Another lost opportunity, despite decades of evidence, as the ICAC Report finalising Operation Dasha recognises, but fails to fix the vulnerability of general managers and other senior staff against threats of being sacked. It’s all about the standard contract and the dreaded artificial term contracts for appointment to jobs that are continuing and ongoing. And the ability of the boss to sack for “no reason”.
Yes, yes, after an investigation of more than three years they did make totally predictable findings against two councillors (one Liberal, one Labor), a former Director of Planning and the former GM of Canterbury. And the Premier’s ex-boyfriend. But faced again with an opportunity to do something about the vulnerability of senior Council employees, they dogged it. What a disappointment.
(Note: To “dog it” means to do less than is required, to loaf or shirk.)
We’ve been railing against the corruption risk of term contracts since December 1986, a time when three of the members of our Committee of Management, were not even at school. And one of them, was 9. Can we really have been arguing about this for longer than many of our members have been alive?
In 1986 Bega Valley Shire accepted the resignation of their “Chief Health and Building Surveyor” (equivalent to a Director these days) who had given up fighting a Council of vested interests and in accepting the resignation the Council then resolved that the next Chief and Building Health Surveyor be employed on a three-year term contract. They knew how easily they could threaten someone to do what they wanted if they were constantly worried about their employment.
The former Gosford around that time did the same and the incumbent did us the disservice of not letting us know that he had blindly and meekly signed up to a three-year term. The Local Government Association that year also resolved at their Annual Conference in October to “support contracts of employment, of fixed duration, for senior officers.”
But none of those three organisations said why they thought that was a good idea. Some say it’s because they are more “performance-based”, there is no performance management that can be done for employees on term counteracts that can’t be done under the Award. Except for the ultimate driver of “good” performance, the fear of unfairly being sacked. Any justification is nothing more than BS, it’s all about the sacking.
The Local Government Act 1993 required that “senior staff” (as determined by the Council) must be employed on term contracts. The Minister for Local Government at the time, the Hon Ernie Page agreed with our concerns, and the problems the industry had properly managing term contracts, and recommended to the Government that the requirement for term appointments be removed.
This was opposed by the Cabinet Office and defeated in Cabinet. We understood at the time that the ICAC and the Ombudsman’s Office had both expressed similar reservations about corruptibility issues that were supportive of the Ministers proposal but, when so much in Government happens behind closed doors, we’ve not seen evidence of that. But we know it happened and that was 26 years ago...
We’ve pursued this vigorously, and sometimes with the support of the other unions, and over the years as term contracts rolled out to employees under the Award, the industry has developed some protections for employees on term contracts through disputes at individual councils, and by a succession of changes to the Award calling for a renewal of the contract automatically if performance had been satisfactory, for example. Later, the Award restricted term contracts to work where the job was either of a fixed duration, or the employment was funded with a grant or some other arrangement of fixed duration.
In 2002, the ICAC concluded an investigation at the former Rockdale Council making findings of corrupt councillor behaviour and made observations about “the importance of protections for Local Government employees involved in the development process”. This, as far as we are aware, is the start of the ICAC publicly accepting that something needed to be done. 19 years ago...
ICAC Commissioner Irene Moss spoke at a PIA Conference in the Hunter on 1 May 2003 after the Rockdale investigation. I was a member of the panel while she was still in attendance and she heard our views, similar to the views she expressed at Rockdale, about the risks of political pressure for employees on term contracts.
In the first week of July 2003, the ABC’s 4 Corners revealed corrupt activity by councillors at Tweed Shire and a councillor, in reference to the Director of Planning, observed, “he’s very capable of looking after himself. There was no bullying involved”. We all know senior staff are not capable of looking after themselves because they can be terminated for “no reason”. And are terminated all the time. And it was no surprise that at the time the Director at Tweed had been told by the Council they would not renew his contract. (He joined depa when he was next employed.)
On 9 July 2003 we wrote to the ICAC Commissioner, and for the first time identified the “corruptibility issues that arise from term contracts”, provided some history and asked “to discuss whether the ICAC has a view about this area of employment in any industry where employees can be very vulnerable to the political process.
I understand that in your report about Rockdale there was some observation made about protections for those employees involved with councillors in development. We would like you to consider that this protection has to include the protection that only permanent employment can provide.”
On 30 July we met with ICAC officers, only to be told by a senior manager that because there had been no complaints to the ICAC that there had been any political manipulation of contract employees, that meant there was no evidence that the practice existed. So while the Commissioner got it, the Senior Manager didn’t. He said in relation to what we were identifying as risks, “to some extent that’s the obligation of public service”. What a dick.
But dick or otherwise, the ICAC has known about the risks of term employment in local government now for virtually two decades.
In October 2016 the ICAC reported on their investigation titled Operation Farra at Mid-Western Council. This was an investigation that had been going on for two or three years into the behaviour of some councillors at Mid-Western Council and during which the GM had sacked the Director of Planning and the Director of Corporate Services because he was threatened by councillors that if he didn’t do so, they would sack him. One of the joys of country councils is that while they might ask staff to leave for the confidential stuff, they remain outside the chambers and don’t miss very much. The Cone of Silence doesn’t work out there at Mudgee.
