Bargaining over Australian public service cuts: Do forcing strategies work?

Abstract

Although a Labor government fiscal stimulus had helped Australia weather the 2008 global financial crisis, budget deficits increased, and the public service was targeted for economies. The Liberal/National (Coalition) opposition won office in 2013, promising public sector cuts. In this context, the Walton et al. concept of a forcing strategy helps analyse the 2014–2016 bargaining round in the Australian Public Service. A forcing strategy involves three negotiating processes: distributive bargaining to achieve concessions in pay and working conditions, the structuring of attitudes to heighten animosity between the negotiating parties, and the management of internal differences to minimise intragroup conflicts. The Liberal/National (Coalition) government adopted elements of these approaches, requiring Australian Public Service agencies to reduce a range of employment conditions to justify pay increases. Interactions between Australian Public Service management and the principal Australian Public Service trade union, the Community and Public Sector Union became increasingly hostile over the course of the bargaining round. In addition, internal differences emerged between the Australian Public Service Commission, which oversaw the bargaining process, and individual Australian Public Service agencies. We consider the efficacy of this forcing strategy in light of the potential for the Community and Public Sector Union to mobilise its membership to resist such an approach to pay negotiations.

Introduction

While Australia survived the global financial crisis (GFC) of 2008 relatively unscathed and austerity measures were not a prominent feature of Commonwealth government responses, the Commonwealth budget experienced deficits from 2007 to 2008 onwards as the mining boom faded and company tax receipts declined (Fraser, 2015). This article explores how the Coalition government (2013–2016) framed its approach to bargaining during the 2014–2016 bargaining round in the context of this budget-constrained environment. The Coalition was elected in September 2013 following 6 years of Labor governments on an electoral mandate to slash Commonwealth government employment levels as one response to budget deficits. It was also committed to an agenda of smaller government, involving the outsourcing of government functions and privatisation of government enterprises (National Commission of Audit, 2014). In reality, rather than achieving the promised reduction, the Australian government’s budget deficit expanded rapidly following the election of the Coalition government (see below). Such increases, however, were accompanied by an agenda of reducing the size and scope of the public sector as safety net and regulator and the role of the state as a model employer.

In 2014, the Coalition outlined its bargaining policy for the forthcoming round of collective bargaining negotiations involving over 100 line agencies and departments and public sector unions. Walton et al. (1994) suggested that at the centre of the interactions between collective bargaining parties are three negotiating processes: bargaining (distributive and integrative), the shaping of attitudes between the parties, and the management of internal differences within the parties. A forcing strategy combines all three negotiating processes. It emphasises a distributive approach to bargaining, the structuring of attitudes between the parties to emphasise the adversarial nature of their relationship and the management of internal differences to reinforce intragroup solidarity and to minimise internal conflicts (Walton et al., 1994). The Australian government’s 2014 bargaining policy required Australian Public Service (APS) agencies to find productivity offsets and make substantial cuts to employment conditions in exchange for modest pay increases. We analyse the impact of this negotiating strategy in the APS on the three key negotiating processes involved in a forcing strategy. While this approach may be compatible with the strategic choices desired by the Coalition, whether it became a feasible strategy in the APS depended largely on the ability of public sector trade unions to mobilise their power resources and mount an effective resistance (Walton et al., 1994). Therefore, we will explore how feasible this forcing strategy was in the context of public sector union responses over 2014–2016.

There are three levels of Government in Australia – Local, State/Territory and Commonwealth. This article is concerned with bargaining at the Commonwealth level. The Commonwealth public sector can be divided into APS employees and non-APS employees (such as employees of statutory authorities). We are concerned with the former, who are employed directly by the Commonwealth under the Public Service Act 1999 (Cth). The APS is responsible for developing, implementing and monitoring compliance with Commonwealth government legislation in areas that include foreign affairs, defence, immigration and taxation. The APS also delivers social services such as old-age pensions and administers grants to the States for the provision of services such as education and healthcare and to local governments for the maintenance of roads (National Commission of Audit, 2014; Parliament of Australia, n.d.).

