1
Form F32
Application for a Bargaining Order
FWA use only
IN FAIR WORK AUSTRALIA
FWA Matter No.:
APPLICATION FOR A BARGAINING ORDER
Fair Work Act 2009—s.229
Applicant
Name:
Address:
Suburb:
Australian Services Union Taxation Officers’ Branch
:
116 Queensberry Street
Carlton South
State:Vic
Postcode:3053
If the Applicant is a company or organisation:
Mr Jeff Lapidos
Contact person:
ABN:
Contact details for the Applicant or contact person (if one is specified):
Mobile: 0419 335 675
Email:Jeff.Lapidos@asutax.asn.au
Telephone:
Fax:03) 9347 8781
Applicant’s representative (if any)
Name:
ABN: [If applicable]
Address:
Suburb:
Contact person:
Telephone:
Fax:
State:
Postcode:
Mobile:
Email:
Respondent(s) (Bargaining representative(s) against whom an order is
sought)
Name:
Australian Taxation Office
ABN: [If known]
26 Narellan Street
Address:
Canberra
Suburb:
State:ACT
Postcode:2600
A bargaining
representative for:
Contact person: David Diment
02 6216 2692
0411 209 791
Telephone:
Mobile:
Fax:
Email:
David.Diment2@ato.gov.au
2
1.
What is the industry of the employer?
Australian Public Service
2.
Other bargaining representatives:
Other union bargaining representatives
CPSU, Lvl 10, 440 Collins Street, Melbourne.
Contact: Rupert Evans, CPSU Deputy Secretary, Ph. 0408 223 025;
Email: Rupert.Evans@cpsu.org.au
MEAA, 2nd Floor,40 Brisbane Ave BARTON ACT 2600.
Contact: Michael White, Ph. 0413153057; Email: michael.white@alliance.org.au;
Non-union employee bargaining representatives
Alley, John; John.Alley@ato.gov.au
Beale, Rita: Rita.Beale@ato.gov.au
Berrett, Peter: Peter.Berrett@ato.gov.au
Bock, Vincent: Vincent.Bock@ato.gov.au
Brown, Ben: Ben.Brown@ato.gov.au
Flintoff, Paul; paul.flintoft@thinklegal.com.au
Gambotto, Leandro: Leandro.Gambotto@ato.gov.au
Giffard, Alan: Alan.Giffard@ato.gov.au
Johnson, Michael: Michael.Johnson@ato.gov.au
Keefe, Kerrie: Kerrie.Keefe@ato.gov.au
Kellahan, Christopher: Christopher.Kellahan@ato.gov.au
Lord, David; David.Lord2@ato.gov.au
McAuliffe, Brett: Brett.McAuliffe@ato.gov.au
Nalliah Suriyan: nalliahsuriyan@gmail.com
Pearse, Edward: Edward.Pearse@ato.gov.au
Pyman, Amanda; amanda.pyman@monash.edu
Randle, Sally: Sally.Randle@ato.gov.au
Roehr, Samuel; Samuel.Roehr@ato.gov.au
Seddon, Michael: Michael.Seddon@ATO.gov.au
Slugocki, Maciej: Maciej.Slugocki@ato.gov.au
3.
4.


Existing enterprise agreement(s):
ATO (General Employees) Agreement 2009. NED: 7 July 2011
ATO (EL2) Agreement 2009: NED: 30 June 2012
Notice under s. 229(4):
The notice under s. 229(4) was given to the ATO, CPSU, MEAA and the non-union
employee bargaining representatives by email on 27 July 2011. See Attachment 1.
5.
Grounds:
The ASU believes that the ATO is not complying with the good faith bargaining requirement
of section 228(1)(b) that it disclose relevant information (other than confidential or
commercially sensitive information) in a timely manner.
3
The parties are unable to agree on a new ATO enterprise agreement because the ATO's pay
offer of essentially 3% over three years is inadequate from an employee perspective given the
cost of living pressures expected over the life of the proposed Agreement.
The ASU and other bargaining representatives believe that the ATO should and can make a
better pay offer. To that end, the ASU wrote to the ATO with nine questions that in various
ways sought to better understand the ATO's budgetary situation and financial constraints, its
future staffing levels, productivities and related matters.
Those questions were first asked by the ASU on 14 July 2011. (See attachment 2). The ATO
responded by letter dated 25 July 2011 from David Diment. (See attachment 3).
