers are going the wrong way. When everyone’s rising with the tide, you probably shouldn’t be paying as much.

MAIDEN When remuneration reports are rejected, the same shareholders at the same meeting overwhelmingly support the re-election of the directors who presented the report – seems illogical, doesn’t it?

COLVIN Does it? It is such an emotive issue. I think it is used as a grab bag for voting dissatisfaction against lots of other things. There’s often other angst about the share price: “This is my retirement saving, I’m angry … I’m not quite sure how to deal with it, but I’ll vote against the remuneration report.”

O’SULLIVAN: Institutions don’t vote against remuneration proposals unless we’ve analysed them and are dissatisfied. The best thing is to engage with the company about the bad things in their remuneration policy, or anything else. Our beneficiaries depend substantially, in their retirement, on the success of these companies. We don’t want to be bagging them in the public. It’s much better to approach them privately, see if we can persuade them to adopt a better course, or at least satisfy us that the course that they’ve taken is actually correct.

MAIDEN And when that doesn’t happen?

O’SULLIVAN That’s why there is the beginning of voting against particular directors. There are failures for which I think you can legitimately say that independent directors didn’t play the role that we would have expected of unconflicted representatives.

MAIDEN Do remuneration committees work? When the board votes on those reports, would there be directors thinking: “I can just tick this – the work’s been done?”

EDDINGTON It’s not uncommon for a non-executive director who’s not on the remuneration committee to ask for clarification because they know it’s going to be very much in the public domain, as it should be, and they’re going to have to defend it collectively.

If you want every member of the board involved in the minutiae of compensation or remuneration, or the risk and governance, directors will need to meet once a week and they’ll need to be full-time.

COLVIN Most boards don’t appoint a CEO more than once. Some don’t do it at all, because they become a board member when it’s been done previously. If the board’s doing it correctly, they will also have the remuneration consultants, the lawyers, the governance people, reporting directly to the subcommittee first, and then secondly to the whole board.

O’SULLIVAN The damage is frequently done with the original contract, and can’t be undone. That’s what gives rise to golden parachutes and all these kinds of “welcome-aboard” payments.

LAWRENCE Part of the problem is that when a board is recruiting a new CEO, it’s like drawing up a pre-nup agreement when you’re trying to convince somebody to marry you.

And we’ve seen it go wrong spectacularly fast.

COLVIN When I was drafting them, the best boards started the contract well in advance of looking for anybody. They had a big discussion about how far they’d go, the hot spots. The board was basically ready to say: “Whoever’s doing the negotiation … has authority to those levels. Come back and chat to us if we get him.”

EDDINGTON I didn’t get a golden goodbye. I would never have accepted one. I wouldn’t expect it to be in the contract. And my view is it’s nonsense, really. You don’t need to put it in there. Good chief executives will front up as long as you offer them a good competitive salary. They don’t want payment for failure either.

But look at (US insurer American International Group) and their bonus payments. Not all boards are smart.

MAIDEN Are the remuneration and search consultants part of the answer or part of the problem?

O’SULLIVAN A bit of both.

COLVIN The lawyers, if they’re doing their job well, will set out the contract and the structure. They won’t advise – because they’re not qualified – on remuneration levels. A lawyer will be asked: is this permissible under law. Their job is to say it is or it isn’t.

Then the next question of the remuneration consultant is: is this fair and reasonable? Yes or no? Remuneration consultants are good up to a point, and then it’s got to come back to commonsense.

LAWRENCE: Unfortunately we see, too many times, boards hiding behind their advice. We’ll say, “Why did you decide to pay your CEO an amount which, if I compare him to the obvious peers, his base for turning up is much higher?” And they say, “Oh, we got an appropriate peergroup from an independent consultant.”

Remuneration is one of the very few insights you get into the relationship between the executives and the board. An executive team that is able to get the remuneration outcomes it wants most of the time is also more likely to be able to come to a board with a merger proposal that perhaps shouldn’t have been done, and get it through. It’s an insight for how that relationship works.

O’SULLIVAN One of the issues in a merger was options that people had. They got a remuneration company to reconstruct what would have happened at an assumed share price.

They paid people for forgone options packages that would have been underwater by 10,000 fathoms if they’d been allowed to run.

When we confronted the chairman, he was sort of laughing with us, saying, “Well, I don’t blame you for not being able to understand it; I could never understand it either.”