Recommendation 1 of the report from Operation Farra recommends the need for “comprehensive, meaningful key performance indicators” to be developed but in the commentary made reference to what the ICAC describes as the “no reason” provisions of the standard contract. That is, no reason is required for a termination if the Council provides 38 weeks’ notice, or payment in lieu of the notice. Invariably, the payment is made.
The commentary records “that the OLG sees ‘no reason’ termination as a swift means of overcoming potential long-term dysfunction that may arise from the poor performance of a general manager. Similarly, Local Government NSW, which is the peak body for councils and councillors in New South Wales, sees the “no reason” provisions as a means of “quickly resolving an irretrievable breakdown in the employment relationship whilst also providing reasonable compensation for the early termination of the contract”.”
Regardless of the OLG and LGNSW’s support for “no reason” sackings, the ICAC observed:
“The “no reason” provisions in the standard contract, however, could create an uncertain employment environment for a general manager. The Commission’s concern is that such uncertainty could be used to improperly influence the action of a general manager. Councils, Local Government NSW and, given its investigative role, the OLG, should be aware that, rather than a simple issue of employer-employee breakdown, the termination of a general manager of a Council under the “no reasons” provisions may indicate that councillors have attempted to improperly influence a general manager.”
And what have the OLG and LGNSW done to respond to the ICAC’s concern since 11 October 2016 about the use of term contracts to “improperly influence a general manager”? Absolutely SFA, four and a half years have passed, and not a bloody thing.
And what’s the ICAC done, monitoring their observations to those organisations since 11 October 2016? Absolutely SFA, four and a half years have passed, and not a bloody thing.
The very issue of concern to the ICAC (since 2002 but particularly since 11 October 2016) was a big issue in Operation Dasha where the Commission had heard from the former GM of Canterbury that councillors had bullied and “blackmailed” him, in his words, with threats of terminating his contract if he didn’t make, and then when problems arose proceed, with the appointment of their candidate for the vacant position of Director of Planning.
And there was good old OLG with their own barrister in proceedings harrying the current GM of Canterbury-Bankstown about the value of the “termination without reasons clause… in the event that there was a breakdown in the relationship between the councillors and the general manager”. We give full credit to Matthew Stewart for rejecting the pressure of that hectoring because we all know that “breakdown in the relationship” means only that the Council doesn’t like the GM, because the GM won’t do what they want.
The OLG’s barrister was strangely silent and had nothing to offer on the bullying and blackmail.
The ICAC again addressed the issue of “no reason” termination in their recommendations.
Recommendation 1 recommended that “ethical culture” be included in a general manager’s performance indicators, Recommendation 3 was that Canterbury-Bankstown make sure it has a recruitment policy for senior staff consistent with the Local Government Act and , recommendation 4 required that the Department of Planning, Industry and Environment (DPIE which contains what was formerly the Office of Local Government) clarifies what constitutes “consultation” with Council by the general manager for the purpose of appointment and dismissal of senior staff as required by S337 of the LGA.
Recommendation 2 specifically addresses the standard contract. It recommends that “the DPIE conducts a review into the no “reason” termination provision in the Standard Contract, which should canvass options such as requiring a two-thirds majority vote of the Council, an absolute majority vote or the availability of mediation”.
And that’s it. Later, on pages 178 to 182 there is some discussion about options and while they say things like this:
- Mr Azzi took advantage of the no reason termination option to pressure improperly Mr Montague,
- the Commission is also satisfied that the vulnerability of general managers determination without reasons and by simple majority of Council vote - is a corruption risk,
- public confidence in the integrity of the actions of general managers would be enhanced by establishing more onerous procedures for terminating their employment,
- the Commission still contends that requiring a two-thirds majority to dismiss a general manager for no reason may be a suitable response,
- it is worth bearing in mind that the current enquiry is not the only example that the Commission is aware of concerning an inappropriate threat to a general managers employment under no reason provision,
they don’t go anywhere near developing protected employment for GM’s, and other members of senior staff who can be bullied or blackmailed, as Jim Montague described it.
Senior staff should be employed under more flexible provisions of the State Award, or some other industrial instrument, with access to the IRC to prevent unfair dismissal and to conciliate and arbitrate unfair sackings.
Finally, they flirted with the idea of mediation, made observations it would be a good idea for some evidence that it had been contemplated but, for reasons not explained, they say “it would be inappropriate to force parties to go to mediation”. Why not, employees sacked in the industry have access to the IRC where the employer has no option but to participate, why should there be less protection senior staff?
Curiously, they say “there is currently a dispute resolution clause in the Standard Contract that either party can request in relation to any matter, the clause is rarely used”. One of the reasons it’s rarely used is that the threat of “no reason” termination hangs like the proverbial sword of Damocles over a courageous employee who initiates the dispute resolution process.
Mediation is never an option if one side has the opportunity to refuse to participate. The existing dispute resolution clause, once initiated, requires that certain things happen and the other party doesn’t get to choose whether they participate or not. It’s compulsory, they must.