Following our section 229(4) notice, the ATO provided a fuller answer by an email including
a letter dated 1 August 2011 from Mr David Diment, First Assistant Commissioner, ATO
People (See attachment 4a) and a report on the ATO Change Program by Aquitaine
Consulting (See attachment 4b).
The ATO failed to disclose relevant information in the following ways:
Question 1.
The ASU asked,
What are the assumptions the ATO has made in its assessment that the
proposed salary increase for the next three years is the maximum it can
afford over this period?
The ATO’s initial response was.
We believe the Enterprise Agreement package we offered to staff was the optimal
balance in terms of maximizing affordable pay outcomes and cost of conditions with
the ongoing need to ensure that the ATO is able to meet our business objectives.
Running a balanced budget is fundamental and as part of their role the ATO’s
Resource Forum continually investigate areas for potential savings. We are not
aware of any area of the ATO budget that has not been or is not currently being
reviewed.
A range of factors
must be taken into account in making budget decisions, they include:
meeting increases in volumes (e.g. as population increases so do our volumes).
The ATO is not funded for these volume increases;
delivering ongoing government savings targets such as savings from Gershon
and other one off savings targets;
new savings that must be delivered such as further accommodation savings,
travel savings, new efficiency dividend;
Managing community expectations relating to increasing demand for improved
services standards, more online capability;
Increases in supplier costs for things such as accommodation (rent, power, etc),
IT (ever increasing utilisation of IT capacity), postage/printing,
Employee costs - pay rises and the effect on our employee provisions, comcare
premium; and
4
To invest in our future.
Increases in the ATO budget as a result of New Policy Proposals (new work) cannot
be factored in to offset pay rises as this funding is quarantined to deliver on new
policy commitments.
The cumulative impact of these savings measures over the last 4 years means the
ATO has to undertake its ongoing work with $150m less. Savings required by
Government like the efficiency dividend are applied to the total ATO budget; we do
not reduce salary rates to offset these efficiencies. This means the ATO has to
continue to find savings in supplier costs in order to minimise the impact of staff
reductions.
The ASU was not satisfied with this response from the ATO. The ASU raised our concerns
with Commissioner D’Ascenzo in a note dated 27 July 2011 pursuant to section 229 (4) (b) of
the Fair Work Act.
The ASU explained,
The ATO response did not detail any assumptions or and any financial assumptions to show that
its calculation of 9% as affordable. We cannot assess from the ATO’s response whether the
ATO’s calculations were sound. We need to be able to make that assessment.
The ATO then provided the ASU with a further response to our question number 1.
The ATO stated in its letter dated 1 August from David Diment,
The key criteria the ATO used for analysing its budget situation to guide affordability in the
development of the Enterprise Agreement are to:
enable us to continue to do our work well, delivering our programs,
maintain our good conditions i.e. not reduce them to fund pay rises,
maintain our current good pay rates relative to APS averages; and
affordable within the ATO budget.
The ATO’s total budget for the next 3 years is listed under question 3 below. In broad terms the
ATO receives additional funding for implementation work associated with new policy and has a
reducing budget for its Business As Usual (BAU) work. Overall it increased by 2.9% this year,
and on current information increases by 2.2% next year and reduces by 3.3% in 2013-14. This
means to fund a 3% pay rise and keep our staffing stable the ATO has assumed BAU work can
be done more efficiently to free up some of our current staff to do the new work that has been
funded by Government.
Business As Usual (BAU) Work
This part of the budget must provide for the cost of the delivery of our core business as usual
activities such as answering phone calls, processing returns and undertaking compliance checks
and audits. It must also cover our supplier costs (both fixed and variable) which include things
like our accommodation costs, IT costs etc.
It is important to note the ATO does not get volume adjustments in the budget which means
that as a consequence of workloads going up and fixed costs going up, the BAU budget is
contracting. Although parameter adjustments are applied, they partially meet cost increases and
do not offset savings applied over the same period, see table below.
5
Government savings applied to the 2011-12 budget $m
Efficiency dividend - changes from 2007-08 -85.8
Efficiency dividend - additional 0.5% for 2011-12 -15.7
Whole-of-government efficiencies -31.4
Gershon savings -66.1
Travel savings -3.2
Operating lease savings -0.1
Total -202.4
Parameter adjustments 51.4
Total decrease to 2011-12 budget -151.0
To demonstrates this, for the 2011-2012 year the ATO is required to find more than $150
million in savings. Any increase in pay and conditions impact the ATO’s budget and the
resources available. The ATO must find internal efficiencies to offset these changes if it is to
deliver on commitments and operate within budget.