That’s just not an independent chairman’s role – to give something a tick when he plainly had no idea how it was calculated.

MAIDEN What is the difference between short and long-term incentives?

O’SULLIVAN One is to encourage making decisions that pay off in the long term. And we’ve always said we don’t mind if people don’t get the rewards for that after they’ve left the company.

Short-term incentives are frequently based not only on financial, but non-financial considerations which (companies say) are sometimes difficult to disclose – but we are very sceptical about the non-disclosure.

LAWRENCE The Corporations Act doesn’t actually acknowledge short and long-term incentives’ existence. It just says any remuneration that is tied to a performance condition, you must disclose a detailed summary of the condition. In 2008, in the top 100 companies, 94 per cent of CEOs got more than 50 per cent of their target bonus, and 45 per cent got more than 100 per cent.

MAIDEN It does seem that it’s base pay in drag.

COLVIN Why not go back to where you get a base pay and a discretionary bonus? Many commentators say we’re not going to have any part of a (system) which allows the board to use their discretion – but that’s probably a trust issue.

Let’s say a chairman went to the shareholders and said: “We’re going to have a base pay. Then the CEO can have a bonus at the discretion of the board up to a set amount.” The chairman may say, “I’m going to do that because I don’t know yet whether the CEO’s going to work out. I also don’t know whether we need to pay a little bit more to keep somebody around in really tough times, or really good times.”

However, this will give the board the flexibility to adjust up and down to meet the existing circumstances without relying on any complicated formulas.

O’SULLIVAN Very largely, the behaviour over the last 10 years has caused a loss of trust. I think you can never have a situation where you don’t disclose the basis for your discretionary judgement.

COLVIN But if the chairman got up and said, “Look, I have awarded 50per cent, because we have been on the edge of going out (of business)”, are you giving really confidential information to your competitors?

Are you spooking the market by being really honest?

LAWRENCE Just say that the board exercises discretion this year to reduce these payments.

EDDINGTON Boards will never do that, nor should they. If a chairman’s going to have a performance discussion with the chief executive he doesn’t want to read about it in the annual report – or the newspapers the next day.

LAWRENCEThe problem is we do (read) about the non-performance payments.

EDDINGTON You don’t read about the conversation where the chairman says to the chief executive, “I think you’ve earned 70 per cent of your bonus this year.”

That’s the sort of conversation a good chairman has with his chief executive, although clearly the size of the bonus should be in the public domain.

MAIDEN Do we have agreement that simplification of remuneration policies is desirable?

EDDINGTON Simple has always got to be better. If you’ve got a formula everyone can understand quite quickly – staff and shareholders – then you’re probably in the right place.

If you need a PhD in mathematics to work it out, self-evidently it’s wrong. People don’t trust what they don’t understand.

MAIDEN Finally, what do you think is going to be the biggest change to remuneration policy that comes out of this?

COLVIN I think one will be something which we haven’t got on to: a focus on what does remuneration do in terms of the culture of the organisation, not only in terms of who we are and what we do, but the ethics and the whole structure that goes behind that.

EDDINGTON I hope that all this focus on remuneration which we’re seeing now will result in clear and hopefully simpler compensation packages for executives that are tied to the things that matter in the business.

O’SULLIVAN What ought to happen is that boards should understand that in relation to some of these bad remuneration policies, responsibility is with them.

If the same people repeat the same errors, then the ultimate recourse is to say to these people, “We really need to get somebody else in there.”

LAWRENCE What I hope will happen is that boards think about whattheir stance on executive pay says about their position with theirshareholders and with the community.

Trust is a precious commodity. It’s hard to get, very easy to lose.

TOP TABLE

SIR ROD EDDINGTON Chairman-designate of ANZ Bank. He is also a director of News Corporation and Rio Tinto and a former chief executive of British Airways. Chairs Prime Minister Kevin Rudd’s Business Advisory Council.

MICHAEL O’SULLIVAN President of the Australian Council of Superannuation Investors, which advises super funds on corporate governance and other investment risks. Deputy chairman of CARE Super.

MARTIN LAWRENCE Co-head of Asia-Pacific governance research for RiskMetrics, responsible for Australia and NZ proxy research. Former manager corporate governance at BT Financial Group’s Governance Advisory Service.

