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Legislative Council - Fifty-First Parliament, Third Session (51-3)
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PUBLIC SECTOR BILL

Second Reading

Adjourned debate on second reading.

(Continued from 28 April 2009. Page 2075.)

The Hon. R.I. LUCAS (11:28): I rise to support the second reading of the bill and, in doing so, indicate that my overall approach to considering and ultimately voting on the bill has been guided—if I can put it as simply—by trying to see whether we as a parliament can develop as fair as possible a system for those employees in the public sector who work assiduously on behalf of the government of the day and the community generally, and also as fair as possible a system in terms of being able to manage an efficient and effective public service from the viewpoint of the current government. In so doing, I want to address a number of issues. There are significantly more issues that do need to be addressed which I (and other members, I am sure) will leave to the committee stage which, I suspect, will be an extended and extensive debate as, indeed, it should.

I have had the privilege of participating in debates going back a decade or so and other debates back in the 1980s in relation to similar legislation. It is obviously a matter of great interest not only to public servants and their association but, as I said, it ought to be of interest to the broader community as well. One of the issues or, I guess, the only issue that has attracted any public attention, in terms of media coverage in relation to this, is what I will call the hire and fire principle.

If I can refer to some of the media commentary, principally in The Advertiser, going back to 25 November last year, the bold headline was 'PS heads to hire and fire'. This was an article by Greg Kelton which stated:

Radical changes to the Public Service including giving department heads the right to hire and fire will be introduced to parliament this week, 12 months after first being proposed. South Australia is the last state, apart from Tasmania, to give the power to chief executives to terminate employment.

It further states:

It will be the biggest shake-up of the state's public sector in 20 years.

That article, principally, was a summary of the government's spin on the document and included government press releases. On 20 February this year there was another article under the bold heading 'Power to hire and fire the key, says Minister Jay Weatherill'. Without reading all the article, it has the minister saying:

One change contained in the bill will attract criticism. This is our intent to give chief executives of government departments the power to hire and fire their staff. We expect a lot from our chief executives. In the past five years we have increased our requirements, given them more responsibilities and increased their accountability. This is as it should be. After all, these are well-paid positions but if we expect a chief executive to be truly accountable for their department we must also give them the ability to manage their own resources.

So says minister Weatherill. Then, on 20 March this year under the bold heading 'Threat to key reforms in the public sector'—again, an article by Greg Kelton and, again, based on government statements at the time—it was stated:

Key reforms to streamline the state's public sector including giving chief executives the right to hire and fire are under threat in the upper house. The government is lobbying Independents to try to have the biggest public service reforms for the past 25 years passed.

I note that, between November last year and 20 March, these reforms have been the biggest for 20 years and now they are the biggest for 25 years. If we keep the debate going longer, it may end up being 30 and 35 years. The article continues:

South Australia and Tasmania are the only states which do not give departmental chief executives the right to hire and fire.

Further on, Mr. Weatherill is quoted as saying, 'This issue was a vital element of public sector reform,' and he could not fathom why the Liberals were supporting the association—'the 'association' being the Public Service Association.

There were a number of other articles during that particular period. One, which I think might have been a leader article, stated 'Permanency must go in the Public Service'—that was in The Advertiser of 17 March 2009. I do not intend to read all the articles but, to summarise and give the flavour, I think the only coverage in relation to this bill has been in relation to the issue of hiring and firing.

Of course, that has coloured other media commentary on the legislation—that is, the view being that this legislation was introducing, for the first time to chief executives, the power to hire and fire. It has also led to prominent business persons in the community indicating that they support the legislation because, for the first time, this gives chief executives the power to hire and fire.

I refer members and others who are following the debate to section 50 of the Public Sector Management Act 1995. There are a number of other sections, but this is the one that is most apt to this particular debate because it relates to excess employees. Section 50 of the act states:

(1) If the Chief Executive of an administrative unit is satisfied—

(a) that—

(i) the services of an employee have become underutilised; or

(ii) an employee is no longer required to perform, or cannot perform, the duties of his or her position,

because of—

(iii) changes in technology or work methods or in the organisation or nature or extent of operations of the administrative unit; or

(iv) loss of a qualification that is necessary for the performance or proper performance of the duties; and

(b) that it is not practicable to assign the employee under Division 1 to another position in the administrative unit,

the Chief Executive must refer the matter to the Commissioner.

I will not read the rest of section 50 of the act in its entirety, but a process was set up where, if there was an excess employee, the chief executive could refer the matter to the Commissioner for Public Employment and various things would have to be done as outlined under other subsections of section 50 but, ultimately, the power exists within the current act under subsection (2)(e), as follows:

...the Commissioner may—

(e) recommend to the Governor that the employee's employment in the Public Service be terminated.

Then subsection (3) provides:

The Governor may, on the recommendation of the Commissioner under this section, terminate an employee's employment in the Public Service.

Therefore, section 50 of the current act already provides a process, albeit cumbersome (and I accept that in relation to the required involvement of the Governor which is, in essence, Executive Council), whereby excess employees, under the act, can be identified and terminated.

As the Public Service Association and, indeed, everybody else knows, the simple fact is that the problem is not with the legislation; the simple fact is that this government and, indeed, previous governments, have, through enterprise bargaining arrangements, agreed to give up their right, in essence, to use these particular provisions—that is, they have agreed to a policy of no forced redundancy, and that has been written into various agreements. I will be honest with my friends or associates within the Public Service Association and indicate that it has not always been the case in the past that I as an individual have necessarily agreed with that policy. However, the view of this government and the view of the former government is that that was the policy, that is, that was an element of the enterprise bargaining negotiations.

Certainly, in our day, a name familiar to many, Paul Case, would come to the various cabinet committees and indicate that, as part of the negations, the view was put to the government that, if this was retained, a wage settlement package might be negotiated at a slightly lower level than if that particular provision was not in there. Whether that would have ever been the case, one will never know; it was part of the give and take or the argy-bargy of collective bargaining. The gory detail is not important; the essential point is that it is through the processes of enterprise bargaining that the policy of no forced redundancy has been enforced and implemented.

