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T8413 and T8483 - 21 July 1999

 

TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s23 application for an award or variation of an award

Tasmanian Trades and Labor Council
(T8413 of 1999)

Private Sector Awards

Tasmanian Chamber of Commerce and Industry Limited
(T8483 of 1999)

 

FULL BENCH:
DEPUTY PRESIDENT B R JOHNSON
COMMISSIONER R J WATLING
COMMISSIONER P A IMLACH

HOBART, 21 July 1999

Wage Rates - State Wage Case July 1999 - applications to review the Wage Fixing Principles and to vary awards in a manner consistent with the Australian Industrial Relations Commission decision in Print number R1999 Safety Net Review - Wages - flow-on of federal safety net adjustment approved - operative date ffpp 1 August 1999 - partial revision of Wage Fixing Principles - full review of Wage Fixing Principles to begin no later than October 1999

REASONS FOR DECISION-SAFETY NET ADJUSTMENT

On 18 May 1999 the Tasmanian Trades and Labor Council (TTLC) applied to vary certain awards of the Commission. The application took the following form:1

"The applicant seeks to vary awards of the Tasmanian Industrial Commission, to reflect the decision of the Australian Industrial Relations Commission of April 1999, contained in Print R1999 - Safety Net Review - Wages and to review the Wage Fixing Principles."

1. Scope of the Application

When the matter came on for hearing on Wednesday 30 June 1999, Ms L Fitzgerald sought leave to amend the application to describe its scope in the following terms:2

"... to vary all wage rates in private sector minimum rates and paid rates awards by the [federal] arbitrated safety net adjustment from beginning of the first full pay period to commence on or after 14 July and to amend the Wage Fixing Principles accordingly."

More specifically, the TTLC proposed that the Commission should change the Wage Fixing Principles only in so far as they apply "to the safety net increase, the operative date, allowances, some minor changes at structural efficiency and to also reflect ... the decision of the federal industrial commission [concerning] the Economic Incapacity Principle".3 Detailed particulars of the changes sought appear in Attachment A of this decision.4

Mr C Willingham, intervening on behalf of the Minister for Justice and Industrial Relations and appearing also for the Minister Administering the Tasmanian State Service Act 1984 (both of whom we refer to as the Tasmanian Government), did not oppose the proposed amendment. He submitted that the words "to review the Wage Fixing Principles" meant, in context, a review of "the Wage Fixing Principles of this Commission in light of the decision that has been made by the National Wage Case and it is clear that that is necessary".5

Mr T Edwards, for the Tasmanian Chamber of Commerce and Industry Limited (TCCI) opposed the amendment on the grounds that the Commission should not interpret the application in such narrow terms. He asserted, on the basis of past State Wage Cases, that it was appropriate and necessary for the Commission to review all the Principles and not merely those affected by the application. It was, he submitted, incumbent upon the Commission, especially in the absence of consent, to consider which Principles should exist into the future and to review them in the context of contemporary developments in industrial relations and wage fixing.

The Commission, Mr Edwards said, should take that action for the purpose of underpinning wage increases, if any, that might flow from the present application. If it did not act in that way, he added, the Commission would be neglecting its obligation to develop a set of Wage Fixing Principles to guide the parties in respect of applications to "increase labour costs" and in respect of their conduct of enterprise bargaining.6

After considering the parties' submissions we concluded that the proposed "amendment" was really no more than an explanation of the scope of the TTLC application. In the circumstances, we overruled Mr Edwards' objection on the grounds that we could not see how the respondents could move to make the application something that the applicant clearly said it was not.

Subsequently however, during the course of proceedings, TCCI lodged an application pursuant to Section 23 of the Industrial Relations Act 1984 in the following terms:

"... to vary all State awards and review the Wage Fixing Principles in light of the Safety Net Review - Wages 1999 R1999 and the State Wage Case application T8413 of 1999 in accordance with Section 35(1)(e) on the Industrial Relations Act 1984".

TCCI asked us to join that application with the TTLC's application for the purpose of hearing both matters together. In support of joinder Mr R Brown submitted that:

  • It is appropriate and necessary that the Commission should review the Wage Fixing Principles at the same time as it considers an application to vary wage rates in private sector awards;
  • The consent package approach adopted by the parties in successive State Wage Cases in recent times no longer exists;
  • In Tasmania, legislation does not underpin many aspects of the Wage Fixing Principles as is the case in the federal industrial jurisdiction;
  • The Wage Fixing Principles need reviewing in the context of contemporary developments in industrial relations; and
  • The draft principles proposed by TCCI remove duplication and simplify the Wage Fixing Principles for the purpose of creating more flexibility.

In response to a question from the Bench Mr Brown added that if the Commission granted the joinder application the suggested review should occur at the same time as, and in the context of, the Commission's consideration of the TTLC's application.

Mr Willingham said that the Tasmanian Government did not oppose joinder of the two applications. The Government's view, he said, is that the Commission's most urgent and pressing need is to deal with flow-on of the safety net adjustment so that eligible employees might receive the benefit of those increases from the earliest possible date. Consequently, he submitted, the Commission should review the Wage Fixing Principles only to the extent suggested by the TTLC.

The Principles thus amended should remain in force until such time as the parties believe it is appropriate to consider their wholesale review-ideally, say, in September 1999. At this precise moment there is no need for the Commission to conduct such a significant review. There is nothing before the Commission that suggests the Principles are in some way inadequate, that they are not serving their purpose, or that they are disadvantaging employers or employees. In the circumstances, a continuation of the Principles in the form suggested by the TTLC should do no violence to anyone.

Ms Fitzgerald opposed the joinder. She submitted that, as a matter of general principle, the Commission only joined applications if they dealt with the same subject-matter. However, she said, as to scope the two applications now before the Commission are quite different.

In the first place the TTLC seeks to increase wage rates consistently with the federal Commission's April 1999 safety net decision from the first full pay period beginning on or after 14 July 1999. The TCCI application, however, seeks a lesser amount of increase and an operative date of 14 October 1999. Second, the TTLC application seeks to vary the Wage Fixing Principles only in relation to the wage increase, operative date, and the Economic Incapacity Principle. The TCCI application, on the other hand, seeks an extensive review of the Principles to ensure that "labour costs are primarily drawn" from enterprise bargaining. 7

In addition, the TTLC's application will affect only a relatively small percentage of the Tasmanian workforce, whereas that of the TCCI will affect all workers covered by both private and public sector awards.

A review of the Wage Fixing Principles, Ms Fitzgerald submitted, is secondary to and contingent upon the quantum of wage rate increases and the date from which those increases should operate. The most urgent matter before the Commission is the matter of a safety net wage increase for eligible workers. In the circumstances it would be an abuse of process to join TCCI's application to that of TTLC.

Responding to a question from the Bench Ms Fitzgerald said the TTLC saw no problem with a review of the Wage Fixing Principles occurring around September 1999.

Mr W J Fitzgerald, appearing for Australian Mines and Metals Inc, (AMMA) withdrew on the first day of hearing because of "unexpected and urgent circumstances". In a brief written submission, however, he said that:

"The Association supports the submissions of the TCCI in respect to the review of the Wage Fixing Principles including the adoption of the revised principles as lodged by TCCI.

In the alternative the Association supports a review of the Principles at a time in the near future so as to allow all parties adequate opportunity to put submissions."

On the question of joinder we granted the application because, although each application differs considerably as to scope, we believed it to be necessary to clearly establish jurisdiction for the Commission to review all the Wage Fixing Principles, should the parties wish to do so.8 As to when such a review should take place, however, we rejected the TCCI's application on the grounds that:

  • Nothing was put to us that tended to show disadvantage or prejudice to the employers should the review occur at some near time in the future rather than immediately; and
  • It would be unwise to proceed to a full review of the Wage Fixing Principles a mere few weeks before, as a matter of wide public knowledge, the government proposes to amend the Industrial Relations Act 1984 in possibly a substantial and significant manner.

In the circumstances, we ruled that:9

"... we will now proceed to hear and deal with the application in two parts. In the present proceedings we will deal only with wage rates and the necessary amendments to the Wage Fixing Principles, including the Economic Incapacity Principle, that would flow as a consequence of any favourable decision that this Commission might take in relation to the TTLC application. In future proceedings, to commence no later than 1 October 1999, we will deal with a full review of the Wage Fixing Principles in their entirety."

2. Economic Considerations

L Fitzgerald for the Tasmanian Trades and Labor Council:

Ms Fitzgerald informed us that, before the Australian Commission, the ACTU's living wage claim sought "increases of $26.60 per week for all award rates of pay up to $527.80 per week ... and 5% for all award rates of pay above that level, subject to absorption in the normal way".10 She said that submissions put to the federal Commission, including one from the Tasmanian Government that supported the claim, focussed on the effect of an increase in safety net award wages on the economy generally. In particular, she added, the Commission considered the economic effects of the ACTU's claim at two broad levels:11

  • "the effects in aggregate terms on wages growth, inflation, employment and productivity; and
  • the effects at the sectoral or enterprise level, recognising that the application of safety net adjustments will vary, reflecting the different incidence of enterprise bargaining and over award payments within and between sectors of the economy and the impact of wage increases on employment levels of employees benefiting from safety net adjustments."

The federal Commission, Ms Fitzgerald said, noted that the likely effect on aggregate cost involved both direct and indirect costs. After considering the submissions the Commission observed that "given the absence of a direct cost measure, a degree of judgment is required and it would be unwise to act on a specific estimate advanced, although each of the estimates provides guidance".12 In respect of indirect costs, the Commission said that "whilst there is likely to be some indirect cost associated with a safety net adjustment, the evidence before us does not support a conclusion that the indirect costs of a moderate safety net adjustment would be other than limited".13 With those considerations in mind the Commission found that because the effects of the April 1998 safety net increase already reflect in aggregate wages growth "the granting of a similar increase now would not of itself materially alter aggregate wages growth".14

On the question of inflation Ms Fitzgerald said the federal Commission acknowledged that a number of factors could influence the economic effect of a safety net increase. However, after taking into account a Joint Governments'15 estimate that the ACTU claim would add 0.9% to Average Weekly Ordinary Time Earnings (AWOTE), the Commission concluded that "assuming no change in other factors, an aggregate addition to wages costs in that order would result in an increase in inflation of about 0.5%, reflecting the wages share of input costs of around 60%, all other things being equal".16

Concerning the effects of a safety net adjustment on employment, Ms Fitzgerald said the Australian Commission considered two aspects:17

"1.  the macro-economic effects, comprised of the effect of a higher general level of real wages on economic activity and employment and the effect of fiscal and monetary policy responses to safety net increases directed to maintaining the wages growth and inflation objectives; and

2.  the micro-economic effects - the extent to which wage increases which impose or accentuate a pattern of wage relativities different from that which would emerge from the market will cause structural unemployment."

After considering the parties' extensive submissions, which supplemented that put to it in either or both of the previous Living Wage cases, Ms Fitzgerald said that, as to macro-economic effects, the Commission concluded that "a moderate safety net adjustment will have a limited impact on AWOTE growth (and a smaller effect on real wages, to the extent that wages growth affects inflation) and a minimal effect on employment growth".18

Regarding micro-economic effects the federal Commission noted that apart from youth wages, "there is a lack of contemporary Australian research concerning the impact on employment of safety net increases" and that "the international material does not provide direct assistance in an Australian context".19 The Commission then went on to refer to an OECD commentary in its December 1998 Employment Outlook that concludes with the observation that "on the basis of the available evidence, however, it is not clear that a rise in minimum wages has unambiguously led to job losses for youth in all circumstances".20

Ms Fitzgerald said that, after considering all the material concerning the effects of a safety net adjustment on employment, the Commission's assessment was that "under current economic conditions, the increases we propose to award, of themselves, will do little or nothing to diminish job prospects".21

In their submissions to the Australian Commission, Ms Fitzgerald said, the Joint Governments placed a significant emphasis on the regional, industry and occupational dimensions of the ACTU's claim. In particular, they submitted that:22

  • "aggregate data masks differential impacts of the proposed safety net adjustments;
  • the effect of safety net increases on employment activity is likely to be greater in regions and industries that are struggling; and
  • the high coverage of agreements will not reduce the impact of safety net increases on those firms, industries and regions which are currently suffering poor economic conditions and/or those who still rely on award regulation of wages and conditions of employment".

The Commission decided that, in considering the ACTU's claim, it would again balance a range of considerations, the differential impact across sectors and firms being one such consideration. The Commission also acknowledged that:23

"The aggregate effects of any safety net adjustment will vary depending on the amount, any conditions attaching to it and the general economic context. Since the safety net adjustment awarded in the April 1998 decision, economic activity had remained strong despite some moderation, aggregate wages growth had remained steady, inflation has remained low and employment growth has been strong".

The federal Commission had noted earlier, Ms Fitzgerald said, that "the economic material before us shows no sign of adverse economic consequences arising from the 1998 safety net increases awarded".24

In terms of the Tasmanian economy the State Government's submission to the federal Commission stated that:25

"On any given economic measure, the Tasmanian economy has performed poorly against all other States and consequently, the nation as a whole. Tasmania's difficult economic circumstances have prolonged for over six years, despite the positive performance of the rest of Australia in that same period. The Tasmanian unemployment rate is the nation's highest, and the State is ranked last against other States in State Final Demand, Participation Rate, retail sales, Private Fixed Capital Formation and Average Weekly Ordinary Time Earnings.

It is these economic facts listed above that means the Commission's decision in relation to the Living Wage Case will be more difficult for Tasmania than in other States. However, it is the Tasmanian Government's view that none of the structural reasons behind Tasmanian relative economic decline relate to movements in wages and therefore believe on equity a beneficent outcome should be supported."

It is clear, Ms Fitzgerald submitted, that the situation of the Tasmanian economy was before the federal Commission.

Ms Fitzgerald submitted that the Tasmanian Government supported the ACTU's stated position "that the clear and intended beneficiaries of that claim are low paid workers who rely on award rates of pay and conditions of employment". The Government informed the federal Commission that:26

  • "Equity considerations should in our view be afforded some degree of emphasis and the claims if granted will be seen to address and assist to redress

  • the disparity in growth in Average Weekly Ordinary Time Earnings and increases in award rates of pay;
  • income inequality arising from widening of the gap between bargaining income levels and award based income levels;
  • the needs of the low paid, through the maintenance of an effective and relevant award safety net."