The article is structured in the following manner. First, the literature review explores the Walton et al. (1994) framework for strategic negotiations. Second, the methods underpinning the empirical research and the economic context of continuing budget deficits are outlined. Third, the Commonwealth government’s distributive bargaining agenda and the responses of public sector unions and employees are examined. Fourth, efforts by the Coalition government, public sector management and unions to shape attitudes towards one another and to manage internal differences are explored. A conclusion draws together the key points developed throughout the article.

A framework for collective bargaining negotiations

Walton et al. (1994) build on the ground-breaking A Behavioral Theory of Labor Negotiations (Walton and McKersie, 1965) to develop a comprehensive framework for strategic negotiations in the more dynamic and turbulent environments that existed in North America from the 1980s onwards. Walton et al. (1994) distinguish between the web of rules resulting from substantive agreements and the social contract or underlying ideology that develops between the parties. Substantive agreements comprise the rules and rights of the parties and may include management’s focus on minimising wage costs, maximising labour flexibility and employee work effort and the interests of labour in protecting job security and increasing participation in workplace decision-making. Substantive agreements also include human resource policies and well-understood informal and tacit work rules. The social contract, on the other hand, develops through interactions between management and unions at the institutional level and between individual employees and their supervisors at workplace level. Such social contracts involve an understanding of the quid pro quo reciprocal arrangements that evolve between the parties (Walton et al., 1994: 43–50).

Walton et al. (1994) suggest that at the centre of the interactions between collective bargaining parties are three negotiating processes: bargaining (distributive and integrative), the shaping of attitudes between the parties, and the management of internal differences. All three negotiating processes are interrelated and actions affecting one process can have a significant impact on the others (Walton et al., 1994: 58). These authors suggest that the parties’ strategies for negotiations, whether explicit or implicit, can alternate between either forcing or fostering strategies, while an avoidance strategy of escape is also possible.

Forcing strategies are compatible with distributive bargaining and involve conflicts over fixed amounts of resources. The achievement of one party’s goals involves a loss or sacrifice by other parties (Walton and McKersie, 1965: 127). A forcing strategy aims to limit pay increases and improvements to working conditions, increase labour flexibility, enhance management’s ability to ratchet up performance standards and enable management to gain increased power over trade unions:

(i)n its pure form, the forcing strategy means that management focuses on achieving specific substantive changes, even at the expense of its working relationships with its employees and union representatives. (Walton et al., 1994: 26)

Many negotiations involve combinations of forcing and fostering strategies. Integrative bargaining is a fostering strategy that focuses on problem solving to extend the amount of value that can be created by the parties (Walton and McKersie, 1965: 127). Integrative bargaining provides for value to be enhanced through a process of dialogue, communication and a willingness to explore the other parties’ underlying interests (Walton and McKersie, 1965: 5). This approach to creating value through negotiations is also referred to as ‘interest-based bargaining’ and has been widely used as a framework for labour negotiations (see for example, Cutcher-Gershenfeld et al., 1996, 1998; Cutcher-Gershenfeld and Kochan, 2004; Eaton et al., 2004; Fonstad et al., 2004; McKersie and Cutcher-Gershenfeld, 2009; McKersie et al., 2008).

The process of shaping attitudes between the parties explores how the relationship between the parties alters during the negotiating process (Walton and McKersie, 1965: 5). A range of possible attitudes include conflict, containment aggression, accommodation, cooperation and even collusion (Walton and McKersie, 1965: 185). For example, Walton and McKersie (1965) note that a pattern of interactions leading to conflict indicates a refusal to accept the legitimacy of the other party, such as management refusing to meet with union representatives and communicating directly with employees. A relationship based on cooperation, however, highlights that there is an acceptance of the legitimacy of the other party, mutual trust, friendliness and a willingness to negotiate over a more extensive range of issues. The relationship between the parties is also influenced by the social beliefs of management and trade unions. A management ideology that highlights management prerogatives can result in efforts to actively undermine the role of trade unions in the workplace and promote direct communications between management and employees (Walton and McKersie, 1965: 186–198). Researchers have also examined the levels of trust and collaboration between the parties, including in public sector negotiations (Brown and Oxenbridge, 2004; Caverley and Cunningham, 2006; Rubin and Rubin, 2006; Townsend et al., 2013; Williamson et al., 2015).