This publicity the government has sought and has managed to generate through the media—and has therefore encouraged some sections of the business community to also believe—is that, in some way, this will be a significant change in existing arrangements and is government spin at its best. However, frankly, it is a nonsense. Nothing is going to change so long as governments—this government, the past government and maybe future governments—continue to include the no forced redundancy provision in their enterprise bargaining arrangements.

So, these bold headlines of the power to hire and fire being held up by the Legislative Council and The Advertiser editorials that these are potentially major reforms or that they are the most significant reforms in 20 or 25 years, depending on the particular time of the article, count for not too much because, as I have said, we are, in essence, just talking about the legislation and not including the more important issue of the agreements entered into through enterprise bargaining.

We know, through the work of the Budget and Finance Committee, that witnesses from one department alone—the Department for Further Education, Employment, Science and Technology (DFEEST)—indicated at our most recent meeting that it already has 140 excess employees within that department. The Commissioner for Public Employment reported that he believed, on the latest figures in, I think, March, that there were 416 excess employees within the public sector more broadly, and that does not include the public servants who are unassigned; that is, they are in the Public Service but they have no assigned position to fulfil.

So, we already have a significant number of excess employees in the system. We already have within the act the capacity to terminate them, and the reason why it does not occur is the enterprise bargaining agreement in relation to no forced redundancies.

Essentially, the change included in the bill is relatively modest, and that is that the government is changing the act but has indicated that it will not change the enterprise bargaining arrangements. The government has indicated that the process that it is suggesting will be much shorter (that is, the decision will be taken by the chief executives); whereas the current act requires a process of going through the Commissioner for Public Employment and then, ultimately, the Governor or Executive Council.

I have already indicated that my personal view is that the notion of having to go to the Governor or Executive Council for the termination of an individual public servant in the Department of Education and Children's Service never seemed to make much sense to me and still does not. So, I do not personally have a problem with that particular provision being removed.

There is certainly going to be debate during the committee stage about whether it is our model or other models the Hon. Mr Parnell has floated already in relation to the involvement of the Commissioner for Public Employment as a protective mechanism in relation to someone whose position has been terminated. I think some of the options the Hon. Mr Parnell has raised, and certainly my own party has raised, are meritorious and deserve active consideration. However, the consistent theme of both models is that it would not just be the chief executive; it would include some degree of protection by including the Commissioner for Public Employment as well.

I want to raise some general questions before I move on to other topics. I note in the second reading reference to the Australian Government Executive Service. In the minister's response to the second reading—or perhaps in the opening of the committee stage debate in the next sitting week—I ask the minister to place on the record the total number of executives in the public sector. I also want clarified whether it is correct that all of our executives are in the South Australian Executive Service, or do we still have executives in the old EX range?

I also want clarified the exact date the policy of non-tenure for executives was introduced, and can the minister confirm how many executives with tenure did not give up tenure when that possibility was offered to them and have remained as executives? That is, they did not give up tenure with the benefits that were supposed to be offered to them but they have remained as executives nevertheless.

I also ask: how many executives have retained fall-back options to lower positions within the Public Service with tenure? My understanding is that some executives who might have been at the lower level of the executive range may have had fall-back options to the higher level of the ASO range, as it was then. It was ASO8; although I understand the classifications are different now. That is, how many executives have retained fall-backs to lower classification positions within the public sector?

Finally, in relation to the questions, how many new executive appointments, that is, since the date of the policy of non-tenure being introduced, have been made where those executives have been given tenure or permanency? Later on, I will be referring to some examples in the Department of Planning and Local Government where I will again highlight some of the concerns I have in this area.

The third general point I want to make is one of the general principles I have seen in relation to this legislation and the power balance between chief executives and the Commissioner for Public Employment over the past seven years. It seems to me pretty clear that this government, with the now Commissioner for Public Employment and the former chief executive of the Department of the Premier and Cabinet, Warren McCann, have supported a policy over the past five or six years of what they would term 'letting the managers manage'.

There is no doubt what Warren McCann's and the government's position has been. As he has said to the Senior Management Council and others, his philosophy on managers is that the managers should manage; he does not believe the commissioner should be there, in essence, as a second guessing body or individual. He also has a novel view that the managers themselves should manage within the agencies and should rely less often on HR managers within their own agencies. I am not suggesting that that necessarily has been reflected in the policy changes over recent years, but I do not think there is any doubt that it has been the personal policy of Warren McCann.

The government's views are obviously important, because we are seeing those in the legislation. Mr McCann's views are also important, because he has been the driver of policy change over the years and a not insignificant influence on public sector management. He has now happily plonked himself in the position of Commissioner for Public Employment. By saying 'happily plonked himself', I am saying that, on a salary of between $350,000 and $400,000, he went from a very senior position as chief executive of the Department of the Premier and Cabinet to be the Commissioner for Public Employment and retained the same salary package for that position.

When the former commissioner came before the Budget and Finance Committee he indicated that his officers and resources have been gutted so much that it was he and two other worthy souls in the commissioner's office who were working there. On any of the executive classifications there is no justification at all for an executive being paid between $350,000 and $400,000 a year for what is now an increase from the two staff that commissioner Walsh had. I understand that has now been increased up to 13, so Commissioner McCann has 13 staff; he is starting to build the commissioner's office up again.

In tracing that history, it is useful to put on the record that that was the government's and Mr McCann's initiative over the past five years: they abolished the former office for the commissioner for public employment; they commissioned the Speakman Payze report; and then the office of public employment which came out of that review was also abolished by the government on the recommendations and urging of Mr McCann.

During that period, the staffing for the office of the Commissioner for Public Employment was reduced from originally 60 before the first of two restructures, which I have just talked about in 2003-04. So just five years ago there were 60 staff in the office of the Commissioner for Public Employment. The first change saw a halving of that staff to a more modest level of 30, which I certainly would not have opposed in terms of a reasonable size, and the second restructure reduced the staff to five full time equivalents, and when commissioner Walsh appeared before the Budget and Finance Committee he said it was he and two other worthy souls at that time.

During the period when commissioner Walsh and previous commissioners had up to 60 staff, he had a salary in the region of $250,000, a level C remuneration package. As I said, the current incumbent has retained his level F and a salary between $350,000 and $400,000; I think it is $360,000, from recollection.