The Commission found that "there is clearly a gap between income levels derived from bargaining and those provided by the award system" before going on to observe that:27

"Central to the adjustment of the safety net consistent with s.88B(2) [of the Workplace Relations Act 1996] is a consideration of the economic factors, the desirability of attaining a high level of employment and the needs of the low paid. In this context we reject the proposition that the low paid include people who are unemployed. The relevant statutory provisions deal separately with the low paid and the unemployed and the expression "the low paid" in s.88B(2)(c) is intended to refer to persons who are in employment."

After taking into account the level of employment Ms Fitzgerald said the Commission found that "many low paid employees are unable to afford what are regarded as necessities by the broader Australian community". Ms Fitzgerald submitted that, because the federal Commission accepted that many low paid employees are struggling, it is in the public interest for the Tasmanian Industrial Commission to ensure that workers in this State, who are dependent on award wages without enterprise bargaining top-ups, do not fall further and further behind.

Ms Fitzgerald said that, in reaching its decision, the Australian Commission reminded itself of the submissions opposing the ACTU's claim that "the level of labour cost increases flowing from safety net adjustments varies between sectors of the economy and is greatest when employees receive the award rate without any additions by way of overaward payments or through locally bargained agreements".28 Nevertheless, she added, the Commission then went on to say that "it is a necessary implication of the safety net concept that there be an appropriate level of minimum wages applying in all industries" and that "the fact that in some sectors the scope to award safety net adjustments is quite limited" is a matter that the Commission took into account in deciding upon the amounts to award.29

The federal Commission decided to award a safety net adjustment of the following amounts:30

"1.  a $12 per week increase in award rates up to and including $510 per week; and

2.  a $10 per week increase in award rates above $510 per week."

With regard to the date at which increases flowing from the decision should become available, Ms Fitzgerald said the federal Commission had accepted the submissions of the Joint Governments and some employers. That is to say, there should be "a twelve month gap between the increases provided for in [the] April 1998 decision and any increases provided for in this case". Accordingly, Ms Fitzgerald said, the Commission decided that "the Statement of Principles will be amended to require that at least twelve months have elapsed since the rates in the award were increased in accordance with the April 1998 decision before the award is varied as provided for in this decision".31

The Commission then went on to rule that implementation of the adjustment would be subject to the following:32

"(a)  the increase will be fully absorbable against all above award payments;

(b)   the increases will be available from a date no earlier than twelve months after the increases provided for in the April 1998 decision in the award in question;

(c)   the commencement of award variations to give effect to this decision will be no earlier than the date on which the award is varied, with phasing-in of increases permissible where circumstances justify it. Any application for phasing-in will be referred to the President for consideration as a special case;

(d)   by consent of all parties, and where the minimum rates adjustment has been completed, award rates may be expressed as hourly rates; in the absence of consent, a claim that award rates be so expressed, may be determined by arbitration; and

(e)   allowances which relate to work or conditions which have not changed and service increments are to be varied; the method of adjustment is to be consistent with the Furnishing and Glass Industries Allowances decision [Print M9675]."

The federal Commission decided that the Statement of Principles determined as a consequence of its decision would continue to operate until reviewed. The Full Bench also observed, Ms Fitzgerald said, that it is the parties, rather than the Commission, who dictate the timing of award safety net reviews.

However, Ms Fitzgerald continued, in response to submissions of the Joint Governments, the Australian Chamber of Commerce and Industry and the National Farmers' Federation the Commission did decide to amend the Economic Incapacity Principle to include the following sentence:33

"The impact on employment at the enterprise level of the increase in labour costs is a significant factor to be taken into account in assessing the merit of any application."

The purpose of the amendment, the Commission said, is to "recognise that the impact of an increase in labour costs on employment levels at the enterprise level represents a significant factor to be taken into account in determining whether an employer is experiencing serious or extreme economic adversity".

T Abey for the Tasmanian Chamber of Commerce and Industry, the National Meat Association, the Registered Clubs of Tasmania Co-operative Society, the Tasmanian Chamber of Retailers and the Tasmanian Newsagents Association:

Introduction

In recent State Wage Case proceedings, because of their consent nature, TCCI referred only briefly to the comparative state of the Tasmanian and national economies. The organisation, however, invariably informed the Commission that the Tasmanian economy consistently under-performed the national economy in virtually every acknowledged barometer of economic performance and that the disparity between the two was increasing rather than decreasing.

In that regard it is relevant to note that, in finding a safety net adjustment was warranted, the federal Commission went on to sound a note of caution in light of a projected slowing of economic growth and a reduction in the level of new private investment-both of which may slow employment prospects.

National Economic Factors that Influenced the Federal Commission

It is clear that the federal Commission was substantially influenced by the positive outlook of the national economy, since it concluded that:34

  • "... Australia's economic performance over the past year has been positive, continuing the strong, low inflationary growth which has been achieved in Australia since the early 1990s, with:

  • low inflation and moderate wages growth;
  • continuing reasonable levels of economic growth;
  • strong employment growth, particularly through 1998 and into 1999, with a continuing reduction in unemployment;
  • high levels of growth in business investment; and
  • an absence of major economic imbalances."

Mr Abey said the federal Commission also noted that favourable economic developments since the 1998 safety net decision included an underlying inflation rate of around 1.5 per cent, annual economic growth of 4.45 per cent, a fall in unemployment from 8.7 per cent to 7.4 per cent by March 1999, growth in average weekly earnings of 4.1 per cent to 4.3 per cent and average annualised wage increases of 4 per cent. Mr Abey submitted that, having regard to Section 36(2)(b) of the Industrial Relations Act 1984, this material and the federal Commission's findings require critical analysis in the context of the Tasmanian economy and its relative strengths and weaknesses.

The Comparative State of the Tasmanian and National Economies

Overview: The Tasmanian Government's most recent assessment of the State economy, Mr Abey said, appears in Budget Paper No 1,35 which the Treasurer presented to Parliament on 27 May 1999. Concerning the current economic position and outlook the Treasurer reported that "Since 1991-92, the Tasmanian economy had fallen behind the Australian average in nearly all measures of economic performance and over the past few years this gap has widened". The Treasurer went on to add that Tasmania's recent economic performance has been characterised by:

  • "modest rates of economic growth;
  • a low labour force participation rate, together with a relatively high unemployment rate;
  • a decline in full-time employment, only partially offset by an increase in part-time work;
  • falling levels of private sector investment; and
  • a decline in population caused by strong interstate out-migration."

Mr Abey said Treasury expected a further slight decline in Tasmania's economic performance over 1998-99. However, the Treasurer did report that over recent months there were some signs of improvement in retail sales, business confidence, housing finance commitments and construction employment. While those observations were "fairly accurate" at the time, Mr Abey submitted, dwelling constructions have now fallen to an all time low, retail sales dropped in May 1999 and TCCI's evidence is that the rise in business confidence dissipated significantly during recent months.36

Treasury's overall expectation, Mr Abey said, is that Tasmania's economic performance in 1999-00 will improve relative to 1998-99 in that growth will be around 2.4 per cent. Mr Abey submitted that, because the Government's overview of the Tasmanian economy encapsulates essentially the same period as that commented on by the Australian Commission in its April 1999 Safety Net Review decision, it comprises a reasonable comparison for present purposes.

Recent economic performance: In observing that the Tasmanian economy "has failed to recover substantially following the 1991-92 recession" Budget Paper No 1 noted the following performance gaps between the national and State economies in the period between 1991-92 and 1997-98:37

  • "the national economy grew by 27.5 per cent, whereas the Tasmanian economy expanded by only 12.8 per cent;
  • national employment increased by 11.3 per cent, whereas employment in Tasmania rose by just 0.5 per cent;
  • the national population grew by 7.1 per cent while Tasmania's population rose 0.8 per cent; and
  • real private sector investment in the national economy averaged around $4700 per capita per annum, whereas investment in the Tasmanian economy averaged $3100 per capita per annum."

This Commission, Mr Abey submitted, should view those figures against the findings of the federal Commission that, in general terms, there has been relatively strong economic growth at national level. It is evident, Mr Abey added, that if the national GDP38 of 30.77 per cent since 1990 is viewed as being relatively strong then the Tasmanian GSP39 of 11.85 per cent over the same period must be categorised as low, weak or even dismal in comparative terms.

Over the last nine years, Mr Abey said, average GSP growth rates for Tasmania have been in the vicinity of 1.32 per cent per annum. The same growth rate for the national GDP is, at 3.42 per cent, more than double that of Tasmania. More recent years show a worsening of that position. Aggregate GSP growth since 1995 is only 0.98 per cent whereas the GDP growth rate for the same period is 15 per cent. On any reasonable and objective analysis, Mr Abey submitted, Tasmania is significantly under-performing the national economy and, according to economic forecasters, it will continue to do so.

Consumer spending: Mr Abey informed us that this economic indicator is not one of those referred to in the federal decision. However, he submitted, TCCI believes it is a relevant consideration in any examination of the Tasmanian economy. The commentary in Budget Paper No 1 that "HFCE [household final consumption expenditure] has been the indicator that has most consistently and closely tracked the national average", suggests such expenditure is one of the stronger performing components of the Tasmanian economy.

Even so, it is still very evident that, in trend terms, Tasmania's growth rate in household final consumption expenditure has continually under-performed the national average since 1994-indeed, the gap widened noticeably between the September 1997 quarter and the present time (Attachment B, page 1).40 In the circumstances, Mr Abey said, extreme care is required to ensure that further pressure is not exerted on this relatively fragile sector of the State economy.

Average weekly ordinary time earnings (AWOTE): Budget Paper No 1 reports that, while the rate of wages growth in Tasmania has kept pace with Australia in recent years, the level of AWOTE in Tasmania remains below the national average.41 Mr Abey said that while trend changes in AWOTE during the 1990s(Attachment B, page 1)42 confirm that Tasmania has largely retained its comparative position, that outcome was achieved against a backdrop of an economy that seriously under-performed the national economy in virtually every other aspect. Furthermore, Mr Abey submitted, the evidence shows that when changes in average weekly ordinary time earnings are measured in real terms, ie after taking into account the effects of inflation, average weekly earnings in Tasmania have remained comfortably ahead of inflation for the relevant period (Attachment B, page 2).43

Labour market: Mr Abey said that the performance of Tasmania's labour market is in stark contrast to that of the national economy. Compared with the national perspective, Tasmania's performance is a significant cause for concern. Budget Paper No 1 observes that:44

"One of the most obvious areas of the State's economic underperformance of recent years is the labour market. Between 1991-92 and 1997-98, national employment increased by over 11 per cent whereas employment in Tasmania was virtually unchanged. ... employment growth in Tasmania has been negligible since the 1991-92 recession and the gap between Tasmania's performance and the strong growth recorded nationally has become even more marked in recent years."

Mr Abey added that Treasury went on to predict that "based on current trends a further, marginal decline in total employment is likely for 1998-99". This material, Mr Abey submitted, clearly demonstrates that the employment market in Tasmania is in decline and significantly at variance with the national picture. The federal Commission, however, was able to view the employment situation from an entirely different perspective, that of strong employment growth and increased employment levels. Consequently, Mr Abey contended, in terms of what the federal Commission referred to as "no sign of adverse economic consequences arising from the 1998 safety net increases",45 the Tasmanian Commission cannot make a similar finding. That is because of the further deterioration that occurred in the Tasmanian labour market following implementation of the 1998 State Wage Case.

Mr Abey submitted that TCCI's analysis of the Tasmanian labour market since that time shows that:46

  • "Full-time employment has increased marginally by 1,400
  • Part-time employment has decreased by 3,100.
  • Consequently, Total Employment has decreased by 1,700.
  • Full-time employment as a % of total labour force has increased but remains 3.23% below the national average.
  • The unemployment rate has fallen but only as a result of the 'discouraged worker effect'.
  • The Participation Rate has fallen substantially."

Mr Abey contended that if the participation rate in Tasmania matched the national average, the real unemployment figure for Tasmania would in fact be 16.5 per cent. That figure, Mr Abey submitted, underpins the significance of the participation rate as an indicator of economic activity. All this evidence, Mr Abey contended, serves to demonstrate that the Australian Commission's up-beat analysis of labour market data in trend terms during the 1990s is not available to this Commission in the context of the Tasmanian economic position.

Population: Population, Mr Abey submitted, is a significant indicator of economic performance. Treasury reports, in Budget Paper No 1, that "Over the past two years, Tasmania's total population has declined by an annual average rate of 0.2 per cent, in contrast to the 1.2 per cent growth recorded nationally".47 Treasury's material on the State's demographics, which shows an actual decline in Tasmania's population, is among the more concerning elements of the economic data tendered by TCCI, Mr Abey said. Of even greater concern, he added, is the government's prediction that it expects the population decline to continue at the rate of 0.3 per cent or 1415 persons per annum. While the State's population continues to decline, Mr Abey contended, the prospect of any real and meaningful economic recovery is unlikely because so many other indicators, eg retail sales, housing and investment, are dependent upon the size of the population.

Business investment: The federal Commission, Mr Abey pointed out, noted that Australia's economic performance since the early 1990s has been characterised by strong business investment.48 Budget Paper No 1, however, reported that "Tasmania's recent investment performance (business and dwellings) has been poor".49 The comparisons between State and national data, Mr Abey said, could hardly be more stark. The difference has widened each year and now constitutes an extraordinary chasm. It is frightening in those circumstances, he said, to contemplate the federal Commission's cautionary observation that the national outlook is for a less favourable investment climate. Should such a decline in investment growth impact on Tasmania, the result could be extremely damaging to the economy and for employment prospects.

Business profitability: Mr Abey said that TCCI uses its own publication, the "Tasmanian Survey of Business Expectations", to track the performance of business profitability in Tasmania. The survey-which covers more than 300 businesses employing 17000-20000 employees-is the largest of its type in Tasmania, Mr Abey said, and is recognised as an authoritative representation of business expectations and performance in Tasmania. Data extracted from the survey and its national counterpart since the March quarter 1995 shows that the net proportion of respondents recording a decline in profitability in Tasmania is substantially greater than the corresponding national performance (Attachment B, page 2).50 Furthermore, for 16 of the past 17 quarters, a net balance of respondents has recorded a decline in profitability.

