The ACT Integrity Commission's first ever public examinations into the procurement process for a school building project have centred around something called the Secure Local Jobs Code.
This legislation came from a deal between the ACT government and the unions which continues to this day.
What was the memorandum of understanding?
On March 28, 2015, Chief Minister Andrew Barr and UnionsACT signed an "Agreed Memorandum of Understanding on Procurement of Works and Services by the ACT Government".
Under this memorandum, the government was to provide a list of tenderers for each government contract to UnionsACT and relevant unions.
"Only providers/performers of works and services who meet the set criteria will be pre-qualified," the document said.
Unions would have 10 working days to "advise government of its views as to whether or not the applicant meets its employee and industrial relations obligations."
When the memorandum became public in March 2016, the Master Builders Association said it was "deeply concerned about the integrity of the ACT Government's tendering processes" while the Canberra Business Chamber said it would lead to additional costs.
Then opposition leader Jeremy Hanson called for it to be terminated in a speech to the Legislative Assembly on April 6, 2016.
He said: "To use the safety or deaths of workers in construction or any other industry as a smokescreen to try to cover up this unethical, corrupted power-sharing agreement is contemptible. It is about power. It is about power that has rotted the integrity of this government, and at the heart of that is this corrupt MOU."
Andrew Barr at the time said the 2015 memorandum was an update to a document that had been around since 2005. He denied it gave unions a veto or undue influence over procurement decisions.
"The MOU is simply confirming the government's intention to contract only with companies that conduct their employment practices ethically and in accordance with the law," he said.
"I cannot believe that this is controversial. The workers that the MOU is designed to protect are often the most vulnerable in the community. These people work hard and their remuneration is often not large."
ACT Greens leader Shane Rattenbury noted that it was an agreement between the Labor party and the unions. He said it was "probably not how I would have drafted such a document" but that it was "benign document" because it operated subject to the Government Procurement Act 2001 and was not a legally binding agreement.
"I would like to remind those who are sceptical that officials in government procurement take their job very seriously," Mr Rattenbury said in 2016.
"They are professionals and they are subject to legal and ethical obligations. They do not just go around saying, "Oh, some union official said we have to award a tender to a particular company, so we will just go and do that." No. They follow proper processes as our public servants seek to do every single day that they turn up to their jobs."
What is the Secure Local Jobs Code?
Unions, including the Construction, Forestry, Maritime, Mining and Energy Union, lobbied the ACT government to replace the memorandum with the Secure Local Jobs Code.
CFMEU national secretary Zach Smith told the Integrity Commission his union and others advocated for legislation to "codify the sort of behaviour that government expects from people who wished to tender and perform government works."
Mr Smith said the memorandum wasn't a sufficient basis for public servants to make decisions on procurement.
"It facilitated information sharing and it facilitated process where unions could share concerns with government about contractors," he said.
"But it didn't carry the weight - sufficient weight that, you know, I believe that government officials could make decisions based on that information in every circumstance."
The government introduced the Government Procurement (Secure Local Jobs) Amendment Bill 2018 which sought to "ensure that public money goes only to businesses that do the right thing by their workers."
Mr Barr said the package would weed out sham contracting arrangements and contractors who exploited visa workers and avoided their industrial, workers' compensation and tax obligations.
"The Bill will help to ensure there is a level playing field for those seeking ACT Government work and simplify the process businesses must undertake in order to secure ACT Government contracts," he said in a press release on August 2, 2018.
The Secure Local Jobs Code came into force on January 15, 2019.
It required all businesses tendering for construction, cleaning, security or traffic management work to hold a Secure Local Jobs Certificate and to meet specific workplace standards on:
- pay and employment conditions
- insurance, tax and superannuation
- health and safety, including training and inductions
- collective bargaining, freedom of association and representation rights.
The Secure Local Jobs registrar was responsible for investigating any complaints made against companies who were allegedly breaking the code.
All contractors must have a valid certificate before they submit a tender for government work and they must ensure all subcontractors also hold a certificate.
A Secure Local Jobs Advisory Council was set up to advise the minister about the operation of the code. The members are appointed by the Industrial Relations Minister Mick Gentleman. Three of the six members of the advisory council are union officials, including Mr Smith.
Why did unions have a problem with the code?
Mr Smith told the commission that there were contractors "blatantly breaching" their obligations under section 15 of the code, which related to a companies' obligation to make their employees aware of their right to collectively bargain.
The inaugural registrar was a person who the commission has given the pseudonym John Green.
Mr Green said he understood the federal Fair Work Act set out the process by which companies could appoint bargaining representatives, but the unions felt the process was being gamed by certain contractors.
One of these contractors was Canberra construction firm Manteena, who had declined to engage with the union to negotiate an enterprise agreement for its staff.
From March 1, 2022, authorised government officers have had the power to enter and inspect businesses to investigate potential breaches of the code.
The registrar can now suspend a certificate or impose conditions if they suspect a business is not compliant. The registrar can issue infringement points for noncompliance. If a business accumulates 100 points over two years, their certificate can be suspended or cancelled.
The code was also updated so that a businesses past performance is considered when awarding contracts for territory-funded work.
What happened to the memorandum of understanding?
Mr Green told the commission the memorandum was never formally cancelled and it "fell by the wayside".
He said the convention of notifying UnionsACT of tenderers for government contracts continued when the Secure Local Jobs Code came into force.
Mr Smith told the commission the union expected if it raised concerns about certain contractors with the relevant government agency that this would be considered in the tender process.