That is important in terms of considering this, because we have had a policy, supported by Mr McCann and the government, of gutting the office. Now that the commissioner has moved into the office we are seeing him now building the staff numbers up again. They have gone from two to 13, but we are seeing in what has occurred over the past few years decreasing responsibility for the commissioner and his office and, in the legislation we are about to vote on, if it is agreed as the government wishes, we will see a further diminution in the actual workload. The resources and responsibilities have been gutted over the past six years, and now, as we go through this legislation, we will see a further reduction in the responsibilities of the commissioner's office if this chamber agrees with the government's proposal.

If that were to occur, how anyone could justify a position of $360,000 a year for essentially managing much of nothing is beyond comprehension to me as a member of this chamber and also as someone who is interested in the public interest of effective expenditure of taxpayers' money.

I now want to raise a number of issues and concerns I have with our current practices and procedures. My purpose is to consider the practices that are occurring under the current system, and then to consider whether or not the bill before us—if it becomes part of the law—will mean that we will see an increase or decrease in these examples of unfairness (as I would deem them), whether we will see any increase or decrease in accountability, and whether we will see any increase or decrease in transparency.

I will give examples, because it is important to understand that these things are happening at present. I have highlighted some of them previously in other debates, but it is an appropriate time to bring some of these practices together. I hasten to say I am sure that under all governments in the past, both Liberal and Labor, there have been examples of unfairness in public sector processes: I will be the first to indicate and acknowledge that. Obviously, it is my partisan view that much more of it is occurring under this administration, because of the arrogance of the Premier, ministers and others. It is a partisan view and I apologise for putting that partisan view during this debate.

It is important to highlight some of the practices that are occurring, and then as we go through the committee stage to look at whether, in essence, we will increase the possibility for these sorts of practices to continue and reduce the transparency and accountability for governments, essentially, and also senior managers in terms of their management processes.

Only this week I raised—as I did earlier this year in March—concerns about some Public Service processes within the Leader of the Government's own department, the Department of Planning and Local Government. As I have indicated previously, in essence we have a dumping ground for ex-Labor staffers, Labor friends and acquaintances being generated within senior and middle management levels of that particular department. I gave the example of four senior director level positions, currently held by George Vanco, Lois Boswell and Kaye Noske—there is another whose name escapes me—in that particular department.

I am aware of a number of other appointments in that department of people with close associations with ministers of the government and their officers or members of the Labor Party. The reason I raise this matter—and I will refer to it in more detail in a minute—is that honest, hardworking, competent but non-politically aligned—neither Labor nor Liberal—public servants in those agencies are furious because they see these prized positions being given to friends and acquaintances of the government.

Their view is that someone needs to highlight these sorts of practices. Last Saturday—on ANZAC Day—the department advertised these four senior executive level positions with a closure date of just nine days—next Monday. Job and person specifications were not available until Tuesday of this week—six days prior to the job applications closing.

Those members who follow the newspapers—The Australian and The Advertiser—will know that, in respect of senior director level positions, if you are trying to attract the best quality within South Australia or, frankly, Australia, most often there are advertisements in Career One in The Australian, if you are advertising beyond the public sector. These positions were limited to Public Service appointments only. These particular positions—and I have highlighted some other examples—were advertised as permanent positions; and this will relate to an issue which I will raise later and which is a question I raised earlier about whether people were meant to be appointed on five year contracts.

These people are in the positions at the moment, the jobs not having been advertised at all. These people were placed in the positions—head hunted, tapped on the shoulder, given a free ride (whatever euphemism one wants to use) into those positions.

The concern of other public servants within these agencies and observers is that this process has been constructed to stitch up the positions for the political appointments who are already there—to minimise it. For example, if you go to the Department of Planning and Local Government's own website, under the 'Careers' section it says, 'We encourage anyone who is interested in a career in planning and local government to apply for any vacancies listed underneath'. Of course, underneath is a spot for all the current positions being advertised, but on Tuesday at lunch time, just before I asked this question, the website said words to the effect, 'No vacancies currently available'; I used the exact words in the question on Tuesday.

That website is controlled by an officer holding the position of director of communications. If the minister is wanting to be fair about this, if there are four director level positions and there is a section on the website to indicate positions available so people can apply, at the very least he would have ensured that those particular positions were being advertised. Sadly, in this particular case, that did not occur.

So, when you look at the legislation before us, in that sort of circumstance, will this bill, in essence, increase or decrease the chances of those sorts of occurrences? Will this bill mean that there will be fewer checks and balances within the system—through the commissioner's office, or elsewhere—in terms of being able to report publicly on these sorts of occurrences within departments and agencies? As we go through the committee stage of the debate, I will refer to this example, and to others like this, to ascertain whether or not we have enough protective mechanisms within the proposed legislation to try to minimise the capacity for that to occur—or, at the very least, ensure we are not making it easier for even more of these events to occur.

The second issue I want to raise is something that I raised a long time ago in this chamber, and it relates to the appointment of a chief executive, Mr Mark Johns, when he was appointed the chief executive of the department of justice. I hasten to say, as I did at the time, that governments of both persuasions (Liberal and Labor), particularly when they are just elected, have what might be euphemistically referred to as the night of the long knives, when chief executives are moved from an agency—

The Hon. B.V. Finnigan interjecting:

The Hon. R.I. LUCAS: I am delighted to have the assistance of the Hon. Mr Finnigan because, when he first came in, one of the now stars of this government, Jim Hallion, was moved immediately from his portfolio in industry and trade because the government did not have faith or confidence in his capacity to manage that portfolio. That was the night of the long knives of the government. Of course, subsequently, Mr Hallion found a position in PIRSA and is now a rising star under this current government and has been given even more increased responsibilities, I guess as a result of the government's taking off the ideological blinkers it might have had in relation to him and making its own judgments about his capacity to perform as a chief executive. So the point I make is that, at changes of government, that occurs.