Business selling prices: The same survey, Mr Abey said, is used to track business selling prices. What the data shows, again from the 1995 datum point, is that for the past 17 quarters a net balance of respondents reported a decline in average selling prices (Attachment B, page 3).51 Mr Abey submitted that while a similar trend is apparent in the national figures, the trend is far more profound in Tasmania. This sustained downward pressure on prices and reducing profitability, Mr Abey asserted, raises the question as to how the current wage claim, if granted, could be funded out in the marketplace. He said that a fiercely competitive market ruled out commensurate price increases in the vast majority of cases leaving only the options of a further reduction in costs or in margins.

These issues, Mr Abey submitted, lead to the question of the impact on employment of wage increases. It is axiomatic, he said, that if the price of an item is increased then demand for the item will reduce, a fundamental law of supply and demand in respect of which labour is no exception. The only question that remains, Mr Abey contended, is the extent of the reduced demand. The federal Commission considered this question, in the course of which it published a table of results estimated by researchers who have looked at the "elasticity of demand for labour".52 The average of those studies, Mr Abey said, "is a co-efficient of around 0.67 per cent, implying that for a 1 per cent increase in wages there will be a 0.67 per cent reduction in the demand for labour".53

The federal Commission concluded that the critical issue, in relation to impact on employment, is the prevailing economic circumstances. However, it could not and indeed did not reach the conclusion that the impact of a wage increase would be minimal if the Tasmanian economic picture translated across the national stage. Of all the economic indicators, growth in average weekly earnings is the only one that most closely matches the national position. It is no coincidence, Mr Abey contended, that this growth has been accompanied in Tasmania by a significant fall in employment in recent times.

Business confidence: In Budget Paper No 1, Treasury remarked that "Surveys of business sentiment in Tasmania show that confidence has improved in recent months and investment intentions on the whole have risen".54 It is true, Mr Abey said, that in the December 1998 and March 1999 quarters, business sentiment lifted strongly, albeit off a low base (Attachment B, page 3).55 However, the survey for the June 1999 quarter shows that, whilst not all gloom and doom, that clear lift in business sentiment has now gone off the boil, with the long term outlook again dropping below the 50 per cent mark.56

Export activity: Tasmania's export activity, Mr Abey submitted, is one area where the State has held its own with the national economy. However, the federal Commission in its decision identified a projection for the slowing of exports, which may adversely impact on a small open economy such as that of Tasmania.

Consumer price index (CPI): This index measures inflation. The exhibited data shows that the CPI in Tasmania in recent years almost exactly matched that of the national economy (Attachment B, page 4).57 In this context, Mr Abey submitted, it is relevant to note that while the State's average annual percentage growth in the CPI or in inflation since March 1990 is 2.6 per cent the average growth in AWOTE during the same period is 4.3 per cent, demonstrating that earnings have remained comfortably ahead of inflation.

The Tasmanian Economy compared with other State Economies

Mr Abey contended that comparing aggregated national data can sometimes mask the true extent of over or under performance of an individual State's economy in respect of any particular indicator of economic activity. It is quite proper, Mr Abey said, to refer to the material contained in Budget Paper No 1 for the purpose of ascertaining a global perspective of Tasmania's economy or to obtain a comparison of the State's economic performance in relation to national aggregate data. However, he emphasised, it is just as important to consider data that compares Tasmania with the other States to ensure that the material is not unduly skewed by the process of aggregation.

Mr Abey said the Victorian Chamber of Commerce and Industry (VECCI) published an annual report that analyses the performance of each Australian State across a broad range of indicators. The most recent report, that of 1999, is called "VECCI - The States Report".58 That report, Mr Abey said, displays a table-Attachment C-which clearly shows that Tasmania's performance is significantly below that of most other States on virtually all indicators. Tasmania's relative ranking, he continued, has fallen from fourth (in 1993) to last, or sixth out of six (in 1999) in seven, perhaps even eight,59 of the twelve indicators and last on an overall basis.

The VECCI report, Mr Abey submitted, provides clear evidence that the Tasmanian economy is not performing well, in a comparative sense, with the other States with which it is in danger of losing touch.

Summary-Economic Analysis

The exhibited data, Mr Abey contended, shows beyond reasoned debate that Tasmania has struggled for a lengthy period of time with an economy that has under-performed the national economy on every conceivable indicator of economic performance. Throughout the 1990s Tasmania's economy has been the worst performed economy in the country and it continues to lag behind the other States. Tasmania's under-performance is especially apparent in such key areas as employment, unemployment, investment, population growth, gross state product and productivity.

For these reasons, Mr Abey submitted, a wage increase of the magnitude proposed by the TTLC will exacerbate the already perilous state of Tasmania's economy. In particular, it will put further pressure on employment numbers, especially full-time employment, it will limit the prospect of increased investment and it will limit the capacity of business to increase economic performance-the only sustainable way to provide additional employment and arrest population decline. The exhibit "Summary of Growth Rates" is a snapshot of the comparative positions of the Tasmanian and Australian economies on 12 economic measures.60 The figures, Mr Abey said, are self explanatory.

Mr Abey contended that the TTLC claim represented an increase in Tasmanian private sector wage rates of 2.58 per cent at the benchmark tradesperson classification. This percentage, he said, is higher for all classifications below that level but decreases in respect of those classifications that are above the benchmark. Mr Abey added that a cursory examination of private sector awards led him to believe that the vast bulk of Tasmanian award classifications fall below the benchmark level.

In addition, Mr Abey said, TCCI's perception is that the level of over-award payments in Tasmania is less than elsewhere. This creates a situation where the ability of Tasmanian business to absorb part or all of the proposed increase is limited. In all likelihood, the increase would amount to a direct increase in business operating costs. In the prevailing Tasmanian economy, Mr Abey forecast, an increase in business operating costs would have an adverse effect on employment.

If the Australian Commission had been faced with the economic picture that confronts this Commission, Mr Abey said, the Full Bench would have come to a decision different from that recorded in the April 1999 Safety Net Review. In the circumstances, he submitted, the Tasmanian Commission must proceed with extreme caution when considering the potential impact the TTLC's claim, if granted, would have on the State economy. Any increase which adversely impacts on business confidence can only have the effect of further undermining Tasmania's economy.

AWOTE growth in Tasmania, Mr Abey submitted, has kept pace with the national average and has exceeded cost of living increases by 15.4 per cent. Given the subdued level of investment, the low profitability of business and a high level of insolvencies, TCCI contends that AWOTE growth has come at the price of high levels of unemployment and a poor relativity between full-time jobs and total employment. A further adjustment of AWOTE in the order of the quantum of increase now under consideration, Mr Abey contended, will again exacerbate those weaknesses and impact adversely on employment. Youth unemployment in Tasmania, for example, is currently running at 26.9 per cent compared with the national figure of 21.3 per cent. Any additional pressure in that area will also exacerbate the position of youth employment.

In TCCI's view it is relevant for the Commission to analyse the economic forecast for the State. By that means the Bench can properly consider the possible effects of an increase in wage rates in the order of those sought by TTLC. Treasury specifically addressed this question in Budget Paper No 1, concluding that "In summary, the State's economic performance is expected to remain relatively subdued but an improvement relative to 1998-99 is anticipated, especially in relation to employment growth".61 Given the State's recent track record, Mr Abey said, that outlook is remarkably optimistic. However, even if achieved, the outcome will still leave Tasmania's performance below the equivalent national forecast.

Budget Paper No 1 also acknowledges that private economic commentators do not share the government's optimistic view. For example, Treasury forecasts a GSP growth of 2.4 per cent and a 1.1 per cent employment growth for 1999-2000 compared with 1.7 per cent and 0.6 per cent respectively by private commentators (Attachment D).62 In light of the divergence in expectations of the State's economic performance in 1999-2000, TCCI submits that there is need to take a cautious approach to a claim for a substantial wage increase which has the potential to prevent growth and which may, in fact, have the opposite effect (Attachment E).63

In conclusion, TCCI submits that the Commission must take into account the impact on the State economy of the proposed safety net adjustment. Had the Parliament intended that the Commission should slavishly follow national safety net adjustments it would not have framed Section 36 of the Industrial Relations Act 1984 in the manner that it did. Indeed, there probably would not be a public interest test at all. The evidence overwhelmingly demonstrates that Tasmania's economic performance is a mere shadow of the robust national economy. The gap between the two economies is getting wider every day. Neither the TTLC nor the Tasmanian Government addressed the State economy other than to say that, in some way, it was contemplated in the economic data that was before the federal Commission in the April 1999 Safety Net Wage Review case. Section 36 of the Act places a much higher onus on both the applicant and the intervener, both of whom have all but ignored Tasmania's sobering economic circumstances.

3. Merit Considerations

L Fitzgerald for the Tasmanian Trades and Labor Council:64

The are a number of strong grounds for flowing the federal safety net decision into awards of this Commission. First, in terms of past practice and precedent, there has never been an occasion when the Tasmanian Commission has declined to flow on the quantum of wage increases awarded by a federal National Wage Case or Safety Net Adjustment decision. Indeed, Full Benches of this Commission in the 1987 and 1991 State Wage Cases formed and reiterated the opinion that:65

"... only in extraordinary circumstances would it be desirable to settle upon objectives manifestly inconsistent with those of the Federal Commission in a National Wage Case."

Second, in terms of economic data, the federal Commission examined detailed argument put to it by the Joint Governments and by employers concerning regional and sectoral variations before handing down a uniform decision in relation to the national economy. This Commission should find that decision compelling because to strike a different rate for Tasmania would suggest that the federal Commission erred.

Third, in terms of federal and State award variations, it would be wrong for the Commission to decline to allow benefits of the national safety net decision to flow to State award workers in circumstances where workers covered by federal awards have an entitlement to that benefit. All the parties, including the Commission itself, have in the past supported that proposition.66 This argument is even stronger when consideration is given to the number of workers actually covered by State private sector awards.

Information provided by Workplace Standards Tasmania, derived from surveys conducted by the Australian Workplace Industrial Relations Surveys (AWIRS), suggests that in 1995 less than 37 per cent of the Tasmanian workforce-there was 50 per cent with federal award coverage and 13 per cent with no award coverage-is subject to State award coverage. Although there is no statistical evidence available to substantiate the claim, the percentage of the Tasmanian workforce covered by federal awards is now believed to be greater than 50 per cent. In any event, a flow-on of the 1999 federal safety net decision will obviously affect less than 37 per cent of the workforce. For example, State public sector employees and employees who have gained wage increases through enterprise bargaining-that is, Section 55 agreements, Part IVA agreements and Australian Workplace Agreements-will not have access to the safety net adjustment.

It is also the case that a number of federal awards that have application in Tasmania have been varied to incorporate the federal safety net decision. There was no employer objection at all to those variations.67

In light of all this evidence it would be the height of inconsistency to argue that State awards, which apply to only a small section of the workforce, should not be varied to reflect the Australian Commission's safety net decision.

Fourth, the current Economic Incapacity Principle provides scope for employers or groups of employers to apply to the Commission to reduce or postpone increases in labour costs on the grounds of very serious or extreme adversity. A decision to flow-on the federal determination to State private sector awards will not, therefore, lock in employers. However, the Principle makes it clear that the Commission will give such applications rigorous testing because material adduced in support must be substantial and convincing.

Fifth, concerning generalisations regarding the likelihood of job losses arising from a flow-on of the federal decision, a Full Bench of this Commission in the 1986 State Wage Case said that:68

"Statements of this nature are easily made but specific evidence was not placed before us and, likewise, the claims for increases were not opposed.

It is our view that if such statements are made they should be supported by evidence so that the Commission is able to come to an informed view and reach a decision having regard to all factors as they apply in this State."

The Economic Incapacity Principle gives employers an opportunity to challenge any wage rate increases that affect their businesses or industry. That Principle is the only safety valve required in the circumstances.

Sixth, Section 36 of the Industrial Relations Act 1984 requires the Commission to have regard to the public interest. In that context the Commission must (a) consider the economic position of any industry likely to be affected by the proposed award; (b) consider the economy of Tasmania and the likely effect of the proposed award on that economy with reference to the level of employment; and (c) take into account any other matter that the Commission considers to be relevant in the public interest.

The needs of the low paid are a matter that the Commission should take into account when considering the public interest. Such needs, which are an important social and economic issue, comprised the central focus of the last two federal safety net adjustment decisions. The basis for such considerations in the federal industrial jurisdiction is expressed in a specific statutory form. However, in Tasmania, Section 36(2)(c) of the Industrial Relations Act 1984 is sufficiently wide enough in scope to permit the State Commission to take the needs of the low paid into account in determining whether the present application is consistent with the public interest.

The safety net adjustment is particularly relevant to the Tasmanian economy and to society. The 1995 AWIRS survey showed that Tasmania has the highest percentage of employees who have received safety net adjustments. Employees in 42 per cent of all Tasmanian workplaces have received safety net adjustments, whereas the Australian average is only 24 per cent. That evidence means that safety net adjustments are more crucial to Tasmania than to any other State or Territory.

Ms Fitzgerald contended that the Commission can and should place reliance on the federal safety net review decision. It is important, she said, to differentiate between the specific indicators of economic performance and the analytical approach to assessment of the impact of wage rate increases. A variety of theoretical, analytical and empirical bases exist upon which quite different conclusions can be drawn as to the impact of a modest wage increase on employment levels. The Australian Commission dealt with this issue in its decision, remarking that "that assessment ultimately requires the application of judgment"69 and, later on, observing that "no significant adverse employment effect is evident from recent safety net increases".70

It is also the case, Ms Fitzgerald continued, that when low paid workers receive a modest wage increase, they mostly spend their money in the local economy-an activity that tends to shore up employment. In any event, it is not enough to simply assert that modest wage increases will cause unemployment. This Commission made it quite clear in the 1986 State Wage Case that such statements should be supported by evidence. TCCI has not met this test because it has not shown that flowing on safety net adjustments will cost jobs. The Commission should regard that assertion as nothing more than another cry of wolf by employers.