The management of internal differences highlights that there is often a lack of agreement among different groups within one party regarding objectives and priorities in negotiations. It can be more challenging to resolve these tensions than it is to negotiate an acceptable outcome with other parties (Walton and McKersie, 1965: 289). The need to manage such internal differences has been highlighted in previous research on public sector bargaining. In 1974, Kochan found that internal conflict within the parties was common. Kochan’s research also emphasised the multilateral and political nature of public sector bargaining. Bach has also examined the multi-party nature of public sector collective bargaining, noting that internal conflicts within the respective bargaining parties makes negotiations increasingly complex and can potentially jeopardise the achievement of bargaining goals (Bach, 1999: 12). Internal bargaining, therefore, is a common feature of public sector bargaining (McKersie and Cutcher-Gershenfeld, 2009: 504).

Walton et al. (1994) highlight the important role played by negotiation structure and the context within which bargaining takes place. They emphasise the importance of the degree of centralisation or decentralisation of bargaining, the number of parties involved (bilateral or multilateral) and the channels of communication utilised by the parties. Walton et al. (1994) also recognise the significance of the economic, social, legal and historical contexts within which bargaining occurs for the strategies and tactics adopted by the parties. Kessler and Purcell (1996) also emphasise that bargaining ‘will be influenced by a range of socioeconomic, political and legal environmental factors’ (p. 209). In relation to devolved bargaining, they note the importance and influence of centralised government policies, linked in with wider human resource management (HRM) reforms such as moves to performance-related pay (Kessler and Purcell, 1996: 215). Others have also found that constraints on local level managers in the public sector resulted in a lack of authority over bargaining processes and outcomes (Bach, 1998: 574; Kirkpatrick and Hoque, 2005: 114).

We aim to analyse the forcing strategy developed by the Coalition in its 2014 Bargaining Policy. In particular, how did the Coalition’s managerial agents pursue a distributive bargaining strategy? How were attitudes between the parties influenced by this approach to bargaining? And how did the parties manage their internal differences? In addition, how feasible was this forcing strategy in the face of opposition and resistance from public sector unions?

Methodology

At the time of writing, only eight APS agreements had been approved by the Fair Work Commission (FWC). The FWC is Australia’s national workplace relations tribunal and is responsible for, among other things, overseeing the process for agreement-making and enterprise bargaining. The authors coded the initial agreements into a spreadsheet which contained the details of each agency and compared the clauses in the new and previous agreements. Clauses on working hours, overtime, leave provisions, pay rises, working arrangements (such as rostering), performance management, union facilities and consultation clauses were examined. We also analysed media reports to track and monitor the progress of the negotiations. Online media were checked regularly for stories on the negotiations, and relevant stories were compiled into a compendium. We then manually thematically coded the stories into categories that related to the negotiations in individual agencies, industrial action across agencies and editorial commentary. Where possible we analysed multiple sources containing similar data to maximise reliability. Additionally, the bargaining policies of both the former Labor government and the Coalition government were examined.

We also interviewed five key informants. After obtaining university ethics approval, the researchers interviewed senior human resources managers (HR managers) involved in enterprise bargaining in four agencies on two occasions. These agencies comprised one large service delivery agency, one medium-sized policy department, one medium-sized central agency and one small cultural agency. We also interviewed a senior Community and Public Sector Union (CPSU) official. Interviews lasted from 30 to 60 minutes. Interviewees were asked about the progress of bargaining in their respective agencies, the parties’ claims, trade-offs, industrial action and bargaining strategies. The interview transcripts were manually coded, and themes and developments were then analysed to provide an overview of bargaining in the APS and in individual agencies, the roles and actions of negotiators and the impact of government policies on the negotiations. These interviews took place over 2014 and 2015.

