[2015] FWC 7692

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.229 - Application for a bargaining order

Australian Municipal, Administrative, Clerical and Services Union
v
Commonwealth of Australia as represented by Australian Taxation Office
(B2015/1135)

COMMISSIONER WILSON

MELBOURNE, 19 NOVEMBER 2015

Application for a bargaining order.

INTRODUCTION

[1] The Australian Municipal, Administrative, Clerical and Services Union, Taxation Officers Branch, (the ASU), has made an application for bargaining orders against the Australian Taxation Office (the ATO) pursuant to s.229 of the Fair Work Act 2009 (the Act). The orders sought by the ASU are for the provision of certain further information by the ATO to the ASU in order to rectify allegations of a failure by the ATO to bargain in good faith, and to otherwise further the course of bargaining for employees within the ATO.

[2] The application is resisted by the ATO and is not supported by the Community and Public Sector Union (the CPSU). Bargaining in the ATO also involves numerous other bargaining representatives, however their views about the ASU’s application are unknown for the reason they did not appear in the arbitration proceedings.

[3] The application was made on 31 August 2015, and was the subject of 3 conciliation conferences before me. While the conferences did not resolve the entire dispute between the parties, they were successful in arranging the ASU’s information needs to be identified in greater detail than previously, which were then responded to by the ATO. In all, the conferences assisted in narrowing the range of information requests still in dispute between the ASU and the ATO.

[4] Upon progression to arbitration, the ASU argued that, because the ATO had refused to satisfy its information requests, the ATO was not bargaining in good faith within the meaning of the Act, which amounts to a contravention of s.228(1)(b), being a failure to disclose relevant information (other than confidential or commercially sensitive information) in a timely manner. Relatedly, the ASU claims that because the information would assist the ASU effectively represent employees in the collective bargaining underway, the failure by the ATO to provide the information sought by the union amounts to capricious or unfair conduct, potentially a contravention of s.228(1)(e).

[5] Being satisfied of the efficiency that permission for legal representation would bring to the conduct of the matter, taking into account its complexity, Mr J McKenna of Counsel appeared for the ASU, and Mr J Snaden of Counsel appeared for the ATO. Mr K Barnes appeared for the CPSU.

[6] For the reasons set out below, I am not persuaded that the ATO has not met the good faith bargaining requirements, and so I have declined to make the orders sought by the ASU.

THE APPLICATION FOR ORDERS

[7] The Orders sought by the ASU are the following;

“1. Within 7 days of the date of this order, the respondent shall provide to the applicant information identifying:

a. The basis for its quantification of proposed productivity savings in the amount of $95,938,151 (or more) over the three years of the proposed Enterprise Agreement in relation to the "new productivity savings" identified in the document titled "Enterprise Agreement summary (August 2015)- Productivity measures v compounded pay rise";

b. expected cash savings from the "property activities" identified in the document "Information on ATO Property Activities (as provided at the National Consultative Forum in July 2015)" (attachment 5) without identifying amounts attributable to individual properties;

c. the expected number of vacant workstations the respondent will retain in each site after the property activities listed in attachment 5;

d. the respondent's plan or plans to reduce the number of vacant work stations over the three years of the proposed Enterprise Agreement (without identifying individual sites) and the respondent's estimate of the savings it will generate if these plans are able to be realised;

e. the number of jobs the respondent expects to lose as a result of the respondent's digital transformation strategy;

f. The quantum of capital investment the respondent is making in its digital transformation strategy by financial year and project;

g. the expected reduction of the respondent's overall demand for employees in its Client Account Services business line (whether or not those employees are terminated or released to perform other work) over the three years of the proposed Enterprise Agreement as a result of the respondent's digital transformation strategy, and/or any projected consequential cost savings;

h. the expected reduction of the respondent's overall demand for employees in its debt business line (whether or not those employees are terminated or released to perform other work) over the three years of the proposed Enterprise Agreement as a result of the respondent's digital transformation strategy, and/or any projected consequential cost savings; and

i. the expected reduction of the respondent's overall demand for employees in its Customer Service and Solutions business line (whether or not those employees are terminated or released to perform other work) over the three years of the proposed Enterprise Agreement as a result of the respondent's digital transformation strategy, and/or any projected consequential cost savings.

2. No less than 7 days after the provision of the information referred to in order 1 (the bargaining information) the respondent shall conduct at least two further days of in person bargain meetings at which it shall make available to employee bargaining representatives relevant personnel to provide an explanation of the bargaining information;

3. The respondent shall not arrange a vote of its employees in relation to any proposed Enterprise Agreement until the expiration of a further 7 days after the completion of the bargaining meetings referred to in order 2.

4. There be liberty to apply.” 1

[8] The ASU argues that the ATO has not met and is not meeting the good faith bargaining requirements, and that it is entitled to make an application for bargaining orders. In relation to the good faith bargaining requirements, the ASU argues that it;

“(b) has given written notice setting out those concerns to the ATO by letter dated 25 August 2015 (25 August request for information) (s.229(4)(b));

(c) gave the ATO a reasonable time within which to respond to those concerns, in circumstances where this application was made 6 days after the 25 August request for information (s.229(4)(c)); and

(d) considers that the ATO’s various responses to the 25 August request for information and subsequent letters has been to refuse to provide key aspects of the information sought (s.229(4)(d)).” 2

[9] The ASU makes the alternative submission that, in the event the Commission is not satisfied the threshold requirements set out in s.229(4)(b) and (c) have been met, which require the Commission to be satisfied the ASU has given proper notice in writing of its concerns as well as a reasonable time for the ATO to respond, the Commission should make the orders in any event because of the provisions of s.229(5), which allow the consideration of an application even where the pre-requisites have not been met, for reason of the Commission being satisfied that it is appropriate in all the circumstances to make the order. My further consideration of that possibility does not arise, for reason that I am satisfied the pre-requisites of s.229(4)(b) and (c) have been met.

[10] In summary, the application relates to whether the ATO has provided sufficient information to the ASU to justify its most recent remuneration offer, which is coupled with certain identified savings, productivity improvements and cost reductions that are either expected in return from employees, or will occur around employees in the life of the proposed agreement. The ASU’s view is that, because of the way the ATO has presented information, the ASU cannot be certain that the remuneration offer made is fair and reasonable. In a context that includes the Australian Government Public Sector Workplace Bargaining Policy (the Workplace Bargaining Policy) that requires all wages offers to employees to be “affordable, consistent with Australian Government policy, and offset by genuine productivity gains which satisfy the Australian Public Service Commissioner”, 3 it could be argued that savings greater than a particular wages offer might be a reason for further bargaining to increase the wages offer. With further information, it might be established that what has been offered is not the highest pay offer possible within the ATO’s existing budgets. Not having the information it seeks means the ASU cannot test what it claims is the ATO’s previously indicated willingness to consider specific details of any further productivity and/or affordability items that could underpin a revised pay offer.4

RELEVANT LEGISLATION

[11] The Act deals with applications for bargaining orders, and when and how orders may be made, in Chapter 2, Part 2-4, Division 8, which provides the following;

Division 8—FWC’s general role in facilitating bargaining

Subdivision A—Bargaining orders

228 Bargaining representatives must meet the good faith bargaining requirements

(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

(a) attending, and participating in, meetings at reasonable times;

(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;

(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;

(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;

(f) recognising and bargaining with the other bargaining representatives for the agreement.

(2) The good faith bargaining requirements do not require:

(a) a bargaining representative to make concessions during bargaining for the agreement; or

(b) a bargaining representative to reach agreement on the terms that are to be included in the agreement.

229 Applications for bargaining orders

Persons who may apply for a bargaining order

(1) A bargaining representative for a proposed enterprise agreement may apply to the FWC for an order (a bargaining order) under section 230 in relation to the agreement.

Multi-enterprise agreements

(2) An application for a bargaining order must not be made in relation to a proposed multi-enterprise agreement unless a low-paid authorisation is in operation in relation to the agreement.

Timing of applications

(3) The application may only be made at whichever of the following times applies:

(a) if one or more enterprise agreements apply to an employee, or employees, who will be covered by the proposed enterprise agreement:

(i) not more than 90 days before the nominal expiry date of the enterprise agreement, or the latest nominal expiry date of those enterprise agreements (as the case may be); or

(ii) after an employer that will be covered by the proposed enterprise agreement has requested under subsection 181(1) that employees approve the agreement, but before the agreement is so approved;

(b) otherwise—at any time.

Note: An employer cannot request employees to approve the agreement under subsection 181(1) until 21 days after the last notice of employee representational rights is given.

Prerequisites for making an application

(4) The bargaining representative may only apply for the bargaining order if the bargaining representative:

(a) has concerns that:

(i) one or more of the bargaining representatives for the agreement have not met, or are not meeting, the good faith bargaining requirements; or

(ii) the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement; and

(b) has given a written notice setting out those concerns to the relevant bargaining representatives; and

(d) considers that the relevant bargaining representatives have not responded appropriately to those concerns.

Non-compliance with notice requirements may be permitted

(5) The FWC may consider the application even if it does not comply with paragraph (4)(b) or (c) if the FWC is satisfied that it is appropriate in all the circumstances to do so.

230 When the FWC may make a bargaining order

Bargaining orders

(1) The FWC may make a bargaining order under this section in relation to a proposed enterprise agreement if:

(a) an application for the order has been made; and

(b) the requirements of this section are met in relation to the agreement; and

Agreement to bargain or certain instruments in operation

(2) The FWC must be satisfied in all cases that one of the following applies:

(a) the employer or employers have agreed to bargain, or have initiated bargaining, for the agreement;

(b) a majority support determination in relation to the agreement is in operation;

(d) all of the employers are specified in a low-paid authorisation that is in operation in relation to the agreement.

Good faith bargaining requirements not met

(3) The FWC must in all cases be satisfied:

(a) that:

(i) one or more of the relevant bargaining representatives for the agreement have not met, or are not meeting, the good faith bargaining requirements; or

(ii) the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement; and

(b) that the applicant has complied with the requirements of subsection 229(4) (which deals with notifying relevant bargaining representatives of concerns), unless subsection 229(5) permitted the applicant to make the application without complying with those requirements.

Bargaining order must be in accordance with section 231

(4) The bargaining order must be in accordance with section 231 (which deals with what a bargaining order must specify).

231 What a bargaining order must specify

(1) A bargaining order in relation to a proposed enterprise agreement must specify all or any of the following:

(a) the actions to be taken by, and requirements imposed upon, the bargaining representatives for the agreement, for the purpose of ensuring that they meet the good faith bargaining requirements;

(b) requirements imposed upon those bargaining representatives not to take action that would constitute capricious or unfair conduct that undermines freedom of association or collective bargaining;

(c) the actions to be taken by those bargaining representatives to deal with the effects of such capricious or unfair conduct;

(d) such matters, actions or requirements as the FWC considers appropriate, taking into account subparagraph 230(3)(a)(ii) (which deals with multiple bargaining representatives), for the purpose of promoting the efficient or fair conduct of bargaining for the agreement.