Concerning Section 36(2)(b) of the Act, Ms Fitzgerald submitted that the Commission's consideration must be at the level of aggregate wage effect on aggregate employment. Conditions that relate to particular industry sectors or enterprises are not necessarily indicative of the impact on employment as a whole.

Ms Fitzgerald said the TTLC relied on the government's assessment of the State's economy. Budget Paper No 1, she said, noted a number of factors that have contributed to Tasmania's relatively subdued economic performance in recent times.71 Many of those factors undoubtedly contributed to job losses. However, at no point in Budget Paper No 1 is there any reference or assertion made that wage levels are responsible for or indeed a factor in such job losses. In fact, in its submission to the federal Commission, the government specifically stated that "it is the Tasmanian Government's view that none of the structural reasons behind Tasmanian relative economic decline relate to movements in wages ..." 72

More positively, Ms Fitzgerald said, Budget Paper No 1 records the fact that some economic indicators have recently shown signs of improvement. By way of example, the Paper refers to the Abt railway project and further call centre developments. Those developments, particularly call centres, do not rely on State awards. It follows, Ms Fitzgerald submitted, that employment arising from those developments will not be affected by a decision to grant a safety net adjustment in respect of State private sector awards.

TCCI's assertion that the TTLC's present position does not extend to adoption of the 12 months' minimum gap between 1998 and current safety net adjustments overlooks the parties' 1998 agreement. On that occasion, Ms Fitzgerald said, she reported that "Both ourselves and the employers are ... clear that for the purposes of any future arbitrated safety net adjustment, the operative date would be 14 July". TCCI, she said, did not contradict that statement.

Ms Fitzgerald submitted that a recent decision of the federal Commission in the Hospitality Industry, Accommodation, Hotels, Resorts and Gaming Award 1998 dealt with a similar issue. In that case the Commission considered the effect of a six weeks' delay occasioned by a failed incapacity argument. The Commission held that:73

"In our view the delay in variation of the Hospitality Award occasioned by the hearing and determination of last year's incapacity case should not be automatically perpetuated by the operation of the so-called 12 month rule in Principle 8(b). We have reached this conclusion not simply because the AHA's claim was unsuccessful but rather that its lack of merit was such that as a matter of fairness the 12 month rule should be waived in this case."

In light of last year's consent application TCCI's argument that the 12 months' minimum gap should result in an operative date of no earlier than 14 October 1999 is despicable. Any acceptance by this Commission of such an argument would penalise low paid workers. The TTLC's position is that increases of $12 and $10 per week should be paid from the first pay period that commences on or after 14 July 1999. In that regard the Commission should follow its past practice of having a common operative date for all awards. Such a practice, Ms Fitzgerald contended, would allow for the orderly conduct of industrial relations and enable all parties to make best use of their resources. There is no valid reason for not adopting that practice in the current case.

Finally, in respect of Principle 16-the Award Review Process-the Commission will be aware, Ms Fitzgerald said, that the unions co-operated positively and have in fact done the work. In the circumstances, Principle 16.3 should not stand in the way of the TTLC's application.

The TTLC submitted that the Tasmanian Industrial Commission should grant a flow-on of the Australian Commission's safety net adjustment as from 14 July 1999.

C Willingham for the Tasmanian Government:

The Tasmanian Government supports the Industrial Commission's adoption of the April 1999 Safety Net Adjustment decision of the Australian Commission. Specifically, the government supports a safety net wage increase of $12 per week in respect of award rates up to and including $510 per week and a $10 per week increase in respect of award rates that exceed $510 per week.

In addition, the government submits that the safety net increases should be accessible on an award-by-award basis from beginning of the first full pay period that commences on or after the Commission's decision- provided, however, not less than 12 months have elapsed since the Commission varied the award or awards in question to reflect the 1998 safety net adjustment. Furthermore, the datum point from which the Commission should measure the 12 months' period is the date upon which the award or awards in question were varied to give effect to the first instalment of the safety net increases that flowed from the 1998 State Wage Case. Concerning the Wage Fixing Principles, the government advocates for their retention and continuance-amended as proposed by the Tasmanian Trades and Labor Council-on a short-term basis only.

The Tasmanian Commission should adopt the course the government proposes. The most important reasons for doing so, perhaps, are the grounds of consistency, of comity, of equity and of equal treatment for all Tasmanian workers. It is a fact that, since the re-introduction of Wage Fixing Principles in 1983, every industrial tribunal in the country has agreed upon the need, except in the most exceptional circumstances, to act consistently with National Wage Cases. There have been no radical or substantial departures from that approach.

There are good reasons in Tasmania to adopt such a consistent approach. One such reason concerns the number of employees covered by State awards. Taking at face value the 1995 statistics, on which the TTLC relies, the maximum number of employees who could be covered by the Commission's decision in the current matter is significantly less than 37 per cent. All employees who are covered by enterprise or workplace agreements may have a relevant award varied, but they will not obtain a safety net wage increase from that action. In addition, in general terms, the State public sector will not derive a safety net increase from this Commission's decision. As a consequence, the figure of 37 per cent probably reduces to a great deal less than 30 per cent, perhaps even 25 per cent.

In a tangible sense, therefore, the TTLC's application probably covers about one quarter of the Tasmanian workforce. The other 75 per cent have already received or will receive the increase awarded by the federal Commission. That is because they are either covered by federal awards or they have received or will receive increases equal to or in excess of the safety net adjustment through other arrangements.

The whole point of safety net increases is that they serve to underpin the industrial relations environment of enterprise and workplace bargaining. They act as a floor to enterprise bargaining by providing a minium set of conditions to protect employees who are vulnerable because they are unrepresented and unaware of their industrial rights in an enterprise bargaining situation. In the present case current average weekly earnings in Tasmania is $686 per week. An increase of $10 per week represents an increase of 1.45 per cent, which is all they will get for a year.74

It is argued that safety net increases are modest and negligible in general effect in order to encourage enterprise bargaining. The reality is that the opposite is often the case. Many employees do not have the power to force or compel bargaining outcomes. In many cases employers who are required to pay the two amounts claimed in these proceedings-$12 and $10 per week-have no incentive whatsoever to do anything else.

Because there is silence on the point, the Commission is entitled to assume that those employers who are parties to federal awards that have been varied to date to incorporate the safety net adjustment increases have not found them to be an insupportable impost. In all the circumstances, if the Commission should decide not to grant the present application it would effectively discriminate against, marginalise and treat unjustly the very employees who most need the Commission's protection.

Concerning Section 36 of the Industrial Relations Act 1984 and the public interest, the Tasmanian Government dealt with that issue in its written submission to the federal Commission,75 which it supplemented with a further brief oral submission.76 At the time the government supported the higher wage rate increases that the ACTU was then seeking. In the outcome the Australian Commission did not grant those increases. However, the Tasmanian Government's position was that increases of the amount sought by the ACTU would not be detrimental to either the national economy or, in particular, the State economy. It follows, therefore, that because the State Government held that belief about much larger increases, the amounts actually granted will not be detrimental to the State economy or to levels of employment and the increases will not stifle employment growth. Such outcomes were demonstrably the consequences of both the 1997 and 1998 State Wage Cases.

It is interesting to look at the circumstances that faced the Tasmanian and national economies in 1985-the very first State Wage Case dealt with by this Commission. The National Wage Case decision of 23 September 198377 reintroduced the Wage Fixing Principles-a system that has stood the test of time ever since-at the behest of all major parties because everyone had had enough of a wages free-for-all. The National Wage Case Full Bench reported that there was very little disagreement about the poor state of the economy.78 If ever there was a set of economic circumstances that called for no wage increases, it was that particular case.

However, Mr Willingham submitted, every party unanimously agreed that wage increases should be awarded in order to bring the then wages explosion and rampant industrial action to an end. The parties recognised that uniformity and consistency across the country was imperative. In that case the Full Bench went to great pains to recognise and acknowledge the independence of State industrial tribunals. However, it was equally at pains to stress that, without their co-operation in adopting Wage Fixing Principles that were consistent with the national Principles, the proposed system could not work. In its 1985 State Wage Case decision this Commission, in adopting the federal Principles suitably modified, recognised that it was "in the public interest for the Principles to operate on a uniform basis throughout the various areas of jurisdiction".79

At the time, in that case, TCCI consented to a wage increase of 2.6 per cent even though, in the organisation's opinion, it was not a good time to be granting award increases because of the state of both the Tasmanian and national economies.80 Coming forward some 14 years to the present it is undeniable that neither Tasmania nor the nation is facing economic circumstances of the kind that were present in 1985. The circumstances are better under any measurable indicator. That is not to say the Tasmanian economy is performing well, a position that the government was at pains to put starkly, but accurately, to the federal Commission in the April 1999 Safety Net Review case. TCCI, however, did not put to the Full Bench in that case any economic material pertaining to Tasmania, preferring instead to rely on national figures.

In 1985 TCCI said it would be "industrially unrealistic to create a situation where approximately half the workforce would enjoy a 2.6% increase and the other half not".81 That is not the present situation. Here the position is that approximately three-quarters of the Tasmanian workforce has received the national increase, but one-quarter has not. In 1985 industrial realism was very important to TCCI but, in 1999, it has gone out of the window.

The current application, Mr Willingham said, is the forty-third time that a party has sought to flow-on the 1999 national safety net adjustment in Tasmania. On none of the previous forty-two occasions did the employers oppose the modest increases of $10 or $12. The present case is the first occasion, concerning the 1999 safety net adjustment, on which the employers have stood up and opposed the increase, let alone presented an economic argument-which they were fully entitled to do under the Economic Incapacity Principle.

It is not just industrially realistic to say that if half the workforce gets a wage increase, the other half should also benefit. It is also an equity argument. What sort of anomaly or inequity would this Commission create if it accepted TCCI's argument? Is it the case that an increase is fine for those employees who have a bit of clout or who are not at the bottom end of the income range, but that those who rely on this Commission for maintenance of the safety net should get nothing? Mr Abey begged the question: How are the employers to pay for this increase? The answer of course, Mr Willingham suggested, is "just the same way that you paid the other 75%".82

The Tasmanian Government does not resile from Budget Paper No 1. Similarly, it does not resile from the submissions it put to the federal Commission or the submissions that it puts to this Commission. In that sense it is very important to remember the purpose that a safety net adjustment serves. It is not an across-the-board increase-some 25,000 public sector employees are not involved, for example-and it is incorrect and perhaps misleading to describe it as such. It is a once-a-year safety net adjustment.

TCCI also states that it opposes this increase because there is in place an environment whereby wage increases should only come from workplace bargaining. That is not the system that is in place. The present system encourages the occurrence of wage movements by means of workplace negotiation, productivity and efficiency. But that same system also recognises that, for a variety of reasons, such wage movements will not always occur. In the circumstances national and State industrial tribunals have decided to maintain a safety net. It would be immoral, unjust and inequitable not to do so.

For all the above reasons, Mr Willingham urged, the Commission should grant the TTLC's application.

W J Fitzgerald for the Australian Mines and Metals Association (Inc):

In a brief written submission Mr Fitzgerald submitted that:

"This Association represents members involved in mining and smelting activities in Tasmania including contractors.

Those members are subject to workplace agreements and awards of this jurisdiction and the Federal jurisdiction.

Those members have already passed on wage increases in excess of the Safety net increase the subject of the application and/or pay wages in excess of award levels whichever award has application. AMMA has consistently denied the legal application of the Pasminco (Mining) Award as a common rule award.

The application therefore has little or no impact on AMMA members.

The Association however urges the Commission like its federal counterpart to adopt an award by award approach which can then allow the parties to the respective awards to put appropriate submissions as to the application of the Safety net increases."

T Abey, T Edwards and R Brown for the Tasmanian Chamber of Commerce and Industry, the National Meat Association, the Registered Clubs of Tasmania Co-operative Society, the Tasmanian Chamber of Retailers and the Tasmanian Newsagents Association:

TCCI's decision to oppose flow-on of the federal Commission's 1999 Safety Net Review decision is largely without precedent in the history of State Wage Cases in Tasmania. However, the organisation was not prepared to agree to a flow-on because, in TCCI's opinion, such an agreement would be contrary to good economic practice and would have an adverse impact on Tasmania's economy. It is TCCI's view that the circumstances which influenced the Australian Commission to award the safety net adjustment are not repeated in Tasmania. For that reason it is incumbent upon this Commission, pursuant to Section 36 of the Industrial Relations Act 1984, to make a decision that rests on Tasmania's specific economic circumstances.

It is clear from the federal decision that the evidence satisfied the Australian Commission that the national economy has been performing well for the most part of this decade-economic growth and productivity have been strong and investment is at historically high levels. Any objective analysis of the Tasmanian economy, however, shows that the State does not reflect such an up-beat assessment. Had the Tasmanian situation faced the federal Commission, the Full Bench is likely to have made a different finding about the economy and its capacity to warrant a safety net adjustment.

The Tasmanian Commission does not have the same statutory obligations as those imposed on the Australian Commission. In the circumstances, the economic evidence tendered by TCCI in these proceedings83 clearly will not support a conclusion that there is a capacity in the State's economy to warrant a safety net adjustment.

The federal Commission also predicated its decision on the growing divergence between the rate of increase in award rates of pay and the growth of earnings generally. On that point the Commission said:84

"Over the two years up to the end of December 1998 increases in award rates arising from safety net adjustments have not kept pace with the growth in earnings generally. Nor have they kept pace with increases resulting from enterprise agreements. The gap between income levels established as a result of bargaining and those determined by the award system has widened since 1992-93."

The federal Commission's discussion of this issue substantially ignores the fact that those employees who obtain wage increases through enterprise bargaining must negotiate, in exchange, increased productivity and efficiency. That is not the situation for employees who obtain their wage increases through safety net adjustments. Now that the focus of wage fixing has for the most part devolved to the enterprise level, it is incongruous that increases of the magnitude of safety net adjustments should be available to employees who are not required to contribute to the productivity and efficiency of the business that employs them.

