Federal Court rejects WorkChoices - finds Queensland Council not a constitutional Corporation

The confusion over whether councils are trading or financial corporations under the Constitution, and therefore whether employment at councils is regulated by Federal laws rather than State laws, is now clearer.

A succession of depa Bulletins over the past couple of years have dealt with the future of employment in councils and the potential impact of Howard's WorkChoices and whatever the Rudd Government decides to do to make it more employee friendly.  It all hinged on whether councils were, or were not, trading or financial corporations under the Australian Constitution.  There had been a number of decisions over the years about this question which focused on the percentage of activities/employees/income and what was the minimum percentage for a council to be regarded as a trading or financial corporation.

In 2007 the Australian Workers Union (AWU) challenged a Federal employee collective agreement between employees (and not unions) and Etheridge Shire Council - taking action in the Federal Court in Queensland on the basis that the Council was not a constitutional Corporation and therefore was not lawfully entitled to lodge a Federal Workplace Agreement with the Workplace Authority.

Yesterday Spender J in the Federal Court in Queensland found that the Council was not a constitutional Corporation.

There is always a risk in summarising a 40 page decision but essentially the Court found that the Council was established by Queensland law to be a local government and, regardless of whether it traded or the extent to which it traded, the predominant and characteristic activity of the Council was that of a local government and it was held not to be a trading corporation or a financial corporation.  Effectively this means that the extent of its trading activities don't matter.

This is great news for employees of local government everywhere but particularly in New South Wales.  It means that it will be a very courageous or foolhardy Council that continues to insist that it is a constitutional Corporation.  We know that Clarence Valley keeps asserting that it is and that Newcastle wants to be sure whether it is or whether it isn't before it starts negotiating a new Award in September, but these are just shallow and ignorant attempts by the councils to keep their options open for a Federal agreement with reduced conditions of employment.

The Federal Workplace Relations Minister Julia Gillard greeted the decision cautiously.  Well, who would be surprised? What has the Rudd Government done that has been anything other than cautious?  Minister Gillard regarded the decision as specific to Etheridge but any reading of the decision makes it clear that the principal determining the finding is of broad application.

Less cautious was the National President of the AWU, Bill Ludwig, quoted in the Sydney Morning Herald today as saying that "councils would no longer be able to use the former Howard Government's WorkChoices laws". 

We agree with Bill and can afford to be less cautious than Julia.  Those who would drive New South Wales councils into a Federal system (regardless of whether it was the horrors of Howard's WorkChoices or whatever is left standing after the fiddling by Rudd/Gillard) will be enormously disappointed by the Federal Court decision.  Like King Canute they can deny the reality but the reality is we are entitled to rely upon this as the latest authority on this question and it has found that councils, because they are councils, are not trading or financial corporations.

There is always the risk with any court’s decision that it will be appealed to a higher authority: in this case it would go to the High Court.  But given that Queensland local government has been de-corporatised legislatively by the Queensland Government, given that the Queensland Government politically would be attracted to this decision, given that the Workplace Authority under a Labor Government is different to the Workplace Authority under the Howard Government, who would appeal it? 

Certainly not the AWU.

Over the next few weeks there will be feverish activity in New South Wales. Clearly it's important that the Local Government Association and Shires Association and the local government unions meet on this as soon as possible and also meet collectively with the Ministers for Industrial Relations and Local Government.  John Della Bosca and Paul Lynch have been discouraging councils from embracing the Federal system because of the confusion about the constitutional status of councils and their advice to councils to be cautious has been shown to have been prudent.

To put things beyond doubt, if any doubt exists any longer, the New South Wales Government should now de-corporatise councils as the Queensland Government has done.

Employees in local government can now breathe more freely.

"Fools rush in" competition

We have five bottles of good wine for the first five members (one each) to send us evidence of a general manager or human resources manager stupid enough to think that the Federal Court decision does not affect their council.  We said earlier there will be plenty of King Canutes, but who will be the first five with wet feet?

Entries to jody@depa.net.au.

 

 

Ian Robertson

Secretary