(2) The kinds of bargaining orders that the FWC may make in relation to a proposed enterprise agreement include the following:

(a) an order excluding a bargaining representative for the agreement from bargaining;

(b) an order requiring some or all of the bargaining representatives of the employees who will be covered by the agreement to meet and appoint one of the bargaining representatives to represent the bargaining representatives in bargaining;

(c) an order that an employer not terminate the employment of an employee, if the termination would constitute, or relate to, a failure by a bargaining representative to meet the good faith bargaining requirement referred to in paragraph 228(1)(e) (which deals with capricious or unfair conduct that undermines freedom of association or collective bargaining);

(d) an order to reinstate an employee whose employment has been terminated if the termination constitutes, or relates to, a failure by a bargaining representative to meet the good faith bargaining requirement referred to in paragraph 228(1)(e) (which deals with capricious or unfair conduct that undermines freedom of association or collective bargaining).

(3) The regulations may:

(a) specify the factors the FWC may or must take into account in deciding whether or not to make a bargaining order for reinstatement of an employee; and

(b) provide for the FWC to take action and make orders in connection with, and to deal with matters relating to, a bargaining order of that kind.

232 Operation of a bargaining order – [omitted]

233 Contravening a bargaining order – [omitted]”

SUBMISSIONS

[12] The ASU submits that the matters set out in its 25 August 2015 correspondence to the ATO are the central issues of the application, and that the correspondence particularises the concerns the union holds about the matters set out in s.229(4)(a)(i) to the effect that the ATO is not meeting or has not met the good faith bargaining requirements.

[13] The ASU’s correspondence to the ATO on 25 August 2015 containing its information request was in these terms;

“Mr Chris Jordan AO
Commissioner of Taxation
Australian Taxation Office
Canberra
25 August 2015

Dear Commissioner

ASU request for relevant bargaining information

This is a request for bargaining information in accordance with s. 228 (1) (b) of the Fair Work Act 2009.

Request for details of productivity improvements and cost savings agreed with APSC

I refer to the document the ATO provided to the Unions for the bargaining session on Wednesday, 19 August 2015. It is titled ‘Enterprise Agreement summary (August 2015)’. The document lists productivities and costs savings that the ATO has agreed with the Australian Public Service Commission (APSC) validate the pay rise the ATO is proposing.

The document lists productivity savings by year for increased working hours, administration of the health and wellbeing allowance and the alignment of salary advancement with performance discussions. Please provide us with a breakdown of how each of these items is calculated and of the assumptions on which these calculations rely.

The grouping of ‘New productivity savings’ from four separate items, ‘Reinvention’, ‘EL1 flexible hours’, ‘Unscheduled absence initiatives’ and ‘Streamlining’ have a single productivity saving by year. Please provide us with a breakdown of the productivity savings by item and by year. We also need a detailed explanation of how these savings are calculated and of the assumptions on which these calculations rely.

The document also lists ‘Sources of Cash’ by year from ‘Removal of various allowances’, ‘Rationalising accommodation’ and ‘Workforce Restructure initiative’. Please provide us with the details of how these savings were calculated and the assumptions on which they were made.

Request for details of expected productivity improvements and costs savings

The productivity improvements and cost savings that the ATO has agreed with the APSC are restricted by the Australian Government Public Sector Bargaining Policy. As a result, many productivity initiatives and cost savings being planned by the ATO were not counted for the APSC’s validation of the ATO’s proposed pay increases.

The ASU needs information from the ATO to place the APSC approved figures in the context of the ATO’s plans between now and the 2018-19 financial years. We request the ATO provide us with a listing of all its planned or expected initiatives over this 4 year period with a brief explanation of the nature of each initiative, and the nature and value of the productivities and cost savings expected from each initiative.

Return of funding to Commonwealth from 2014-15 year

The ATO’s bargaining representatives advised us last week that the ATO had returned funding to Government from savings made because there was no pay rise in the 2014-15 year. Please advise us of the amount of the funding returned to the Commonwealth and how the amount was calculated.

Please confirm by close of business on Wednesday, 25 August 2015 that the ATO will provide us with this information and when we may expect it.

Yours sincerely

Jeff Lapidos” 5

[14] The motivations for the ASU’s application include the following submissions by the union;

“6. Save for annual amounts attributed to “new productivity savings” the ATO has not provided particulars of its “new productivity savings”. It is said by the ATO that there are no further assumptions and/or calculations underpinning these calculations which the ATO can provide. In circumstances where the Bargaining Policy requires the provision of evidence of productivity improvements to underpin any pay increase, the ASU does not accept this assertion. Rather, the ASU believes the “new productivity savings” to have a value well in excess of $96m. In order to make good that assertion and to bargain for increased remuneration, the ASU needs access to the information about those “new productivity savings”.

7. The ATO has also refused to provide further information relating to the rationalisation of ‘accommodation’ as a source of cash. It says that this information is commercial in confidence. The basis for this claim should be rejected. On the information already known to the ASU, it is submitted that this item is likely to generate savings in excess of those identified by the ATO. However, in the absence of additional information, the ASU is prevented from making specific representations on behalf of its members about this issue during bargaining.

8. It is understood that the digital transformation of the ATO has been identified as part of “reinvention”, being one of the “new productivity savings”. The ASU reasonably believes that this measure will generate substantial productivity improvements and will also provide a source of cash. However, again, in the absence of particulars about this information the ASU is prevented from adequately addressing this issue during bargaining.

9. Of course, bargaining about remuneration is also closely linked to bargaining about terms and conditions of employment and so the relevance of the bargaining information sought by the ASU is not limited to remuneration only. Moreover, the information sought is also relevant to employees to the extent that it reflects changes which will impact upon many employees during the life of the proposed new agreement.” 6

[15] Bargaining in the ATO has been on-going for some time and has progressed in a manner involving extensive resources. The ATO estimates there had been more than 39 bargaining days since 2014, although the ASU does not have its own estimate. 7

[16] The ATO argues it has gone to considerable lengths to address the ASU's requests for information. In particular;

“It has produced a significant volume of material in a short space of time for a single bargaining representative that represents a small proportion of the employees to be covered by the agreement the subject of bargaining. It has postponed the circulation of its offer to employees for consideration and approval, despite indications from other bargaining representatives that they would prefer for employees to be able to vote on it.” 8

[17] The ATO’s frustration with this situation is evident. It sees the ASU’s application as bearing an appearance of strategic delay. 9 It sees the delay to a ballot as being for a collateral purpose – to delay the offer being put to employees, as well being a mechanism “through which the ASU might secure from the ATO information or undertakings about various non-bargaining-related measures that the ATO intends to implement over the course of the next three years”.10

[18] The agency argues this application for bargaining orders is either for the purpose of delay or for gathering information to be used in a campaign against a ballot. It has readily provided the relevant information it has and adopts the CPSU submissions that;

“In the eight months since the ATO began formally tabling its proposals employees have received a vast amount of information about the proposals from the ATO, the CPSU and the [ASU].” 11

[19] Two offers have been put by the ATO to employees, neither of which have been accepted by the principal bargaining representatives, the ASU and the CPSU.

[20] The first of the offers (the ATO First Remuneration Proposal) was made in February 2015. The wages increase component was constructed as an increase of 0.8% upon commencement of the enterprise agreement, with two further increases of 0.8% each, at the start of the second and third years of the life of the agreement. The increases were calculated by the ATO to compound to 2.42% over the term of the agreement. 12

[21] The wage increase component of the proposal was costed at $87,970,481 13 (note that all subsequent monetary amounts in this decision have been rounded to the nearest $0.1m). The offer was put forward by the ATO to employees on the basis that the full cost of the wage increase would be offset by savings, productivity improvements and cost reductions within the ATO, generically referred to as “productivity savings”, assessed at $88.4m within the ATO First Remuneration Proposal.14

[22] When the ATO First Remuneration Proposal was not accepted by the bargaining representatives, there was further bargaining between the parties. That process led to the ATO putting forward a second offer in August 2015 (the ATO Second Remuneration Proposal). That offer proposed wage increases to employees of 2.5% upon commencement of the wage increase, with two further increases of 1% each at the start of the second and third years of the life of the agreement. With the overall cost of the second proposal estimated at $184.2m, its cost is slightly more than double the first. 15

[23] While the cost of the ATO Second Remuneration Proposal is substantially greater than the first, so too is the impact of the offsetting conditions on which it is put forward. Like its first proposal, the ATO has made the second offer conditional upon there being productivity savings; comprising savings, productivity improvements and cost reductions of not less than the cost of wage rises to be granted to employees. In effect, that means offsetting productivity savings of $184.2m 16 over the life of the proposed agreement instead of $88.4m.

[24] The second offer has also been rejected by the principal bargaining representatives.

[25] Why that is so was not entirely clear, although it appears connected mainly with the perception of the sufficiency of the wage rises and, on the part of the ASU, a belief perhaps that the proposed savings, productivity improvements and cost reductions are either unpalatable or deserving of greater remuneration recognition on the part of the ATO, or deserving of improved protections for the perceived deleterious effects of the changes mooted within the proposed enterprise agreement.

[26] Having had the offer rejected by bargaining representatives the ATO desires to put its proposed agreement in the form of the ATO Second Remuneration Proposal to employees in a ballot in the near future, after it has obtained the necessary Ministerial and other approvals to do so. The ATO argues only a small minority of employees are members of either union. It believes just 1,300 employees are members of the ASU, with the CPSU having more; perhaps 4,500 in total. 17 That combined membership stands in contrast to the overall employment base of the ATO, estimated in its Corporate Plan 2015-19 of around 18,500 employees in all States and Territories.18

[27] Not unreasonably then, if its assessment of union membership is accurate and overall union density is less than one-third of all employees, the ATO holds the view that a ballot of employees for its ATO Second Remuneration Proposal for an “on commencement” wage increase of 2.5%, followed by two further 1% increases at the start of the second and third years of the agreement may well lead to the agreement being made, especially if the greater proportion of its employees who are not members of either union vote in favour of the improved second offer.

[28] For its part, the CPSU wants to get on with balloting as well. It wants a ballot on the ATO Second Remuneration Proposal to proceed without delay. 19 It argues in this regard that;

“21. CPSU considers that the most efficient conduct of the bargaining is for the ATO agreement proposal to be put to an employee vote in order to break the current impasse.