The claim pursued by the TTLC in these proceedings, if successful, will comprise a net addition to wage costs. There is no prospect of employers offsetting that additional cost by any means other than by reducing employment levels. The option of increasing prices simply does not exist in an economic setting of low inflation and negative economic growth. The evidence before the Commission regarding a lengthy decline in selling price expectations of Tasmanian businesses85 adds to the likelihood of a fall in employment numbers should the current application be successful.

TCCI contends that the application now before the Commission seeks to circumvent the overriding sentiments expressed in Principle 1. Introduction of the current Wage Fixing Principles. In particular, the wage rate increases claimed will significantly inhibit the incentive for employees to pursue enterprise bargaining and circumvent the continued pursuit of both structural efficiency changes and the award review process.

The purpose behind devolution towards enterprise specific outcomes in wage fixation is the need to ensure that the competitiveness of Australian and Tasmanian businesses is enhanced by balancing wage increases against approved productivity and efficiency changes. Increases in award wages through safety net adjustments total $60 since the introduction of this methodology into wage fixation. Using the base tradesperson's rate, that sum amounts to an increase of 14.38 per cent increase in wages without an accompanying requirement for changed work practices or other efficiency initiatives. Such a level of increase in the absence of attention to productivity is not sustainable in the long term and will lead to unsustainable labour cost increases, which will impact adversely on employment and/or insolvencies.

It is incongruous to compare only the wage rate component of bargaining outcomes with wage increases derived from safety net adjustments. Enterprise bargaining outcomes are invariably more complex than a mere wage increase. They involve a range of changes to conditions of employment and work practices that are designed to offset the whole or at least part of the cost to the enterprise of the wage increase. No such amelioration is available through the safety net adjustment concept. To the extent that the federal Commission made such a comparison it was an invalid comparison.

Contrary to widespread belief, TCCI holds no "in principle" objection to wage rate increases as such. However, where they are not underpinned by productivity performance improvements, they constitute a net additional cost burden that cannot be recovered from the marketplace in economic circumstances such as those currently operating in Tasmania. TCCI intends to put to the Commission a series of proposed changes to the Wage Fixing Principles that are designed to ensure labour costs flow primarily from enterprise bargaining and to minimise other labour cost increases.

In the federal Commission, the Joint Governments and some employers were successful in encouraging the Full Bench to ensure that there is a gap of 12 months between increases that arose from the 1998 safety net decision and those that will flow from the 1999 decision. It is interesting to note that the purity of the position for which the TTLC argues in the present case does not extend to a flow-on of that 12 months' gap. TCCI contends that a pure application of that requirement in the current proceedings would produce an operative date that does not precede 14 October 1999.

The Tasmanian Industrial Commission is not simply an arm of the Australian Industrial Relations Commission. The Tasmanian Commission is a creature of statute that is bound to exercise the jurisdiction accorded to it by the Industrial Relations Act 1984. In that context the Tasmanian Commission is not a rubber stamp of its federal counterpart and it is not obliged to have regard to any of the statutory tests imposed on the federal Commission by the Workplace Relations Act 1996.

The Industrial Commission of Tasmania is, however, obliged to apply a number of statutory measures in the execution of its functions. Section 20 of the Industrial Relations Act 1984 requires the Commission to, in brief, act with equity and good conscience. In the past this Commission has acted in a manner that was inconsistent with directions of the Australian Commission and has jealously guarded its independence. The present application creates another opportunity for the Tasmanian Commission to demonstrate its relevance in relation to wage fixation in this State.

TCCI contends that there are cogent grounds for this Commission to critically analyse the federal safety net review decision for the purpose of producing a decision that is consistent with Tasmanian circumstances. Much of the economic foundation upon which the federal decision relies is not repeated in Tasmania. TCCI strongly submits that this Commission must test the key assumptions and foundations of the national decision in a Tasmanian context and test the TTLC's claims in light of the result of that exercise. To do otherwise the Commission would be acting without regard to its statutory responsibilities under the Industrial Relations Act 1984.

An identical situation recently confronted the South Australian Industrial Commission in respect of a union application to flow-on the same federal safety net decision that is the subject of the current proceedings.86 In that matter the applicant unions argued for a shortening of the 12 months' period whereas the respondent employers argued to extend the period. In essence the South Australian Commission held that its own statute required the Commission to apply national decisions with some caution and to carefully test the assumptions within those decisions before adopting them into the local jurisdiction. The same situation applies in respect of the Tasmanian Commission.

In that context the statutory requirement of primary importance is Section 36 of the Act, which obliges the Commission to have regard to the public interest. In general, Section 36(1) provides that "Before the Commission makes an award under this Act ... the Commission shall be satisfied that the award ... is consistent with the public interest". Section 36(2) enacts what the Commission must do in that regard:

"In deciding whether a proposed award ... would be consistent with the public interest, the Commission shall -

(a)   consider the economic position of any industry likely to be affected by the proposed award ...;

(b)   consider the economy of Tasmania and the likely effect of the proposed award ... on the economy of Tasmania with particular reference to the level of employment; and

(c)   take into account any other matter considered by the Commission to be relevant to the public interest."

TCCI differs little from TTLC as to the variety of factors that might arise under Section 36(2)(c) of the Act. In that context the Commission would need to have some regard to the needs of the low paid in addition to other relevant considerations that might fall from any of the parties now before the Commission.

That said, TCCI contends that the Commission must apply the requirements of Section 36 in its consideration of the TTLC's application. In particular, the nature of the application requires that the Commission must rigorously examine the Tasmanian economy and the likely effect any decision might have on that economy with particular reference to the level of employment. TCCI's position is that the federal decision relies on economic material that reflects the buoyant nature of the national economy and that the $12 and $10 increases awarded represent an affordable increase in light of the state of the national economy.

The Tasmanian Industrial Commission is not required to assess the national economy or to determine an affordable wage increase on the basis of national economic data. Rather, the Commission's responsibility is to weigh the economic material before it for the purpose of assessing the nature of the Tasmanian economy and to determine from that material what increase, if any, is affordable. Such an approach, which is mandated by Section 36 of the Act, will inevitably lead this Commission to reach a different decision from that determined by the Australian Commission in the April 1999 safety net review. This position is clearly very different from that of 1985 when, unlike the present, Tasmania's economy, according to Budget Paper No 1, "closely tracked that of the Australian economy".87

The TTLC argues that because the Tasmanian economy forms part of the national economy the State economy was subject to the scrutiny of the federal Commission. However, the fact is that the federal Commission is only required to have regard to the national economy. In doing so it is not realistic for that Commission to have regard to the economic circumstances that exist in individual States and within individual sectors or industries. In that context the public interest test that the federal Commission must apply is a different test and a different consideration from that which the Tasmanian Commission must apply, which is solely the Tasmanian economy.

TCCI does not say that this Commission should lightly dismiss the federal safety net decision. Obviously, it is a decision of considerable weight and one for which the Commission will have due regard. What TCCI does say is that the Commission is required to reach its own conclusions in accordance with the statutory jurisdiction within which it operates. It would be inappropriate to simply adopt another tribunal's decision without first examining the circumstances that gave rise to that decision and considering whether or not those same circumstances exist in Tasmania.

The Commission must also have regard to the existing Wage Fixing Principles in the execution of its functions when considering the TTLC's application. In the context of that application the relevant Principles are Principle 6 - The Award Safety Net and Principle 16 - Award Review Process.

Principle 6, in part, prescribes that:

"The award safety net may on application be reviewed and adjusted from time to time to ensure its relevance. Generally the detailed nature and timing of any adjustments will be determined in the context of specific applications and in light of the prevailing economic, social and industrial circumstances."

The current TTLC application is one that falls within the scope of Principle 6. No industrial circumstances surround that application. However, in the course of looking at a revision of safety net wages in private sector awards, the Commission must consider the dual and conflicting issues of social and economic circumstances that affect the application.

Paragraph 3 of Principle 16 prescribes that:

"At the time of an application for any future arbitrated safety net adjustment (however described) the Commission must take account of the extent to which the parties have actively pursued the award review process."

This Principle clearly restricts the Commission to an award-by-award approach to any proposed safety net adjustments. The Principle requires such an approach if the Commission is to take account of the extent to which award parties have actively pursued the award review process.

The parties considered this Principle at some length during the 1998 State Wage Case proceedings and constructed its wording as part of the package outcome of that case. The Principle was clearly intended to apply to the current proceedings. In the circumstances, the Commission should not relax this requirement or interfere with it otherwise than by consent of the parties-in other words, it must apply the Principle as written and originally agreed between the parties and endorsed by the Commission. It follows, therefore, that because the applicant did not seek to amend Principle 16, it is not open to the Commission to grant the TTLC's application on an across-the-board basis.

In saying this TCCI does not assert that the relevant employees cannot access a wage increase-which might be equal to or even greater than the safety net adjustment-by means of enterprise bargaining. In 1985, however, when TCCI consented to the TTLC's application it did so because at that time the alternative of enterprise bargaining was not available. Consequently, a refusal to accept the wage movement would have effectively denied the increase to employees for all time.

Having regard to the economic evidence and the Commission's statutory duty to take account of the public interest pursuant to Section 36 of the Act TCCI submits that the only reasonable and technically correct decision the Commission can make in all the circumstances is to refrain from granting any increase in wages as a result of the current application. It is very apparent that the State's economy cannot stand an increase of the magnitude claimed by the TTLC. In TCCI's view Tasmania's economic performance is so poor as to warrant unusual and unpalatable measures. It is for that reason that TCCI largely rejects the TTLC's application. That said, however, TCCI does support the proposed amendment of the Incapacity to Pay Principle.

If, contrary to TCCI's submissions, the Commission should be of a mind to grant any increase at all, it should be no more than the 1.4 per cent forecast for wages growth as forecast by the government in Budget Paper No 1. Any amount in excess of that quantum will act to undermine the modest growth estimates advanced by Treasury in the State budget. In those circumstances TCCI suggests that the increase should be capped at $6.50 per week for each classification up to and including the base tradesperson's rate. Furthermore, any such increase should only be available on an award-by-award basis, consistently with Principle 16, and delayed for a significant period. An acceptable date would be 1 January 2000.

The operative date of 14 October 1998 for the second component of the 1998 safety net adjustment was specifically set to ameliorate the economic impact of that adjustment. Had that arrangement not been part of the package TCCI would not have agreed to the TTLC's claim. Economic conditions have continued to decline since the 1998 increases. Consequently an even more economically responsible approach is now required if further damage to the economy is to be avoided.

4. Decision

Synopsis of Arguments Opposing the Application

Those who opposed the application (TCCI and certain other employer organisations whom it represented) asserted, relying on economic evidence, that we should not grant a flow-on of the 1999 federal safety net adjustment of $12.00 or $10.00 per week because increases of that magnitude:

(a)   would adversely affect Tasmania's economy which, unlike the Australian economy, is performing so poorly that it has no capacity to warrant a safety net adjustment;

(b)   are contrary to the Wage Fixing Principles in that they inhibit the incentive for employees to pursue enterprise bargaining;

(c)   are not sustainable in the long term without attention to productivity measures, ie employee contributions to changed work practices or other efficiency initiatives in the enterprises that employ them; and

(d)   would impact adversely on employment by adding to the likelihood of a fall in employment numbers or increasing insolvencies in an environment where the option of increasing selling prices does not exist.

In support of those contentions, arguing that this Commission is not simply a rubber stamp of its federal counterpart, TCCI relied primarily on the Commission's duty to satisfy itself that such an increase would be consistent with the public interest having regard to, especially, Section 36(2)(b) of the Industrial Relations Act 1984, ie:

"... the economy of Tasmania and the likely effect of the proposed award ... on the economy of Tasmania with particular reference to the level of employment."

Synopsis of Arguments Supporting the Application

Those who supported the application (TTLC and the Tasmanian Government) asserted, relying on equity grounds, that we should grant a flow-on of the 1999 federal safety net adjustment because:

(a)   Tasmania's economic position was before the federal Commission in the context of that Commission's consideration of regional and sectoral variations in relation to the national economy;

(b)   on no previous occasion since this Commission's introduction of the current regime of Wage Fixing Principles in 1985 has the Commission declined to flow-on the quantum of wage increases awarded by federal National Wage Case or Safety Net Adjustment decisions;

(c)   it would be wrong in terms of consistency, comity, equity and equal treatment for all Tasmanian workers to refuse to flow-on the federal decision in circumstances where (i) State awards cover less than 37 percent-perhaps as few as 25 percent-of award covered workers in Tasmania and (ii) there has been no employer objection to flow-on of the increases in federal awards that apply in Tasmania;

(d)   the whole point of the safety net adjustment concept is to underpin the enterprise bargaining environment by providing a minimum set of conditions to protect employees who are vulnerable because they do not have the power to access or to compel enterprise bargaining outcomes;

(e)   if the Commission were to refuse to flow-on the federal decision it would effectively discriminate against, marginalise and treat unjustly the very employees who most need the Commission's protection;

(f)   there is no evidence before the Commission that supports the employers' assertion regarding the likelihood of job losses should the Commission decide to flow-on the federal decision;

(g)   in taking into account the public interest, the Commission should consider the needs of the low paid, pursuant to Section 36(2)(c) of the Industrial Relations Act 1984; and

(h)   the current Economic Incapacity Principle-Principle 17-enables employers or groups of employers to apply to the Commission to reduce or postpone increases in labour costs on the grounds of very serious or extreme economic adversity.

Considerations

There are two primary contentions involved in the submissions put to us: an economic argument and an equity argument. We begin with the economic argument. In the first place we note that, in broad terms, there is no significant distinction to be drawn between the position of each of the parties regarding the state of the Tasmanian economy. The Tasmanian Government did not attempt to hide that situation from either the federal Commission or from us. In that regard the government openly stated:88

"On any given economic measure, the Tasmanian economy has performed poorly against all other States and consequently, the nation as a whole. Tasmania's economic circumstances have prolonged for over six years, despite the positive performance of the rest of Australia in the same period. The Tasmanian unemployment rate is the nation's highest, and the State is ranked last against other States in State Final Demand, Participation Rate, retail sales, Private Fixed Capital Formation and Average Weekly Ordinary Time Earnings.