JOHN COLVIN Chief executive of the Australian Institute of Company Directors. A lawyer by training, he was formerly a partner at legal firm Freehills, specialising in employment law and corporate governance, advising companies on executive appointments.

http://business.theage.com.au/business/where-to-after-the-fall-20090320-94ko.html

Dennis Shanahan, Political editor | March 20, 2009
Article from: The Australian

THE essence of the continuing dispute in the Senate over the Rudd Government’s promise to rip up John Howard’s Work Choices legislation is politics pure and simple, and politics will solve the impasse one way or another.

Liberal divisions and delays of leadership have allowed the Rudd Government to build a completely misleading, and completely devastating, portrayal of the Coalition’s policy on industrial relations in an economic atmosphere that should have allowed a politically viable and credible Opposition position.

Instead, the industrial relations debate is now firmly stamped as Senate obstruction and Coalition negativity coupled with the Liberal resurrection of Work Choices.

Dithering and inconsistency on the Liberals’ behalf means the opportunity to galvanise growing industry dissension over the industrial relations laws, after notable silence, has been missed. So, too, has the opportunity to portray the Coalition as taking an unpopular decision to defend jobs, just as Howard did with the Tasmanian logging decision in the 2004 election.

Julia Gillard has won the politics and policy of the industrial relations laws and doesn’t require a double-dissolution trigger or the threat of an early election for that victory.

The Deputy Prime Minister wants to get the industrial relations laws in place and working according to schedule by piling up political pressure on the Coalition and on Family First senator Steve Fielding.

She’s playing it hard, will have an overwhelming policy victory even if she gives more ground and has exploited Malcolm Turnbull’s indecision and discomfort on industrial relations to the hilt.

After months of promises, consultation, draft legislation, public debate, shifting allegiances and positions and Coalition rifts, the final days of negotiation came down to one provision involving the unfair dismissal laws. This is not the resurrection of Work Choices, which Howard himself gutted and diluted when the realisation struck that the laws had gone further than necessary, and far beyond what the Australian people were prepared to accept. Howard genuinely believed his laws would continue to create jobs into the future, but only began to backtrack on contentious issues when it was so late it didn’t matter what he did, he couldn’t get the public to listen.

Nor is the argument tenable that the Government’s mandate on one provision in a raft of legislation is being undemocratically undermined by the Senate.

Labor fought and lost an election on the GST but opposed it tooth and nail in its entirety, and then ran another election promising to roll back the GST. What’s more, the Government has accepted amendments by the barrow load without screaming about its loss of mandate, as is the case with most lengthy, complex bills.

The sticking point in this mandate argument is a provision that at most will affect 46,000 small businesses and 735,00 employees of small business out of a sector where there are 2.4 million small businesses and more than six million employees.

But for Gillard and the Rudd Government the provision defining a small business as one with fewer than 15 employees, for the implementation of unfair dismissal rules, has become a totemic issue and a political vehicle to distort the politics in its favour.

Gillard, as the prosecutor of the Government’s industrial relations proposals, has been able to take advantage of Liberal divisions and the party leader’s vacillation on unfair dismissals to spook Coalition MPs and extend her mandate on union rights of entry. The spectre that has scared the Opposition is the thought of running another election on Work Choices after it was so discredited at the last election. Yet, talk of the Government straining at the leash for an early double-dissolution election to be fought on industrial relations doesn’t bear close scrutiny.

At every opportunity to create a double-dissolution trigger through Senate rejection twice of the same bill, separated by three months, the Rudd Government has baulked. The bills have either been dropped entirely – as was the case with the doomed Fuel Watch scheme – or amendments have been accepted.

As Labor in Queensland faces a huge backlash, as unemployment races towards an annual forecast in just months and as business begins to stir on the job-limiting nature of some of the industrial relations laws, it stretches credulity that the highly political Prime Minister would willingly put his Government at risk.

Yet there are Coalition MPs who still quail at the thought of running on long-held Liberal principles and policy, and facing an election as a result.

Certainly, Brendan Nelson did his best to bury Work Choices during his ill-fated and short-lived leadership after the 2007 election defeat. It was something Nelson had to do, to kill off unpalatable policies and reshape Liberal strategy.

Unfortunately for Nelson, the killing and burying of Work Choices was not followed by the creation of a job-supporting Liberal policy that tapped into the Howard-Costello tradition of looking after blue-collar workers and their families as never before.