However, once you go through a panel process for a chief executive, you are bound to follow the requirements of the legislation and the various Commissioner for Public Employment determinations. Without going through all the gory detail, a most recent example is in some of the details I gave on 25 March this year, but I first raised this issue back on 9 February 2005. To cut a long story short, there had been a long process to try to appoint a new chief executive of the department of justice, and I placed on the public record a very serious accusation that I made against the Premier back in 2005 that, after a number of panel processes which had not recommended Mr Mark Johns, Premier Rann had a meeting with Mr Warren McCann (Chief Executive of the Department of the Premier and Cabinet), Attorney-General Atkinson and one or two others, at which the Premier told Mr McCann (and I placed this on the record), 'You were told what to do to get Mark Johns up and you've failed.' I will repeat that: the Premier told Mr McCann at that meeting, 'You were told what to do to get Mark Johns up and you've failed.' At that meeting the Premier turned to the Attorney-General, Mr Atkinson, and said, 'Will you oppose his appointment?' and—surprise, surprise!—Mr Atkinson said no, he would not oppose the appointment of Mr Johns to the position of chief executive.

Mr Johns had very strong supporters for his appointment in the Premier's own office. Mr Nick Alexandrides, the now chief of staff, had been lobbying strongly for Mr Johns; Debbie De Palma, who was within the justice department and had contacts with the Premier's wife and others in the Premier's office, was lobbying for Mr Johns; and the Premier was lobbying strongly for Mr Johns to be made the chief executive of the department. Ultimately, of course, Mr Johns was made the chief executive.

Some of my Public Service friends have advised that the accusation that I was making was that, in essence, the Premier had breached section 15(2) of the Public Sector Management Act, which says under the heading 'Extent to which chief executive is subject to ministerial direction':

No ministerial direction may be given to a chief executive relating to the appointment, assignment, transfer, remuneration, discipline or termination of a particular person.

The point that I made this year was that, having made that accusation four years ago, Premier Rann or his representatives have said nothing in response to that. They have never denied it and they have never dignified the question with any sort of response at all. That is the sort of arrogance I guess those of us in this chamber have come to expect. So I highlight that as a second example of some of the processes occurring at the moment.

Again, I ask, as we look at this bill: are we increasing the chances of those sorts of things occurring if we continue to reduce the power of the Commissioner for Public Employment and his office through the sort of legislation that we have in this chamber? I think some of the amendments we are looking at are extremely helpful but, as I will outline today and also in the committee stage, it may well be that other amendments are required to ensure greater accountability and transparency—and I note that the Hon. Mr Brokenshire has flagged a series of amendments, and a number of us will obviously look at those with some interest.

The third example I want to raise relates to a particular whistleblower allegation, and I will outline the scenario that I am talking about. Back in November 2005 a whistleblower within a department alleged that the chief executive of that department was involved in—was being accused by the whistleblower, who had tried to resolve this issue within the department but had been unsuccessful and then resorted to the whistleblower legislation—bullying and inappropriate treatment of staff not being dealt with, an inappropriate overseas placement, and victimisation of the whistleblower, all of which the whistleblower alleged was influenced by a personal relationship the chief executive had with a female within that department. The whistleblower argued that this demonstrated maladministration in breach of the Public Sector Management Act, the Occupational Health, Safety and Welfare Act and the Whistleblowers Protection Act.

I will not go through all the details of the complaint, but to be fair in relation to this the former commissioner for public employment appointed Mr Graham Foreman, a former chief executive officer, as a delegate to investigate this complaint, and Mr Foreman reported in March 2006 in relation to the matter. Mr Foreman, the commissioner's delegate, reported:

Firstly, I cannot find evidence to support the victimisation. Secondly, I believe the overseas placement had merit and was not an improper use of public funds, but in making a decision on the matter the chief executive had a conflict of interest.

The investigation reported that the chief executive had a conflict of interest on this issue. He continued:

Thirdly, the bullying and treatment of staff problems were real OHSW issues and the departmental response was slow and ineffective. The female employee had been absent from the department since January 2005—

that is, since the female employee got the overseas placement—

and the whistleblower resigned in December 2005. Investigation into the disclosure points to a need to examine the Department of the Premier and Cabinet's policies, which is the department we are talking about, and training in relation to occupational health, safety and welfare, the code of conduct and performance management, and I so recommend. There may be learnings for broader application in the public sector about situations that may arise where officers are working with friends and decisions affecting those friends need to be made.

It is important to note that in some of the evidence taken the investigator, Mr Foreman, found that the chief executive indeed did have a friendship beyond the workplace with this particular employee and had a conflict of interest or patronage that needed to be managed. The widely-held perception by staff of the department of his relationship also led to a wide perception of a conflict of interest on his part. The investigator went on to say:

Where a conflict of interest or the perception of one is known to exist, it is incumbent on a public officer to step aside from the decision-making process.

The code of conduct for South Australian public sector employees states:

If your relatives or friends are the subject of a work matter for which you are a responsible decision maker, such as job selection, allocating training development opportunities, you must ensure that you are not improperly involved.

Further on the investigator said:

Given the relationship between the chief executive and the female employee, the decision involved the chief executive in a conflict of interest and was understandably perceived as such by many staff of the department.

I have not gone through all the gory detail of the complaints by the whistleblower and the investigation as what I have put on the public record is sufficient, but it was a most serious allegation made against the then chief executive of the Department of the Premier and Cabinet, Mr Warren McCann, who is now the Commissioner for Public Employment. This raises many questions, and not the least of course, in debating this legislation, is the fact that Mr McCann is now the Commissioner for Public Employment and this legislation is trying to ensure accountability and transparency in relation to a number of these issues.

I should have indicated that I think the Commissioner for Public Employment's new office name is now the Office for Ethical Standards and Professional Integrity. That is the new title for the office commissioner McCann is heading. The question that needs to be considered here is whether in the future, if a whistleblower within a department raises an issue with the Commissioner for Public Employment of a similar nature to the one I have just outlined, under the proposed legislation the Commissioner for Public Employment will be able to conduct an appropriate investigation. There is considerable doubt under the government's proposal, supported by Mr McCann, that that would be the case. If that is the case—and I will pursue this in committee—I will have considerable concerns.

