Notification under section 130 by Bechtel Australia Pty Ltd of a dispute with Unions New South Wales and others re clause 32 in Enterprise Agreement [2007] NSWIRComm 1012

LEGISLATION CITED: Industrial Relations Act 1996

CASES CITED: Port Waratah Coal Services Project 3D Consent (State) Award [2005] NSWIRComm 420 Bechtel Australia Pty Ltd Port Waratah Coal Services Project 3D Enterprise Agreement [2005] NSWIRComm 434

HEARING DATES: 10/3/06, 2/5/06, 15/11/06, 13/2/07

NOTIFIER Ms E Morson, Australian Industry Group Mr M Allen, Bechtel Australia Pty Ltd

RESPONDENT LEGAL REPRESENTATIVES: Mr P McPherson, Unions New South Wales also appearing for: Newcastle Trades Hall Council Australian Workers' Union, New South Wales Australian Manufacturing Workers' Union Electrical Trades Union of Australia, NSW Branch Transport Workers' Union of New South Wales

DECISION: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Notification under section 130 by Bechtel Australia Pty Ltd of a dispute with Unions New South Wales and others re clause 32 in Enterprise Agreement STATEMENT

1 In April 2005, the Port Waratah Coal Services Limited Board (PWCS) approved the $160 million 'Project 3D' Kooragang Coal Terminal expansion within the Port of Newcastle. At the time, the project was expected to complete in late 2007. The expansion comprised a fourth coal stockpile on Pad D with a capacity of over half a million tonnes, a fourth stacking stream consisting of two conveyors and an additional stacking machine, capacity improvement to the existing Pad C and upgraded water management and central control systems.

2 Upon completion, coal would be received from existing dump stations at a rate of 8,000 tonnes per hour with a consequent reduction in rail delays. PWCS operates two terminals; Carrington and Kooragang and receives, assembles and loads Hunter Valley coal for export to customers around the world. The expansion would boost the total ship loading capacity by 13 million tonnes per annum (mtpa) to 77 mpta at Kooragang, increasing total capacity within the Port of Newcastle from 89 to 102 mtpa.

3 PWCS subsequently awarded an engineering, procurement, management and construction contract to Bechtel Australia Pty Ltd (Bechtel). Bechtel and its industrial relations advisor, the Australian Industry Group, convened a series of meetings with Unions New South Wales, Newcastle Trades Hall Council and affiliated construction unions to determine how best to approach industrial relations arrangements to govern construction work. Central to that consideration was the commitment of both PWCS and Bechtel to bring together their combined and substantial resources to deliver a project that would set a new benchmark for construction in the Newcastle and Hunter region. The key components of that strategy were based upon the following principles: Leadership

Safe work environment, work methods and work practices

Commitment to shared, achievable project goals and objectives

Proven existing systems and processes across all aspects of the project

4 On 2 November 2005, his Honour, Deputy President Harrison made the Port Waratah Coal Services Project 3D Consent (State) Award [2005] NSWIRComm 420 with effect from 1 October 2005 to remain in force until 1 October 2008. The parties bound by that consent award were: Australian Industry Group (on behalf of all contractors engaged on work that fell within the application and scope of the award)

All employees of contractors engaged on the Port Waratah Coal Services 3D Project, whether members of the organisations listed below or not: Unions New South Wales Newcastle Trades Hall Council The Australian Workers' Union, New South Wales The Australian Manufacturing Workers' Union, registered as the AFMEPKIU The Construction, Forestry, Mining and Energy Union (NSW Branch) The Electrical Trades Union of Australia, NSW Branch The New South Wales Local Plumbers and Gasfitters Employees Union The Transport Workers' Union of New South Wales 5 The award provided the certainty, structure and jurisdiction of the New South Wales Industrial Relations Act 1996 whilst the enterprise agreement gave legal empowerment and enforcement not otherwise available to the commitments and agreements of the parties. 6 The two industrial instruments made pursuant to the New South Wales Industrial Relations Act operate together to provide a single line of authority thus avoiding confusion, uncertainty and misunderstanding which arises from the application of a multiplicity of cross jurisdictional industrial instruments. Within that framework of industrial stability the parties were able to direct their attention and energies to the issues of safety and productivity.