A range of other data sources were also used, including protected action ballot orders and ballot results. These data are useful because under the Fair Work Act 2009 (Cth) (FW Act) industrial action will only be lawful if, among other requirements, it is approved by a secret ballot of eligible employees (Creighton and Stewart, 2010: Chapters 22–23; Stewart, 2015: Chapter 18). The authors coded the ballot orders to determine the types of action employees indicated they would be prepared to undertake. The coding framework for the industrial actions included work stoppages, which varied in duration, and work bans, such as not responding to emails, and other collective actions. Once the ballots were coded, the authors analysed the results to determine the extent and types of action in which employees may have engaged.

The Australian Public Service and the response to the global financial crisis

While Australia avoided a recession following the GFC of 2008, to inoculate the economy, the then-Labor government implemented a large fiscal stimulus in late 2008 and over the 2009–2010 financial year of over USD50 billion. This stimulus programme was designed to encourage economic activity and retain jobs in key areas of the economy. The then-Labor government also undertook substantial investments in infrastructure, health services and education (Rudd, 2009). Despite the stimulus, sectors of the economy – such as finance and manufacturing – experienced a substantial contraction. Many employers across a range of sectors also implemented redundancies or required employees to take paid and unpaid leave (Cooper, 2010: 263). The Labor government reported a USD44 billion deficit for the 2011–2012 financial year and a deficit of USD18.8 billion for 2012–2013 (Australian Government, 2013; Colebatch, 2013; Swan, 2012). This constrained budgetary environment impacted on the APS. The Labor government embarked on a programme of APS redundancies which shed approximately 2000 employees (APSC, 2014a). It also increased efficiency dividends, effectively imposing a budget cut on most APS agencies (Roles et al., 2012: 640).

The Coalition government, elected in September 2013, continued the previous Labor government’s focus on reining in the budget deficit (Austin, 2015). However, the Commonwealth government’s budget deficit worsened. It was USD41 billion in 2014–2015 and was predicted to be USD37 billion by 2016–2017 (Morrison and Cormann, 2015). Much of the deficit was related to reductions in government revenue resulting from declining commodity prices, falling company tax receipts and a slowing economy (Parliamentary Budget Office, 2015).

One of the Coalition’s first acts in relation to the public service was to establish a Commission of Audit to review the ‘scope, efficiency and functions of the Commonwealth government’. Simultaneously, the Coalition planned to fast track the outsourcing and privatisation of Commonwealth government functions. The ‘smaller government’ programme resulted in the sale of Medibank Private for USD5.7 billion in 2014 (ABC, 2014). The Coalition also outlined its intention to reduce the overall size of the APS. A freeze on external recruitment was introduced in 2013, with exemptions for positions deemed to be ‘critical’ (APSC, 2013). In May 2014, the Treasurer announced in the budget that 16,500 staff would exit the APS over the following 3 years as part of the Coalition’s response to the Commission of Audit (Hockey, 2014). The government achieved this target ahead of time. Before the election of the Coalition, there were a total of 167,051 APS employees employed under the Public Service Act (APSC, 2014a). By 30 June 2015, total APS employment levels had declined to 152,430 people, a reduction of almost 15,000 employees (APSC, 2015a) (see Figure 1).

Figure 1. All APS employees by employment category, June 2005 to June 2015.

Source: Australian Public Service Commission (2015).

A forcing strategy in the APS

The Coalition’s negotiation strategy was outlined in its Australian Government Public Sector Workplace Bargaining Policy (2014 APS Bargaining Policy). The 2014 APS Bargaining Policy, among other things, required the Australian Public Service Commission (APSC) to ensure that any wage increases were ‘… affordable … and offset by genuine productivity gains which satisfy the Australian Public Service Commissioner’ (APSC, 2014: 6). The requirement for productivity offsets resulted in agencies offering low pay rises – initially below 1% per annum. The Coalition, through the 2014 APS Bargaining Policy, also went as far as it could within the FW Act framework to reduce union involvement in proposed enterprise agreements. Consultation and dispute resolution terms were to be ‘equivalent’ to the minima prescribed in the Fair Work Regulations 2009 (Cth) and could not ‘provide third parties with the ability to veto or interrupt workplace improvements and managerial prerogative’ (APSC, 2014b: 30–31). Agencies were also encouraged to establish mechanisms for direct consultations with employees (APSC, 2014b: 26).