Turnbull, as the new leader, was determined to fight the Rudd Government on the issue of economic management and avoid what he saw as the dead weight of Work Choices and the climate-change scepticism of the Howard years.

Last December he publicly ceded the ground on unfair dismissal laws to the Government and handed Gillard her mandate argument on a platter, saying the Opposition would respect the Government’s election promise of restricting the unfair dismissal breaks to small businesses of 15 or fewer employees. Before Work Choices it had been 20 employees and after Work Choices it was 100 employees. Turnbull simply backed Gillard’s plan.

It is that explicit commitment on the 15 employees and unfair dismissals that Gillard has been able to turn into a pressure point for the Senate and a question of character for Turnbull.

The number of employees for a small business has also become totemic within the Liberal Party because of Peter Costello’s advocacy for a return to 20 and the shadow cabinet’s counter-bid of 25.

In the end Labor will get a substantial victory on policy and politics by virtue of business’s silence and the Liberals’ inconsistency.

http://www.theaustralian.news.com.au/story/0,25197,25212483-17301,00.html

Patricia Karvelas, Political correspondent | March 20, 2009
Article from: The Australian

THE Coalition last night adopted Peter Costello’s position on unfair dismissal, shifting closer to Labor – but the Rudd Government’s bill to destroy Work Choices was still destined to fail unless Julia Gillard agreed to a last-minute compromise today.

The federal Liberal and National parties decided at an emergency meeting last night to join independent senators Steve Fielding and Nick Xenophon to fight for an amendment to the bill to increase the definition of a small business from Labor’s position of 15 full-time employees to 20 workers.

While the Coalition’s own amendment was for small business to be classed as 25 workers, the special partyroom meeting decided to ultimately support Senator Xenophon’s changes.

The Coalition backdown on the last sticking point of the proposed laws comes after Mr Costello suggested the definition of 20 at last week’s heated partyroom meeting. The former treasurer argued that the figure should be 20 in line with the definition used by the Australian Bureau of Statistics.

Last night, after its amendment was voted down in the Senate, the Coalition voted for Senator Xenophon’s amendment.

The Coalition’s compromise is a victory for Mr Costello, who had put the definition forward but was told shadow cabinet had decided on the more ambitious target of 25.

Ms Gillard, the Workplace Relations Minister, is now under pressure to compromise on her definition of a small business or risk seeing her entire bill fail.

The Government will today test the resolve of Opposition Leader Malcolm Turnbull to stand firm on his new position on the bill.

The Government will change the definition back to 15 when the Fair Work bill returns to the lower house.

Opposition workplace relations spokesman Michael Keenan said last night the Coalition would fight for its amendment and would not accept Labor’s push to change it back to 15.

“The Coalition parties will not change our minds,” Mr Keenan told The Australian.

If the Coalition votes against the bill after the Government uses its numbers to change it to 15, Ms Gillard will paint Mr Turnbull as being pro-Work Choices and failing to keep his word to kill the workplace laws championed by John Howard.

Senator Xenophon and Senator Fielding, of Family First, were also expected to vote to increase the small business employee threshold definition to 20, making it impossible for the Government to get its laws passed intact.

The last-minute turnaround from the Coalition meant the bill was on track to pass the Senate with the new definition of a small business. But the Government vowed to change the definition back to what it proposed in the federal election, 15 employees, in the lower house, where it has the numbers. The bill will then be returned to the Senate for a second vote.

The Government has extended the parliamentary session to allow it to reintroduce the bill today, and is vowing to have it in place by July 1. The decision not to wait three months to reintroduce the bill means it will not form a trigger for a double dissolution.

Mr Keenan confirmed the Coalition would “insist” on the Senate amendment when the bill returns to the upper house for a second time.

He accused the Government of putting their pride ahead of the successful passage of the bill.

“The idea that the Government will throw away its whole new system over the definition of a small business would be putting the minister’s pride over any sensible outcome,” he said.

The Coalition has essentially also decided not to insist on its other amendments on union right of entry, conceding the proposals did not have a chance at success without the support of the independent senators. The Rudd Government has repeatedly ruled out changes to the provision.

Ms Gillard revealed figures that showed that if the definition of small business was changed from 15 to 20, an extra 485,720 workers would not be offered unfair dismissal protection.