I refer members to clause 13 of the legislation, functions of the commissioner, where under paragraph (g) it says that a function of the commissioner will be to:

investigate or assist in the investigation of matters in connection with public sector employee conduct or discipline as required by the Premier or at the request of a public sector agency.

So, if the Premier requires you as the commissioner to conduct an investigation, you need to do so, but does this mean that, if an individual whistleblower was to approach the Commissioner for Public Employment with a similar concern against a chief executive within his or her agency, the commissioner has the power to initiate or respond to that particular inquiry? It is an issue we need to confirm in committee, but on the surface one could argue, as others have argued to me, that the way this legislation has been drafted, which changes this section significantly, it might mean that in the sort of circumstances I have outlined (and others, as this is not the only example) one might not have the capacity, unless the political master, the Premier, requires an investigation. As we have seen, unless it is absolutely required, the current Premier is not too keen on anything that might approach an independent investigation of a number of issues which have occurred within public administration in this state.

The fourth issue I would like to raise (and, again, I have spoken at length on this issue so will not repeat all the detail) is one I also raised on 9 February 2005. It relates to a reclassification issue where a female employee in the Attorney-General's office, Ms Loula Alexiadis (a friend at the time of Mr Nick Alexandrides, the now Chief of Staff to the Premier), in essence, wanted an upgrade in classification and higher pay. At that time I advised that I had been provided with details of the performance management assessments for Ms Alexiadis—obviously from someone who did not agree that she should have an upgrade. I did not put it all on the record, and I do not intend to do so today, but I summarise it by saying that it was quite clear, in terms of the various briefs, that those who managed the performance of this officer were very concerned about her performance, and strongly believed that it did not merit an increase in salary or classification.

Ms Alexiadis had the great advantage of having friends in high places (if I may put it like that), both in the Attorney-General's office and in the Premier's office, and there was an ongoing campaign, which was unsuccessful in getting a reclassification, with the former chief executive Kate Lennon. I understand that, very soon after Mark Johns was appointed chief executive, Ms Alexiadis received her classification upgrade. This was after political staff in the Attorney-General's office had written arguments in support of an upgrade of classification.

As I said, I will not go through all the detail again, but this is another example of what is currently occurring. When we look at the legislation we must ask whether we are creating a system that would allow even more of that, as well as less accountability and transparency in terms of being able to challenge that if need be through the work of the Commissioner for Public Employment's office, or a similar office.

In terms of the fifth issue, I refer to section 22(1)(d) of the current legislation. Currently, the commissioner can 'make binding determinations as to the cases or classes of cases in which selection processes will not be required to be conducted for appointments to positions in the Public Service'.

Now, there is a report each year that indicates the number of what are, in essence, non merit-based appointments of executives. So agencies are required, under the current legislation, to provide data to the commissioner on the use of section 22(1)(d). I note that the legislation actually says 'make binding determinations', and it may be that the commissioner has delegated some of these powers to chief executives as opposed to the raw reading of the legislation, and I seek the minister's advice on that. However, the commissioner's response says that they are required to provide data, namely, 'where the chief executive or appropriate delegates determine that merit-based selection processes are not required for appointment to executive positions'.

The most frequent use of section 22(1)(d) was when an employee on a temporary contract had the contract converted either to an ongoing contract or a one to five year contract, which was used in 366 instances. Previously, this would have involved a merit-based selection process. Other uses of section 22(1)(d) specified by agencies indicate that the delegation is being used in line with its intended purpose, and no instances of abuse have been identified.

I seek details from the minister, through the commissioner's office, of the other numbers in relation to the use of section 22(1)(d). In addition, on my reading of it, it appears that under the proposed bill there will be no transparency or accountability in relation to non merit-based selection processes. If that is the case I think it is wrong, and I believe there ought to be legislative change to pick up that particular provision. If executives are not using merit-based selection, for whatever reason, and if, in this legislation, all these appointments are essentially going back to the executives with little role for the commissioner, there needs to be some transparency and public accountability regarding the number of occasions executives are using non-merit based executive appointment processes, and the reasons for that.

Again, in part this comes back to the issues I raised within the Department of Planning and Local Government, where the original appointments were non merit-based; they were just people who were tapped on the shoulder. As I said, supposedly we are not going through a formal process, which I believe to be a stitch-up for the various positions, and I think it is important that we look at those issues.

There are many other issues that need to be raised in the committee stage of the debate. I note the submissions of the Public Service Association, and some of my colleagues in this chamber, as well as others, have raised a number of those in the debate. I will not repeat them at this stage, but I want to raise some questions about certain other aspects of the legislation.

In the bill, we have a novel concept of what is called an attached office, and I refer members to that. On the surface, it appears to me to be potentially supportable by all members of the chamber, but I think we need to explore exactly what restrictions, if any, there are. The minister's second reading explanation states that there are greater powers—and I am paraphrasing—for a direction on policy from the minister in relation to these new attached offices. I am not sure whether that is necessarily the case.

It seems to me that it is a vehicle for a number of these offices that we see plonked into large departments being able, in essence, to report to a different minister than the minister for the overall department. I am not sure whether I have this exactly right, but it may be that, if the Office of Local Government is in minister Holloway's department, but the Office of Local Government needs to report to minister Gago, or whoever the appropriate minister is, this may give minister Gago the responsibility in relation to the office and the employees as opposed to minister Holloway. However, I think we need to clarify that with the minister handling the debate on this. If that is the case, and it is clear as to which minister is responsible, we will not get a situation of minister Holloway pointing to minister Gago and minister Gago pointing to minister Holloway as being responsible.

The Hon. P. Holloway: Responsible for what?

The Hon. R.I. LUCAS: For the attached office. I think that is an issue that we need to explore in the committee stage. Clause 71—Appointment of other special staff—provides:

(1) The minister may engage—

(a) a person as a member of the staff of a member of parliament; or

(b) a person in employment of a class prescribed by the regulations, on conditions determined by the minister.

(2) A person employed under this section is not an employee in the Public Service.

If this is potentially to cater for the situation of the one staff member in the Leader of the Opposition's office in the Legislative Council and also the staff of the Independents in the upper house and possibly the lower house, I seek clarification from the minister if that is the case. If it is not the case, I seek clarification on exactly what the provision is intended to achieve.