7 On 18 November 2005, his Honour approved the Bechtel Australia Pty Ltd Port Waratah Coal Services Project 3D Enterprise Agreement [2005] NSWIRComm 434 pursuant to the New South Wales Industrial Relations Act, with effect from 1 October 2005 to remain in force until 1 October 2008. That agreement was made between Bechtel, Unions New South Wales, Newcastle Trades Hall Council and Unions party to the consent award. 8 The enterprise agreement provided for a monthly site communications meeting for union delegates and a monthly meeting of employees. I note that arrangements were put in place between the parties for the listing of dispute proceedings immediately after each monthly meeting, as required, in order that any issues could be dealt with expeditiously by Newcastle based members of the Commission.

9 On 10 March 2006, his Honour convened a compulsory conference following the notification of this industrial dispute which concerned the application of top-up workers' compensation insurance provisions under the enterprise agreement. Simply put, the parties sought the assistance of the Commission following advice that insurance underwriters were only able to offer limited top-up cover. That dispute was subsequently resolved and the matter was adjourned for further conference and site inspections.

10 His Honour and the Commission as presently constituted conducted site inspections on 2 May and 15 November 2006. Those inspections comprised presentations concerning construction progress, project safety and performance, contractor-employee issues, site communications, project leadership and employee training. 11 The inspections provided the Commission with a first-hand opportunity to view construction progress and canvass project related issues with representatives of Bechtel, contractors, union officials, delegates and employees together with representatives of the Peak Councils, Unions New South Wales, Newcastle Trades Hall Council and the Australian Industry Group. 12 The matter was allocated to the Commission as presently constituted on 12 December 2006. 13 On 31 January 2007, the Australian Industry Group, on behalf of the parties to the project consent award and enterprise agreement filed the following notification with the Industrial Registrar: The Port Waratah Coal Services Project 3D formally concludes today, 31 January 2007. Given the close involvement, assistance and interest of the Industrial Relations Commission of New South Wales throughout all phases of this project, the parties wish to provide the Commission with a final report and review of the project and the operation of the Bechtel Australia Pty Ltd Port Waratah Coal Services Project 3D Enterprise Agreement 2005 and also, the Port Waratah Coal Services Project 3D Consent Award 2005.

14 In accordance with the request of the parties, the matter was subsequently listed for report back on Tuesday, 13 February 2007. Appearances

15 Mrs E Morson appeared on behalf of the Australian Industry Group. Mr M Allen appeared on behalf of Bechtel Australia Pty Ltd. Mr P McPherson appeared on behalf of Unions New South Wales, Newcastle Trades Hall Council, the Australian Workers' Union, New South Wales, the Australian Manufacturing Workers' Union, registered as the AFMEPKIU, the Electrical Trades Union of Australia, NSW Branch and the Transport Workers' Union of New South Wales.

16 Mrs Morson confirmed that the Port Waratah Coal Services Project 3D formally concluded on 31 January 2007 and submitted the parties were eager to provide the Commission with a final report and review of the Project, given the close involvement, assistance and interest of the Commission. 17 Mrs Morson stated that construction work under the $160 million project began in October 2005, concluded eight months ahead of schedule and significantly under budget. The project had been afforded success on many fronts with good industrial relations and safety playing a key role in that success. 18 Mrs Morson submitted that the very strong commitment of PWCS, Bechtel, contractors, unions and employees to safety that resulted in zero lost time injuries over more than 600,000 man hours and no lost time due to industrial disputes "was a fantastic result and almost unheard of on a construction project of this size and achieved through the commitment of all the parties to the approach that 'if it's not safe don't do it that way'." 19 Mrs Morson identified some of the key achievements of the project beyond the significant achievement in terms of safety and industrial harmony:

Achievement of 99 per cent local labour and a peak workforce of 300 employees in October 2006;

470 employees and 21 local contractors engaged over the life of the project;

implementation of a recognition and rewards system to encourage input and ideas from employees. This system focused on reinforcing positive relationships and recognition of employee effort in the success of the project. Employee recognition took the form of project-themed caps, restaurant dinners or a work group BBQ;

employee training and skill improvement projects where 22 employees successfully attained WorkCover accreditation and ticketing. Five electricians attained instrumentation certificates and all electrical personnel participated in electrical awareness training. 20 Mrs Morson asserted that the Stage 3D Project had built upon the success of a number of recent construction projects in the region including the Tomago AP22 and Hydro Aluminium Smelter Upgrade and Retro-fit Projects and she submitted the existing cooperative relationships between the parties had strengthened: There exists within the region excellent working relationships between Unions New South Wales, Newcastle Trades Hall Council, affiliate unions, employers and the employer groups - relationships built on the basic tenets of communication and cooperation facilitated by the making of the project award and enterprise agreement and ready access to the Commission for conciliation, mediation and dispute resolution.

21 On behalf of the Australian Industry Group and the Bechtel PWCS Project 3D team, Mrs Morson took the opportunity to thank Unions New South Wales, Newcastle Trades Hall Council and affiliate Unions for their leadership and cooperation on the project, from the initial stages of discussion and negotiation through to the monthly meetings and site inspections. In that regard, she stated the following: The success of the Stage 3D Project and other recent projects demonstrates the industrial harmony and stability that exists in this region. This is something that everyone involved in the project can be proud of and something that cannot be overstated. This harmony and stability is a competitive advantage to the region providing future investors with confidence and acts as a conduit to further investment and regional prosperity. We would like to thank the Commission for its involvement and interest in this project. While there has been zero lost time as a result of industrial disputation, the Commission has still had a role to play and its assistance has been invaluable. The physical proximity of the Commission, its regional knowledge and ability to list matters quickly and engage (the parties) has been of particular assistance to the project.

22 Finally, Mrs Morson submitted she was pleased to be in a position to report and formally advise the Commission that the Port Waratah Coal Services Project 3D had concluded. She said "the parties had achieved much and learnt a lot from the project's construction philosophy as well". From the Australian Industry Group's perspective, it was her hope that the success of this project would result in additional infrastructure investment in the region. The relationships of communication, cooperation and consultation had certainly created a firm base to underpin safety and employee relations on the project.

23 Mr M Allen was the Bechtel Employee Relations and Industrial Relations Manager for Project 3D. He endorsed the submissions of Mrs Morson and articulated what he believed were the significant factors central to the project's success: The skills, competencies and commitment of the team put together to execute the project.

The process systems and methodologies used including a favourable construction schedule, excellent planning, project controls and attention to detail.

The commitment to the achievement and demonstration of the leadership philosophy and model used to establish the project's culture and work environment through the engagement and inclusion of everyone involved together with the training given to all employees involved so as to ensure they understood this culture and could measure its execution.

The commitment to and achievement of a safe work environment through the use of a wide range of safety tools, systems and processes.

The implementation of a people-based safety program, the unequivocal pursuit of zero incidents and the use of personal safety plans. Arguably, the most important of all was the engagement and participation of every person on the project in the safety program.

The establishment of a 360 degree open, simple, timely, effective and informative communication program.

The willingness of the project leadership team to encourage, recognise and reward individual team and work group suggestions. Contribution, performance and achievement through the project's performance excellence program.

The adoption of process assistance methodologies and programs and their capacity to contribute innovative and creative ideas for consideration and adoption across the project.