If the Coalition was successful in getting its figure of 25 up, 735,000 workers would lose the protection.

http://www.theaustralian.news.com.au/story/0,25197,25213651-601,00.html

Mark Davis, Political Correspondent
March 20, 2009

SENIOR Federal Government ministers plan an intense election-style campaign designed to direct worker anxiety over job losses against the Coalition and to put Malcolm Turnbull’s leadership under pressure if the Senate rejects Labor’s industrial relations legislation.

With the Government heading for a confrontation with the Senate, the Prime Minister, Kevin Rudd, yesterday accused the Opposition of frustrating the electorate’s will on industrial relations and exposing workers to having entitlements such as redundancy pay ripped away as the economy slowed.

The Workplace Relations Minister, Julia Gillard, said 700,000 workers would lose protections against unfair sacking under Opposition-backed amendments to the Fair Work Bill.

The Government plans to use the Parliamentary recess to re-run the 2007 election debate on industrial relations if the Senate waters down Labor’s unfair dismissal protections.

Mr Rudd made it clear yesterday that the Government would not accept amendments increasing the number of small businesses exempt from the bill’s full suite of unfair dismissal rules.

Under the bill, businesses with less than 15 employees would be allowed to sack a worker within 12 months of hiring the employee without any redress under unfair dismissal rules.

The Opposition, Family First Senator Steve Fielding and South Australian independent Senator Nick Xenophon were last night expected to amend the bill to extend these special rules to all businesses with less than 20 employees on a full-time equivalent basis.

The Government plans to keep Parliament sitting on the weekend if necessary so it can use its numbers in the House of Representatives to reject these amendments and send the bill back to the Senate. If the Senate then insists on the amendments the legislation will be defeated.

That would mean Labor’s reforms – new national employment entitlements, minimum wage-fixing arrangements and stronger legal backing for unions and collective bargaining – would be stymied and the former Howard government’s Work Choices legislation would continue regulating workplaces.

Mr Turnbull has said the Opposition would insist on its amendments. If the Government can persuade either Senator Fielding or Senator Xenophon not to insist on the unfair dismissal amendment, the legislation will get through.

If the legislation is blocked, Labor will bring the bill back when Parliament resumes in winter, setting up a potential trigger for a double dissolution election if the Senate fails to pass the bill a second time.

Mr Rudd said the Liberal Party was split into two factions: purists, led by the former Treasurer Peter Costello, who wanted to deregulate the labour market and pretenders, led by Mr Turnbull, who wanted to avoid a backlash from voters on industrial relations.

He predicted that Mr Costello would take over the Liberal leadership from Mr Turnbull. “It will be like Frankenstein having the electrodes reconnected as far as Work Choices is concerned.”

http://www.smh.com.au/national/labor-to-undermine-turnbull-over-ir-laws-20090319-93cr.html?page=-1

Posted Fri Mar 20, 2009 2:45am AEDT
Updated Fri Mar 20, 2009 7:16am AEDT

The Senate changed the Bill to expand the number of businesses that would have special unfair dismissal rules.

The Senate has passed the Government’s Fair Work Bill in an amended form after debating it into the early hours of this morning.

But the amended bill is likely to be rejected when it returns to the Lower House and that is already prompting talk of another election.

The Senate changed the Bill to expand the number of businesses that would have special unfair dismissal rules.

The Government wants it limited to firms with less than 15 staff, the Senate says it should be any business with the equivalent of 20 full-time staff.

Human services Minister Joe Ludwig says the Government has a mandate for 15.

“We put the detail of what we would actually do and I am here now doing just that,” Mr Ludwig said.

“It was crystal clear what we were going to do when we got to office.”

Family First’s Steve Fielding has questioned if the Government would dare use it as a trigger for another election.

“Tell this chamber how you’re going to go to the public with a double dissolution around 15,” Senator Fielding said.

Greens Leader Bob Brown has warned the Opposition, Family First and independent senator Nick Xenophon that if they insist on their change, they risk the Government calling another election.

“Accept the judgement of the people in 2007 or face the ire of the people in 2009,” Senator Brown said.

The Bill goes back to the House of Representatives later this morning where the Government is likely to reject the Senate’s changes.

http://www.abc.net.au/news/stories/2009/03/20/2521274.htm

March 19, 2009 – 8:59AM

The federal government will not budge on its planned changes to workplace relations.