22. The ATO has had adequate opportunity to conduct a ballot. The ASU application has already caused delay; and, the orders sought by the ASU, if granted in full, would result in an open-ended process and the ongoing denial to employees of their right to make a decision with respect to their proposed agreement.” 20

[29] While not in favour of the proposed agreement, the CPSU’s view is that the ballot will fail and that a further round of bargaining will lead to a new proposal to be developed which may, at that later time, be supported by the parties. 21

[30] The ASU is also against acceptance of the ATO Second Remuneration Proposal. They argue, through this application, that the ATO has not been bargaining in good faith, with the lack of good faith being said to be largely a failure to provide relevant information to which the ASU seeks access, and relatedly, capricious conduct on the part of the ATO because of its refusal to provide information the union seeks. Capricious or unfair conduct arises since “the ATO knew, or ought to have known, that [the information withheld] was not commercial sensitive or confidential and/or it has denied the existence of information in its possession.” 22

CONSIDERATION

[31] Determination of whether a party has complied with the good faith bargaining requirements is dependent on all the circumstances of the matter. In relation to s.228 of the Act generally, the Federal Court has held the following about what may be compliance or conformity with the requirements;

“The outer limits of the conduct which falls within s 228 is largely dependent upon factual matters which will undoubtedly vary from one situation to another. Certainly, it is neither possible nor prudent to attempt any exhaustive statement as to what will constitute compliance with the “good faith bargaining requirements” in the present statutory context.” 23

[32] In relation to s.228(1)(b), concerning the provision of information during bargaining, the Commission has noted that the reason for disclosure of information is to allow the other bargaining representative(s) to give consideration to the position being advanced; per National Union of Workers v. Defries Industries Pty Ltd. 24 Further, parties are required to disclose relevant information in a timely manner, subject to it not being confidential or commercially sensitive; per Australian Nursing Federation v. Victorian Hospitals' Industrial Association.25 A critical part of the bargaining process is for parties to disclose their bargaining proposals and responses; with bargaining being a process and not a unilateral act of one party to present a proposal to the other on a take it or leave it basis; per National Union of Workers v. Linfox Australia Pty Ltd.26

[33] It is, of course, the case that whether conduct is capricious or unfair can only be ascertained by an examination of all of the circumstances in a particular case: per CFMEU v Tahmoor Coal. 27

[34] It has been held by the Full Bench, in Endeavour Coal v APESMA, 28 a matter involving a majority support determination as well as contentions about a failure to bargain in good faith, that a sham negotiation, or pretence at bargaining, may well be capricious or unfair;

“[30] The main question in the present case concerns whether the Company was meeting its obligation to bargain in good faith. This involved a consideration as to whether there was a real or serious endeavour being made by the Company to negotiate an agreement, having regard to the finding by FWA that a majority of its staff employees want to bargain for an agreement. If the conduct of an employer in engaging in the bargaining process is a mere sham or pretence, such as going through the motions of bargaining without any real intention to enter into an agreement, then this would be contrary to the good faith bargaining requirements. In particular, such conduct might involve a failure to give genuine consideration to the proposals of other parties (s 228(1)(d)) or it might constitute capricious or unfair conduct that undermines freedom of association or collective bargaining (s 228(1)(e)). Such conduct might also amount to a failure to recognise and “bargain” with other parties (s 228(1)(f)).

[31] In the ABC case it was said that the determination of whether or not a negotiating party is “negotiating in good faith” may depend upon the conduct of the party when considered as a whole. The Full Bench gave the following example:

… if a party is only participating in negotiations in a formal sense but not bargaining as such then they may not be “negotiating in good faith”. Negotiating in good faith would generally involve approaching negotiations with an open mind and a genuine desire to reach an agreement as opposed to simply adopting a rigid predetermined position and not demonstrating any preparedness to shift.

[32] The evidence in the present case is that in many respects the Company complied with the formal requirements of the bargaining process by participating in meetings and responding to proposals put by APESMA. However, on our consideration of the evidence as a whole, it was open to the Commissioner to conclude that the Company’s conduct was not such as to demonstrate a genuine endeavour to negotiate an agreement with APESMA. The Company has not previously had a collective agreement covering staff employees at the Mine and it is clear from the evidence that it would prefer not to have such an agreement at this time. The Company participated in the bargaining process but did not make any substantive contribution to the possible content of an enterprise agreement or put proposals of its own.

[33] In these circumstances it was open to the Commissioner, and appropriate on the evidence, to conclude that the good faith bargaining requirements envisioned by s 228(1)(d) were not being met by the Company in that it was not giving “genuine consideration” to the proposals being put by APESMA. In our view, it would have also been open on the evidence for the Commissioner to conclude that the requirements in s 228(1)(f) were not being met by the Company.” 29

[35] The ASU submissions about the information it seeks establishes a desire for the information for several apparent purposes;

The furtherance of bargaining on the subject of wages that it says is incomplete; and

The furtherance of bargaining for protections in relation to certain changes identified by the ATO in the proposed agreement that will likely result in cost savings, productivity improvements and cost reductions.

[36] Against such purposes the ATO puts forward its arguments not only that it has fulfilled its obligations to provide all relevant information that it is able, but also that the ASU’s motive’s constitute a strategic delay to any ballot or to secure information or undertakings that might assist its purpose in future years. 30

[37] An understanding of the ASU’s request for information is best formed from a schedule of cash flows about the second offer originally prepared by the ATO (referred to as the Second Remuneration Proposal Schedule) and provided to bargaining representatives in August 2015. The schedule consists of the following information; 31

[38] Evident from this Schedule is that the $184.2m cost of the wage rise on offer is entirely offset by certain expected changes within the ATO, collectively comprising the productivity savings referred to earlier.

[39] The Schedule bluntly shows that while employees will be paid $184.2m more over the life of the proposed agreement, the ATO will achieve productivity savings of $184.2m by doing things differently. In explaining the ATO Second Remuneration Proposal to employees, the ATO put forward the following further detail about the elements within the above Second Remuneration Proposal Schedule;

“Productivity and affordability measures

We have been able to include new productivity measures to support the increased pay offer. The Australian Public Service Commissioner advised in April 2015 that he was able to consider a broader range of productivity initiatives than before. As a result, we have reassessed our productivity and affordability measures and in doing so have been able to address some of the issues raised by employees in February 2015.

The table below sets out the productivity and affordability measures that will make up the ATO’s revised pay offer:

EL2 classification realignment

I would like to advise you of a new proposal as part of this EA process. We have included the realignment of the EL2.1 and EL2.2 classifications as part of the ATO Leadership Strategy. We want to de-layer our organisational structure and improve our spans of control. This means that the ATO is proposing that there will no longer be separate EL2.1 and EL2.2 classifications, but rather just one EL2 classification. This initiative will be discussed at bargaining. This proposal is not linked to the pay offer.” 32

[40] The above material indicates the cost of the ATO Second Remuneration Proposal is in balance with the “productivity savings” and “sources of cash”, with each costed at $184.2m. The relationship between the latter two was not explained in these proceedings; however the focus of the ASU’s application was upon whether sufficient information had been provided to bargaining representatives about the information shown under “productivity savings”.

[41] The costings attributed to the first three of the productivity savings, “increasing working hours (9 mins)”, “Removal of Health and wellbeing allowance (administration)” and “align salary advancement with performance discussions”, were not the subject of claims in these proceedings for the provision of further information. The savings attributable to those items appear readily calculable.

[42] Instead, the ASU’s claims of a failure to bargain in good faith surround the provision of further information for the initiatives aggregated into the heading of “new productivity savings” for which savings of $95.9m have been identified by the ATO over the life of the agreement. The savings attributable to those matters are said by the ATO to be less readily calculable.

[43] The sum of savings shown for the new productivity savings is, in effect and calculation, a balancing item.

[44] That is, with the cost of salary increases being $184.2m, and the savings attributable to the first three of the productivity savings adding to $88.3m, savings of $95.9m are needed from the “new productivity savings”, or elsewhere, for the total savings to equal or surpass the remuneration costs. As a result, the identified savings have not been derived through the sum of careful calculation of each element and sub-element within the new productivity savings group, but have, instead, been derived as an estimate of the savings that will be achieved through the initiatives indicated in the group. While a balancing item, the ATO is, in effect, putting forward that its managerial skill, knowledge and experience is such that it is confident that the savings to be had from these matters will be equal to or greater than the amount shown and that there is no useful purpose served by precisely calculating the amount from first principles, and that in any event it would be too time and resource consuming to do so.

[45] The ASU’s position on this aspect of the ATO’s submissions is that by failing to answer the union’s questions on the subject, the ATO is not acting in good faith because the union is unable to test whether the savings from the new productivity savings group are in fact greater than $95.9m, and the union is thereby unable to initiate a negotiation with the ATO that the gain-sharing to employees from the savings should be greater. It says that in order to make good its assertion that the value of the new productivity savings is well in excess of that identified by the ATO, and to bargain for increased remuneration, the ASU needs access to the information it seeks about those “new productivity savings”. 33

[46] The progression of the dispute between the ASU and the ATO leaves three unanswered categories of information, 34 for which the ASU seeks bargaining orders from the Commission;

New productivity savings, referred to above, and indicated to have aggregate savings of $95.9m. The ATO in turn submitted that the dispute between the parties about the disclosure of information related now to four classes of savings, identified in the table above; the ATO’s “reinvention program”, a broad suite of initiatives to transform the agency; the introduction of flexible working hours for employees at the EL-1 level, who presently work in accordance with a flex-time arrangement; initiatives aimed at reducing unwarranted unscheduled absences of employees; and improvements to the agency’s efficiency of working through changes to the enterprise agreement – in effect, efficiencies to be had through the removal of enterprise “red tape”;

Savings to be had from rationalising accommodation, identified by the ATO as saving $40.3m over the life of the agreement; and

Savings to be had from the ATO’s digital transformation program, which in any event the ASU understands to be part of the “reinvention”, referred to above in the “new productivity savings” group. 35

[47] The principal focus then of the evidence and submissions was on three facets of the above matters; justification of the identified aggregate savings of $95.9m from the “new productivity savings” group; savings to be had from rationalising accommodation, identified by the ATO as saving $40.3m, and the related subject of savings to be realised from a program to reduce the number of vacant workspaces in ATO accommodation; and the calculation and size of anticipated savings to be realised from the ATO’s digital transformation program.

[48] Plainly, there is an overlap between elements of these three facets, with the digital transformation program apparently being a sub-group of the “new productivity savings” group; however, for the purposes of convenience, I will deal with the reasoning for each in turn.

Aggregate savings from the “new productivity savings” group

[49] As referred to above, the attribution by the ATO of the new productivity savings group of saving $95.9m is, both in calculation and effect, a balancing figure. It submitted that;

“The evidence is clear: there is no set of calculations and assumptions that will "add up" to each of the yearly figures. They were simply not produced in that way. What has been applied (and communicated) is that the suite of new productivity measures will, when added to the quantifiable measures already identified, be sufficient to offset the cost of a 4.5%-over-three-years pay offer.” 36

[50] The evidence supports that there have been no supporting calculations for the number, which is put forward, it seems, as a minimum saving the ATO expects to realise from the identified initiatives, based upon its management’s skill, knowledge and experience. While such judgement on the part of the ATO brings with it certain risks, it ultimately is a judgement the ATO is entitled to make.