The relationships established with local external providers in kindred organisations that led us to achieve the excellent results of zero industrial disputation and zero time lost to any industrial disputes.

24 Mr Allen stated that after a decade of Australian and international experience working with Bechtel, Project 3D was the first where both zero lost time injuries and zero industrial disputation have been achieved. 25 Mr Allen acknowledged the value of the underpinning award and enterprise agreement. He submitted the resultant cooperative and consultative framework provided a work environment where all parties could participate in a contributory manner to the safety, productivity and work environment: The most important facet of any project or any activity we get involved with in our organisation is to ensure that we all come to work eager to work in a good work environment. One that's safe and that we can expect to go home as safe as when we came to work but having learnt a bit more about ourselves and our capacity to do things. It's extremely satisfying that nobody was hurt on this project to the extent that required recordable injury or lost time injury, an incredible effort and exciting actually, because hopefully that has demonstrated to people in this part of the world that these things are possible. They're not pie in the sky, they're not management gimmicks for want of a better expression or platitudes trotted out for everybody to gain some kudos. But we're talking about more tangible things, people not being hurt, being able to work in a cooperative framework that allows people to have their point of view, be different, be acknowledged for being different, yet be heard and have those issues dealt with and dealt with expeditiously and without rancour, so it has been a very impressive project. 26 Mr Allen explained the significance of the communications strategy towards the project's success in the following terms: ... one of the keys to that was that communications program I talked about. We got together every month and there was never an opportunity for anything to get out of hand. The monthly review activities that we had were very beneficial and dealt with any issues ... The people-based safety program and all those things ... the employees themselves never once said why should we not get involved, they'd just say, "Yeah, we'd be happy to get involved". The one-on-one observation program, the planned job observation program where individuals observed one another in doing their work and executing that work was an invaluable tool. In a lot of other projects there has been quite a deal of resistance from a number of quarters in wanting to adopt this approach because of the "old thought process of dobbing in your mate". However, this is a no blame process and clearly achieved the goal we set which was a safe work environment and zero incidents. We've proved that can be done. It takes cooperation, it takes commitment. The client has got to take a reasonable pat on the back for that as well because they created the environment for us, the managing contractor, to then share with the rest of the contracting workforce, the Unions, the Commission and everybody else. Unions New South Wales and Newcastle Trades Hall Council

27 Mr McPherson supported the submissions of Mrs Morson and Mr Allen. He submitted the project was the product of the relationships that existed between the parties, including Port Waratah Coal Services, Bechtel, the Australian Industry Group and the Unions represented by Unions New South Wales and Newcastle Trades Hall Council. In addition, he submitted that the affiliated unions on the project, the Australian Workers' Union, Australian Manufacturing Workers' Union, the Construction, Forestry, Mining and Energy Union, Construction Division, the Electrical Trades Union, the Plumbing Gasfitters Employees Union and the Transport Workers' Union and their membership engaged on the project played a positive and constructive role.

28 Mr McPherson stated that from the Unions' perspective a key component of the project's success was the close relationship between the parties built on "the three pillars communication, cooperation and consultation". That success reflects the leadership, professionalism and dedication of the union officials involved, union delegates, representatives of the Australian Industry Group and Bechtel. The fact that some 99 per cent of contractors engaged on the project were Newcastle and Hunter Valley based was also significant.

29 Mr McPherson submitted that the Industrial Relations Commission of New South Wales was a significant positive contributor to the success of the project in the discharge of its jurisdiction afforded by the Industrial Relations Act.