New Work
Each year the ATO receives additional funding for new policy work. This amount varies from
year to year as some measures terminate which may or may not be replaced with other new
measures. Not all new measures come with funding so the cost of delivering unfunded new
measures must be met from within the base level budget funding.
Budget allocation process
To determine the final internal budgets a series of decisions made at the relevant internal
governance forum. This occurs at the Line level, the Sub-plan level, through to the Resource
Forum and ultimately at the ATO Executive.
The assessments made during those deliberations have regard to the work required to be
delivered and the number of people required to deliver on that program of work in light of the
total budget available (that is after taking government savings targets and known fixed costs off
the top).
While the ATO does not get appropriation at a line item level, that is labour or supplier, we have
a strong focus on managing down our supplier budget over recent years. We always look to find
savings in supplier budgets in the first instance to meet efficiency savings. The split between staff
and supplier costs has remained stable over recent years with staff costs representing between
63-64% of the total ATO budget and current year forecasts loaded into our financial system
show that this pattern is expected to continue.
To do our work well means we need to deliver the outcomes required of us by Government and
meet the rising expectations from the community. Our internal planning process takes into
account these workloads (both new and existing), the people required to deliver on that
workload and the known fixed and variable costs of running a large and complex national
organisation.
Summary
Fundamentally the ATO must focus on the outcomes required to be delivered and the number
of people we require to do that work.
The injection of new policy money has meant that the ATO has been able to retain relatively
stable ongoing staffing numbers and direct those resources to meet the new policy
commitments.
6
The quantum of the pay and other staff conditions has a significant impact on the ATO financial
position. A 9% increase in salary over the next three years has been determined as affordable and
balanced given the constraints described above. Given that the majority of the supplier budget is
fixed contract (e.g. ICT, property, postage and printing, etc) any increase in pay or conditions
will have to be largely funded from labour, which will result in less staff and consequential
adverse impact on the delivery to government and the community.
The ASU asked the ATO to disclose the (financial) assumptions it used to conclude that the
9% offer was the highest it could afford.
The ATO has not disclosed the actual assumptions it made in deciding that its proposed pay
increase is the maximum it can afford to make.
The ATO initially told us all it could afford to pay was a 3% pay increase a year,
compounding in each of the three years covered by the proposed agreement.
The ATO then adjusted its position and said the most it could afford to pay was 3.5% in the
first year, 2.5% in the second year and 3% in the third year, each pay increase compounding
on the former pay rate.
After ATO employees voted against the proposed ATO Enterprise Agreement, the ATO
advised bargaining representatives that the most it could afford to pay was a salary increase
of 4% in the first year and then 2 ½% in the second year followed by another 2 ½% pay
increase in the third year, again with pay increases compounding.
The ATO still has not explained the assumptions it made in deciding that each of these
positions was the maximum it could afford. We expected the ATO would also have advised
us of the assumptions it made in deciding each of these positions was the maximum it could
afford to pay by financial year.
Question 2
The ASU asked,
What is the inter-relationship between funding, staffing levels, productivity
and affordability in the ATO determining how much it can afford to pay in
salary increases?
The ATO’s initial response of 25 July stated,
The ATO has allocated its budget to meet service standards.
As can be seen from the list above there are a range of on’s and off’s associated
with the ATO budget that need to be considered. The ATO Resource Forum
consciously look at all these things to determine where to reinvest savings in order to
balance all these important elements.
That balance is required to ensure the ATO is best positioned to meet the business
outcomes required of us by government.
ATO (like other agencies) is not funded for pay rises.
7
Putting together the ATO budget is a complex puzzle. On one hand the ATO
receives funding from Government in most years for implementing new policy (this is
new work).
On the other hand the ATO is required to find savings for:
the cost of smaller unfunded new policy measures
pay rises
other expenditure increases e.g. airfares, accommodation and IT
Whole of Government savings including Gershon, Accommodation, Travel and
efficiency dividend.
It should be noted that the annual efficiency dividend and annual pay rises have a
compounding impact on the ATO’s budget. As noted above the cumulative affect of
the savings measures over the last 4 years means the ATO has to undertake its
ongoing work with $150m less
The budget figures are as follows:
2010-11 - $3,196.6m
2011-12 - $3,281.8m
Note: Both these amounts exclude AVO but include TPB and depreciation.
As you are aware the ATO has set up a meeting between Robert Ravanello, CFO
and yourself and other bargaining representatives to provide further opportunity for
you to seek further information on the ATO budget.