[51] The ASU views the ATO’s judgement with incredulity and attaches the same to the Australian Public Service Commissioner’s decision that the Second Remuneration Proposal satisfies the obligation within the Australian Government Public Sector Workplace Bargaining Policy “that proposed remuneration increases are affordable within an agency’s existing budget and offset by genuine productivity gains”. 37 Such incredulity or questioning does not change either that the ATO has exercised a judgement or that the APS Commissioner is apparently satisfied the judgement sufficiently supports the Second Remuneration Proposal for it to be allowed to be put to bargaining representatives and employees in the manner envisaged in the Policy.

[52] In forming this view I have had regard to the supporting information requirements set out in the Workplace Bargaining Policy. 38 While the Policy refers to an agency providing the APS Commissioner with “detailed information on employee costs, productivity offsets and the agency’s operating statement”, an attached template leaves the impression that the Commissioner’s need for information is at a relatively high level, and that he is ultimately protected in the exercise of his responsibilities through the obligation of the Agency Head to make several declarations which are consistent with an accountability model in which the Agency Head, and not the APS Commissioner, carry the risks associated with implementation of and funding for a proposed agreement. The pro forma declarations include that;

All additional costs arising can be funded from within existing and known future budget and revenue streams;

The improvements in terms and conditions contained within the proposed workplace arrangement are not, and will not be, funded through the use of programme funding; and/or increases to customer service and product fees. 39

[53] The ATO has declined to provide to bargaining representatives the material it provided to the APS Commissioner in order for him to be satisfied of the consistency of the ATO’s Second Remuneration Proposal with the Workplace Bargaining Policy. It argues that such material is confidential and part of the internal deliberative process of Government. 40 I accept that argument.

[54] I am satisfied therefore that the ATO has disclosed to the ASU and bargaining representatives the relevant information it holds on the subject of costing of the new productivity savings group, other than confidential or commercially sensitive information.

[55] The question arises then of whether the ATO should be required to compile information about the new productivity savings group: see Australian Nursing Federation v Victorian Hospitals' Industrial Association. 41

[56] The ATO argues that the compilation of the requested material would take many resources and even months to prepare in the case of the digital transformation projects, comprising part of “reinvention” group. 42 Their submissions include that the nature of the four elements of the group – “reinvention”; the introduction of flexible working hours for employees at the EL-1 level, who presently work in accordance with a flex-time arrangement; initiatives aimed at reducing unwarranted unscheduled absences of employees; and streamlining of the terms of the enterprise agreement – is such that there are considerable unknowns, as well as uncertainty about the time at which savings would be realised.

[57] For example;

While the ATO knows that introduction of flexible working for EL-1 employees will see a change in their behaviour and expects them to work in a more flexible and agile manner, it cannot measure the productivity gain from the initiative; 43

The reinvention program and its related digital transformation strategy are major long-term projects with significant complexity and sub-projects and their timing and likely outcomes are unknowns, with the consequence that prediction of the extent of productivity savings would be “speculative and futile” 44 and “digital transformation is an ongoing journey rather than a specific deliverable”45; further they contain elements which may not have any cash savings benefit for the ATO, but instead have benefits for taxpayers, such as in the form of a red tape reduction;46

While the ATO aims to reduce its unscheduled absence rate which is presently in excess of 15 days per person per year to less than 14, and that it expects a reduction in the rate, it is unable to speculate about what reduction can realistically be achieved. 47

[58] The context of the requirement in s.228(1)(b), to disclose relevant information (other than confidential or commercially sensitive information) in a timely manner, is an expression in broad terms, but with some connection between the information sought and the matters being bargained for;

“… Subject to the information not being confidential or commercially sensitive and being relevant to the bargaining for the proposal enterprise agreement, bargaining representatives are required to disclose the information in bargaining in a timely manner.

This will generally, but not always, involve “the disclosure of information … to allow the other bargaining representative(s) to give consideration to the bargaining representative’s position”. It may be, however, depending on the circumstances, the subsection imposes an obligation on a bargaining representative to disclose information which is relevant to a position advanced by the other bargaining representatives, thereby facilitating bargaining in accordance with the objects of Pt 2-4 and Object s 3(f) of the Act.” 48 (reference omitted)

[59] Allowing that the reason for disclosure of information is to allow the other bargaining representatives to give consideration to a position being bargained for, 49 and that the compilation of material may be desirable in some circumstances,50 I accept that the further provision of information by the ATO on these subjects may, to some degree at least, further facilitate bargaining, depending on what the information showed.

[60] For example, information that showed no or little productivity to be gained from the EL-1 flexible working hours may lead to a debate that there is little purpose in pursuing the claim. Information that showed the productivity benefit of bringing the unscheduled absence rate down to the APS average might reinforce that there is a quantifiable productivity element that could be contributed to the overall savings required to fund the salary increase.

[61] Perhaps a model could be prepared, with suitable assumptions about the benefits to flow from either initiative, to provide an expected financial saving or productivity improvement. Whether such model would ever have any degree of robust or valid operation that would usefully inform bargaining would reasonably be a matter of conjecture. I note, in addition, that there is insufficient material before me about the objectives or benefits of the “streamlining” initiative, aimed at efficiencies to be had through the removal of enterprise agreement “red tape”, for me to form a view about whether information on that subject could reasonably be compiled.

[62] I also note that, in all likelihood, the savings from those three initiatives are the very minor cousin to the “reinvention” initiative.

[63] However, the proposition that further provision of information by the ATO on these subjects may, to some degree at least, further facilitate bargaining, depending on what the information showed is, is linked inextricably with the context of the journey the parties have taken thus far, traversing as it does many bargaining meetings; the attendant exchange of what the CPSU describes as a “a vast amount of information” 51; and two detailed offers by the ATO.

[64] The question arises then of what purpose further information provision may serve. Will new information, if required to be provided or compiled, advance bargaining in a way that the already-provided information has not? Will the time and resources needed to compile the information have been worth the effort? The evidence does not sufficiently support or affirm these questions.

[65] I consider in greater detail in the section below dealing with the digital transformation program the utility that would be served with the compilation of additional information, and adopt that reasoning here as well, for the reason that “reinvention” includes that program.

[66] I am satisfied that, in the circumstances of this matter, it would not be appropriate to require the ATO to compile information for bargaining representatives on the subject of the new productivity savings beyond that which has already been provided. This part of the ASU’s application, relating to a failure by the ATO to follow the good faith bargaining requirements in respect of s.228(1)(b) is therefore not made out.

[67] The obligation to refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining (s.228(1)(e)) is within the context that such conduct undermines freedom of association or collective bargaining; Queensland Nurses' Union of Employees v. TriCare Limited. 52 Further, I note that the meaning of “capricious” was addressed by Commissioner Bissett in Application by AMWU, Re: UGL Operations and Maintenance Pty Ltd in which she held the following;

“[67] Capricious means subject to or indicative of caprice. Caprice is defined in the Macquarie Dictionary as:

A sudden change of mind without apparent or adequate motive; whim;

A tendency to change one’s mind without apparent or adequate motive; whimsicality; capriciousness.” 53

[68] The circumstances before me do not lead to a conclusion that the ATO’s conduct, of not compiling further information on the subject of the new productivity savings, constitutes a failure by the agency to refrain from capricious or unfair conduct that undermines collective bargaining. There is no evidence the ATO’s decision making was without adequate or apparent motive, or based on a whim; and neither is there evidence that the ATO’s conduct had the effect of creating unfairness.

Rationalising accommodation and reduction in the number of vacant workspaces

[69] As would be expected, the ATO is a large holder of accommodation throughout Australia. The cost of accommodation is a major cost factor for the agency. It is regularly in the property market leasing new accommodation, disposing of unwanted accommodation and entering into sub-lease arrangements.

[70] The ASU has sought three types of information from the ATO about its property activities;

“25. What are the expected savings for each of the ‘property activities’ in Attachment 5 54 over the three years of the proposed Enterprise Agreement?

26. How many vacant workstations in each of the ATO’s remaining sites are expected to remain in the ATO after the property activities listed in Attachment 5?

27. What is the ATO’s plan to reduce the number of these vacant work stations over the three years of the proposed Enterprise Agreement and what is the ATO’s estimate of the savings it will generate if its plans are able to be realised?” 55

[71] It submits about these requests that;

“Clearly the ATO has a significant excess of workpoints and there exists an opportunity for very large cash savings as a result of reducing vacant workpoints. The ATO estimates the saving from rationalising accommodation to be in excess of $40m over three years. The ASU wants to review the basis for arriving at that figure as it believes that the available cash savings may be considerably higher.” 56

[72] Information about what was then the current state of the ATO’s property activities was disclosed to bargaining representatives on 1 September 2015 in response to an earlier request in August 2015. 57 That response restated material provided at an earlier time, in July 2015, and was provided again in September following the ASU’s request to be provided with further details of how the “rationalising accommodation” savings were calculated. The ATO’s response to the request on 1 September was that;

“ The ATO has quantified savings in consideration of those arrangements where it is reasonable to do so and we are able to direct $40.3m over the three years of the proposed EA to fund pay rises.

We are unable to provide more specific costings on property initiatives as such details are commercial in confidence.” 58

[73] The ATO reiterated this response in reply to the ASU request, set out above, on 14 September 2015, and elaborated the following in relation to vacant workstations, or workpoints (for the purposes of context, the numbered paragraphs are the ASU’s questions, and the un-numbered paragraphs are the ATO’s response);

“26. How many vacant workstations in each of the ATO’s remaining sites are expected to remain in the ATO after the property activities listed in Attachment 5?

The ATO’s approach is to implement whole of agency property management strategies. The level of information you are seeking cannot be made available as it is commercially sensitive and the subject of ongoing confidential negotiations which cannot be made public.

At the July 2015 National Consultative Forum (NCF), the ATO provided union representatives with details about current vacancy rates across all sites.

The ATO is implementing property management strategies, per the Commonwealth Property Management Framework, to manage significant vacant space around the country and meet density targets. This includes proactively exploring options to sub-lease space to other government agencies, co-locate staff in other agency premises where appropriate, surrender excess space as part of lease negotiations with the building owner, which may include some refurbishment.

The ATO is committed to ensuring that staff and their representatives are aware of all property plans and decisions that can be made publically available recognising there are some commercial negotiations that occur in advance due to the lease timings etc. which must remain “commercial in confidence” and will not be made public.

