ROYAL COMMISSION INTO TRADE UNION
GOVERNANCE AND CORRUPTION
Public Hearing - TWUSUPER/TEACHO
(Day 3)
Level 5, 55 Market Street, Sydney
On Thursday, 3 July 2014 at 10.00am
Before the Commissioner: The Hon. John Dyson Heydon AC QC
Counsel Assisting: Mr Jeremy Stoljar SC
Ms Fiona Roughley
Instructed by: Minter Ellison, Solicitors
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1 THE COMMISSIONER: Yes, Mr Stoljar.
2
3 MR STOLJAR: Mr Sloan will continue his evidence this
4 morning, if that's convenient to you, Commissioner.
5
6 THE COMMISSIONER: Certainly.
7
8 <DAMIAN JAMES SLOAN, on former oath: [10.00am]
9
10 <EXAMINATION BY MR STOLJAR:
11
12 MR STOLJAR: Q. Mr Sloan, do you have before you the
13 bundle of documents marked Sloan MFI1 and your statement?
14 A. Yes, I do.
15
16 Q. Could you go, please, to tab 12, page 238?
17 A. Yes.
18
19 Q. This is the TEACHO Deed for 2011. I was asking you
20 some questions about it at the end of the day yesterday?
21 A. Yes, correct.
22
23 Q. Just picking up from those questions, this deed was
24 entered into pursuant to the 2011 Toll EBA?
25 A. That is correct.
26
27 Q. If you go to page 240, the numbering in the top
28 right-hand corner, the parties to the TEACHO Deed were Toll
29 and the TWU?
30 A. Correct.
31
32 Q. TEACHO itself was not a party to the TEACHO Deed?
33 A. That is right.
34
35 Q. Some matters are recited under the heading
36 "Background", and then if one comes to the
37 "Operative provisions", clause 1.1 stipulates that.
38
39 ... for each full year that the
40 EA [that's the 2011 Toll EA] is in
41 operation, Toll will contribute up to, but
42 not more than, $150,000 to TEACHO ...
43 A. Correct.
44
45 Q. When it says "each full year", you're referring to the
46 term of the 2011 EA which is indicated in paragraph A under
47 the heading "Background, 2011 through to 2013 ?
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1 A. That is correct.
2
3 Q. The contribution will be paid to TEACHO, who isn't a
4 party to the deed?
5 A. That is right.
6
7 Q. And then clause 1.2 separates the contribution of up
8 to 150,000 into three categories. Firstly, there's an
9 up front component and then two at risk components of
10 $25,000 each?
11 A. Correct.
12
13 Q. The up front component is payable automatically upon
14 the expiry of particular dates?
15 A. That's right.
16
17 Q. Namely, the dates stipulated in clause 2.1?
18 A. That is right.
19
20 Q. And then if we come to the first at risk component in
21 paragraph 3.1, page 241, it says:
22
23 Toll will pay TEACHO the First At Risk
24 component of $25,000 at the end of 2011 and
25 2012 and at the nominal expiry date of the
26 EA ... subject to TEACHO meeting [certain]
27 Key Performance Indicators ... described in
28 clause 3.2 below.
29
30 If one looks at the KPIs in 3.2, they seem to require or
31 contemplate that TWU will do certain things. Why does 3.1
32 make reference to TEACHO meeting KPIs?
33 A. Yes, that's inconsistent.
34
35 Q. In any event, if one then tracks through the KPIs
36 identified in 3.2 - perhaps before delving into the detail,
37 the way this works is that if - I think it should be TWU
38 does the things set out in 3.2, then in that event Toll
39 will pay TEACHO the first at risk component; is that right?
40 A. That is correct.
41
42 Q. That's the way it works?
43 A. Yes.
44
45 Q. The first thing contemplated is in subparagraph
46 (a)(i):
47
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1 The Union will conduct audits, wage
2 inspections or other compliance measures of
3 a Transport Competitor during each of the
4 years 2011, 2012, 2013.
5
6 A. Yes.
7
8 Q. A transport competitor is defined for the purposes of
9 clause 3 at the top of page 242 meaning:
10
11 [A] ... transport operator which is in
12 direct competition with Toll and identified
13 as one by Toll.
14
15 A. Correct.
16
17 Q. Did the parties or at least did Toll, to your
18 knowledge, contemplate that Toll would identify one of its
19 competitors to TWU, and TWU would then conduct audits, wage
20 inspections or other compliance measures of that competitor
21 during each of those years nominated in subparagraph (i)?
22 A. No.
23
24 Q. How would the competitor be identified?
25 A. I think - I don't know that it was a formal process,
26 Mr Stoljar. I think that there are certain entities within
27 the transport industry that would be fairly regarded as a
28 competitor of Toll and who the union would know to be one
29 of our competitors.
30
31 As I understood the intention of this clause was that
32 it was really for the union to demonstrate that over the
33 relevant period, it had undertaken the activities detailed
34 in clause 3.2(a), and would demonstrate to us that the KPI
35 had been met, such as to enliven the first at risk payment.
36
37 Q. I suppose I was thinking about the words at the top of
38 page 242.
39
40 ... a transport operator which is in direct
41 competition with Toll and identified as one
42 by Toll.
43
44 A. Yes. I'm aware of the words.
45
46 Q. The deed seems to contemplate that the task of
47 selecting the transport competitor for the purpose of
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1 clause 3.2(a)(i) was one which fell to Toll?
2 A. I appreciate that that's the language but that's not
3 how it played out.