What an absolute inconsistent farce. Senior staff employees fearful of being unfairly sacked can initiate the dispute resolution process, where the Council has no option but to participate, but in doing so understands that at the end, the sword remains above their head. The dispute resolution process would not be rarely used, if the sword was removed. How has the ICAC missed this? It beggars belief.
The ICAC has failed here, just as it has repeatedly in the past. Observations they don’t pursue, recognition that they can’t stop people being sacked because they don’t have that power and offering only ineffective options that will fail to protect GMs and senior staff.
And we all had such high hopes. In discussions with OLG, LGNSW and the other unions while Dasha ran in the background, we all acknowledged that Operation Dasha would have to be the trigger for some proper action to provide employment for senior staff no less secure, or protected, than that already established in the Public Sector Executive Service. A shakeup, after which no one would have any excuse, or anywhere to hide.
But consistent with recommendation 2, OLG will need to review its historic commitment to the trigger to sack a GM simply because the councillors have a problem unrelated to performance. While they may have stressed at Mid-Western, and during Operation Dasha, that there needs to be a mechanism to remove a GM if there is an irretrievable breakdown in the relationship, they need also to come to grips with if they want to keep “no reason” terminations, then 38 weeks is not enough. The current CEO of Canterbury-Bankstown got it right when he said it should be 52 weeks. We support that.
Their view is a strange submission to make by senior public servants who can’t be dismissed like their counterparts in local government without someone providing a report to the Public Service Commission, detailing the reasons for that dismissal. There is no equivalent yet in local government.
Why can’t that happen in local government?
We are already talking to LGNSW and it seems there may be some movement on their historic opposition to the concept of mandatory mediation and may also be some softening of approach about the provision of reasons for termination, if the employee asks for them.
A council having to identify reasons for sacking someone does at least make them think about their capacity to properly describe it, and that can mean they recognise they can’t do it. The GM at Mid-Western would not have been able to include in the termination letter that he had sacked the two directors to save himself. And the provision of reasons also allows an employee to understand exactly why there being sacked, and whether the Council’s expressed reasons can be contested under section 106 Unfair Contracts in the Supreme Court - a slow and expensive process, but all that is available at the moment.
Our submission to the ICAC’s Operation Dasha is a good starting point for the OLG’s “review” of the standard contract to remove those things identified and, once and for all, to remove the risks of corruption inherent in that employment arrangement. How can it be so hard to provide employment arrangements for senior staff in local government that are no less secure or protected than the employment arrangements of the NSW Public Sector Executive Service.
Here is our submission.
The ICAC dogged it for reasons none of us really understand. They weren’t really prepared to focus on a proper protective regime, like that existing in the NSW Public Sector that apply to the senior staff of the Commission itself and, coincidentally and ironically, the OLG. But there are three players involved here critical to the development of employment arrangements for senior staff that are not a corruption risk. Will they dog it, or will they do it?
Local Government NSW
LGNSW is the key here, and President Linda Scott and CEO Scott Phillips know it. We can be sceptical about the capacity of DPIE to provide employment protections similar to those under which they are employed themselves, but LGNSW can’t sustain the idea of a policy that allows councillors to unfairly sack GM’s and GM’s to unfairly sack other senior staff.
That doesn’t sit comfortably with the relatively progressive approaches adopted by LGNSW in all other areas and, particularly, in the progressive operation of the Local Government State Award.
And they already support mediation options but mediation without everyone having to participate isn’t an advancement, nor a solution, it’s really a farce. And it’s also inconsistent with the current clause 17 Dispute resolution of the standard contract.
Early indications are that they understand the confronting realities of the public display at the former Canterbury and the undesirable spectacle of public officials being threatened with the sack for doing the right thing in resisting threats, but they need to act now.
Will they dog it, or will they do it?
Office of Local Government
Officially it doesn’t exist any longer, being part of a cluster/mega department, but they’ve argued rigidly and consistently for the retention of an ability to sack people in a way they can’t be sacked themselves, and ignored the hypocrisy and inconsistency of having a transparent process in the NSW Public Sector that doesn’t create “unresolved conflicts entrenching organisational dysfunction” as they expect would occur in councils. A bit hypocritical?
We know OLG to be secretive and painfully slow in its consideration of anything, operating behind an impenetrable opaque screen and never having to justify their decisions, but the pressure is now on. They should have done something in 2016 and they didn’t, and now they have to do something.
Will they dog it, or will they do it?
The Minister for Local Government
Known for a commitment to fairness and equity, she will rely heavily upon advice from OLG. It’s hard to be the Minister for Local Government when councils so publicly go about threatening and sacking senior staff and refusing to disclose the reasons for doing so.
She’s seen the GM at Snowy Valleys sack three directors to clear the deck for a restructure, and apparently having done so thinking that around $400,000 in terminating those contracts is a reasonable cost.
She’s seen the infamy of the former Canterbury and would much prefer that sort of thing never occurring on her watch. But, as they say, final decision will be hers. Or Cabinet’s, if she recommends proper reform.
Will she dog it, or will she do it?