Over the past quarter (from March 2015 to May 2015) the ATO has reduced its vacant work points by 885.” 59

[74] The evidence in these proceedings of the ATO’s Director, Corporate Budgeting & Financial Reporting, Mr Cameron Shipard, who costed both the First and Second Remuneration Proposals, is that;

“… the property activities that were used to generate the $40.3 million amount consisted of several subleasing arrangements and savings from renewal of leases where space was surrendered and that the total 'savings' expected to be generated from these arrangements over the next three years is roughly $55 million.” 60

[75] The evidence before the Commission is that the overall savings expectations of the ATO for its accommodation rationalisation program have been disclosed to bargaining representatives, however the details of where the changes will occur have not. The evidence also shows that the generality of known changes have been disclosed to bargaining representatives. For example, in July 2015, and again in September 2015, and now in these proceedings, a 2 page summary of property activities has been provided to bargaining representatives. 61 The summary identifies properties across 5 categories; “Space consolidation”; “Sub-lease options”; “Option to co-locate staff”; “Exit site” and “New build”. It identifies what appear to be at least 21 locations to be affected. The program is subject to change; for example, a decision by the ATO to exit accommodation in Darwin was announced shortly before the commencement of the hearing.

[76] The objection by the ASU is that, while the ATO has identified a contribution for bargaining purposes of savings from all property initiatives of $40.3m, from a total property saving of roughly $55m over 3 years, it has not identified the savings to be had from each of the proposals.

[77] The evidence on the subject of confidentiality includes that of Mr Justin Untersteiner, Assistant Commissioner – Property Security and Environmental Services, who gave evidence that;

“Like all APS agencies, the ATO is a custodian of public money and has a responsibility to spend funds in a sensible and defensible way. The ATO would be acting against its own best interests if it did not keep property information confidential.” 62

[78] Mr Untersteiner developed his concerns about the confidentiality of this information in cross-examination by Counsel for the ASU during his oral evidence as follows;

“When you refer to other terms of these arrangements is that a reference to the terms of the contracts, presumably?---That's correct. So that may include – obviously the key issue for us would be cost but other terms could be, for instance, information about incentive so – and incentives might mean relate to costs, or incentives may mean relate to, for instance, a capital agreement where we may have a vendor, for instance, with part of an incentive under a deal, will agree to do some capital works on our behalf. So it's not necessarily all attributed to a dollar figure, specifically.

All right. Turning then to the first subparagraph you identified that it might compromise the ability of the ATO to negotiate a short-term bridging lease to tied you over until the new premise opens up, so presumably that sub-item is irrelevant to projects that are publicly announced?---That would be not necessarily. So to give an example there, and I will talk about this in non-specific terms because of the nature again, we are currently looking at a sublease deal with a particular government agency to align the dates properly. They need to seek a bridging of their existing lease. And the know for almost certainty, because of the difficulty with their lessor, that if that lessor was to know about the arrangement or anything about the arrangement that he would probably refuse the extension or would choose to increase the rates significantly, putting the Commonwealth at a disadvantage, maybe not directly the ATO but certainly the Commonwealth.

So that's assuming that the identity of the other party is known?---Yes but also understanding there's further complexities to this, so in certain locations - there may only be several government agencies in a location and it is likely that the lessor could infer that that arrangement relates to that agency.” 63

[79] And further, in relation to the prospect that the release of further information about an already publicly announced project, such as in Gosford, might have no difference to the ability to obtain a bridging lease;

“Yes?---No, that's not correct. That could certainly cause problems for – at the moment, the announcement that we're building a building in Gosford, you're correct. That would not create issues for someone in terms of a bridging lease. However, hypothetically, I mean, if we were looking at a sublease arrangement and we were to announce that publicly, it could cause issues for us.

Yes but my point is, it's already been announced. The fact that it's happening is already in the public domain so to the extent that you say that there'd be a very real market disadvantage if specific costs and other terms of the arrangements were released publicly, any damage has already been done by the public announcement of the project, in terms of the ability to negotiate a short-term bridging lease?---Not necessarily. Again, I don't agree with that, I'm sorry. I would say that if hypothetically we were to enter into negotiations with the tenant to sublease space in the building and that information was to be released prematurely and particularly information about the financials, it could certainly create issues for that agency or that tenant in terms of their ability to obtain a bridging lease for an extension.” 64

[80] The reduction of vacant workstations is within the context that in July 2015 the ATO reported to its National Consultative Forum that at that time it had 5,601 unoccupied workstations, representing over 21% of its total capacity of 25,968. Not surprisingly, the ATO intends to reduce these as much as it can, and apparently has been doing so for some time. The July 2015 vacancy rate was a considerable improvement on that reported in December 2014, of 6,783 vacant workstations, or more than 24% of total capacity. 65

[81] The ATO’s evidence about its property rationalisation activities is that there is an element of unpredictability about what can be reduced and when, being dependent on the interests or actions of potential sub-lessors and others. Mr Untersteiner’s evidence in cross-examination was that there were “lots of factors that could drive an outcome and including market factors that are out of our control” 66 as well as the following, including about the recently announced surrender of a lease in Darwin;

“... So is it the case that there are additional property activities that will generate cost savings for the ATO that where contracts have been signed but do not appear in this list?---Unlikely. I think this is a – contracts that have been signed should appear on this list.

All right. Sorry, I thought that was – I think we might be at - - -?---Sorry, to clarify my earlier point there are arrangements on here – I mean, our approach is to be as transparent with the unions as we possibly can and part of that means that there are times that we will put information on here that indicates out intention to release space but that doesn't necessarily mean that we need to sign a contract or even have a deal in place. And one good example of that is at 140 Elizabeth Street. We've got a line on that particular page that states that we intend to sublease the remainder of the building by mid 2017. I haven't a contract to sign though. I don't have a tenant lined up. We're trying to be transparent with staff and give timing to flag that that's our intention. And that's why we provided that to the unions earlier. We have to be transparent.

So that is an example where there is a sublease that has been signed with respect to levels 7 to 10 but not for the remainder of the building?---We are still in negotiations. Final negotiations are on level 7 to 10 but we're virtually there. But the other, that's correct, we don't have a contract in place.

And there are, of course, a large number of other property projects that are in the pipeline that don't appear on this table?---No, not necessarily at all. This represents a fairly large title in that portfolio. The commercial market is funny in that we may identify an opportunity that wasn't present yesterday. You know, you never know where an offer may come from. But at this stage we don't have a large pipeline of opportunities.

In the pipeline of opportunities is ceasing the lease of the Darwin office?---That's correct.

And presumably there are other projects like that that will arise over the coming three years or so?---I don't know the answer to that. I would be speculating. There is a possibility of course but not necessarily a likelihood.” 67

[82] I accept Mr Untersteiner’s evidence that the ATO’s property dealings are commercially sensitive and that it would be contrary to the agency’s interests for its detailed expectations for savings in particular locations to be widely known. It would be unsurprising that property owners, contractors and current and prospective lessors would try to use to their advantage against the ATO any information that is put in the public domain about its expected costs or savings or movements in its property dealings. Likewise particularised information relating to the ATO’s expected savings in each location from reducing vacant workstations, if such could be predicted given Mr Untersteiner’s evidence about the happenstance nature of such savings, reliant as they are on a third party having interest in areas occupied by the ATO, is more likely than not to work against the ATO’s commercial interests.

[83] Balanced against the ATO’s commercial interests is the question of the utility to bargaining of further information on these subjects.

[84] Such utility is likely to be firstly in relation to overall savings and the attendant question of the proportion of gain sharing for employees and, secondly, the question of whether the effect on employees of changes in the ATO’s presence in particular locations is sufficiently well protected in the Proposed Agreement’s conditions. In relation to the quantum of savings, Mr Shipard’s evidence is that the overall property savings expected by the ATO is about $55 million, while allocating to employees $40.3 million of that amount. 68 I understand Mr Untersteiner’s evidence to be that there may, or may not, be further savings from rationalisation of vacant workstations. Bearing in mind that a sophisticated lessor such as the ATO would, in any event, be expected to do everything in its power to seize every available opportunity to reduce property holding costs, so too could it be expected that a sophisticated bargainor against the ATO, such as the ASU, would anticipate even higher savings from the portfolio in the next few years, whether or not it had detailed information on the subject. The budget imperatives for such plainly exist.

[85] The ATO regularly reports to its National Consultative Forum about its property holdings, providing forecasts of intended activities on the part of the ATO. For example, the December 2014 report advised on activities in numerous locations, and in respect of 4 major projects, indicating the following;

“…

d Canberra
To support the sublease of the Gnabra Tower (10,000m²) to DVA, a restack has commenced and is expected to be complete Feb/Mar2015.

e Gosford
An Expression of Interest (EOI) was advertised nationally from 16 October 2014 for office accommodation in Gosford. The approach to the market is in response to the 2014-15 Federal Budget announcement that the ATO will be taking the lead on the Commonwealth Government initiative for a New South Wales Central Coast office aimed to boost investment and employment in the region. The site will support around 600 Commonwealth employees with the ATO expected to comprise approximately half of this number. As we are at the commencement of this process, the work functions, composition and how this is achieved, are unknown at this stage. It is expected the completion of the Gosford site will be late-2017.

f Parramatta
We have negotiated a lease extension with the current building owner in Parramatta until 2023, this includes plans for a site refurbishment program which will include but is not limited to repainting, re-carpeting, some new soft furnishings and storage capabilities. This lease extension also included the surrender of Level 18.

g Penrith
We have negotiated a lease extension with the current building owner in Penrith until 2026 at a reduced space of 10,000m² to support workforce requirements. There is also plans for a site refurbishment, the program includes but is not limited to new restroom amenities, re-painting, re-carpeting, new soft furnishings including new work points, storage capabilities and improved video conference and meeting spaces.

...” 69

[86] Material before the Commission in this matter indicates that the Gnabra Kembery office, Canberra, accommodates 2,003 employees, with the lease expiry in November 2022; Paramatta accommodates 1,669 employees, with the lease expiry in June 2023; and Penrith accommodates 1,044 employees, with the lease expiry previously in December 2016. 70

[87] In the September 2015 National Consultative Forum property report, the ATO made the following status report about anticipated property developments across its portfolio; 71

[88] The same report identifies the vacancy rate at ATO locations. At the 10 largest sites, each with on-site capacity of greater than 1,000, the reported vacancy rates were; 72

Adelaide, Franklin St – 18.0%

Melbourne – 17.3%

Moonee Ponds – 21.4%

Perth, Northbridge – 31.7%

National, Amungula – 9.7%

National, Gnabra Kembery – 33.3%

Parramatta – 11.7%

Penrith – 31.0%

Sydney, Latitude East – 10.3%

Brisbane – 9.0%

[89] Collectively, this is not insubstantial information that has been provided by the ATO to its National Consultative Forum, and there is no evidence that this information is not available to bargaining representatives, or that the representatives have not been able to use the information in bargaining. The information, and its context, leads to the view not only that property management is both a complex and dynamic challenge, but also that the ATO will likely be doing everything it can within its skill and power to minimise the cost and risk associated with those challenges. Such may well include efforts to sub-lease or dispose of inefficient leases, or to find locations that are more cost-effective for the ATO. That much can be anticipated and to be reasonably known to bargaining representatives, and additional information is unlikely to be required to surmise such strategy on behalf of the ATO.