But the forcing strategy had limits. The FW Act did protect union recognition and constrained efforts by agency managements to minimise union participation in APS bargaining. Such protections weakened the feasibility of the Coalition government’s forcing strategy. Any new single-enterprise agreement must ultimately be approved by employees. In the APS context, this is by a ballot of eligible employees, in which a majority must cast a valid vote in favour of the agreement for it to be made (FW Act ss 180–182). Although the FW Act formally vests representational rights in bargaining representatives which, on the employee side, may or may not be a trade union, the practical effect of the legislation in the APS was an increased capacity and role for unions in bargaining. This effect occurred through provisions aimed at informing employees of their representational rights, union recognition, good faith bargaining and the capacity to bring bargaining disputes before the FWC (Roles and O’Donnell, 2013: 102–108).

In 2015, public sector unions campaigned to organise ‘no votes’ (i.e. to reject a proposed agreement) in response to initial agreement offers they believed to be substandard. They also relied on the taking of targeted industrial action and other forms of community campaigning. The 2014 Bargaining Policy’s requirements for strict productivity offsets, the stripping out of terms and conditions of employment and changes to consultation and dispute resolution provisions in proposed enterprise agreements caused difficulties for medium and large agencies with more comprehensive agreements. The CPSU and some union members vigorously opposed the ‘streamlining’ of agreements, fearing that conditions could be reduced if transferred to policy (interviews with HR managers, 26 November 2015; 1 December 2015; 2 December 2015).

In September 2015, APS employees at the Department of Veteran’s Affairs (DVA), the Department of Human Services (DHS) and Department of Immigration and Border Protection (DIBP) were asked to vote on new enterprise agreements. All the proposed agreements sought to move a large number of conditions to agency workplace policies. Additionally, the agreement offer to DVA staff asked them to accept an increase in working hours while losing other entitlements (CPSU, 2015a). The proposed DHS agreement sought to provide increased managerial prerogatives over rostering arrangements, reduce allowances and to change the way personal leave accrued (CPSU, 2015b).

DIBP was formed following a merger of the former Department of Immigration and the former Customs agency. The bulk of the cuts would affect ex-Customs employees, who stood to have a raft of allowances replaced by one allowance, estimated by the CPSU to cost individual employees USD8,000 per annum (CPSU, 2015c). Ex-Customs employees also faced an increase to their daily hours. The unions campaigned hard for a ‘no vote’ in these and other affected agencies. These campaigns were successful in that all these agreements were voted down by large margins (DHS: 83%, DVA: 61%, and DIBP: 91%).

In addition to ‘no votes’, public sector trade unions engaged in targeted and lawful forms of industrial action. Trade unions in Australia can take lawful industrial action, known as protected industrial action, provided that strict rules are followed (Creighton and Stewart, 2010: Chapters 22–23; Stewart, 2015: Chapter 18). In broad terms, protected industrial action can only be taken by employees if any previous agreement has passed its nominal expiry date (FW Act, ss 409(1) and 417). Before protected action can be taken, it must be approved by a secret ballot of eligible employees (FW Act s 409(2); pt 3–3, div 8). At least half of the eligible employees must vote, and a majority of those voting must support the taking of the forms of industrial action listed in the ballot order issued by the FWC (Stewart, 2015: 400–401). The action must then generally be taken within 30 days of the date of the declaration of the ballot, provided notice and other requirements are met (Creighton and Stewart, 2010: Chapters 22–23; Stewart, 2015: Chapter. 18). Under the FW Act, employees are not permitted to be paid, or to accept payment, for work stoppages caused by protected industrial action (FW Act, ss 470 and 473). Partial work bans are treated differently, and in broad terms involve the employer making a choice as to whether to accept the ban and make no deduction, make a proportional deduction or accept no work from the employee and make no payment of wages (FW Act, ss 471 and 472).

