Despite the substitution of Prime Minister Tony Abbott and hardline Public Services Minister Eric Abetz for Malcolm Turnbull and Michaelia Cash, the Community and Public Services Union says that around 92 per cent of Commonwealth public servants are holding out for a better pay deal and demanding a shift in the government’s approach to cutting their terms and conditions.

While the size of the ‘no’ vote may be beginning to dwindle in some quarters – Department of Employment staff voted by a margin of 55 per cent to reject the government’s offer in December last year, compared with 95 per cent the year before – and a handful of smaller, less unionised agencies such as the Departments of Finance; Foreign Affairs and Trade and Social Services have capitulated, there is no denying that the government still has a fierce fight on its hands.

APS staff across a number of key departments are still refusing to sign new agreements, including those at the Departments of Human Services; Employment and Immigration and Border Protection as well as the Australian Taxation Office, the Australian Bureau of Statistics and the National Disability Insurance Agency and an earlier Government News magazine feature still has poignancy.

The following story first appeared in Government News magazine in October/November 2015. 

As industrial relations reach crisis point in the Australian Public Service and the federal government and the unions butt heads, Marie Sansom asks: how did we get here, what damage has been done, and how can the deadlock be broken?

Enterprise agreements for all 114 APS government agencies and departments elapsed on 30 June 2014. Negotiations on some agreements began in April last year. But little has been resolved, and the level of industrial activity has been growing. Canberra is not a happy place.

There remains an enormous stack of more than 100 unsigned draft enterprise agreements on the table. Unionised public servants are taking the fight to the streets and ramping up industrial action in airports, offices, service centres, call centres and ports. It is starting to affect the public – and the pubic consciousness.

To make matters worse, most of the agreements left unsigned cover the vast majority of 150,000 APS staff, with the largest agencies – the Departments of Human Services, Defence, Immigration and Border Protection, Health, Agriculture and the Australian Tax Office – all holding out for a better deal.

Part of the problem for staff at larger departments is that they suffer from the ‘tyranny of numbers’. If they secure even minimal pay rises, the overall effect on the government’s bottom line can be serious. Conversely, a government drive to cut conditions and entitlements in larger departments can mean greater efficiency impacts and send a powerful message to all APS staff.

Smaller agencies or departments, which also tend to be the least unionised, have tended to be those first to fall into line and sign new enterprise agreements. But even so, only a handful have done so and these agreements cover only 4 per cent of APS staff.

First to capitulate was the NBN Co in June 2015. The government owned enterprise, which has around 3,000 staff, locked in a pay rise of 2.5 per cent in year one and 1 per cent in the second and third years, with no major cuts to conditions – but more than three-quarters of its employees are on individual contracts.

Others who have signed up to the mandated 4.5 per cent pay rise over three years include the Department of Communications, with around 390 staff; Treasury, which has around 950 staff; the Australian Public Service Commission; the Australian Office of Financial Management and the Australian Transport Safety Bureau. Staff at the 2600-strong Department of Social Services narrowly voted to accept the government’s pay offer in September.

Meanwhile a personnel change at the very top, with new Prime Minister Malcolm Turnbull and a new Minister for Public Services Michaelia Cash, has given unions some hope of a fresh start and a possible compromise after the hard-line stance taken under former Prime Minister Tony Abbott and his Minister for Public Services Eric Abetz.

But While Mr Turnbull has said he has no desire to prolong conflict with unions or attack the conditions of Australian workers, Ms Cash is a former senior industrial relations lawyer from Freehills law firm and a known union sceptic. The path ahead remains a rocky one, for both sides.

How did we get here?

The government’s hard-line stance and refusal to back down has no doubt contributed to the bloodletting, combined with below inflation pay offers and what the unions regard as blatant attempts to cut working conditions and entitlements.

Neither has it helped matters that the government initially came out and demanded productivity increases (which the unions believe means longer working hours and lower staff numbers) in return for meagre pay rises.

Another gambit was an attempt to remove the 15.4 per cent guaranteed employer’s superannuation contribution from enterprise agreements – leaving them open to the possibility of being cut later on by Finance Minister Mathias Cormann.

Dr John O’Brien from Sydney University Business School’s Work and Organisational Studies blames the stalemate on the federal government imposing an official ceiling on wage increases (4.5 per cent over three years) across every department and agency for the first time ever, while simultaneously trying to dilute conditions and made deep cuts to APS jobs.

Dr O’Brien says this gave little room for manoeuvre, and meant discussions were unlikely to proceed in good faith. “It seems to me that’s a recipe for industrial strife,” he says. “What’s interesting is the imposition of a uniform wage increase across the APS and the level of public sector industrial action, which really goes back to pre-Keating government days. It’s pretty unprecedented.

Dr O’Brien says the government made a mistake when it caved into political pressure and awarded Australian Defence Force (ADF) personnel a 6 per cent deal over three years, especially since the Defence Renumeration Tribunal recommended a pay rise of only 1.5 per cent a year. That set expectations across the APS.

The government’s initial offer to the ADF was just 1.05 per cent, combined with longer hours, less time off and a slower progression up the pay scale. “They’ve made a rod for their own back with the APS,” Dr O’ Brien says. “They should have kept the military separate, as they had done in the past.”

The above average ADF pay rise could also increase pay differentials and reinforce the cultural division between military staff and Defence APS civilian staff. Employment relations and public sector administration specialist Dr Keri Spooner, Senior Lecturer at Sydney’s University of Technology, said the dispute is one of the most serious rifts between the government and public servants she has ever seen.