[90] The Commission’s approach to determination of what is confidential or commercially sensitive will involve a decision on a question of fact; per Endeavour Coal v APESMA. 73 The context of the matter will be relevant to such consideration; per National Union of Workers v. Linfox Australia Pty Ltd.74 Information may be confidential because it pertains to persons other than the one who has been asked to provide it; per APESMA v Peabody Energy Australia Coal Pty Ltd.75

[91] When the competing interests of confidentiality and relevant information for bargaining are taken together, I am satisfied that there is no additional information that ought to be required to be disclosed for bargaining. The ATO’s contentions about the confidential nature of the information sought by the ASU have been made out, since the information it holds, if released, would have a prospect of working against the interests of the ATO. The context of the information sought and of bargaining allows a finding that the information sought is confidential or commercially sensitive. The ASU’s claims that the further information is needed for bargaining are not made out to a point that they would negate the ATO’s submissions regarding confidentiality. Further, it is more likely the ASU wants this information for a collateral purpose, being to know and then use industrially the ATO’s forward expectations about changes in its presence in particular localities. Whether such purpose has a sufficient connection with bargaining is unclear.

[92] This part of the ASU’s application, relating to a failure by the ATO to follow the good faith bargaining requirements in respect of s.228(1)(b), is therefore not made out.

[93] Neither has the ASU satisfied the Commission that the ATO’s conduct, in relation to the non-disclosure of information relating to the rationalisation of accommodation and reduction in the number of vacant workspaces, has been a failure on the agency’s part to refrain from capricious or unfair conduct that undermines collective bargaining (s.228(1)(e)). There is no evidence the ATO’s decision-making in this regard was without adequate or apparent motive, or based on a whim; and neither is there evidence that the ATO’s conduct had the effect of creating unfairness.

Anticipated savings to be realised from the ATO’s digital transformation program

[94] The background to the ATO’s digital transformation program, and its potential impact on the agency and its staff is explained in the following manner in the witness statement of Mr John Dardo, the ATO’s Acting Deputy Commissioner Customer Service & Solutions and Chief Digital Officer;

“20. The Reinvention Blueprint is a high level document articulating a vision for 2020, and identifies a range of interactions where a digital platform is intended to be utilised to improve and streamline services. It is underpinned by cultural change based on six strategic programs, one of which is contemporary digital services. The approach to 2020 and beyond is to make it easy for our clients to comply with their obligations and hard not to, through more streamlined self-assessment based on integrated digital solutions and stronger relationships.

21. The Reinvention Blueprint sets out how the ATO will move from 'high-touch' to 'low touch' or 'no-touch' activity for clients who have simple, transparent, low-risk tax and superannuation affairs. This will progressively reduce the need for people or businesses to interact manually with the ATO, leading to a reduction in compliance costs for all parties i.e. less red tape for clients and more efficient revenue collection for the ATO.

22. Accompanying these changes will be a significant investment in how we plan, deliver and manage technology. The ATO is transforming how we view and use technology to fulfil our role in effectively managing and shaping the tax and super systems. Our aim is to become an intelligent and agile organisation that is able to adapt.

23. The strategy has four focus areas, three of which are around the products and services that will be built. These include end-to-end digital service delivery, and the creation of a digital working environment. Through end-to-end digital service delivery we will move from:

(a) accepting lodgements digitally to servicing the full customer experience digitally from end to end;

(b) siloed channels to seamlessly integrated channels;

(d) ATO-designed services to co-designing services with the full range of stakeholders; and

(e) ATO-centric service delivery to fully integrated whole of government digital services.

24. There are numerous activities currently underway within the ATO that will contribute to the creation of a digital work environment. This continues a very long term focus that the ATO has had in increasing digital adoption. Over the last 15 years, this has included the implementation of Electronic Lodgement Service (ELS), Portals, e-tax and AUSkey. There has been an iterative and ongoing program of work since March 2011 that has already seen a range of further initiatives implemented such as mandatory electronic refunds, myGov, myTax and voice authentication.

25. Digital transformation will improve client experiences, but it should also 'free up' ATO staff to enable them to take a more proactive approach to encouraging and supporting client participation in the taxation and superannuation systems. Digital technologies will eliminate or automate a range of simpler interactions thus allowing staff to focus on value-added services that promote compliance. As set out in the Reinvention Blueprint, we will invest in our people to enable this transformation and there will be a supported shift of work to the value-added services. This is a long term strategic agenda, beyond the life of the proposed enterprise agreement. It is recognised that the nature of work will change over that life, as it has already changed.” 76

[95] The ATO’s March 2015 “Reinventing the ATO – Program Blueprint” 77 publication refers to staff presently being slowed down because of the amount of process and red tape, and being fatigued by all the change that has been occurring, while expressing a desire in the future to be empowered and trusted to act, having access to contemporary tools.78 Further, with respect to the strategic nature of changes to be brought about in this regard, it develops the following objectives for its workforce;

“Build a professional and flexible workforce with the right skills, knowledge, attitude and tools to deliver excellent client service in a collaborative, supported and trusted environment.

Ensure change processes and work practices are collaborative, agile and client focused.

Transform our culture, recruitment and capability development approaches.” 79

[96] The ATO’s IT Strategy “Agile and Intelligent in a Digital World” 80 elaborates that substantial changes are proposed to how the agency works, and that information technology is likely to lead that process of change. At a high level, the following strategic intent is described thus;

“ATO’s corporate vision is to be ‘a leading tax and superannuation administration, known for our contemporary service, expertise and integrity’. As part of this vision, the ATO has identified four goals that articulate the strategic priorities for the organisation:

1. Easy for people to participate
2. Contemporary and tailored service
3. Purposeful and respectful relationships
4. Professional and productive organisation

To realise the vision the ATO will need to change from one of ‘doing the same things better’ to one of ‘doing the right things’, and doing them differently where necessary.

We will make client interactions as simple while ensuring security of personal information. We will structure our services around relevant scenarios for clients, such as major life events and the multiple roles they may play, and use our information holdings to provide transparency and certainty when they engage in the tax and super systems. This will involve tailoring of their tax affairs – providing a ‘light touch’ or ‘no touch’ experience for those who regularly meet their obligations, and a greater level of intervention for those considered a higher compliance risk.” 81 (reference omitted)

[97] The IT Strategy develops 4 focal areas;

End-to-end digital service delivery – the design and delivery of digital services “as though the paper process had never existed”;

Insight and intelligence – using data for better compliance decisions and service delivery;

Digital working environment – “the ATO workforce will undergo a transition from mainly transaction and exception processing to a greater focus on knowledge work – delivering outcomes by leveraging tools and information”; and

Reinventing how IT services operate – resulting in “a different culture, streamlined processes, new technologies, stronger connections to our stakeholders, productivity improvements, and an openness and willingness to change”. 82

[98] As referred to above, one of the 6 strategic programs underpinning the Reinvention Blueprint is Contemporary Digital Services, which consists of approximately 50 projects, of which the following have been approved and are in the process of being designed, delivered or built; 83

“Whole-of-government Manage ABN Connections	Enable sole traders to link their ABN to their myGov account, allowing them to use myGov to access online business services that would otherwise need an AUSkey.
Whole-of-government Digital Business Transaction Layer	A single whole-of-government account for business clients with a 'tell us once' tool (ability to update contact details in one place for all linked agencies) and mailbox (to receive secure digital government correspondence).
Whole-of-government Digital Individuals Transaction Layer	Enhancements to the myGov 'tell us once' and mailbox tools for individuals.
Voice Authentication (app)	Use of voice prints to prove identity when accessing digital services via the ATO app.
Voice Authentication (ATO and whole-of-government)	Use of voice prints to prove identity when accessing digital services within the ATO and across government.
Cloud Software Authentication & Authorisation (ATO, whole-of-government and agency onboarding)	Enable clients to leverage the AUSkey of their software provider, instead of needing their own.
Whole-of-government Relationship & Authorisation Manager	Streamlined management of access for third party authorised contacts across government.
myTax2016	Expansion of myTax 15 (streamlined and tailored individual income tax return), to enable lodgment by all individuals.
Whole-of-government Streamlined Business Registration	A single online business registration service.
Enabling Digital by Default	Legislative framework to enable the Commissioner to require the majority of clients to use digital channels (those who cannot will be supported to use alternative channels).
Priority Digital Services	Delivery of a digital channel for non-digital priority services (annual volumes >50K).
Superannuation - Data Standards and eCommerce	Data Standards and e-Commerce is an integral part of the SuperStream initiatives and is a package of measures designed to bring the back-office of superannuation into the 21st century.
Superannuation- Display Membership	Provide an electronic service for individuals to access information about their superannuation, including ATO-held money. As well as provide information that enables individuals to make decisions about their superannuation holdings and facilitate the action of those decisions online.
Verint Upgrade	Deliver an upgraded virtual platform and enhanced functionality for the Verint Impact 360 suite of products.
Single Touch Payroll	Employers will be able to use their business management software to report (and pay) Pay As You Go Withholding (PAYGW) taxes to the ATO and Superannuation Guarantee (SG) payments to super funds at the same time as wages are paid to employees.
ELS to SBR Transition	Replacement of the legacy Electronic Lodgment Service (ELS) with a contemporary lodgment service available via practice management software.
Omni-Channel Experience	To enhance the client experience by providing smarter interactions across all touch points, driving the need for integration across all channels to enable one seamless experience. Phase 1 includes Virtual Assistant.”

[99] In September 2015, the ASU sought the following information about the digital transformation program;

“Digital transformation of the ATO

The ASU understands the Government has predicted that 40,000 jobs will not be required across the Australian Public Service as a result of implementation of its digital transformation strategy.

5. How many jobs does the ATO expect to lose as a result of implementation of this strategy?

New portals for business and taxpayers generally

The ASU understands that the ATO intends making portals, like the tax agent portal, more generally available, so businesses, individual taxpayers, self managed superannuation funds, partnership etc. will be able to access their account with the ATO. This would enable them to update contact details, check for any outstanding returns or activity statements, lodge returns and activity statements, make corrections or amendments to returns or activity statements, check any debts on their accounts, make on line payments, approval of extensions of time to lodge returns, activity statements and time to pay and make on line payment arrangements.

6. How much is the capital investment the ATO is making in this digital transformation by financial year and by product?

Digital transformation and on-line access to ATO systems

A significant part of the workload of employees in the Client Account Services (CAS) business line is taken up with updating contact details, error correction, tracing taxpayers, and approvals of extensions of time to lodge.

7. What is the ATO’s estimate of its demand for employees in CAS to reduce over the life of the proposed Enterprise Agreement as a result of this digital transformation by financial year and by classification level? What is the cost saving from this?

8. The digital transformation will impact on taxpayers’ ability to make payment arrangements, pay debts, access their account to see that payments have been made and how general interest charge may have accrued, the imposition of penalties etc. What is the ATO’s estimate of its demand for employees in its Debt business line to reduce over the life of the proposed Enterprise Agreement as a result of this digital transformation by financial year and by classification level? What is the cost saving from this?