APS unions appear to have acted within these stringent rules. The industrial action taken was characterised by gradual escalation as bargaining became more protracted, with forms of action specifically tailored for individual agencies. For instance, union members engaging in protected industrial action in December 2014 in the 24,000 employee-strong DHS offices across Australia refused to wear the corporate uniform or to enter auxiliary codes into the computer/telephone system. They also read a statement to the public using DHS call centres (FWC, 2014). As bargaining dragged on, unions gradually escalated the protected industrial action. A notable feature of the 2014–2016 bargaining round was an increased willingness by employees to stop work for between 1 and 24 hours, with such action being approved in the four largest agencies by margins of between 90% and 98% (FWC 2014; FWCa, FWCb, FWCc). According to the union, in May 2015, ‘30,000 members took part in rolling 1-hour stoppages across 1000 workplaces’ (CPSU, 2015d). In June 2015, union members working in 15 APS agencies engaged in a half-day strike. Key services were targeted, such as processing airline passengers arriving on international flights and the delivery of front-line services, including tasks associated with the processing of welfare payments (CPSU, 2015e).

In September 2015, these stoppages escalated further following the rejection of agreements in DHS, DIBP and other agencies. CPSU members in DIBP engaged in 2-hour stoppages at Australia’s international airports during peak periods for 10 days (CPSU, 2015e). APS employees at international airports refused to inspect or search cargo, baggage and passengers. Planned to coincide with the start of the school holidays in most Australian States, this action was designed to maximise pressure on the government, though it also risked alienating many members of the public. The escalation was not confined to airports, with a coordinated half-day stoppage involving workers in the departments of Human Services, Employment, Environment, Education, Agriculture, Defence, Veteran’s Affairs, the Australian Tax Office (ATO), the Bureau of Meteorology and the Australian Bureau of Statistics.

Tensions escalated in late 2015 when DIBP union members working at eight international airports engaged in a simultaneous 24-hour strike, an increase on the 2-hour rolling stoppages outlined above (CPSU, 2015f; Towell, 2015a). Matters escalated on the management side also, with DIBP electing not to accept any work from employees engaging in partial work bans and exercising its right not to pay them at all until the end of the day on which the ban ceased. This industrial action represented a significant escalation compared with earlier rounds of APS bargaining (Roles et al., 2012).

The Coalition shifted its position. In September 2015, Malcolm Turnbull became Australia’s new Prime Minister. He appointed Michaelia Cash as the new Minister for Employment and Minister Assisting the Prime Minister for the Public Service (Cash, 2015). In October, Minister Cash released a new workplace bargaining policy (2015 APS Bargaining Policy) which contained two main changes. The first was to stipulate that agencies could offer a 2% per annum pay rise (APSC, 2015b: 1). The second relaxed the approval process. The 2014 Bargaining Policy had required that agencies obtain approval from the APSC, the relevant agency minister and, in certain circumstances, the Department of Finance before providing the proposed agreement to employees (APSC, 2014b: 32). The 2015 Bargaining Policy required that approval was only required from the APSC (2015b: 1). Our interviewees confirmed that this change assisted negotiations to proceed more effectively (interview with HR managers, 1 December; 2 December 2015, 26 November 2015).

Negotiations escalated in the latter part of 2015, with more agencies issuing proposed agreements to employees. The incidence of employees rejecting agreements also increased. Employees in the Department of Prime Minister and Cabinet (Thomson, 2015a) rejected the offer put to them, reportedly due to the low wage rise, decreased access to pay increments and reduced conditions of employment (Sansom, 2015). Similarly, employees in the ATO, one of the largest APS agencies, as well as employees in the Department of Agriculture and the Department of Employment voted against their proposed agreements (Towell, 2015b). Employees in several smaller agencies also rejected proposed agreements. Bargaining fatigue was becoming evident, however, as the margins by which some of the agreements were voted down were declining – by 62 votes in the Department of Agriculture and by 55% of employees in the Department of Employment (Towell, 2015c). A minority of agreements were also approved by APS staff, for example, at the Department of Foreign Affairs and Trade (Thomson, 2015b) and the Department of Finance, due, in part, to the pay offers being increased to 2% (Thomson, 2015c).