I seek some clarification in respect of division 3 of the current Public Sector Management Act and the duties of corporate agency members. There are a number of provisions in relation to corporate agencies. In talking about conflict of interest, it refers to not just pecuniary interest but other personal interests of the senior officer. I think all these sections have now been removed from the new bill, and I stand to be corrected if that is wrong. If they have been removed, can I ask the minister to indicate why that is the case and where are these similar provisions intended to be? This is obviously in relation to corporate agencies.

For me, this raises the following question: under the current legislation, we appear to have requirements on chief executives for pecuniary interests as conflicts of interest and other personal interests of a senior officer conflicting with his or her duties. Do we have similar guidelines that relate to chief executives of current government departments and agencies within the general government sector? I assume that we do and, if we do, can the minister indicate where they are, and do they relate to the particular phrase, 'other personal interest of the senior official'? I would have thought that, if we had this issue of other personal interest—which may be a close personal friendship with an employee—the issue that I raised earlier in relation to a chief executive may have been picked up by that particular conflict of interest restriction. I flag that I will ask the minister to provide some response to that.

The first part of the minister's second reading explanation says that the Premier is provided with a new capacity to give directions to public sector agencies to obtain specified whole-of-government objectives and can direct that agencies collaborate with each other and share information. This was the other selling point that the government was using in terms of why the legislation was required; that is, the Premier was going to have a new capacity to give directions. I refer the minister to section 15(1) of the current act, which already provides:

Subject to this section, the chief executive of an administrative unit is subject to direction—

(a) by the Premier with respect to matters concerning the attainment of the whole of government objectives;

It is quite clear that under the existing legislation—and we were told at the time this legislation was changed—the Premier has the power to direct chief executives in relation to whole-of-government objectives. This was the State Strategic Plan, etc. So, that power already exists. I ask the minister to explain what the new bill does which is different to the powers which already exist within the current act.

Secondly, the minister's second reading explanation makes the claim that the bill also addresses public sector governance, making provision for the Premier to give directions to public sector agencies relating to structural arrangements in the public sector in the formation of new entities. This new capacity will be used to raise the standard and consistency of governance across the public sector. In relation to this new capacity for structural arrangements, can the minister indicate exactly what provisions exist in the new bill to give the Premier this new capacity, and exactly what new powers does the Premier have which do not currently exist?

Certainly my experience with this administration, and the past administration, is that, in terms of structural arrangements, almost anything seems to have been possible. One only has to look at the various structural changes that we have seen over the past decade or so to know that almost anything is possible, because it has actually been done.

I refer members to section 16 of the current legislation—the extent to which the commissioner is subject to ministerial direction. I note that—and this is consistent with the current act so I make no criticism—a ministerial direction to the commissioner must be communicated to the commissioner in writing and it must be included in the annual report of the commissioner. Given that the annual report of the commissioner sometimes does not occur until up to six months or more after the end of the financial year, if this ministerial direction is given to the commissioner at the start of the financial year, the first there could be any public knowledge of it might be 18 months later.

I wonder whether members who are interested in the point I am making in the chamber might not accept the view that perhaps there should be an additional provision (which exists in most legislation) that such a ministerial direction to the commissioner should be tabled in parliament within six sitting days. So, at the start of the financial year, if a ministerial direction is issued to the commissioner to do something, within six sitting days of parliament it would be public knowledge, rather than waiting for the annual report of the commissioner which, as I said, may be up to 18 months later.

I refer members to the section 'Functions of Commissioner'. I raised one of these issues before about whether or not they could institute an investigation off their own bat. Subclause (1)(g) provides:

...to perform any other functions assigned to the Commissioner under this Act or by the Minister.

I have to say that I did not pick this up on my first run through. I have a concern about the commissioner or the minister just being able to add functions to the Commissioner for Public Employment without any reference to the parliament at all. In paragraphs (a) through to (g) we have all these functions of the commissioner and then we say, 'However, if the minister wants to make up a function at any particular time, the commissioner can have this additional function, as well.' I would have thought that, at the very least, we should look at having that reviewable through regulations so that, if an additional function is added by the minister to the Commission for Public Employment, parliament would have the opportunity to review that by way of the regulation review process. Again, I hope that other members will consider whether or not they believe that is an appropriate course of action.

I refer members to the definition clause in respect of a public sector agency and ask the minister to confirm whether the Ombudsman is a public sector agency under the current definition or the proposed definition in the bill. There is a public sector agency provision, I think, in the existing legislation. Is the Ombudsman a public sector agency and, under the proposed bill, will the Ombudsman be a public sector agency for the purposes of the proposed legislation?

Finally (and I am sure members will be delighted), I refer members to clause 32. I am not sure whether I have the appropriate clause, but I want to raise the issue of whether or not there should be appeals on the issue of reclassification. I raised an issue in relation to reclassification earlier. This is an issue that we ought to explore in the committee stage. It is an important issue for members of the Public Service in relation to what they perceive to be fairness or unfairness. There are arrangements under the current legislation where, if you have applied for reclassification and you have been knocked back, you can go through an appeal process.

My understanding is that that is probably not possible under the proposed legislation. If that is the case (and we need to confirm that with the minister, or have the minister confirm it), why does the government believe that that should be the case? I do not think there is any doubt that some of these processes are fraught with potential difficulty and that people may be disadvantaged because of the bias or perception of the chief executive (or the appropriate senior officer) in relation to a reclassification issue. If what we are being asked to do is to remove completely the capacity for an appeal process then, personally (I cannot necessarily speak on behalf of my party on this issue), I remain to be convinced about the merit of that position.

With that, I conclude my second reading contribution. As I said, I look forward to the minister's response in what I know will be an extended committee stage.

The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister Assisting the Minister for Transport, Infrastructure and Energy) (12:35): By way of concluding remarks, I thank all honourable members for their contributions to this most important bill. Before dealing with particular issues about the bill, I will make some observations about some of the commentary, particularly from the opposition. As I listened to opposition members extolling the virtues of our public sector workers, I could not believe that it was the same opposition that proudly boasted at the last election of its intention to get rid of 4,000 public sector workers.