It is these economic facts listed above that means the Commission's decision in relation to the Living Wage Case will be more difficult for Tasmania than in other States. However, it is the Tasmanian Government's view that none of the structural reasons behind Tasmanian relative economic decline relate to movements in wages and therefore believe on equity a beneficent outcome should be supported."

The above statement, in our opinion, accurately encapsulates one view of the economic evidence put to us in detail by TCCI. Simply expressed, the government, having acknowledged the under-performing nature of Tasmania's economy, then went on to put an equity argument to the federal Commission and to us-one which we will shortly consider. In terms of the economic argument, however, the government stipulated that, in its view, "none of the structural reasons behind Tasmanian relative economic decline relate to movements in wages".

TCCI's view of the economic data is different from that of the government. That is to say, perhaps over-briefly, that the Tasmanian economy cannot afford a safety net adjustment of the quantum determined by the federal Commission and that, should this Commission award a flow-on of similar amounts in the absence of productivity measures, further unemployment is likely to result.

Clearly, in the course of discharging our statutory duty pursuant to Section 36 of the Act in relation to the current application we must weigh these competing views. In the first place we observe that TCCI did not, on this occasion, speak for all Tasmanian industry sectors, employers or employer groups. The Australian Mines and Metals Association, in a brief written submission, did not support TCCI's economic argument but simply said that "the application ... has little or no impact on AMMA members".89 The Tasmanian Farmers and Graziers Employers' Association, for its part, withdrew from the proceedings without making a submission at all. We conclude therefore that the submissions put to us by TCCI represented the views of simply a sector of the business community in Tasmania.

The Tasmanian Government on the other hand and in our opinion, being mandated to do so by reason of its election to office, spoke about the whole Tasmanian economy, including the individual sectoral interests that comprise that economy. The government, again by reason of its election to office, is also responsible to the electors for the performance of the State's economy. That is not a level of responsibility that falls upon TCCI or the business interests that it represents.

In weighing the competing views put to us regarding the Tasmanian economy and assessing the likely effects on that economy of a flow-on of the federal safety net adjustment, we must apply judgment, as did the federal Commission itself in "assessing the possible economic effects of safety net adjustments".90 In the circumstances, in considering "the economy of Tasmania and the likely effect of the proposed agreement on the economy of Tasmania with particular reference to the level of employment" pursuant to Section 36 of the Industrial Relations Act 1984 we believe it is open to us, on the evidence and for reasons discussed above, to prefer the views expressed by the Tasmanian Government over those expressed by TCCI.

It remains for us, at this point, to mention the brief submission put to us by TCCI that, in accordance with Principle 6 - The Award Safety Net, we must determine this matter "in light of the prevailing economic, social and industrial circumstances". We accept TCCI's assertion that there are no industrial circumstances to consider. In terms of economic circumstances we accept the government's submissions, for reasons discussed above. In doing so, we conclude on that basis that, having regard to the Tasmanian economy, there are no grounds on that issue alone for refusing to grant a flow-on of the April 1999 federal safety net adjustment to the 25 per cent (or a little more) of Tasmanian employees who are covered by the TTLC's application. By way of explanation, we point out that employers covered by federal awards, enterprise agreements, industrial agreements, Australian Workplace Agreements, Tasmanian public sector employees and award-free employees are not included in the current application. We now turn to consider the equity argument which, of course, arguably includes social circumstances.

Like issues of public interest, the Commission's obligation to "act according to equity, good conscience, and the merits of the case ..." is also a statutory duty.91 The Act does not assign a meaning to equity which, as an abstract concept, is notorious for meaning all things to all people. Mr Abey recognised as much when, in responding to an observation from the Bench-what views did TCCI have regarding the equity argument that the Tasmanian Government presented to the federal Commission-he asked the rhetorical question: What do we mean by equity?92 In answering his own question (or ours) in the context of the fact that these proceedings cover only a minority of Tasmanian employees, Mr Abey focussed in the main on issues that we would see as reflecting the now discarded notion of comparative wage justice.

In our view the meaning of equity, as an expression of fairness, is not a matter of subjective judgment by reference to abstract principles-whether they be of broad or narrow application. Rather, we believe, the concept must derive its meaning from an objective appreciation of all the surrounding facts and circumstances of each particular case.

What then, as we see them, are the equity issues involved in the current proceedings? In the first place, it is clear that neither TCCI nor those organisations that it represents put an economic incapacity argument to the federal Commission in relation to Tasmania during the course of its 1999 Safety Net Review proceedings. So much appears plainly from the candid admission of Mr Edwards who, when asked the question by this Bench, said that:93

"The detailed material upon which I will rely in proceedings before this Commission were not, as I understand it, before the Australian Commission. The TCCI instructed the Australian Chamber of Commerce and Industry, in the creation and making of its submissions which the Commission would no doubt have noted in its reading of the AIRC decision, put a proposition that the increases were not economically sensible-the ones being sought-and in fact argued for a deferral of the national adjustment. In that context the submissions of ACCI apply equally to Tasmania as they do elsewhere in Australia and we, I suppose, in that regard are as guilty as most others, and that is that we didn't put detailed economic material to the AIRC on which they [might have been] able to gauge the situation in the State of Tasmania."

The uncontested assumption before us is that awards of the federal Commission cover a substantial majority-within the range of 63-75 per cent-of Tasmanian employees. The evidence before us suggests that in none of the federal Commission's awards that apply in Tasmania, and which have been varied to date to incorporate the safety net adjustment, have the employers opposed such wage increases. It surprises us therefore that, in those circumstances, TCCI should now oppose a flow-on of the safety net adjustment to State private sector awards, that cover a minority of Tasmanian employees, on the basis of detailed submissions that (a) it did not put to the federal Commission in the first place and (b) has not put in any of the federal award hearings to date, when it relevantly might have done so.

Second, TCCI pressed upon us the strong view that, in effect, there should be no wage increases that are not related to productivity and efficiency improvements-to do otherwise is to inhibit the incentive of employees to engage in enterprise bargaining. In our opinion a proposal of that nature strikes at the very heart of the enterprise bargaining approach to wage fixation that currently exists nationally by broad consensus. In short, it is a proposal that, if successful, would remove the floor of minimum wage levels that, by acting to protect those employees who do not have access to enterprise bargaining, including the low paid, underpins the enterprise bargaining structure.

In our opinion, recalling the words of the 1985 State Wage Case Full Bench, it is "in the public interest for the Principles to operate on a uniform basis throughout the various areas of jurisdiction".94 In such circumstances, a proposition as significant as that now advanced by TCCI should be, as a matter of public interest, initially the subject of debate at a national level rather than at the level of a single State. There was, however, no suggestion from TCCI that it had put such a case to the federal Commission.

On this issue also it seems to us that TCCI opposes a flow-on of the safety net adjustment to a minority of Tasmanian employees on the basis of a submission that, while it was relevant and pertinent to do so (a) it did not put to the federal Commission in the first place and (b) has not put in any of the federal award hearings to date.

Both the above issues, in our judgment, raise the same question of equity. It was open to TCCI to relevantly raise each matter in the federal Commission-whose awards cover the substantial majority of Tasmanian employees-during the course of the April 1999 Safety Net Review case. For reasons not explained to us, however, the organisation elected not to follow that course of action. Instead it opted to promote those issues in the State industrial jurisdiction whose awards, as we have already mentioned, only cover a minority of employees.

In our view such an approach lacks equity because it appears to discriminate against State award covered employees solely for that reason rather than any reason of merit. In every other respect TCCI's submissions appear to us to have equal application and relevance to all Tasmanian employees, whether covered by federal or State awards. In the circumstances, having regard to our earlier conclusion in respect of the economic argument, we believe the applicant's equity argument should succeed.

Having considered the parties' submissions, including the needs of the low paid pursuant to Section 36(2)(c) of the Act-no party disputed the appropriateness of this provision for that purpose-we are satisfied that, concerning Section 36 of the Act, the award variations proposed by the applicant are consistent with the public interest for reasons discussed above. We have also taken into account the Commission's duty to act according to equity, good conscience, and the merits of the case. In view of these findings we have decided to vary all wage rates in private sector minimum rates and paid rates awards-including junior, apprentice and trainee rates (on a proportionate basis) and the minimum wage-to include safety net adjustments of the following amounts:

1.   A $12.00 per week increase in award rates up to and including $510 per week; and

2.   A $10.00 per week increase in award rates above $510 per week.

We will also increase existing allowances relating to work or conditions in accordance with Principle 10.1.2. Using the formula specified in that Principle, we calculate the increase to be 2.58 per cent.

Concerning the methodology that we should adopt for the purpose of incorporating the above increases into the Commission's awards, the applicant took the view that we should follow past practice by varying all awards from a common operative date, ie, 14 July 1999. The relevance of this particular date is that it represents a period of exactly 12 months since the first instalment of the 1998 safety net adjustment.

Both the Tasmanian Government and TCCI, however, submitted that the Commission should adopt an award-by-award approach. The Government submitted that the datum point for calculating the period of 12 months' gap between the 1998 and 1999 safety net increases should be 14 July 1999. TCCI, however, submitted that if, contrary to its submissions that there should be no increase at all, the Commission should decide to award an increase then it should not exceed the equivalent of 1.4 per cent (the amount of wages growth forecast for 1999-00 in Budget Paper No 1)95 or an amount capped at $6.50 per week. Furthermore, because of the economic circumstances, the increase should not take effect before 1 January 2000. In the alternative, any such increase should not become operative before 14 October 1999, that being the date of the second instalment of the 1998 safety net increase.

The question of operative date aside for the moment, TCCI contended that Principle 16 - Award Review Process, in particular Principle 16.3, restricted the Commission to an award-by-award approach in determining the application of safety net adjustments. That Principle contains a direction to the Commission in the following terms:

"... at the time of an application for any future arbitrated safety net adjustment (however described) the Commission must take account of the extent to which the parties to the award have actively pursued the award review process."

This provision, TCCI contended, arose out of the 1998 State Wage Case consent settlement and comprised a significant element of that package. In the circumstances, in the absence of any application to amend the Principle, the Commission should not relax that requirement other than by consent of the parties. Consequently, an "across-the-board" approach is not available to the Commission on this occasion.

In terms of that Principle, the current proceedings clearly comprise "an application for any future arbitrated safety net adjustment (however described)." "At the time" of that application, which means, in our view, in the current proceedings, "the Commission must take account of the extent to which the parties to the award have actively pursued the award review process." TCCI's submission clearly relies on the word "award" being singular rather than plural as in "awards". We do not believe the public interest is best served by this Bench taking such a narrow and pedantic approach to the application of Principle 16.3.

In our view, the proper and most efficacious resolution of the industrial disputes that comprise these proceedings requires us, in the public interest, to consider Principle 16.3 in the context of the current application. We do not see that such an approach is inconsistent with the sentiments expressed in the Principle.

No party gave us the benefit of any extended submissions regarding this issue. However, because the Commission took the lead in facilitating the award review process, the progress to date is a matter of the Commission's own knowledge. Each Member of the Commission convened several conferences of private sector award parties within their respective areas of responsibility. Registered organisations of employers and employees alike actively contributed to that process. In addition, the President convened a number of conferences of interested parties for the purpose of establishing a consistent award format and for examining the feasibility of standardising a number of clauses that are common to all awards. That is a continuing process.

While we believe the process of reviewing awards has been slower than we would have expected, there are reasons for the delay which we accept. In all the circumstances we are satisfied with the progress the parties have made towards fulfilling the requirements of the award review process. Accordingly, we believe there is nothing in the parties' actions in that regard that provides sufficient grounds upon which we might form the conclusion that we should refuse to grant the application now before us.

Returning to the question of a common operative date or an award-by-award approach we believe that the delay required to implement our decision on the basis of an award-by-award approach is, in all the circumstances of this case, contrary to the public interest. We believe such an approach would tend to frustrate and militate against the proper and efficacious settlement of the industrial dispute that comprises the application now under consideration.

Because of the view we have taken regarding the economic arguments we believe there are no grounds for awarding the operative date of 1 January 2000, for which TCCI contended. As for TCCI's least preferred option of 14 October 1999, we note that Ms Fitzgerald relied on the parties' statements and explanations on the occasion of the 1998 State Wage Case.

In that matter Ms Fitzgerald, for TTLC, is reported as saying that "Both ourselves and the employers are [quite] clear that for the purposes of any future arbitrated safety net adjustment, the operative date would be 14 July".96 Mr Edwards' response, for TCCI, was that "We therefore would indicate formally on the record that we do offer our consent to the agreement ... We will indicate formally that ... the agreement reached does not create a precedent".97 Ms Fitzgerald's submission on this point was that "The TCCI did not contradict the TTLC regarding the operative date for future safety net adjustments ...".98 However, it is not clear to us that Mr Edwards' comments represent an unambiguous acceptance by TCCI of TTLC's understanding of their agreement. Indeed, it is at least arguable that the words "the agreement reached does not create a precedent" indicate a contrary view. Accordingly, we do not rely on those statements in coming to a decision on this issue.

After perusing in context the remarks made at the time by both Ms Fitzgerald and Mr Edwards, it seems clear enough to us that the general intention of TTLC and TCCI was that the 1998 State Wage Case agreement constituted a "one-off" arrangement that did not create a future precedent for or against either organisation. In the circumstances, having regard to the view we take of the economic arguments, we see no reason to depart from the 14 July 1998-which both TTLC and the Tasmanian Government argue is the relevant date-as being the datum point from which the 12 months' period between the 1998 and 1999 safety net increases should commence to run.

Accordingly we have decided to implement the safety net adjustment increases by means of a common operative date; that is to say, on and from the beginning of the first full pay period to commence on or after 1 August 1999. This operative date, however, will only be available in circumstances where:

  • existing wage rates in awards have been varied to include the arbitrated safety net adjustment arising out of the July 1998 State Wage Case; and
  • a period of at least 12 months has elapsed since the wage rates in the award were increased to reflect the first instalment of the safety net adjustment arising out of the July 1998 State Wage Case.

In circumstances where an award does not meet the above requirements it may be varied, subject to a separate application to that effect, to incorporate the arbitrated safety net adjustment. However, the operative date of any such adjustment will be determined by the Commission on the basis of the parties' submissions.