9. The ATO intends placing much its policy, practice and procedure on line so it is directly accessible by taxpayers and their representatives. This would replace much of the work undertaken in Customer Service and Solutions (CS&S). Employees in CS&S also have responsibility for updating client details such as name and address, and may other functions that the ATO intends making available on line. What is the ATO’s estimate of its demand for employees in its CS&S business line to reduce over the life of the proposed Enterprise Agreement as a result of this digital transformation by financial year and by classification level? What is the projected cost saving from this?” 84

[100] The response provided by the ATO to this request is largely that it either does not have such costings or that the projects are at numerous stages and that it is unable to provide an accurate or perhaps even coherent response to the question. In September 2015, the ATO responded in the following manner to the foregoing question from the ASU;

It is not aware of the prediction of whole of APS job-losses made in the ASU’s question 5 referred to above;

In response to the ASU’s question 6, it indicated that capital budget is not available for pay rises and is therefore not accessible for the purposes of the enterprise agreement;

In relation to the ASU’s questions 7, 8 and 9, “Digital transformation is a key component of Government strategy. The ATO is not in a position to apportion a specific cost saving to digital transformation. It is expected that employees will be diverted to other priority work for any savings realised.” 85

[101] Further to this response, Mr John Dardo, the ATOs Acting Deputy Commissioner Customer Service & Solutions and Chief Digital Officer, gave evidence that while some projects do provide a net saving to the ATO, that may not necessarily be so for all or the majority of the projects 86; and that cost/benefit analyses are conducted at a particular point in time and for the scope that has been approved.87 His evidence, in cross-examination, was also that the outcome of the cost/benefit analyses varied, even where employees were freed up from established activities;

“In short, perhaps not in short but what that means is that people who are doing roles that subsequently are performed by technology, will then be able to perform other roles within the ATO?---Again, for some of them, yes.

There are two consequences of that I suggest to you. The first is that there will be productivity improvements for the ATO, productivity savings for the ATO?---Absolutely, the system as a whole for clients, keeping in mind one of the key focus areas here is for clients - red tape reduction experience for clients. Experience for clients should be more streamline, more efficient and the system, the administration of the system on our side should be easier or better.

Yes, and so that's a part of the side that I am interested in. Easier and better for the ATO, and what that means is that there will be productivity savings?---Yes.

A further consequence of those employees being freed up to do other work is that there will be cost savings for the ATO, won't there?---There might be some cost savings but there are also investments that led to those cost savings, so some of these projects come out at a neutral point, some come out slightly more expensive, some come out at a saving.

They're certainly things that you'd expect to be analysed and detailed in a cost benefit analysis?---To the extent that it's possible and at the particular point in time for the scope that's been approved.” 88

[102] The ASU does not accept the ATO’s responses on this subject. Its evidence is that the digital transformation program as a whole, and certain projects in particular, will have profound effects on the organisation and that the ATO would have calculated the returns to it of each project. Mr Lapidos, the Branch Secretary of the ASU’s Taxation Officers Branch, outlined his concerns in the following way in his witness statement;

“75. By my letter dated 14 September 2015 I sought detailed information about the ATO’s plan for its digital transformation on behalf of the ASU. The request for information included details of the number of jobs the ATO expects to lose as a result of implementation of this strategy. By its response of 18 September 2015 the ATO indicated that its Digital Transformation Strategy was not designed to make employees redundant. This answer does not address the point of the ASU’s question. The relevant information sought by the ASU goes to the productivity and cost savings from the ATO’s Digital Transformation Strategy. I understand that successful implementation of the strategy will release many on-going employees from their current work so they can undertake work of greater value or priority. This is a productivity saving which I anticipate would have been carefully considered and quantified by the ATO.

76. I also understand that the implementation of the Digital Transformation Strategy may allow the ATO to reduce the number of irregular and intermittent (casuals) and non-ongoing employees that it needs to engage. Similarly, this may reduce its demand for contract labour and thereby generate cost savings. The ASU is seeking this information.” 89 (references omitted)

[103] In cross-examination, Mr Lapidos more pointedly referred to his concerns, that the ATO has not put into writing its understanding of savings;

“So when you say, as you do for example, at paragraph 75 that you anticipate that there does exist some form of quantification, at least in this case in relation to digital transformation, what you are really saying is that you don't believe what you've been told, correct?---No, I am saying that they haven't put in writing what you are suggesting they have, and if they have, you should take me to it and I will have a look at it and I will tell you why or what I think it means.” 90

[104] Mr Dardo’s evidence is that while cost/benefit analyses are undertaken and visible and transparent, they are point-in-time reviews taking into account the then-known scope of each project. 91 Mr Dardo’s evidence was that digital transformation is not a driver for reducing employee numbers.92 He illustrated the point with a reference to the ATO’s experience with online services that appear to have increased the demand on call-centres;

“... Would you be aware - if the identification of the number of potential redundancies flowing from the digital transformation had been done, can you confidently say you'd be aware of that?---I can confidently say that for the last five years people have been predicting that the move to online will create redundancies in the call centres, for the last five years. We've moved four million people online in the last two years, 1.2 million to voice biometrics in the 12 months, half a million into mobile apps and the workload in the call centres has been increasing. So my difficulty here is that I - you know, you could speculate in any direction but the evidence on the ground is that as we move people into more digital work, the very place where people were forecasting the work would disappear has actually increased its workload.

Can I take it from that answer that you simply don't know whether that analysis has been done?---There is no analysis which identifies our staff reduction as a result of digital transformation, because digital transformation is a journey and there are elements that you just - we can't even scope the scape of because it requires cabinet legislative government approval and digital adoption by the community.” 93

[105] His evidence was also that the benefits to government or taxpayers may be featured in particular projects. A project may be pursued even where it did not have a benefit for employees or the ATO. It might be that the project had a benefit to taxpayers, but not the ATO. For example;

“Some investments, such as voice authentication and myGov, increase digital uptake across all products and channels. Similarly, investments in other products like myTax, which may at first instance be considered to be an income tax product, impact more broadly on lodgement, debt and client experience.” 94

[106] Mr Dardo’s oral evidence gave two detailed examples of how the whole-of-Government approval process, within which the ATO works, may impact on how cost/benefit analyses may focus on matters other than employee savings. His first example referred to “single touch payroll” referred to in the Contemporary Digital Services document 95 as a project to allow employers to use their software to directly report Pay As You Go Withholding taxes and Superannuation Guarantee payments to super funds at the same time as wages are paid to employees.

“I take it that those cost benefit analysis are things that are not done by you?---They're sometimes done by the people within my space, they're sometimes done by people in other parts of the organisation but go through consideration. They're visible and transparent but again for the scope or point of time of the projects.

Sorry, what do you mean visible and transparent?---Let me use single touch payroll as an example. There is a project called single touch payroll. It appears on that list, it is an approved project. The approval is for a group of people to work up the concept of single touch payroll. It's been a project that's been on our agenda for three years, we've been working on it for three years. So the project approval has been for each of their years, the number of people working on developing that concept up; legislative design, IT design, engagement with the community around consultation. That project has at least four to five phases. Phase one is around you know streamlining employer reporting and streamlining superannuation reporting by employers. That requires government to agree, so cabinet approval, it requires legislative change, it requires the community to agree to dates. So that project alone, just phase one, has not yet had cabinet approval, legislative change and agreement from industry about roll out dates. The roll out dates for that project could be anything from July 17 through to July 2020. Phase two is about other commonwealth agencies consuming single touch payroll. We haven't even costed that yet. Phase - - -

Could I just stop you there. It's probably my fault, I asked you an open-ended question but the question did relate to what visible and transparent meant. What I want to suggest to you is we're talking about cost benefit analysis. You said they must be visible and transparent. What that means is that they must be tangible cost benefit analysis mustn't they?---For the scope and point in time, yes. The benefits may not be a saving to the ATO. They may be a red tape reduction for clients.” 96

[107] The other example to which I refer is that of voice recognition, with Mr Dardo’s answer in cross-examination stemming from questions about the consideration of employee factors in project approval processes;

“You say that wouldn't be relevant to a consideration for someone determining whether to approve a project?---No, it's - and again, I'll use an example. Voice authentication was a project we worked on for three years. You know, different points in time there were cost benefit analysis and different level of detail. Before we did the final approval to purchase the technology and make the investment, we estimated the number of people that may register a voice print and how much time it would save per phone call if they used their voice print. Now the reality is as you go into production, the adoption rates of people registering a voice print vary from your forecast. The cost to implement vary and the workforce that you do or don't use or that you're able to redirect varies. So it's impossible at, you know, stage one of a project or stage two or stage three to predict that it will be these casuals or those non ongoings or those ongoings that will get a benefit. All you can do is estimate on a per work item, you know, calculation what you think you might save and what that might mean in terms of answering more calls. So for that project, we estimated we would save 47 seconds per call when a client registered a voice print and authenticated and that 47 seconds was able to be reused to do a longer call, or to do a different type of call.” 97

[108] In relation to its question to the ATO about capital allocations for the digital transformation projects, the ASU argues that knowing the capital allocation for a particular project “would allow the ASU to assess the size of the investment and the digital transformation strategy generally, and that itself would be indicative of the size of the returns that were expected from it”. 98 The argument, put another way, is to the effect that no-one would invest potentially millions of dollars into a project unless commensurate returns were expected. However, against such proposition is the evidence of Mr Dardo about the likelihood that projects contain elements which may not have any cash savings benefit for the ATO, but instead have benefits for taxpayers, such as in the form of a red tape reduction.99

[109] Ultimately the ASU’s request for further information on the subject needs to be tested against the factors of relevance to bargaining; whether the information sought by the union exists; and if not whether it should be compiled.

[110] Again, like other aspects of the ASU’s information request, disclosure of further information on the subject of the digital transformation project is put forward on the basis that it may facilitate further bargaining about the extent of gainsharing or the adequacy of employee protections within the proposed agreement, and especially those relating to change with significant effects, restructuring or redundancy.

[111] In an environment such as the ATO, change resulting from technology has likely been a given for decades and is likely to continue to be so. There is a consistency of evidence of both parties that the changes now under consideration, set out within the Reinvention Blueprint, and the IT Strategy, will have the effect of stopping work presently being done and requiring entirely new work to be done, with the attendant likelihood of changed skills or different jobs, or even reduced demand for jobs. It would be an unusual workplace in which such pressures were not evident. The predictability of those things, however, does not lead to a view that bargaining is unable to proceed, or is unable to fairly proceed without further information on these matters being ordered by the Commission.