4
5 Q. In practice, if the competitor was to be identified,
6 that was done on a more informal basis than Toll, as it
7 were, documenting or identifying formally a competitor?
8 A. My understanding - yes, I think that - the answer to
9 your question is yes.
10
11 Q. When it says "the union will conduct audits, wage
12 inspections or other compliance measures", is that, to your
13 knowledge, intended to suggest that the TWU would exercise
14 entry rights under the Fair Work Act?
15 A. I would have thought that was one of the arrows in
16 their quiver, yes.
17
18 Q. For example, assuming that - I won't take you through
19 the specific sections, but you understand that the Fair
20 Work Act regulates, among other things, circumstances in
21 which a permit holder, as explained in the Act, may enter
22 premises and inspect documents and do other tasks?
23 A. I'm familiar with those provisions, yes.
24
25 Q. Was it, to your knowledge, contemplated that the
26 "audits, wage inspections or other compliance measures"
27 described in subparagraph (i) would be exercises of the
28 statutory entry rights conferred under the Fair Work Act?
29 A. I don't think it was specifically a matter in
30 contemplation.
31
32 Q. In any event, the words "audit, wage inspections or
33 other compliance measures" contemplate the union actually
34 going on to premises and auditing those premises in order
35 to determine whether the compliance measures in place in
36 respect of the transport competitor were sufficient or
37 appropriate?
38 A. That's correct.
39
40 Q. And then the next step in the process is that if the
41 union discovers significant breaches by a transport
42 competitor of relevant awards, or any other industrial
43 instrument, it will after providing the transport
44 competitor reasonable opportunity to rectify, undertake
45 appropriate enforcement action, which may include
46 prosecutions?
47 A. That is correct.
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1
2 Q. That's the next step. And then subparagraph (iii):
3
4 In deciding what prosecutions, audits or
5 other compliance measures are taken by the
6 Union, the Union has agreed to have regard
7 to any concerns raised by Toll as to
8 practices in the industry.
9
10 That clause really directs attention, does it not, to
11 matters in respect of which Toll may have concerns?
12 A. That is correct.
13
14 Q. Was it intended that the prosecution - I mean you
15 can't speak for TWU - but on the part of Toll, was it
16 intended the prosecutions, audits or other compliance
17 measures that would be taken would focus on things in
18 respect of which Toll was compliant?
19 A. That would be correct, yes.
20
21 Q. I will finish working through 3.2 and then I'll come
22 back to that "because" question. Subparagraph (iv):
23
24 The Union must prepare a report for Toll as
25 to the progress and status of any
26 prosecutions ... and the findings of audits
27 ... and the steps the Union has taken or
28 intends to take to ensure future
29 compliance.
30
31 So it was contemplated that once the audit had been carried
32 out on the competitor, the findings of that audit would be
33 made available to Toll?
34 A. Yes.
35
36 Q. And then the report would be provided to Toll at
37 scheduled meetings, and it need not provide it at the first
38 of those meetings.
39
40 Can I then come back to the question I started to ask
41 you about subparagraph (iii). I asked you whether the
42 focus was on things that Toll was, or matters in respect of
43 which Toll was compliant, and you said it was and I said
44 because the reason is that Toll regarded itself as
45 generally compliant?
46 A. Correct.
47
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1 Q. And operating at a high standard of compliance?
2 A. Correct.
3
4 Q. That placed Toll in some senses at least in Toll's
5 perception at a competitive disadvantage?
6 A. That's correct.
7
8 Q. Because it was incurring, putting it in a nutshell,
9 expenses to achieve that level of compliance that it
10 apprehended some of its competitors were not incurring?
11 A. Correct.
12
13 Q. Toll's intention, included in 3.2, the process that
14 we've just gone through, was to level the playing field, if
15 I can put it that way, by causing some of its competitors
16 to incur the sorts of expenses Toll was incurring?
17 A. I'd certainly endorse the phrase "levelling the
18 playing field", and I think that the corollary to that is
19 that they would start to incur those expenses, but we would
20 prefer to look at it as raising the standards across the
21 industry. If we raised standards, then necessarily our
22 relative competitive position would be improved.
23
24 Q. Yes. You deal with this to some extent in
25 paragraphs 82 and paragraph 83 of your statement, although
26 perhaps in a slightly different context. Can I take you
27 back to that. In the second sentence of 82 you say:
28
29 Toll took the view, and still does, that we
30 are, by and large, a compliant
31 organisation. We pride ourselves that our
32 terms and conditions are amongst the best
33 that anyone will get in the transport
34 industry.
35
36 And then you say:
37
38 Often, Toll's standards come at a price of
39 being uncompetitive in many situations so
40 Toll looks to find ways in which it can
41 help level the playing field.
42
43 Then you talk about TEACHO assisting in bringing other
44 organisations up to Toll's standards and the like, but the
45 obligations contained within the TEACHO Deed were ones that
46 fell to Toll rather than TEACHO, correct, at least in
47 clause 3.2 - I'm sorry, TWU rather than TEACHO?
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1 A. That is correct.
2
3 Q. You were really or Toll was really looking to find
4 ways in which it could help, as you say in 83, level the
5 playing field by placing obligations on TWU?
6 A. I think in respect of that first KPI that we've talked
7 about, that is correct, but remembering that the payments
8 on an annual basis weren't just on the KPIs in 3.2 but
9 included the $100,000 annual payment as well, so it's all
10 wrapped up in the same context.
11
12 Q. I'm focusing for the moment on the payment
13 contemplated or described as the first at risk component?
14 A. At risk.
15
16 MR GLISSAN: I am loathe to interrupt my friend, or the