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'Union forum' to meet monthly on Canberra tram build

Canberra's tram contract gives unions a central role in the construction and operation of the light-rail line, requiring the establishment of a "union forum" to meet regularly throughout.

The union forum includes a member of the government, a member of the private-sector consortium (Project Co), the on-site directors of construction and operations, union representatives as nominated by Unions ACT and anyone else the government nominates from time to time.

The forum is to meet each month during construction and four times a year during operation.

Its job is to "discuss and address" any industrial relations issues, as well as any other matters the government and consortium want discussed.

A similar forum will exist for subcontractors, which will meet quarterly during the term of the tram contract.

Capital Metro Minister Simon Corbell released the government's contract with the Canberra Metro consortium late on Thursday.  

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The requirement for a union forum is among hundreds of pages of documents now online, including details of the termination clause which the Liberals have vowed to use to scrap the deal if they win government in October.

The union forum, and the role it gives unions and peak group Unions ACT, will fuel controversy about the extent to which unions are involved in the giant construction project and their ability to control work sites.

The Canberra Metro consortium has already made an agreement with the Construction, Forestry, Mining and Energy Union to employ 250 people directly, a deal that enraged Canberra's civil engineering industry, which fears its own workers' agreements will be distorted by the tram deal, and sparked a brawl with the Master Builders Association. 

Construction workers on Canberra's tram will be paid between $36 and $48 an hour, under the deal, with loadings for shifts, overtime and weekend work.

The tram contract released by Mr Corbell obliges the consortium to keep the government informed of industrial issues or actions and what it has done to overcome them.

It also requires the consortium to provide the government with copies of any subcontracts worth more than $200,000 or lasting more than six months.

Master Builders Association executive director Kirk Coningham said it was clear that light rail would be a project controlled by the unions.

"I don't think there are any surprises there for us," he said. "This is now a union job, the union will be front and centre in all aspects of it, including what we anticipate would be hyper-inflated wages."

Mr Coningham warned the unions' role in the project would create a higher wage bill for the project, and create "long-term industrial issues".

But Unions ACT, which nominates the representatives who will sit on the forum, said such consultative bodies were "standard features of major infrastructure projects around Australia", including the recent Cotter Dam project.

Secretary Alex White said it would ensure safety and industrial concerns were resolved early and collaboratively.

 "Canberrans can be assured that thanks to this, the light rail project will have high safety standards and will create 3500 local high-wage jobs," Mr White said.

The contract details costs of the tram project as follows: Design and construction of $534 million, operating costs of $269 million, financing and other costs of $22 million, and a contingency of $114 million, adding to $939 million.

It sets out each year's "availability payments" to the consortium, starting at $36 million in the first year, then $54 million in the second year, rising steadily over the 20-year life of the tram to $75 million in 2039.

The Liberals have vowed to scrap the contract if they win government. The government has signed what it says is a standard "termination for convenience" clause with the tram consortium, which it says is consistent with national guidelines on public-private partnerships and with "recent market precedent".

It allows the contract to be scrapped with 60 business days' notice.

It includes a highly detailed formula to calculate the payout to the consortium, which the government describes in a contract summary as "Canberra Metro's outstanding project debt, plus the fair market value of Canberra Metro's equity, plus any other reasonable costs incurred by Canberra Metro as a result of the termination". 

The contract specifies a service 365 days a year, with a 24 minute travel time for the 12 kilometres from Gungahlin to the city. 

The government is responsible for providing the electronic ticketing system, setting fares and establishing fare policies. 

For the boffins, the termination payment is the greater of "A + B - D +/- G - H - I + J + K + L - M - R - S  and "A +/- G - H - I + J - M - R".

Or, in long hand, the first formula is project debt, plus fair market value of the equity, minus amounts owning to the territory, plus or minus the costs or gains made as a result of terminating the finance documents, minus any other amounts owing and any credit balances, minus any insurance proceeds, plus any amounts owed by the territory at the time including availability payments accrued, plus redundancy payment that must be made, plus payments owing to major partners, minus any prepayment of debt or interest, minus an amount relating to final refurbishment works, minus the receivables refund payment. But no double counting.

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