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State owned corporations and federal law.

30/06/2010

Queensland Rail Ltd has been ordered to pay civil penalties to five  unions under the Fair Work Act 2009 for failing to honour consultation provisions in 12 industrial agreements.  The matter arose in the context of the proposed IPO of QR, but the principle applies equally in any other context. The case is remarkable, firstly, for its analysis of whether QR’s course of conduct should be a punished by a single penalty or whether cumulative penalties should be imposed in respect of each separate offence.

More significantly, however, the Federal Court reminded State-owned corporations about their obligations under federal law even while they observe the demands of their masters.

QR Limited is, strictly speaking, a public company even though all the shares are held by Ministers of the Crown.  The only difference is that the shareholding is not widely distributed and is held by political officers.  To the external world, it is like every other public company competing in the marketplace. That is the result of a deliberate legislative plan to encourage competition by publicly owned entities.  But, as a result of that public ownership, a state-owned corporation is susceptible to political value judgements by its shareholders on behalf of the government of the day.

The result is tension between the freedom of action otherwise enjoyed by the executive government of a State and the ordinary obligations of all corporate citizens under federal law.  Management should respond to that tension by placing some distance between themselves and their shareholding ministers so they obey the federal law while taking into account the dictates of their political owners.

Read the Federal Court’s judgement in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (No 2) [2010] FCA 652

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