The ASU wrote to Commissioner D’Ascenzo in a note dated 27 July 2011 pursuant to section
229 (4) (b) of the Fair Work Act.
The ASU explained,
The ASU asked about the inter-relationship between funding, staffing levels, productivity and
affordability in the ATO's determination of what pay increases it could afford.
The ATO's response did not explain any interrelationships.
The ATO then provided the ASU with a further response to our question number 2.
The ATO stated in its letter dated 1 August from David Diment,
The ATO receives appropriation funding is for Business As Usual and New Policy work.
The volume of Business As Usual and New Policy work is used to establish required staffing
levels. Pay rates and conditions of employment impact the cost of the required staffing levels.
Staff and supplier costs must fit within the available budget.
We demonstrate productivity year in year our by being able to continue to meet our service
standards with the challenge of increasing volume of work within the BAU area despite
decreasing resources being funded to that work.
8
We have been able to maintain our overall ongoing staffing levels because of the new policy
work and the additional budget allocation that comes with that.
What is affordable in terms of pay increases is determined based on the considerations above.
Our people are working effectively and efficiently. The impact of having to do what we need to
do with 210 people less each year to offset an additional 1% pay increase would be unreasonable
if not impossible without impact to government and community.
The ASU’s view is that the ATO still has not answered our question number 2. We are trying
to understand how the ATO can genuinely say that each of the three pay proposals it has put
to ATO employees is the maximum it can afford to pay. We are concerned the ATO’s
assertion that its position on affordability is not genuine. We are concerned the ATO is
disguising the real reasons it is not offering a higher pay increase through pretence that it
cannot afford to pay more. But in any case, if the ATO will answer our questions we can
then use that information to put submissions to them on how they could afford a bigger pay
increase. In the alternative, we will discuss the issues with our members and decide how best
to proceed.
Question 3
The ASU does not raise this question in this application.
Question 4
The ASU updated the original question we asked the ATO on 14 July 2011 in our letter dated
28 July 2011. We asked.
Please advise the savings and value of productivity improvements that have resulted from
implementation of the Change Program to 30 June 2011 and that are expected, by year, over the
life of the proposed Agreement. Please also advise the impact this has on the ATO’s demand for
labour, by year.
The ATO stated in its letter dated 1 August 2011,
The Change Program Benefits are outlined in the Aquitaine Report. To clarify our previous
response and discussion at the Budget and affordability meeting on 28 July2011, the $150 million
increase does not include the Income Tax ICP release.
The $150 million refers to the total savings that have been realised from the change program at
the time the report was developed (September 2010). It excludes the savings from the Income
Tax release and the report states it will take 2 to 3 years post implementation to fully realise these
savings.
Page 10 of the attached report provides the breakdown of the savings realised by capability. As
we outlined on Thursday 28 July 2011, we do not have this by year, only total.
Broadly, $150 million in savings from the Change Program have been applied in three areas. The
first is in the whole of government savings that we are required to deliver as outlined in question
1 above. The second is to continue to invest in those areas that will provide future efficiency and
effectiveness improvements, for example, our ATO online 2015 program. The third is directed
to pay increases for our people.
9
The ATO's response was to refer us to the Aquitaine Report, a copy of which is attached. The
Aquitaine Report only relates to savings achieved to September 2010. There is no
information disclosed as to the amount of productivities/savings expected to be made by the
ATO through further implementation of the Change Program over the life of the proposed
enterprise agreement.
The ATO has not answered the ASU’s question about the savings and value of the
productivity improvements expected from implementation of the change Program over the
life of the proposed Agreement and its impact on the ATO’s demand for labour, by year.
Question 5
The ASU does not raise this question in this application.
Question 6
The ASU does not raise this question in this application.
Question 7
The ASU does not raise this question in this application.
Question 8
The ASU does not raise this question in this application.
Question 9
The ASU does not raise this question in this application.
6.
Order(s) sought:
[Set out the orders sought or attach a draft order. See s.231 for the content of bargaining
orders.]
1. The ATO will provide pertinent responses to ASU questions numbered 1, 2 & 4 within 7
days of the date of this order.
2. The ATO will allow a minimum of a further 14 days of good faith bargaining following
the provision of the required answers prior to finalising a draft enterprise agreement for
consideration by ATO employeese.
Date:
Signature:
5 August 2011
Name:
Capacity/Position:
Jeff Lapidos
Australian Services Union Taxation Officers’ Branch
Secretary