I cannot believe that this is the same opposition that hardly lets a week go by in this place without bemoaning the increase in the number of public sector workers under this government. Week after week we listen to members opposite groaning. I cannot believe it is the same opposition that developed the nasty habit of singling out, in parliament, public servants for personal ridicule and abuse. We saw the Hon. Robert Lucas in fine form yet again today doing exactly that—disgraceful and cowardly behaviour in singling out individual public servants, besmirching them in this place, discrediting them personally in this place when he knows that they are not able to come into this place and put their own version of events on the record. He knows that; he knows how it works in the public sector. It was disgraceful and cowardly behaviour, and he should be absolutely ashamed of himself. I could not believe that it was the same opposition that has regularly besmirched those hardworking public servants, whose only crime in life is to earn $100,000 or more, by calling them 'fat cats'. I could not believe it.

I hope that this signals a new era, where those members opposite will really value our public sector workers and the work they do. I hope that we will see no more of the attacks on their character and their job security that have featured so prominently in the opposition's conduct up until now, but somehow I doubt it. I suspect that, when this bill is done and dusted and the PSA members are no longer carefully watching, we will quickly see the real opposition back in action.

I think we get a clue about what might happen by observing the proceedings in the other place. Just as in this chamber, during the passage of this bill in the other place, members of the Liberal Party expressed their reverence for public servants, but that reverence lasted just one day. On the very next day, the deputy leader could not help herself, reverting to type and calling public servants 'donkeys'. Of course, she was at it again just a fortnight ago, when she quite falsely accused ambulance workers of causing a kidney transplant procedure to fail because, she claimed, ambulance workers were too lazy or did not have enough time to attend, or something like that. It was disgraceful conduct.

I urge all public sector workers following this debate to be very cautious before accepting at face value the advances of members opposite. Perhaps they might want to test this apparently new approach by asking opposition members whether they will join us in our commitment to maintaining the no forced redundancy principle. Opposition members in both houses could not bring themselves to make that commitment, and they do not make that commitment now. Public sector workers might also want to ask why, even during this debate, the opposition continues to question the increase in public sector numbers under this government.

If the opposition really valued the work of public sector workers, this would be a cause for approval. If they really believed in the value of public sector workers, this legislation would be cause for approval. If they really believed in the value of public sector workers, they would see that this would mean better services for South Australians—but, no, an increase in the size of the public sector is cause for concern, according to those opposite. No matter how they dress up the issue, what opposition members are really about is taking away jobs from public sector workers. So, I find it the height of hypocrisy to feign an interest in job security while all the time they are steeling themselves for yet another attack on people's jobs.

Of course, unlike the opposition, we on this side of politics have always valued our public sector workers. We have always regarded them as a great asset, whose value should be maximised, and that is why we have introduced this bill. We want our public sector to be as effective and responsive as it can be, and as attractive a place to work in as possible.

The reforms set out in the bill are far reaching, and I welcome the fact that, perhaps with the exception of the Hon. Robert Brokenshire, there is generally widespread support for most of these reforms: a principle-based approach, with the principles we have chosen having an emphasis on one government; collaboration and information sharing between agencies; greater flexibility; performance management and development requirements; and the South Australian Executive Service, with its emphasis on leadership.

There were some matters of concern expressed by members, with which we agree. We agree that there should be protection from discipline for public sector workers who are participating in public affairs outside their employment, and I will be moving an amendment to the bill to that effect. Our amendment is different from the opposition's foreshadowed amendment in this regard. However, given that we all agree on the principle, I am confident that we will find the appropriate set of words; indeed, I understand that the opposition is prepared to support the government's amendment. We agree that rights of review for reclassification matters should be preserved. The government undertook some time ago that these rights would be protected, and I will be moving an amendment to secure that protection.

We agree that the default rule for suspension pending investigation is that suspension be with pay and that the discretion to suspend without pay be available only in limited circumstances, and I will be moving an amendment to make it clearer that this is indeed the case. We agree that, when appointing the commissioner or commissioners to the Public Sector Grievance Review Commission, the government should seek representations from unions and that the bill should set out a required broad skill set for the commissioner or commissioners, and I will be moving amendments providing for these particular matters.

The issues left between us are few, but they are significant, and I will address the main ones now. In relation to preference for big unions, the Hon. Mark Parnell raised the issue of the opposition's amendment designed to provide preferences for unions, such as the PSA, over other unions. Opposition members have not dwelt on these provisions in their contributions. Surprise, surprise! This makes it a little hard to discern the justification for the amendments, and I will be interested to hear the debate relating to these amendments during the committee stage.

So that members are clear, the effect of the opposition's amendments is to provide that the government is required to consult only with those unions that, in the opinion of the Commissioner for Public Sector Employment, have a significant number of public sector employees. As some members would be aware, it is equivalent to the set of provisions in the current act which are being used by the PSA to try to frustrate the Health Services Union of Australia in its attempt to represent its public sector members.

It is extraordinary that the Liberal Party, in its desperation to embrace the PSA, its new best friend (for now; until the cameras are off and the crowds have gone), would be seeking that this chamber insert provisions designed to prefer some legitimate unions over other equally legitimate unions, and I am pleased other members here are be able to bring a more objective mind to this issue.

In relation to review rights, we have strengthened review rights for public servants. For the first time in serious matters they will be able to address the Industrial Relations Commission. The IRC will decide whether the decision being reviewed is harsh, unjust or unreasonable, and this will ensure a robust public appeal forum. For less serious matters public servants will be able to seek review by the Public Sector Grievance Review Commission, and I note the opposition's intention to require the commission to sit as a panel comprising a commissioner, an employee representative and an employer representative.

I am not sure whether there was an argument setting out the benefits of the panels, but the disadvantages are clear. The matters that will go to the PSGC will be many and varied, requiring a panel to be convened for each of them. Obviously, it will be time consuming, cumbersome and no doubt expensive and, as I understand it, no-one is suggesting that the IRC adopt a panel approach. A single IRC commissioner will hear unfair dismissal matters, so why would we require a panel approach with the PSGC, which necessarily is dealing with less serious matters?

