For every litre of milk sold by home-delivery in Canberra, 0.9 cents is going to the Transport Workers Union as part of a deal brokered with the vendors and the ACT Milk Authority in 1993 to settle an industrial dispute.
More than $150,000 has been paid to the union by the vendors and reimbursed by the authority in the form of allowing higher prices for milk.
The money is still being paid, but is now described as a consultantcy and the authority and the union say it is for services that have stood up to detailed scrutiny and competitive tender.
However, according to documents received by The Canberra Times, the matter has been referred to the Australian Federal Police by the head of the Chief Minister’s Department, John Walker, apparently of his own motion based on legal advice because the government is in caretaker period.
Mr Walker has asked the police to investigate whether the payments are “”inappropriate and possibly illegal payments to the union to ensure industrial harmony”.
The ACT secretary of the TWU, Trevor Santi, said he was unconcerned because the payments had been thoroughly scrutinised and were for consultantcy services for advice on industrial relations, legal matters and occupational health and safety. The TWU had tendered below two others offering the same advice.
According to the documents, the arrangement began in 1993 when vendors wanted to sell bread as well as milk and some milk runners and their parents complained about wages to the union. The union found out that under a 1966 award the vendors would have been up for about $400,000 back pay. Instead of pursuing this claim the union agreed to be paid for “”consultantcy” services amounting to about $40,000 to settle the dispute. The authority had agreed to this and increased the price of milk to cover the costs.
ACT Government sources point out that this was during the Labor administration when most of the authority’s members were Labor appointees.
Some vendors are unhappy with the arrangement, but the authority and the Milk Vendors’ Association are happy saying they get value for money for the consultantcy which includes provision of legal, industrial relations and occupational health and safety advice. The union says the authority ensures the vendors get value for money and that the consultantcy had gone out to tender which it won.
Legal advice to the ACT Government last month, however, says, “”There is no immediately explicable and legitimate basis on which this payment could be made.” It suggested the authority be directed to provide full details of the arrangement.
The chief executive of the Department of Urban Services, Rod Gilmour, did that. The authority replied that the payments began some years ago as a consultantcy to develop an award for milk runners. But during the review last year the authority saw that the consultantcy covered services that the TWU should have provided to its TWU members in the ordinary course of its functions and that consultantcy fee had been reduced for subsequent years accordingly.
The authority’s reply said that $162,545 had been paid to the union or allowed for under the arrangement.
It was “”considered by the authority to be a legitimate expense because the authority’s understanding and basis upon which the claim was made by the [milk vendors’] association was that the TWU was to supply consultantcy services for the benefit of the association’s members and to assist them in the operation of their businesses”.
It cited the example of developing the award which “”avoided potential claims under the then existing award which would have added about $400,000 . . . to the wages costs for milk runners”.
However, one milk vendor described the arrangement as amounting to “”extortion”, according to a complaint by him logged with the ACT Government.
The general-manager of the authority, Clinton White, said the milk industry employed 650 people and delivered the cheapest milk prices in Australia.
“”The arrangement with the TWU is a perfectly legitimate commercial arrangement,” he said. The authority did a detail review of all the costs every year.
“”The outcome of the consultantcy has been a very beneficial one,” he said.
The chair of the ACT Milk Vendors’ Association, Brad Hammond, said most corporations had a team of consultantcies and industrial experts. It was cheaper and better than the vendors joining an industry association. With the TWU as consultant the vendors had been able to resolve every dispute with employees. It was an “”extremely unusual”’ relationship but a beneficial one. The last thing anyone wants is a cost outbreak in wages.
Mr Santi said his union was doing a service competitively.
Asked whether the union should be doing the work as part of its ordinary duty to members, he said the union was “”not going to chase kids for membership of the union. We can’t sign up kids and most of them are under 15.”
His union was protecting them against some vendors who were not paying them at all, saying they were on training.
Asked whether it was a conflict to represent employees while taking payment from employers, he said, “”No we represent the whole industry, the kids the vendors.”
It was a beneficial arrangement that had been continued under the Liberal Government and all the costs had been acquitted every year.