We have amended the current Wage Fixing Principles to reflect the above decisions. The changes we have made are set out in bold type in the attached Principles other than in the case of existing Principle 9.5, which we removed because its effect is exhausted. We also point out that, because no party objected to the amendment, we have varied Principle 17 to include the words added by the federal Commission to its Economic Incapacity Principle.

In due course, Members of the Commission will issue orders giving effect to this decision in their respective areas of responsibility.

 

B R Johnson
DEPUTY PRESIDENT

Appearances:
Ms L Fitzgerald for the Tasmanian Trades and Labor Council.
Ms P Shelley for the Australian Liquor, Hospitality and Miscellaneous Workers Union - Tasmanian Branch.
Mr J Long for the Construction, Forestry, Mining and Energy Union, Tasmanian Branch.
Mr I Paterson for the Australian Municipal, Administrative, Clerical and Services Union.
Mr C Brown for the Health Services Union of Australia, Tasmania No 1 Branch.
Mr G Cooper for the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union.
Mr D Elliott for the Australian Education Union, Tasmanian Branch.
Mr P Noonan for the Shop, Distributive and Allied Employees Association, Tasmanian Branch.
Mr R Clegg for The Community and Public Sector Union (State Public Services Federation Tasmania}.
Mr T J Edwards, Mr R L Brown and Mr T J Abey for the Tasmanian Chamber of Commerce and Industry Limited, the National Meat Association of Australia (Tasmanian Division), The Registered Clubs of Tasmania Co-operative Society Limited, the Tasmanian Chamber of Retailers and the Tasmanian Newsagents Association Limited.
Mr W J Fitzgerald for the Australian Mines and Metals Association (Incorporated).
Mr K J Rice for the Tasmanian Farmers and Graziers Employers Association.
Mr C Willingham for the Minister for Justice and Industrial Relations pursuant to Section 27 of the Act and the Minister Administering the Tasmanian State Service Act 1984.

Date and place of hearing:
1999
June 30 (T8413 only)
July 5
Hobart

TASMANIAN INDUSTRIAL COMMISSION

REVIEW OF WAGE FIXING PRINCIPLES 1999

THE PRINCIPLES

1.  INTRODUCTION

This Statement of Principles to be observed in the jurisdiction of the Tasmanian Industrial Commission has been developed to encourage enterprise bargaining, and the development of equitable and workable enterprise bargaining relationships between employers, employees and their unions.

The process of enterprise bargaining is conducted within the framework of an award system which provides a safety net of secure, relevant and consistent wages and conditions of employment.

The award system provides a safety net of wages and conditions which underpins enterprise bargaining and protects employees who may be unable to reach an enterprise agreement while maintaining an incentive to bargain for such an agreement.

The Principles are also designed to ensure that the structural efficiency process continues to apply to awards of the Tasmanian Industrial Commission and that the award review process is effectively implemented.

2.  STRUCTURAL EFFICIENCY

Consistent with the September 1988; October 1989; August 1991; February 1992; December 1993, December 1994, July 1996, July 1997 and July 1998 State Wage Case decisions, the structural efficiency principle provides a framework through which it is intended that the parties to an award should co-operate positively in a continuing review of that award with a view to implementing measures to improve the efficiency of industry and enterprises and provide employees with access to more varied, fulfilling and better paid jobs. The measures should include but not be limited to:

  • establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;
  • eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;
  • creating appropriate relativities between different categories of workers within the award and at enterprise level;
  • ensuring that working patterns and arrangements enhance flexibility and the efficiency of industry and enterprises;
  • including properly fixed minimum rates for classifications in awards, consistent with the Form of Orders Principle, related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments;
  • updating and/or rationalising the list of parties to awards;
  • addressing any cases where award provisions discriminate against sections of the workforce;
  • examining both award and non-award matters to test whether work classifications and basic work patterns and arrangements are appropriate - the examination to include specific consideration of:

    (i)   the contract of employment including the employment of casual, part-time, temporary, fixed term and seasonal employees;

    (ii)   the arrangement of working hours;

    (iii)   the scope and incidence of the award;

  • inserting facilitative provisions in relevant clauses of the award;

  • establishing a consultative mechanism and procedures appropriate to their size, structure and needs for consultation and negotiation on matters affecting their efficiency and productivity;

  • providing in awards, in order to ensure increased efficiency and productivity at the enterprise level, while not limiting the rights of either an employer or union to arbitration, a process whereby consideration can be given to changes in award provisions; any agreement reached under this process would have to be formally ratified by the Commission and any disputed areas should be subject to conciliation and/or arbitration; and

  • providing in an award a provision to the effect that an employer may direct an employee to carry out such duties as are within the limits of the employee's skill, competence and training.

Structural efficiency exercises should incorporate all past work value considerations.

3.  ENTERPRISE BARGAINING

3.1 When approving enterprise bargaining agreements, the Commission will have regard for the primary consideration that such agreements should be formalised as Section 55 registered industrial agreements. Parties who wish to pursue a different approach in a particular circumstance will be required to satisfy the Commission to that effect on the basis of the circumstances of the particular enterprise or enterprises involved.

3.2 A Section 55 agreement or enterprise award may be made or adjusted to reflect an enterprise bargaining agreement between parties, subject to the following:

3.2.1 the proposed enterprise bargaining agreement is consistent with the continuing implementation at enterprise level of the structural efficiency principle (ie ensuring existing structures are relevant to modern competitive requirements of industry and are in the best interests of both employers and employees), including the consideration of a broad agenda.

3.2.2 any wage rates contained in the proposed enterprise bargaining agreement [apart from rates that may be approved on the basis of other principles] which exceed the appropriate rates set in accordance with the minimum rates adjustment principle or prescribed in an existing paid rates award, must be based on the actual implementation of agreed efficiency measures designed to promote productivity and efficiency.

3.2.3 the enterprise bargaining agreement has been negotiated through a single bargaining unit in an enterprise or section of an enterprise. In the case of a single bargaining unit in a section of an enterprise, the parties must demonstrate that the section is discrete: the fact that it is being treated separately from other sections of the enterprise must not restrict the implementation of the structural efficiency principle and enterprise bargaining in that establishment, or other sections of the enterprise;

3.2.4 where the proposed award or agreement will operate in conjunction with another award or agreement or other awards or agreements, it details the wage increases involved for each classification;

3.2.5 where the proposed award or agreement is not to operate in conjunction with another award or agreement, then the award or agreement should specify the classification in the relevant minimum rates award on which the actual rate prescribed for the key classification in the new agreement or new award is calculated. It should also contain a procedure for re-negotiation of the award or agreement at the expiry of its term;

3.2.6 the proposed award or agreement does not result in a reduction in ordinary time earnings, or departure from parental leave standards determined in test case proceedings and Commission standards of hours of work and annual leave with pay. A proposed award or agreement shall not in any way limit or forego the rights of employers and employees to make application and have determined by the Commission any matter in respect to termination, change and redundancy.

3.2.7 where parties to an enterprise bargaining agreement reached through negotiations with a single bargaining unit include employees within the jurisdiction of the Australian Industrial Relations Commission, an agreement covering those employees is submitted for approval through the processes provided under that jurisdiction.

4.  ROLE OF THE COMMISSION IN ENTERPRISE BARGAINING

The Commission will continue to play an active role in encouraging and facilitating the parties in the pursuit of enterprise specific outcomes through enterprise bargaining.

4.1 The Commission, on application by a party which could be by way of Section 29, will undertake a conciliation and/or facilitation role to assist the parties in reaching agreement.

4.2 Section 61 of the Act [Private Arbitration] may be utilised by the parties where needed, to conclude an agreement.

4.3 Failing agreement to private arbitration in accordance with Section 61, or should a party wish to pursue an enterprise award or variation to an existing award, the relevant provisions of the Act may be pursued.

4.4 When approving an enterprise bargaining agreement which is to be reflected in a Section 55 agreement or enterprise award, the Commission will ensure that the Section 55 agreement or enterprise award, taken as a whole, will not disadvantage the employees concerned.

5.  MINIMUM RATES ADJUSTMENT

Minimum rates adjustment for minimum rates awards in accordance with the October 1989 and August 1991 State Wage Case decisions shall continue to be allowable and shall be in accordance with the following:

5.1 the appropriate adjustments in any award will be applied in no less than four instalments which will become payable at six monthly intervals provided in appropriate cases longer or shorter phasing-in arrangements may be approved or awarded and/or parties may agree that part of a supplementary payment should be based on service;

5.2 the second and subsequent instalments of these adjustments will not be automatic and an application to vary the relevant award will be necessary; and shall take into account those matters referred to in Principle 7 - Previous State Wage Increases.

5.3 supplementary payments may be prescribed in the wages clause of awards.

6.  THE AWARD SAFETY NET

Existing wages and conditions in the relevant award or awards of the Commission shall be the safety net underpinning enterprise bargaining.

The award safety net may, on application be reviewed and adjusted from time to time to ensure its relevance. Generally the detailed nature and timing of any adjustments will be determined in the context of specific applications and in the light of prevailing economic, social and industrial circumstances.

7.  PREVIOUS STATE WAGE CASE INCREASES

7.1 Increases available under previous State Wage Case decisions such as structural efficiency increases, minimum rates adjustments and the three previous $8 arbitrated safety net adjustments will on application continue to be accessible.

7.2 The spacing of increases to awards by the minimum rates adjustment process or the structural efficiency process in accordance with Principle 7.1 shall be determined by agreement between the parties to any particular Award or failing agreement by decision of the Commission.

7.3 The application of any outstanding safety net adjustments into an Award in accordance with Principle 7.1 will be available by application on or after 1 September 1998. In respect to an application seeking to vary an Award by more than one arbitrated safety net adjustment the spacing of those increases shall be determined by agreement between the parties to the Award or failing agreement by decision of the Commission.

8.  ARBITRATED SAFETY NET ADJUSTMENTS

8.1 All wage rates in private sector minimum rates and paid rates awards, including junior, apprentice and trainee rates (on a proportionate basis) will be varied to include arbitrated safety net adjustments in accordance with the following schedule, on and from beginning of the first full pay period to commence on or after 1 August 1999:

Weekly Award Wage Rate

Safety Net Adjustment

Up to and including $510 per week

$12.00 p.w.

Above $510 per week

$10.00 p.w.

This operative date, however, will only be available in circumstances where:

  • existing wage rates in awards have been varied to include the arbitrated safety net adjustment arising out of the July 1998 State Wage Case; and
  • a period of at least 12 months has elapsed since the wage rates in the award were increased to reflect the first instalment of the safety net adjustment arising out of the July 1998 State Wage Case.

In circumstances where an award does not meet the above requirements it may be varied, subject to a separate application to that effect, to incorporate the arbitrated safety net adjustment. However, the operative date of any such adjustment will be determined by the Commission on the basis of the parties' submissions.

8.2 The amount of the arbitrated safety net adjustment is to be reduced to the extent of any over award payment currently being paid by an employer.

8.3 In the event of a public sector award not having been varied to incorporate increases from enterprise bargaining, application may be made to incorporate safety net adjustments.

8.4 The safety net adjustment will only be available where the rates in the award have not been increased, other than by safety net adjustments, or as a result of the application of the Minimum Rates Adjustment or Work Value Changes Principles, since November 1991.

9.  FORM OF ORDERS

9.1 Arbitrated safety net adjustments shall be shown as a separate amount against each classification in the award.

9.2 Where the minimum rates adjustment process has been completed in a minimum rates award or in a paid rates award the Commission may on application determine to combine the base rate and supplementary payment into an award rate. The arbitrated safety net shall continue to be expressed as a separate amount to protect the integrity of the relativities established in the structural efficiency process.

9.3 Where the minimum rates adjustment process has not been completed, the safety net adjustment may be taken into account in determining the size and phasing in of a minimum rates adjustment.

9.4 By consent of all parties to an award, where the minimum rates adjustment process has been completed, the weekly award rates may be expressed as hourly rates as well as weekly rates. In the absence of consent, a claim that award rates be so expressed may be determined by arbitration.

10.  ALLOWANCES

10.1  Existing Allowances

10.1.1 Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect the relevant changes in the level of such expenses.

10.1.2 In circumstances where the Commission has determined that it is appropriate to adjust existing allowances relating to work or conditions which have not changed and service increments for a monetary safety net increase, such allowances and service increments shall be increased by a percentage derived as follows: divide the monetary safety net increase by the weekly wage rate for Level 7 - Metal and Engineering Industry Award immediately prior to the application of the safety net increase to the award and multiply by 100.

10.1.3 Increases to existing allowances as a result of the July 1999 State Wage Case shall be applied in one instalment from the first full pay period commencing on or after 1 August 1999 equal to the percentage computed by the method outlined in Principle 10.1.2 for the total safety net adjustment.

10.1.4 Existing allowances for which an increase is claimed because of changes in the work or conditions will be determined in accordance with the relevant provisions of the work value changes principle.

10.2  New Allowances

10.2.1 New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses.

10.2.2 No other new allowances shall be created unless changes in work have occurred or new work or conditions have arisen; where changes have occurred or new work or conditions have arisen, the question of a new allowance, if any, shall be determined in accordance with the relevant principle.

The relevant principle in this context may be work value changes or first awards and extensions to existing awards principle.

10.2.3 New service increments may only be awarded to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant parts of the work value changes provisions of this Statement of Principles.

11.  SUPERANNUATION

11.1 Agreements may be approved or consent awards made providing for employer contributions to approved superannuation schemes for employees covered by such agreements or consent awards provided those agreements or consent awards:

11.1.1 operate from a date determined or approved by the Commission; and

11.1.2 are consistent with the provisions of the Industrial Relations Act 1984 and the September 1994 AIRC Superannuation Test Case decision [Print L5100].

11.2 Where, following a claim for employer contributions to approved superannuation schemes for employees, the parties are unable to negotiate an agreement consistent with this principle, and conciliation proceedings before the Commission have also failed to achieve such an agreement, the Commission shall, subject to the provisions of the Industrial Relations Act 1984, arbitrate on that claim.

11.3 The Commission will not grant retrospective operation for any matters determined in accordance with this principle.

11.4 For the purpose of this principle, approved superannuation scheme means a scheme approved in accordance with the Commonwealth Operational Standards for Occupational Superannuation Funds.