On the last scheduled day of sittings before parliament takes a seven-week break, the government’s Fair Work bill remains snagged in the upper house.

The sticking point appears to be what defines a small business under the bill’s unfair dismissal provisions.

The draft laws provide special arrangements for businesses with fewer than 15 employees, but two key crossbench senators want that number lifted to 20.

Workplace Relations Minister Julia Gillard is refusing to budge, saying Labor has a mandate for its number.

“We took every aspect of this policy to the last election,” she told ABC Radio.

She said the proposed unfair dismissal provisions were “crystal clear” at the time, “including the number 15”.

“It is the number for redundancy law in this country,” she said, adding businesses with fewer than 15 employees were not obligated by the award system to pay redundancies.

Ms Gillard says she has told crossbench senators Nick Xenophon and Steve Fielding the government feels honour-bound to deliver what it took to the Australian people.

She said she would not countenance any result other than Senate approval on Thursday.

“I’m not contemplating any other outcome,” she said, adding parliament would sit for as late as it takes.

Opposition finance spokeswoman Helen Coonan says the coalition has always acknowledged Labor had a mandate for workplace changes, but the government had overstepped the mark. “The mandate has been pushed beyond the mandate,” she told ABC Television on Thursday.

The coalition would work “all day” with the government and crossbench senators to address the areas where it believed Labor had exceeded its mandate, she said.

http://news.theage.com.au/breaking-news-national/govt-vows-to-stand-firm-on-ir-in-senate-20090319-92gf.html

The Senate has voted to remove a clause granting the Exclusive Brethren religious order an exclusion from parts of the Fair Work Bill.

Senators voted 33 to 31 to remove the exemption, which the Greens Leader Bob Brown says allowed Exclusive Brethren businessmen the right to refuse unions entry to their workplaces.

Senator Brown says the move will apply to all workplaces run by members of the religious order, including schools.

“It means that there are 4,000 people in 33 workplaces in Australia who were denied the opportunity to have unions if they wanted to come and sort out problems in those workplaces, they now have the same rights as people all over Australia,” he said.

http://www.abc.net.au/news/stories/2009/03/18/2520104.htm?section=australia

Jacob Saulwick and Phillip Coorey
March 19, 2009

THE existing contracts of executives will be unaffected by the clampdown on “golden handshakes” announced by the Government yesterday as part of its campaign against greed.

After months of railing against excessive executive salaries, the Federal Government flagged laws giving shareholders more power to control the size of exit payments granted to executives.

The Treasurer, Wayne Swan, also charged the Productivity Commission with a nine-month, sweeping review of executive pay, meaning further limitations could be imposed next year, before the federal election.

Mr Swan said the community was “rightly offended” by excessive bonuses paid to some executives. He framed the measures as necessary to rebuilding confidence in the economy.

“If there isn’t a level of trust between executives and workers and the wider community we cannot build a stronger economy for the future,” Mr Swan said.

Under the changes, the Government will lower the maximum payment a company can grant a departing executive without asking shareholders.

As it stands, companies can lavish exit payments on executives of up to seven times their annual remuneration without seeking shareholder approval.

The changes to the Corporations Act will make termination payments limited to one year’s base salary – excluding share options and other instruments used to drive up pay – before requiring shareholder assent.

The Government also widened the range of executives whose termination payments need to be put to shareholders. But the laws will not be retrospective, so they will have little effect on the current crop of executives.

The announcement will bolster the case the Prime Minister, Kevin Rudd, makes at the Group of 20 summit in London on April 2, where he will urge other nations to curb executive largesse. He will also be armed with as-yet-unreleased recommendations from the Australian Prudential Regulation Authority on reducing greed-induced risk-taking in financial institutions.

Mr Rudd has been coming under pressure from his own back bench to do more than talk about executive salaries.

Several MPs have raised the matter at successive caucus meetings over the past fortnight, citing anger in their electorates.

Last year Malcolm Turnbull said shareholders should decide the entire remuneration of executives and board members, not just their severance packages.

Yesterday the Opposition Leader said a review was not needed and his proposal was “the simplest and fairest solution”.