It is possible to discern some trends in the eight APS agency agreements that were approved by a majority of employees in 2015. First, a slight reduction in conditions can be detected – working hours were slightly longer in one agency, access to part-time work for parents returning from parental leave have been reduced in another. Second, demonstrating the government’s commitment to ‘streamlining’ agreements, various provisions relating to performance management and flexible working arrangements, such as working from home and job-sharing, have been incorporated into human resource policies. Other clauses, such as those relating to facilities for union members, were removed from some agreements. Consultation obligations in some agencies were truncated in accordance with the 2014 Bargaining Policy.

Shaping attitudes between the parties

Within the context of a forcing strategy, shaping attitudes between the parties often entails maximising intergroup animosity. Both the CPSU and the Coalition (and its managerial agents) were highly critical of each other in their public messaging. The CPSU maintained a consistent message that the government’s bargaining policies were ‘harsh and unfair’, unworkable and ‘radical’ (Towell, 2015d, 2015e, Thomson, 2015d). The CPSU repeatedly argued that the relatively low pay offers and proposed reductions to terms and conditions of employment were unacceptable, given increased workloads due to downsizing, redundancies and outsourcing (CPSU, 2015g, 2015h). The CPSU portrayed the government as harsh and unreasonable towards its own employees and ideologically and politically driven. The public service minister reportedly stated that the CPSU’s claims were ‘unaffordable and unworkable’ (Mannheim, 2015). Portraying the union’s claims as excessive and self-interested, particularly in comparison with the private sector, the public service minister stated that APS employees had enjoyed higher wage rises over the previous decade than private sector employees (Towell, 2015f). Both sides accused each other of not living in the ‘real world’ (CPSU, 2015g; Towell, 2015g).

As bargaining became more protracted, the language used by both the union and management escalated in tone and animosity. Nadine Flood, the National Secretary of the CPSU, was highly critical of revised offers provided by management in agencies such as DIBP that came with proposals to reduce the proposed workforce by over 5%, reportedly describing it as ‘… outrageous and show[ing] just how ridiculous the government’s funding of Immigration and Border Protection is …’. DIBP responded by claiming the union’s statements were misleading: ‘(t)he CPSU is trying to distort the fact that this is a much improved offer with exaggerated claims …’ (Towell, 2015h). In addition, Minister Cash sought to downplay the level of employee participation in industrial action, using APS agency statistics. She cited the example of the DHS, claiming that on average, only 1173 of 30,000 employees engaged in industrial action, statistics which were disputed by the CPSU (Thomson, 2015e). Both the union and management negotiators sought to discredit one another’s responses to the revised offers in an attempt to shore up support or mobilise against agreement offers.

Managing internal differences

There is considerable potential for disagreements to emerge within one or more parties to the bargaining process. Such conflicts threaten internal solidarity and may encourage other parties to take advantage of such internal differences (Walton and McKersie, 1965: 289). In the 2014–2016 bargaining round, internal divisions emerged between APS agencies and the APSC, with agency management reportedly stating that they had ‘no room within the framework to make better offers’ (Towell, 2015d). In March 2015, the APS Commissioner, John Lloyd, indicated that a less onerous definition of productivity savings would be applied (Easton, 2015). Additionally, long-term structural adjustments to work practices could be regarded as productivity trade-offs. This eased the restrictions on negotiations slightly, and a few agencies with relatively low union density successfully negotiated agreements.

In contrast, the CPSU presented a more unified front and appeared to maintain internal solidarity. The CPSU’s campaign contained several strategies. First, the CPSU presented a consistent message. The union campaigned against proposed modest pay rises and reductions to terms and conditions of employment. Second, the union presented their campaign as being ‘the fight of our lives’ (Towell, 2015i), an industrial struggle which was larger than the bargaining occurring in individual agencies and affecting individual employees. Industrial action, discussed earlier, was widespread and occurred over an extended period of time. The CPSU used social media to distribute details of the actions and their impacts (such as long queues at airports due to striking workers) to build solidarity amongst the membership and to encourage potential members to join. Solidarity was also enhanced as hundreds of union members in numerous locations attended rallies and meetings (CPSU, 2015i). A crowd-funding campaign was also established to seek public support to help striking workers (CPSU, 2015k). Third, campaigning accompanied the industrial action and aimed to engage the public, with over 2.5 million postcards reportedly distributed by union members (CPSU, 2015j).