12.  WORK VALUE CHANGES

12.1 Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification.

These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle.

12.2 Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole.

12.3 The time from which work value changes in an award should be measured is, unless extraordinary circumstances can be demonstrated in special case proceedings, the date of operation of the second structural efficiency adjustment allowable under the 30 October 1989 State Wage Case decision, or the date of any increase awarded in accordance with this principle since that date.

12.4 Care should be exercised to ensure that changes which were or should have been taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this principle.

12.5 Where a significant net alteration to work value has been established in accordance with the principle, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment should normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work. However the Commission will also take account of the relativities and the integrity of the internal award classification structures and the external classifications to which that structure is related.

12.6 The expression "the conditions under which work is performed" relates to the environment in which the work is done.

12.7 The Commission should guard against contrived classifications and overclassification of jobs.

12.8 Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle, shall not be taken into account in any claim under this principle.

13.  MAKING AND VARYING AN AWARD ABOVE OR BELOW THE SAFETY NET

An application to make or vary a minimum or paid rates award for wages and/or conditions above or below the award safety net shall be referred to the President for consideration as a special case. A party seeking a special case must make an application supported by material justifying the matter being dealt with as a special case. It will then be for the President to decide whether it is to be dealt with by a Full Bench and whether or not it constitutes a special case. Exceptions to this process are applications which fall within the provisions in the Enterprise Bargaining and First Award and Extension to an Existing Award Principles.

In considering an application to make or vary a paid rates award for wages and/or conditions above or below the award safety net, the Commission will ensure that any such paid rates award sets fair and enforceable wages and conditions of employment that are maintained at a relevant level.

13.1 Considerations which may be relevant in determining such wages and/or conditions in a paid rates award are:

13.1.1 ensuring it is suited to the efficient performance of work according to the needs of the particular industries and enterprises, while employees' interests are also properly taken into account;

13.1.2 the market and the extent of restructuring and associated efficiency improvements;

13.1.3 that a range of rates may be introduced for classifications in the award;

13.1.4 skill and responsibility;

13.1.5 recruitment and retention;

13.1.6 the commitment of the parties at both state and corporate level;

13.1.7 that the rates fixed do not lead to wage adjustments elsewhere;

13.1.8 that in a review of a paid rates award applying to a single enterprise/employer or a number of enterprises/employers, consideration should be given to internal relativities, if necessary, by a process of collective review of all the paid rates awards applying only to the particular enterprise/employer or enterprises/employers. Relevant factors in such a review are the particular circumstances of the enterprise/employer or enterprises/employers, including the particular market; and

13.1.9 that reliance on nexus itself provides no justification for a paid rates adjustment.

13.2 Where the market is a consideration the following should apply:

13.2.1 in the first instance, before any steps are taken to obtain information about the market, appropriate classifications and internal relativities should exist or be set for the workplace or sector concerned on the basis of skill and responsibility;

13.2.2 market information should not be used to alter the internal relativities already set without good and sufficient reason and the onus must lie on any party seeking to alter those relativities to demonstrate good and sufficient grounds for alteration;

13.2.3 in some cases the relevant market will be the local geographical market, although in other cases national market considerations will be relevant and the market may include the public sector;

13.2.4 when using information about market rates of pay, care must be taken to ensure that the rates examined have been set for classifications which are comparable and that conditions of employment have been objectively taken into account; and

13.2.5 in obtaining information about market rates, the relevant consideration is the level of actual rates paid not the amounts of any increases in rates.

14.  FIRST AWARD AND EXTENSION TO AN EXISTING AWARD

The following shall apply to the making of a first award and an extension to an existing award:

14.1 In making a first award the long established principles shall apply. That is, prima facie the main consideration shall be the existing rates and conditions.

14.2 In the making of a first award, the other main consideration shall be that the award meets the needs of the particular industry or enterprise while ensuring that employees' interests are also properly taken into account. Structural efficiency considerations shall apply in the making of such an award.

14.3 In the extension of an existing award to new work or to award-free work the rates applicable to such work will be assessed by reference to the value of work already covered by the award, providing structural efficiency considerations, including the minimum rates adjustment provisions where relevant, have been applied to the award.

14.4 Additional matters which are to be considered when making a first paid rates award would include:

14.4.1 whether the wages and conditions of employment of the employees concerned have customarily been determined by a paid rates award;

14.4.2 whether the parties to the award are appropriate, bearing in mind that a paid rates award is most appropriately framed on the basis of limited coverage;

14.4.3 that such an award should generally cover all important aspects of the employment relationship considered appropriate for award regulation;

14.4.4 that wages and conditions of employment in a paid rates award are to be fair and enforceable and maintained at a relevant level. Considerations which may be relevant to the determination of such wages and conditions are:

14.4.4.1 ensuring it is suited to the efficient performance of work according to the needs of the particular industries and enterprises, while employees' interests are also properly taken into account.

14.4.4.2 the market and extent of restructuring and associated efficiency improvements;

14.4.4.3 that a range of rates may be introduced for classifications in the award;

14.4.4.4 skill and responsibility;

14.4.4.5 recruitment and retention;

14.4.4.6 the commitment of the parties at both state and corporate level; and

14.4.4.7 that the rates fixed do not lead to wage adjustments elsewhere.

14.4.5 that the award should specify the classification prescribed in the relevant minimum rates award on which the paid rate prescribed for the key classification in the award is calculated; and

14.4.6 the need for the parties to give a commitment that they will maintain the integrity of the paid rates award. [The Commission may convert into a minimum rates award a paid rates award which ceases to be maintained as a true paid rates award. The conversion of a lapsed paid rates award into a minimum rates award will involve the evaluation of classifications in it by comparison with similar classifications in other minimum rates awards].

14.5 Where the market is a consideration the following should apply:

14.5.1 in the first instance, before any steps are taken to obtain information about the market, appropriate classifications and internal relativities should exist or be set for the workplace or sector concerned on the basis of skill and responsibility;

14.5.2 market information should not be used to alter the internal relativities already set without good and sufficient reason and the onus must lie on any party seeking to alter those relativities to demonstrate good and sufficient grounds for alteration;

14.5.3 in some cases the relevant market will be the local geographical market, although in other cases national market considerations will be relevant and the market may include the public sector.

14.5.4 when using information about market rates of pay, care must be taken to ensure that the rates examined have been set for classifications which are comparable and that conditions of employment have been objectively taken into account; and

14.5.5 in obtaining information about market rates, the relevant consideration is the level of actual rates paid not the amounts of any increases in rates.

15.  STANDARD HOURS

In approving any application to reduce standard hours to 38 per week, the Commission should satisfy itself that the cost impact is minimised. A reduction in standard hours below 38, or an increase in standard hours up to 38, will be approved only in circumstances where the parties demonstrate their consent.

16.  AWARD REVIEW PROCESS

16.1 Consistent with the decision of the Tasmanian Industrial Commission in the July 1996 and July 1997 State Wage Cases the parties are to continue to pursue their commitment to review Awards in the context of:

(i)  consistent award formatting;

(ii)  removal of discriminatory provisions;

(iii)  removal of obsolete or amendment of inaccurate award provisions;

(iv)  updating Clause 6 - Parties and Persons Bound;

(v)  re-writing of the award in plain English;

(vi)  the appropriate use of facilitative provisions;

(vii)  the inclusion of an appropriate enterprise flexibility clause.

16.2 The Commission will convene conferences of parties to each award to receive reports on the award review process and to assist in the development of timetables including where relevant a timetable to finalise the review by conciliation and/or arbitration.

16.3 At the time of an application for any future arbitrated safety net adjustment (however described) the Commission must take account of the extent to which the parties to the Award have actively pursued the Award review process.

17.  ECONOMIC INCAPACITY

Any registered organisation subject to an award may apply on behalf of an employer or group of employers to reduce and/or postpone the application of any increase in labour costs determined under the principles on the grounds of very serious or extreme economic adversity. The merit of such application shall be determined in the light of the particular circumstances of each case and any material relating thereto shall be rigorously tested. The impact on employment at the enterprise level of the increase in labour costs is a significant factor to be taken into account in assessing the merit of any application.

It will be a matter for the President to decide whether any such application should be dealt with by a Full Bench.

 

1 TTLC Exhibit "A".
2 Transcript 30/6/99, p. 3.
3 Transcript 30/6/99, p. 5.
4 TTLC Exhibit "F".
5 Transcript 30/6/99, p. 6.
6 Supra, p. 8.
7 T8413 and T8483, transcript 5/7/99, p. 58.
8 Supra, p. 62.
9 T8413 and T8483, transcript 5/7/99, p. 62.
10 Safety Net Review Wages April 1999, Print R1999, p. 8.
11 Supra, p. 18.
12 Supra, p. 19.
13 Supra, p. 20.
14 Supra.
15 The Commonwealth, South Australia, Victoria, Western Australia, Australian Capital Territory and the Northern Territory.
16 Safety Net Review Wages April 1999, Print R1999, p. 20.
17 Supra, pp. 20-21.
18 Supra, p. 22.
19 Supra, p. 23.
20 "Making the Most of the Minimum: Statutory Minimum Wages, Employment and Poverty", OECD Employment Outlook, December 1998.
21 Safety Net Review Wages April 1999, Print R1999, p. 24.
22 Safety Net Review Wages April 1999, Print R1999, p. 17.
23 Supra, p. 18.
24 Supra, p. 14.
25 TTLC Exhibit "D".
26 TTLC Exhibit "D".
27 Safety Net Review Wages April 1999, Print R1999, p. 31.
28 Supra, p. 32.
29 Supra, pp. 32-33.
30 Safety Net Review Wages April 1999, Print R1999, p. 33.
31 Supra.
32 Supra, pp. 34-35.
33 Safety Net Review Wages April 1999, Print R1999, p. 50.
34 Supra, p. 13.
35 Budget Overview 1999-00, pp. 19-23.
36 T8413 & T8483 5/7/98, transcript pp. 70-71.
37 Budget Overview 1999-00, p. 27.
38 Gross Domestic Product.
39 Gross State Product.
40 Exhibit TCCI 1, Chart "Retail Turnover".
41 Budget Overview 1999-00, pp. 30-31.
42 Exhibit TCCI 1, Chart "Average Weekly Ordinary Time Earnings".
43 Exhibit TCCI 1, Chart "Real Average Weekly Ordinary Time Earnings".
44 Budget Overview 1999-00, p. 31.
45 Safety Net Review Wages April 1999, Print R1999, p. 14.
46 Exhibit TCCI 1, document "Analysis of the Tasmanian Labour Market since the Implementation of the 1998 State Wage Case".
47 Budget Overview 1999-00, p. 35.
48 Safety Net Review Wages April 1999, Print R1999, pp. 13 and 63.
49 Budget Overview 1999-00, p. 36.
50 Exhibit TCCI 1, Chart "Profitability".
51 Supra, Chart "Average Selling Prices".
52 Safety Net Review Wages April 1999, Print R1999, pp. 21-22.
53 T8413 & T8483, transcript 5/7/99, p. 87.
54 Budget Overview 1999-00, p. 39.
55 Exhibit TCCI 1, Chart "Business Confidence".
56 Tasmanian Survey of Business Expectations for the September Quarter 1999, p. 2.
57 Exhibit TCCI 1, Chart "Consumer Price Index".
58 Supra, Document 10.
59 Mr Abey disputed, with reference to ABS statistical data, the accuracy given by the report to Tasmania's productivity ranking (2) which he claimed should be six. While Ms Fitzgerald declined to accept the statistic as an error, we have not found it necessary to resolve the matter one way or another.
60 TCCI 1, Document 11.
61 Budget Overview 1999-00, p. 48.
62 TCCI 1, document "Economic Forecasts".
63 TCCI 1, document "Summary-Growth Rates".
64 Mr I Paterson, appearing for the Australian Municipal, Administrative, Clerical and Services Union, and Mr G Cooper, appearing for the AFMEPKIU, each presented brief submissions supporting the TTLC's application.
65 T712, T665, T691 and T675 of 1987, p. 28 and T3069 and T3166 of 1991, p. 15.
66 T96 and T99 of 1985, p. 10; T432, T435 and T440 of 1986, pp. 4 and 15; and T712, T665, T691 and T675 of 1987 of 1987, p. 11.
67 Exhibit "E", which nominated some 54 awards.
68 T432, T435 and T440 of 1986, p. 16.
69 Safety Net Review Wages April 1999, Print R1999, p. 21.
70 Supra, p. 22.
71 Budget Overview 1999-00, p. 27.
72 TTLC Exhibit "D".
73 Print R4975.
74 Mr Abey disputed these figures. He said that while the figure relied on by Mr Willingham was a rough approximation of average weekly earnings for adult males, a better figure would be the average weekly earnings of all persons, ie $548.50. Those persons, he said, would get a $12 increase or 2.2%: Transcript 5/7/99, p. 96.
75 TTLC Exhibit "D".
76 T8413 of 1999, transcript 30/6/99, pp. 35-36.
77 Print F2900.
78 Safety Net Review Wages April 1999, Print R1999, p. 44.
79 T96 and T99 of 1985, p. 19.
80 Supra, p. 10.
81 T96 and T99 of 1985, p. 10.
82 T8413 & T8483 transcript 5/7/99, p. 107.
83 Exhibit TCCI 1.
84 Safety Net Review Wages April 1999, Print R1999, p. 32.
85 Exhibit TCCI 1, Chart 7 "Survey of Business Selling Prices" (Attachment B, page 3).
86 I.29/1999 State Wage Case - May 1999.
87 Budget Overview 1999-00, p. 27.
88 TTLC Exhibit "D".
89 Above, p. 26.
90 Safety Net Review Wages April 1999, Print R1999, p. 21.
91 Section 20(1)(a), Industrial Relations Act 1984
92 T8413 & T8483 5/7/99, p. 97.
93 T8413, transcript 30/6/99, p. 50.
94 T96 and T99 of 1985, p. 19.
95 Budget Overview 1999-00, p. 48.
96 T7702 of 1998, transcript 28/5/98, p. 13.
97 Supra, p. 17.
98 T8413 & T8483, transcript 5/7/99, p. 119.