The Minister for Corporate Law, Nick Sherry, said the “retirement gold watch” had been “replaced by a truckload of gold bullion”. He cited as examples Owen Hegarty at OZ Minerals, who received a bonus of $8.35 million, and John Alexander’s $15 million bonus from Consolidated Media – as payments that would be difficult to make under the new legislation.

The director of the corporate governance advisers Riskmetrics, Dean Paatsch, praised the initiative. “I think they’ve got the balance right. They are acting to constrain the worst excesses of compensation structures.”

Allan Fels has been appointed an associate to the Productivity Commission and will help inquire into executive pay. The Government said all options are on the table for the inquiry, which will report early next year.

The chief executive of the Australian Institute of Company Directors, John Colvin, lamented not being consulted. “Acting in haste or going too far with legislative solutions could be counter-productive,” he said.

The Business Council of Australia said excessive corporate salaries “that have occurred overseas have not been such an issue here in Australia”.

Sandy Easterbrook, director of the advisory firm CGI Glass Lewis, said boards had responded to complaints about excessive exit payments and would no longer be likely to grant them. “It is shutting the door when you don’t need to,” he said.

http://business.smh.com.au/business/rudd-takes-action-on-bosses-pay-20090318-927w.html?sssdmh=dm16.367000

Patricia Karvelas, Political correspondent | March 19, 2009

THE Rudd Government faces the defeat of its workplace legislation today unless Julia Gillard agrees to last-minute changes to Labor’s unfair dismissal policy to appease crossbench senators.

Independent senators Nick Xenophon and Steve Fielding are threatening to vote against the Fair Work Bill unless they secure a higher threshold for unfair dismissal provisions so a larger number of new employees is exempt from making claims for 12months.

Both senators want the Government to define small business as employing up to 20 staff, rather than Labor’s preferred 15.

But the Coalition, which has not revealed how it will vote on the bill, acknowledged that several of Labor’s amendments resolved their objections to the bill.

The Opposition’s workplace relations spokesman Michael Keenan told The Australian yesterday the Government had made various concessions that made the bill more appealing.

“They have essentially acknowledged the concerns that we have about greenfields (new project) agreements and they have accommodated them,” he said. “Our concerns were that the way they had structured them was going to make it very difficult to get projects off the ground without the approval of union officials.

“We are glad the Government’s seen the sense of some of the things we’ve proposed.”

Mr Keenan’s comments signal that the Coalition is moving to a position where it can support the bill, pending movement on unfair dismissal laws. The Opposition is trying to put itself in the same political position as the crossbenchers, in an effort to lose the stigma of being the party of Work Choices.

The Greens have managed to secure another amendment to the IR legislation that eliminates a clause, also contained in Work Choices, allowing employers who are followers of the Brethren religious group to get a special certificate exempting them on the grounds of their faith from the right of entry regime.

Ms Gillard, the Workplace Relations Minister, urged senators to “get rid of Work Choices”.

“We are insisting on our election policy – that is what the Australian people voted for,” she told ABC’s Lateline program.

But Senator Xenophon told The Australian he would not be able to support the bill unless Ms Gillard compromised on unfair dismissal.

“It puts me in a very difficult position,” he said. “I can’t guarantee the success of the bill unless that issue is resolved.”

It comes after a business survey revealed nearly half of all employers feared the new industrial laws would lead to job losses and higher business costs. The Australian Chamber of Commerce and Industry’s chief executive, Peter Anderson, said negotiations in the Senate on changes to Labor’s Fair Work Bill were crucial to jobs.

Mr Anderson said the chamber’s survey of investor confidence found 47 per cent of small business owners believed the legislation would weaken their ability to maintain current employment levels. More than half – 54 per cent – believed removing the current exemption for small businesses employing fewer than 100 staff from unfair dismissal laws would dissuade them from employing more staff.

Ms Gillard was forced to concede yesterday the Government would need to intervene to ensure retail and restaurant businesses were not made to pay workers more, after her plan for revamping award minimum employment conditions was drawn up.

Proposed pay rises that could flow to many workers from a government-commissioned review by the industrial umpire – which have sparked warnings from employers of large-scale job losses – challenge Ms Gillard’s claim that Labor’s industrial regime would not cost jobs.

“I acknowledge that there is an issue here for restaurant owners that they are desperately concerned about,” she said.

http://www.theaustralian.news.com.au/story/0,25197,25208947-5013404,00.html