[112] The imperatives on which the ATO is acting are clear enough, and are well articulated in the strategy documents and Portfolio Budget Statements before the Commission. 100 Mr Shipard identified that Government appropriation will reduce by $400m from 2014/15 to 2018/19.101 With some understatement, he indicated hope that elements of the digital transformation project would bring meaningful savings for the ATO;

“Are you aware that a number of those proposals will result in work currently being done by an individual being done through some form of technology?---I'm hoping so because I've got to find $400,000,000.” 102

[113] These imperatives combine to require deployment of technology in order to better serve the community, as well as to respond to significant shifts in funding. Not only are the strategic imperatives set out in the Reinvention Blueprint, and the IT Strategy, but also the Portfolio Budget Statements, showing a significant decline in the ATO’s appropriation from Government. 103 In the circumstances then, it is unlikely that those imperatives are not understood by bargaining representatives, or that the consequences are not understood, at least in broad concept.

[114] I am satisfied the information is not presently in existence as a coherent, orderly report or reports that can be provided to the ASU and other bargaining representatives. I am also satisfied that it would not be desirable to require the information to be compiled. Such action is likely to be time and resource consuming and require new and potentially questionable assumptions to be made about the employee impact of particular projects when the evidence plainly is that such consideration has not presently been undertaken.

[115] While clearly there is some relevance to the provision of the information sought to the furtherance of bargaining, that relevance does not rise to a point above the practicalities associated with the obtaining of information. In a perfectly informed negotiation, the impact of change could be readily assessed and compensated, whether through wages, conditions or protections. Yet negotiations on these points are available to the ASU without the need for further information. There was no evidence in these proceedings that negotiations on particular topics had been stymied without additional information, or that they would progress better with additional information.

[116] This part of the ASU’s application, relating to a failure by the ATO to follow the good faith bargaining requirements in respect of s.228(1)(b) is therefore not made out.

[117] Neither was the ATO’s conduct in how it responded to the ASU’s request for further information on the anticipated savings to be realised from the digital transformation program a failure to refrain from capricious or unfair conduct that undermines collective bargaining (s.228(1)(e). There is no evidence the ATO’s decision-making on the subject was without adequate or apparent motive, or based on a whim; and neither is there evidence that the ATO’s conduct had the effect of creating unfairness.

CONCLUSION

[118] On 28 October 2015, after my decision in this matter was reserved, the ATO wrote to me drawing my attention to a recent change in the Australian Government’s Workplace Bargaining Policy. The ATO advised;

“Given this important development, the ATO has decided to withdraw its current pay offer of 4.5% and will now seek to develop a new offer in accordance with the revised Bargaining Policy. At this stage, we do not have any specific timeframes as to when a new offer will be developed and approved. It is possible that our revised offer will differ in several areas when compared to the offer which precipitated the ASU's application.”

[119] The parties were invited to make such further or additional submissions to me on this development as they wished, however none did so, and I considered it appropriate to proceed to determine the matter on the basis of the submissions and evidence before me.

[120] In conclusion, and after consideration of all of the materials before me, I am not satisfied that the criteria for the making of bargaining orders has been made out by the ASU. Their case rested on the stated need for further information for the purposes of bargaining. The information sought was claimed to be both relevant, as well as necessary, for the furtherance of bargaining. I am not persuaded that is the case, and am instead of the view that what the ATO puts forward about the ASU’s purpose for this application of strategic delay or fishing for information that can be used in later industrial activities is more likely.

[121] In summary;

I am satisfied that the ASU application has been properly made, pursuant to the provisions of s.229(4);

I am satisfied that the employer and employees have agreed to bargain and have initiated bargaining for a proposed agreement (s.230(2));

I have considered whether the ATO has met and is meeting the good faith bargaining requirements, either by disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner or by refraining from capricious or unfair conduct that undermines collective bargaining, in relation to the following three matters;

New productivity savings indicated to have aggregate savings of $95.9m;

Savings to be had from rationalising accommodation, identified by the ATO as saving $40.3m over the life of the agreement; and

Savings to be had from the ATO’s digital transformation program, which in any event the ASU understands to be part of the “reinvention”, referred to above in the “new productivity savings” group.

In relation to these matters;

I am satisfied that the ATO has disclosed relevant information on these matters (other than confidential or commercially sensitive information) in a timely manner and that it is not appropriate in all the circumstances to order that further information be compiled; and

I am satisfied that the ATO has refrained from capricious or unfair conduct that undermines collective bargaining.

[122] As a result, I must now dismiss the ASU’s application and an order doing so is issued at the same time as this decision.

[123] Before learning of the ATO’s views about a possible revised offer to bargaining representatives and employees, I had formed a view that, on the basis of the material before me, I could see no useful purpose in further delaying a ballot regarding the proposed enterprise agreement based upon the Second Remuneration Proposal, if that is what the ATO wished to do. I saw no impediment to moving toward a ballot at the earliest opportunity.

[124] While a revised offer plainly requires formulation and negotiation, and potentially the exchange of relevant information, the desire to put a revised offer to employees should not become an opportunity for delay on either part. Instead the development and negotiation of a revised offer should be done expeditiously, with the consequent aim of putting the result, whether agreed between bargaining representatives or not, to employees at an early opportunity.

COMMISSIONER

Appearances:

Mr J McKenna of counsel for the ASU

Mr J Snaden of counsel for the ATO

Mr K Barnes for the CPSU

Hearing details:

2015.

Adelaide (video link to Melbourne).

14-15 October.

1 Exhibit ASU-5 Applicant’s Minute of Proposed Orders.

2 Exhibit ASU-1 Applicant’s Outline of Submission [13].

3 Exhibit ASU-3 Witness Statement of Jeffrey Lapidos, Attachment JL-1, Australian Government Public Sector Workplace Bargaining Policy, Supporting Guidance [3.1].

4 Ibid [4].

5 Exhibit ASU-3 Attachment JL-20.

6 Exhibit ASU-1 [6]–[9].

7 Transcript PN152.

8 Exhibit ATO-2 ATO Outline of Submission [58].

9 Ibid [67].

10 Ibid [9].

11 Exhibit CPSU-1 Submission of CPSU [18].

12 Exhibit ATO-2 18; Exhibit ASU-3 Attachment JL-4.

13 Exhibit ASU-3 Attachment JL-9.

14 Ibid.

15 Ibid Attachment JL-18.

16 Ibid.

17 Exhibit ATO-5 Witness Statement of David Miller [22].

18 Exhibit ASU-3 Attachment JL-28, 2.

19 Exhibit CPSU-1 [9].

20 Ibid [21]–[22].

21 Transcript PN1502.

22 Exhibit ASU-1 [51]-[52].

23 Endeavour Coal v APESMA (2012) 206 FCR 576, 217 IR 154, at [31].

24 [2009] FWA 88, at [64].

25 [2012] FWA 285, at [99].

26 [2013] FWC 8428, [30].

27 [2010] FWAFB 3510; (2010) 195 IR 58, at [7].

28 Endeavour Coal v APESMA[2012] FWAFB 1891, (2012) 217 IR 131, with reference to Public Sector, Professional, Scientific, Research, Technical, Communications, Aviation and Broadcasting Union v Australian Broadcasting Corp (unreported, AIRCFB), Print L4605, 31 August 1994.

29 Ibid [30]–[33].

30 Exhibit ATO-2 [9].

31 Exhibit ASU-3 Attachment JL-18.

32 Ibid Attachment JL-14, 2-3.

33 Exhibit ASU-1 [6].

34 Ibid [2].

35 Ibid [8].

36 Exhibit ATO-2 [36].

37 Exhibit ASU-3 Attachment JL-1, Supporting Guidance [3.1.2].

38 Ibid [3.1.12].

39 Ibid Attachment A.

40 Exhibit ATO-5 [65].

41 [2012] FWA 285, at [101].

42 Transcript PN1324.

43 Ibid PN833.

44 Exhibit ATO-6 Witness Statement of John Dardo [35].

45 Ibid [34].

46 Transcript PN1037, PN1043–8.

47 Ibid PN880–6.

48 Australian Nursing Federation v Victorian Hospitals' Industrial Association[2012] FWA 285, (2012) 216 IR 380, at [99] – [100].

49 National Union of Workers v. Defries Industries Pty Ltd [2009] FWA 88, at [64].

50 Ibid at [101]; see also APESMA v Peabody Energy Australia Coal Pty Ltd[2015] FWCFB 1451, at [29] and [39].

51 Exhibit CPSU-1 [19]; Exhibit ATO-2 [69].

52 [2010] FWA 7416, at [50].

53 [2014] FWC 3724, at [67].

54 Exhibit ASU-3 Attachment JL-26.

55 Ibid Attachment JL-32.

56 Exhibit ASU-1 [45].

57 Ibid [49]; Exhibit ASU-3 Attachment JL-26.

58 Exhibit ASU-3 Attachment JL-23, 6.

59 Ibid Attachment JL-34, 12.

60 Exhibit ATO-7 Witness Statement of Cameron Shipard [62] (as amended in oral evidence); Transcript PN1137.

61 Exhibit ASU-3 Attachment JL-26.

62 Exhibit ATO-4 Witness Statement of Justin Untersteiner [46].

63 Transcript PN684–6.

64 Ibid PN691–2.

65 Exhibit ATO-4 Attachments JU-6 and JU-7.

66 Transcript PN626.

67 Ibid PN660–5.

68 Exhibit ATO-7 [62] (as amended in oral evidence); Transcript PN1137.

69 Exhibit ATO-4 Attachment JU-6.

70 Ibid Attachments JU-3 and JU-4.

71 Ibid Attachment JU-8.

72 Ibid Attachments JU-4 and JU-8.

73 [2012] FWAFB 1891, at [64].

74 [2013] FWC 8428, at [33].

75 [2015] FWCFB 1451.

76 Exhibit ATO-6 [20]-[25].

77 Ibid Attachment JD-14.

78 Ibid 6-8.

79 Ibid 55.

80 Ibid Attachment JD-15.

81 Ibid Attachment JD-15, 7.

82 Ibid 9, 12-3, 15.

83 Exhibit ASU-4.

84 Exhibit ASU-2 Attachment JL-33, 2-3.

85 Ibid Attachment JL-34, 16-17.

86 Transcript PN1002.

87 Ibid PN1025.

88 Ibid PN1028–32.

89 Exhibit ASU-3 [75]–[76].

90 Transcript PN465.

91 Ibid PN1035.

92 Exhibit ATO-6 [32].

93 Transcript PN1086–7.

94 Exhibit ATO-6 [37].

95 Exhibit ASU-4.

96 Transcript PN1035–7.

97 Ibid PN1075.

98 Ibid PN1469.

99 Ibid PN1037, PN1043–8.

100 Exhibit ATO-7 Attachment CS-2.

101 Transcript PN1286.

102 Ibid PN1279.

103 Exhibit ATO-7 [18]; Transcript PN1247, PN1311–8.

Printed by authority of the Commonwealth Government Printer

Australian Municipal, Administrative, Clerical and Services Union v Commonwealth of Australia as represented by Australian Taxation Office