30 Mr McPherson gave strong support to the project's ethos that "all accidents are preventable" and complimented the efforts of management, union officials and employees who were committed to the sustainable achievement of "Zero Incident Performance" through continuous improvement practices and statutory compliance. 31 Mr McPherson complimented the communications program undertaken on site in the form of project newsletters and safety awareness programs and literature distributed throughout the project by Bechtel and the safety teams. He referred to the tendered materials where the following project safety objectives were canvassed with regular vigour and enthusiasm: Promote environmental, safety and health objectives as a constant value in designing, planning, training and executing work. Spread ownership and enhance employee awareness and involvement in environmental, safety and health program implementation. Optimise the use of continuous improvement practices as the basis for Zero Incident Performance initiatives. Select subcontractors that are committed to Zero Incident Performance. Recognise and reward excellence in environmental, safety and health performance. 32 With reference to the achievement of zero lost time due to industrial disputation, Mr McPherson submitted: We did have our problems at different times but like I said earlier on, through the leadership ... and the professionalism of the parties we were able to sit down and discuss those matters and resolve them without any lost time. In the 16 years that I've been a union official and in the 18 years I've been an electrical tradesman, I've never seen a project of this nature that has enjoyed no lost time. 33 Mr McPherson referred to the attainment of zero lost time due to industrial disputation and lost time injuries and submitted that result was one that all parties could be proud of. 34 Mr McPherson concluded by stating that Unions New South Wales and Newcastle Trades Hall Council would not have any problems recommending the model used for the 3D project for future projects in the Hunter Valley, New South Wales or indeed elsewhere within Australia given its outstanding success.

35 Material tendered by Mrs Morson in proceedings and marked MFI 6 contained a series of monthly Project 3D site newsletters setting out a range of construction related news, project milestones, safety management and employee relations initiatives. 36 In submissions, the parties informed the Commission that in addition to setting specific construction goals, PWCS had also set down strict guidelines concerning all aspects of project safety management consistent with its commitment to the occupational health and safety of its own employees and those of contractors working within its coal handling operations. 37 The Commission has observed that the client's expectations insofar as safety was concerned were articulated in a very clear and unequivocal "Message to Employees" contained in the December 2005 Newsletter published shortly after the commencement of construction work where PWCS General Manager, Mr G Davidson stated: The recent launch of project 3D underlines the importance of PWCS Kooragang Operations to the success of the Hunter Valley coal system. The facilities at the Newcastle Port provide the platform for successful delivery of coal to the rest of the world and this expansion will ensure that the continuing growth in demand can be met. With demand increasing rapidly we need to ensure that the expansion is completed in a timely manner. But this cannot be at the expense of your safety. Production never comes before your safety at PWCS. If an activity carries an unacceptable level of risk, you have been authorised to stop what you are doing and stay stopped until the risk is adequately addressed. Work with your team mates and supervisors to develop safe methods before restarting. We do not operate systems that carry an unacceptable risk of hurting somebody. We won't expose our workforce to risk which we would find unacceptable for our family, friends and colleagues. [emphasis added] 38 Mr Davidson's strong message to employees was reinforced by comments from the PWCS Project Manager, Mr O Scott in the same Newsletter: We have a great opportunity to deliver an expanded facility to PWCS that will be seen as best practice in project delivery. How can we do that? In the main by continuing the great safety efforts to date and ensuring that no one gets hurt. This is challenging - and achievable - through the constant effort of everyone involved. We must maintain our focus on safety while we deliver a quality product that meets the needs of PWCS Operations and Maintenance. [emphasis added] We must remember that we are carrying out construction work within an operating plant that has extra hazards to those we normally associate with construction. Please be aware of the activity in the area where you are working and seek assistance and guidance in dealing with these different hazards. 39 Bechtel's vigilance towards safety was exemplified in the December 2005 Newsletter where Project Manager, Mr D Elsdon wrote the following "Message to Employees": Project 3D offers us an opportunity to build on the great work carried out in the previous Stage 3 Expansion and to once again deliver a successful project to PWCS. Our main focus on this project must be to carry out all project activities safely to ensure that every person on this project returns home safely to their families every day. Equally important is focus to ensure that the project facilities are constructed safely and that they are safe to operate and maintain. I encourage you all to maintain the same safety awareness in and around the home. [emphasis added] 40 The client's resolve that all employees had authority to stop work where that work carried an unacceptable level of risk was reaffirmed by Mr Elsdon in the August 2006 Newsletter: In my daily walk-around I see many examples of good task planning and work execution incorporating our project safety initiatives. However as we experienced recently, despite all this excellent work and effort, it takes but a moment for someone to get hurt. I urge all my fellow team members to remain vigilant and be alert to opportunities to identify patterns and risks and to take immediate action to eliminate them. You have the authority to stop the work and fix the problem. [emphasis added] CONCLUSION 41 The parties have presented the Commission with a series of comprehensive reports universally supporting the success of the PWCS Stage 3D expansion project. There was zero lost time injuries and zero time lost to industrial disputation. The project was completed eight months ahead of schedule and below original budget estimates. 42 From the project's commencement, there was a very strong and unequivocal message to employees from PWCS and Bechtel: "If an activity carries an unacceptable level of risk, you have been authorised to stop what you are doing". In that regard, the various statements and messages of senior PWCS and Bechtel management set out in the project Newsletters provide a very poignant reminder that communication and leadership are important drivers in the achievement of a sustainable safety culture in the construction industry. 43 A zero incident team was established to facilitate a continuous process of improvement, participation, communication and co-operation in project safety and 26 team meetings were conducted. The identification of hazards, assessment of risks and the development and implementation of controls using the job safety analysis tools were an integral part of project safety management. A total of 2,224 formal on-the-job observations were conducted.