But inter-union differences in negotiation strategy also emerged at the ATO, between the CPSU and another union, the Australian Municipal, Administrative, Clerical and Services Union (ASU). The CPSU wanted a management offer in August 2015 to go to an employee ballot, in the hope that it would be voted down, continuing to build the momentum of ‘no’ votes. The ASU wanted to use the FW Act’s good faith bargaining requirements to obtain more information concerning the ATO’s offer. The ASU was unsuccessful (FWC, 2015d) and the agreement was voted down by a large margin of employees shortly afterwards.

Discussion and conclusion

The Coalition pursued an approach to APS bargaining in 2014–2016 that was compatible with a forcing strategy. This forcing strategy comprised a distributive bargaining approach that required APS agencies to fund wage increases through productivity savings and cuts to employment conditions. This negotiating approach affected the attitudes of public sector managers and unions towards one another and created internal differences within the ranks of both management and unions. Walton et al. (1994) emphasise that negotiations give rise to both substantive agreements and social contracts between the parties. The social contract is underpinned by a set of ideological beliefs. The Coalition believed that public service employment conditions should be brought into line with those of private sector employers, ‘deprivileging’ the Commonwealth public sector workforce (Bach, 2016). The Coalition attempted to use its power resources, principally the 2014 and 2015 APS Bargaining Policies, to implement its forcing strategy.

However, the 2014–2016 bargaining process highlights the limits of a forcing strategy where public sector unions have the organisational capability to organise an effective opposition. Public sector unions were able to utilise the FW Act to mobilise their network of workplace union representatives and members to promote ‘no vote’ campaigns in many APS agencies. Industrial action targeted stoppages at airports and other politically sensitive workplaces in an effort to place political pressure on the Coalition to improve its offers. Where a majority of employees did vote in favour of agreement offers, cuts to conditions were relatively modest. At the time of writing, only approximately 6% of APS employees in eight APS agencies were covered by a new or replacement enterprise agreement approved by the FWC. Proposed reductions to terms and conditions of employment were minimal though agreements were streamlined, with union consultation and performance management clauses shortened or relegated to HR policy. The low number of agreements approved by the end of 2015 highlights the ability of the CPSU to maintain a strong level of solidarity amongst both union and non-union members. Even though the government maintained that participation in industrial action was low, the swathe of agreements rejected – some more than once – highlighted the effectiveness of a strong union campaign. It also highlights the importance of legislation supportive of collective bargaining and union participation in collective negotiations. Nonetheless, the Coalition and its managerial agents have succeeded in freezing APS wages for the vast majority of APS employees.

This public sector bargaining process also demonstrated how the shaping of intergroup attitudes under a forcing strategy can lead to an escalation of hostile rhetoric as the adversarial nature of the relationship between the parties intensifies (Walton et al., 1994). Over 2014–2016, the relationship between the CPSU and the Coalition and its managerial agents deteriorated. Nevertheless, this increased hostility assisted public sector unions to maintain members’ solidarity throughout its industrial campaigns, rallies and industrial actions.

In addition, this study highlighted that the control of internal differences is particularly challenging for public sector managements. The involvement of multiple layers of management, from line agencies, to the central agency overseeing the bargaining process, the APSC, to the Minister Assisting the Prime Minister for the Public Service, created multiple opportunities for intragroup conflicts. In particular, tensions emerged between agency management and the APSC over the latter’s strict interpretation of the Coalition’s Bargaining Policy. The revised Bargaining Policy, issued in 2015, raised the remuneration cap to 2% and implemented some other changes including a streamlined approval process by the APSC. This provided agencies with increased capacity to negotiate and a number of agreements were finalised and approved in 2015. On the whole, agency managements would have preferred increased discretion to negotiate with union representatives at workplace level. However, the reality of oversight by central agencies over public sector collective bargaining processes highlights the likelihood of ongoing and structural conflicts between line and central agencies involved in public sector pay negotiations.