Dr Spooner said she suspects the government’s proposed cuts to conditions, low pay increases and flexing of control are a way of downsizing the APS by getting public servants to quit without having to be offered redundancy pay outs.

“Whether there’s a degree of trying to move people out, avoiding compulsory retrenchment pay, making people toe the line and making it a little less attractive to hand around, I  get that feeling they’re trying to shrink the workforce,” she says.

The question is how many more staff the APS can afford to lose without a profound impact on services, particularly given it has already lost around 16,500 jobs since the Coalition took office in September 2013. The government’s actions could also be a way of setting trends for industrial relations across the whole economy, Dr Spooner says.

“You often see more extreme behaviour in the public sector, which is surprising to most people,” she says. “It’s about casualisation. What they’ve been trying to do across the board is remove or reduce the movement between casuals and permanent. Either there’s no guarantee or there’s a longer waiting period.”

But Dr Spooner says the major sticking point for public servants during negotiations on enterprise agreements has been less about pay and more about the government’s attack on conditions and entitlements. “1.5 per cent is actually pretty high at the moment, compared to the private sector.”

Few public servants would say they are in it for the money. Rather it is the chance to do some worthwhile, coupled with what the public sector has traditionally been seen as being better at than the private sector: providing workplace flexibility.

But another reason for the ongoing conflict is that the government has slashed departmental budgets, and departmental heads simply don’t have the money for wage increases.

The damage done

Dr Spooner warns that cuts to working conditions could lead to a public service brain drain and reduce graduate recruitment, as people saw the private sector employers as more enlightened. “If you reduce or don’t keep up with employment conditions people leave, it isn’t always the people you want to leave either,” Dr Spooner says.

“The government is losing a lot of talented people, and they are not recruiting them in the numbers they will need into the future. The long-term consequence is a declining public service.”

She says the consequences of this brain drain, along with protracted negotiations and strikes, could take their toll on the lives and the morale of remaining APS staff. “People stay because they can’t go somewhere else, but they are less engaged with their organisation. That can lead to depression, alcoholism, people feeling like they’re wage slaves, like they are not valued.”

But it is not just the impact this bitter dispute is having on public servants but also the public’s optimism and on their perceptions of government and the public service which is also at stake. “There’s that feeling of resignation and depression, that things aren’t good in the wider community and that there’s something wrong and the economy isn’t doing well when there’s a lot of strikes,” says Dr Spooner.

“It was once seen as admirable to work in the public service. It was a respected institution. We should be careful about how that translates into community views about government and the public service. We can’t ignore that.

“The public service is a major employer in this country. A sizeable percentage of citizens identify with government and government employment. I do believe that we are disconnecting the process of government from citizens.”

Dr Spooner said she is also concerned about the government’s capacity to uphold the law and police standards of behaviour if more people public servants leave following the cuts to budgets and staff.

For example, staff at the 700-strong Fair Work Ombudsman, which enforces minimum pay, voted in September to reject a 3.25 per cent pay rise over three years. The proposal also included 12 job cuts.

“In recent decades in Australia we have seen a shrinking of the regulatory and enforcement arm,” she observes. “We have food safety rules that aren’t implemented, working conditions not monitored – look at 7:Eleven [where many franchisees were found to be paying below minimum wage]. Everybody in the community knows, but who made it public? Not the regulatory body, but the media. That’s a very serious thing.”

Dr Spooner said the government’s approach to bargaining negotiations signals that industrial relations have become governed by political ideology, rather than by a business agenda. “Many successful private firms have incredible flexibility in place, in terms of moving from casual to permanent and flexible hours, and they’re not going broke. They’re doing really well. It’s very difficult to see the functional economic argument to this.

“It seems very clear that what we have seen in recent years is much more direct control over public service employment relations by politicians. We’re moving away from an independent civil service model.”

Dr O’Brien agrees. He says the uniform ceiling on wage increases that the government has been trying to enforce could backfire and reduce the interdepartmental mobility of APS staff. He says staff of the same seniority are often already paid quite differently depending on the agency they work for.

He says sustained strikes could mean that public sympathy for APS staff receded, but that the government will suffer in the long term. “Initially people will blame the unions but as the strikes go on people will start to blame the government because they haven’t solved the problem.”

How can we break the deadlock?

The way forward is less ideology and more flexibility, says Dr Spooner. “Malcolm Turnbull is certainly not going to want to be identified with reducing flexibility. He will want to be different. It is a political risk for him because he wants to have a different image.

It wasn’t a political risk for Tony Abbott because that’s the image he wanted,” she believes. “If Turnbull is a strategist – and I think he is – he wants his coming to be associated with an uplift in spirits, an optimism, and you don’t get that feeling among the proletariat when you see strikes like this.”

She says the current rash of strikes and their impact on the general public may influence the government to start making compromises to get those agreements signed. It is also in the interests of public servants and unions to go back to the negotiating table prepared to make concessions, not only to get some certainty over their working conditions but also because they will receive no back pay.

Dr Spooner says that token good will gestures from the government could be the key, such as “giving everybody a .5” and loading agreements at the back end, awarding a larger wage increase in year 1. “And if they need to manage people out, just do it. Don’t use this enterprise agreements as a tool for everything,” she advises.

Dr O’Brien says there will have to be a deal eventually. “Given the history of these things there will probably be a deal which is better from the union point of view than what’s on the table now but the government needs to save face.

“Who knows whether there will be just cosmetic changes with the new government, or whether they will stick to the ceiling on wages?”