In relation to termination powers of chief executives, during this government's tenure we have gone a long way towards requiring chief executives to be accountable to government for performance targets from areas as diverse as homelessness and reducing business red tape. However, if we are to require this accountability we must provide chief executives with the means to achieve their targets. To do this we need them to have all the tools they need to be able to effectively manage their staff.

Many of the features of the bill are intended to lead to the better management of staff, the strong employer of choice principle, stronger leadership through the SAES, greater mobility of employees and flexibility in their deployment and the requirement for performance management and development systems.

If we really expect chief executives to be accountable and to properly manage their staff, they must be given the power to terminate employment where they are faced with non-performing staff or staff engaged in misconduct. The government believes that withholding from chief executives the power to terminate employment has been a powerful disincentive for agencies to take responsibility for properly managing their employees.

This failure to properly manage employees is not widespread, but it does exist so, rather than being managed, employees are ignored or put into low priority jobs. This has a consequence for the morale of the employees directly concerned and can manifest in health issues and workers compensation claims. It has consequences for the morale of other employees as they see poor performance or misconduct ignored, and it leads to problems with redeployment. Managers and agencies become reluctant to take on redeployees as they perceive that the pool of excess employees is tainted by poor performers.

The government does not suggest that withholding from chief executives the power to terminate employment is the only cause of this failure and its consequences, but it is nevertheless at least one of the causes, which is probably why in all other Australian jurisdictions except Tasmania the power to terminate has been given to chief executives. The government is not aware of any suggestion that this has led to any misuse of power. The PSA has certainly not suggested to the government that this is the case, but the government accepts that there are some misgivings about this, notwithstanding that all jurisdictions bar Tasmania have gone down this path with no apparent ill effect.

So, we accept that there is a need for balance to ensure that inappropriate use of power is discouraged and, where it occurs, remedied. Therefore, the bill creates a strong set of principles to guide decision making, frees up the commissioner to develop and ensure adoption of appropriate standards, guidelines and policies and provides for a robust public appeal forum. As I have indicated, for the first time public servants will be given access to the Industrial Relations Commission.

Finally, I draw members' attention to the recent Economic Development Board report, which made comment on these matters. In the report the board stated that it 'welcomes the provisions of the Public Sector Act that place explicit responsibility on chief executives for performance management' and further states:

Chief executives must be held accountable for the financial performance of their agency, and accordingly must have authority and flexibility to shift resources within their portfolio to meet new needs and priorities.

This is an overdue reform and should be supported. Put simply, in the 21st century a chief executive should be able to dismiss an employee who, for instance, is guilty of serious misconduct. The consequence of not making this change is that the bill will be less effective in remedying the lack of proper management of staff that I alluded to earlier. Members need to understand that this will be the consequence if they continue to oppose this reform.

In relation to the commissioner's role, a number of members have raised the issue of the role of the Commissioner for Public Employment to act on his or own initiative in certain matters, and this is indeed an important issue, as is the issue of whether the commissioner should have the power to advise agencies or to conduct reviews of agencies or to investigate matters of employee conduct or principle on his or her own initiative.

The government believes that the role of the commissioner for public sector employment is to lead good practice in agencies by setting the appropriate standards across government, encouraging achievement of those standards and monitoring performance against those standards. We wanted to move the relationship between the commissioner and chief executives away from a relationship of command and control. That policeman or umpire role is to be played by the review bodies.

Consistent with this view, we believe that giving the commissioner a roving power to act on his or her own initiative tends to suggest that this is a relationship of overseer or policeman. We think it will make it more difficult to establish the engaging, influencing role that we think is the appropriate one. We recognise that there are some who think that, as greater powers are given to chief executives, this roving role of the commissioner is even more important. There is some force in this view, and we will listen to the debate around that particular issue. However, the government's present view is that the importance of getting right the relationship between the commissioner and the chief executive outweighs the additional comfort that the commissioner's roving role might bring.

The Hon. Ann Bressington foreshadowed amendments designed to improve the effectiveness of whistleblower protection in the public sector. The government agrees that we need to ensure that we are providing an environment in which public sector workers can feel confident to come forward with an issue of concern, but the government does not support the foreshadowed amendments. We have a Whistleblowers Protection Act which is a complete code relating to whistleblowing. It facilitates disclosure, provides means by which the disclosure can be made, requires action to be taken in respect of disclosure, and provides protection for people making disclosures. The government believes that no good purpose could be served by having two statutory regimes setting out the rights and obligations of people involved in whistleblowing matters. This is all the more the case where in some respects the foreshadowed amendments are inconsistent with the Whistleblowers Protection Act itself. We have issues as well with some of the particular amendments, which I will address in committee.

In conclusion, I think I have covered the main issues between us, but before I close I need to make reference to the suggestion that the government had inadequately consulted. Members will be aware of the extensive public consultation on the draft bill during 2007 and 2008, but the Hon. David Ridgway stated that the minister had met only once with Jan McMahon, General Secretary of the PSA, about the bill. The clear implication of his remarks was that this was the full extent of government engagement with the PSA and, of course, that is completely untrue.

I am advised that, in addition to the extensive public consultation on the bill, the minister's office has met with PSA officers at least 15 times to painstakingly work through issues regarding the bill. The minister's office has met with PSA officers at least 15 times to work through the bill, right from the period when the bill was still being developed and after the public consultation phase, before and after the bill was finalised, and continuing since the bill's introduction. Draft bills have been shared, draft amendments have been shared, and there have been countless telephone conversations. Indeed, it is precisely because of this constructive manner of engagement that we have been able to introduce this far-reaching legislation, yet—

An honourable member interjecting:

The Hon. G.E. GAGO: Well, there are differences between us, and I have outlined those and we do not resile from them. We believe this is good public policy and is long overdue, but to say that disagreement constitutes lack of consultation is an absolute nonsense. The fact is that we have extensively consulted, which has resulted in agreement on a range of aspects. However, there remain some areas in which we still disagree. That does not constitute lack of consultation. Indeed, the PSA does not have everything that it has wanted from us, but it cannot be said it is because of lack of consultation. I look forward to those remaining issues being resolved, if we can do so, and to the committee stage.

Bill read a second time.

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