44 The majority of contractors, some 99 per cent were Newcastle or Hunter Valley based. Significant training was undertaken by employees engaged on the project. Approximately 350 employees received compulsory leadership and team member training. Some 22 employees received WorkCover accreditation for the operation of elevated work platforms, forklifts and mobile cranes. Five electricians received instrumentation certificates. Apprentices were also engaged on the project. 45 During the course of the site inspections the Commission was most impressed by the mandatory induction program requirement that all employees write their own personal safety plan for the project setting out how they proposed to keep themselves and their fellow workers safe whilst at work. These safety plans were prominently displayed within contractor meeting rooms and crib facilities across the project.

46 The parties variously submitted that Project 3D had built upon the success of past projects including the most recent Hydro Aluminium project in 2004/05 where Unions New South Wales, the Newcastle Trades Hall Council and affiliated Unions party to the Hydro Aluminium project agreement, provided enormous leadership and goodwill over the life of that project amidst some often difficult industrial circumstances. That project was, on balance, a resounding success on all accounts and must auger well for further strategic investment in the Hydro Aluminium Kurri Kurri Smelter.

47 Having considered the submissions of the parties it is readily apparent that the success of Project 3D and the other projects referred to by the parties was very much built upon the three pillars, described by Mr McPherson and Mrs Morson as "communication, consultation and cooperation". 48 It is very evident to the Commission that the development of consultative and cooperative relationships between the Peak Councils, the Unions, Bechtel, contractors and employees based on mutual respect, trust and a preparedness to consider alternative viewpoints has materially contributed to the impressive safety and industrial relations achievements of the project. 49 It is also very evident that the industrial instruments of this Commission that governed construction work on the project and the enthusiastic commitment and cooperation of all parties have also materially assisted the reality and acceptance of "a fair go all round" to employees and contractors alike.

50 Parties to the Port Waratah Coal Services Project 3D Consent (State) Award 2005 and the Bechtel Australia Pty Ltd Port Waratah Coal Services Project 3D Enterprise Agreement 2005 have clearly demonstrated that the commitment to communication, cooperation and consultation is a model for best practice in the construction industry. 51 Consistent with the comments of Mr McPherson, this project is one where all parties can be justifiably proud and satisfied that their commitment and participation, within a cooperative and consultative framework, has produced a positive result for the client, contractor, subcontractors, unions and employees in delivering an important infrastructure project with a very significant contribution to regional, state and national economic prosperity.

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