T9062
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Tasmanian Trades and Labor Council Private Sector Awards See end of decision for Orders
Wage Rates - State Wage Case July 2000 - application to vary private sector awards in a manner consistent with the Australian Industrial Relations Commission decision in Print number S5000 - 2000 Safety Net Review - Wages - Agreed Settlement - $15.00 Arbitrated Safety Net Adjustment and 3.14% increase to work related allowances - Approved REASONS FOR DECISION Application T9062 of 2000, an application by the Tasmanian Trades and Labor Council (the TTLC) pursuant to section 23 of the Industrial Relations Act 1984, was lodged with the on 22 June 2000. It sought to vary private sector awards, from a common operative date, in a manner consistent with the Australian Industrial Relations Commission (AIRC) decision in Print number S5000 Safety Net Review - Wages and as a consequence, review the Arbitrated Safety Net Principle and the Form of Orders Principle. At the commencement of the hearing on 24 July 2000. Ms L Fitzgerald, for the TTLC, sought and was granted leave to amend the application, by removing any reference to a review of the Wage Fixing Principles. This, she submitted, was unnecessary as a complete review of the Principles had been undertaken by a Full Bench of the commission, in its decision1 dated 6 July 2000. Without detracting from the submissions presented by the parties to these proceedings, they can be summarised as follows: Submission of TTLC In support of her amended application, Ms Fitzgerald addressed, in some detail, the May 2000 Safety Net Review decision2 of the AIRC. She took the commission to:
Ms Fitzgerald further submitted that the AIRC found:
In determining whether or not the Tasmanian Industrial Commission should flow on the increase arising out of the AIRC decision, Ms Fitzgerald contended that the commission was required, pursuant to section 36 of the Industrial Relations Act 1984, to consider the economy of Tasmania and the likely effect of the proposed award or proposed agreement on the economy of Tasmania with particular reference to the level of employment. Ms Fitzgerald said, in considering the effect on the Tasmanian economy of a flow-on of the 1999 AIRC Safety Net Adjustment, the Tasmanian Industrial Commission had preferred the views expressed by the Tasmanian Government over those expressed by the Tasmanian Chamber of Commerce and Industry (TCCI). On this occasion, Ms Fitzgerald said, on the evidence of numerous public statements made this year, the views of the TCCI and the government should align. From exhibit TTLC 1, Ms Fitzgerald relied on the following extracts from print media releases:
With regard to equity issues, Ms Fitzgerald submitted that the Tasmanian Industrial Commission, in the 1999 State Wage Case decision, in a synopsis of the arguments supporting the application to flow-on the safety net adjustment stated that: "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 the circumstances where (i) State awards cover less than 37 per cent - perhaps as few as 25 per cent - 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."11 These arguments, she said, remained contemporary. Ms Fitzgerald stated she had been advised by a number of unions, including the Transport Workers' Union, the Australian Services Union, and the Association of Professional Engineers, Scientists and Managers, Australia, that federal awards, having application in Tasmania, had been varied to incorporate the safety net adjustment without any opposition from the employer organisation. With regard to the public interest test, required pursuant to s.36 of the Industrial Relations Act 1984, Ms Fitzgerald submitted that it was a test which required the commission to have regard to the economy in general, the level of employment, the economic position of any industry likely to be affected by a proposed award or agreement, and any other matter which the commission considered to be relevant to the public interest. Ms Fitzgerald contended that the needs of the low paid are matters which the commission should take into account in considering this public interest test. She said, widening income disparity and the inability of a proportion of the members of society to participate in that society, because of low incomes, remained issues important to the economy in general. Ms Fitzgerald further submitted that the only published relevant material - the 1995 Australian Workplace Industrial Relations Survey - showed that Tasmania had the highest percentage of employees who received safety net adjustments. In 42 per cent of all workplaces, employees received safety net adjustments, whereas the Australian average was 24 per cent. This, she said, meant that the safety net is more crucial to the Tasmanian situation as the safety net is relevant to more employees than in any other state or territory. When concluding her primary submission, Ms Fitzgerald advised the commission that discussions had taken place between the TCCI and the TTLC which gave rise to a statement12 confirming their understanding for the 2000 State Wage Case. That statement read as follows:
Submission of TCCI In opening his submissions, Mr M Watson for the TCCI, emphasised the point that the quotes relied upon by Ms Fitzgerald, and taken from the May 2000 Safety Net Review decision13 of the AIRC, were based on the national economy and should be seen in that context for the purposes of the Tasmanian State Wage Case. With that in mind, Mr Watson made the following submissions: He said the TCCI's decision not to oppose the flow-on of the $15 safety net adjustment had not been reached without considerable soul searching. Mr Watson said the decision not to oppose the TTLC's application had to be weighed against a variety of competing considerations including the economy, the imperative of employment growth, the other employment cost factors, such as the 1 per cent increase in superannuation contributions, and increasing workers' compensation premiums. In electing not to oppose the increase Mr Watson sounded a few cautionary notes. He said there could be no doubt that the Tasmanian economy on aggregate had experienced considerable growth over the last 12 months. In addition, there had been a solid increase in most indicators of economic health and this growth had been matched by business sentiment as measured through the TCCI Colonial Bank Survey of Business Expectations, which had remained buoyant for the last three quarters to June 2000. Amid the rosy picture, Mr Watson said, a number of trends were not as positive, including an apparent plateauing in employment growth, a sharp decline in business investment since September 1999 and the continuing decline in the Tasmanian population. Of concern, Mr Watson said, was the latest survey of business expectations that showed Tasmanian businesses expected a significant deterioration in business activity and business environment for the next quarter and indeed for the next 12 months. Mr Watson was of the view that, whilst the current resurgence in the economy was warmly welcomed by business, it had occurred from an extremely low base and the Tasmanian economy was still under-performing, in aggregate terms, when compared with the economies of the other states and the national economy. In this context, Mr Watson said, considerable caution was required as the recovery to date remained fragile and a significant increase in labour costs could exacerbate the already skittish business community. Mr Watson submitted that some sectors of the Tasmanian economy would be unable to afford the impact of this increase and it would therefore impact adversely, but, in an unequal manner between various sectors. Those areas relying on government funding, he said, would continue to struggle to survive if appropriate recompense was not made to fund the increase. Mr Watson emphasised that the $15 per week wage increase, awarded by the AIRC and sought to be flowed on into state awards, was very much at the upper end of an affordable increase. He said, whilst the TCCI had chosen, on balance, not to oppose the flow-on on this occasion, he believed the need for restraint remained as acute as ever and he urged the commission to remain vigilant to sectoral claims that exceed the existing safety net and which may have the capacity, either directly or through flow-on, to seriously damage the slowly recovering economy. This vigilance, Mr Watson submitted, would be required to avoid the potential of double dipping in the context of a sharp rise in the CPI occasioned by the GST, but, for which compensation has already been provided by significant taxation breaks. In the context of those issues, Mr Watson said, the application conformed with the current Wage Fixing Principles of the commission and the public interest test of the Act had been served. Mr W J Fitzgerald for the Australian Mines and Metals Association (Incorporated) supported the submissions of the TCCI. Submission of the Minister for Justice and Industrial Relations Mr C Willingham submitted, on behalf of the Minister, that the Tasmanian Government supported the application of the TTLC and warmly endorsed the agreement that had been reached between the TTLC and the TCCI and as expressed in exhibit TTLC.2. He said the Tasmanian Government's position was in accord with the commentary made by the full bench in the national case in print S5000 at page 41 at paragraphs 121 and 122 wherein the bench stated: "In all the circumstances we have concluded that a larger increase is warranted this year than last. We have decided to award an increase of $15.00 per week in all award rates. In money terms the increase is of a similar order at the lowest award levels as the increase awarded at those levels in 1998. In real terms the increase is less than awarded in recent safety net adjustments. Because of our concern about compression of relativities the increase will be the same at all levels and it follows that the weighting of the adjustment in favour of the low paid, although still considerable, is not as significant as it was in the 1998 and 1999 adjustments."14 The major concern for the Tasmanian Government, Mr Willingham submitted, was to ensure equity for the low paid and those who have not been able to gain access to increases by means other than award variations reflecting the safety net. He said, that perhaps as little as a quarter of all Tasmanian employees in total would receive the benefits of any decision arising out of this application. Put in another way, he said, probably 75 per cent of the Tasmanian workforce had either received the increase via federal awards or would have received a comparable or greater increase through the processes of workplace bargaining. Mr Willingham further submitted that the finding, in the AIRC's decision15, was most appropriate, both in the national and especially in the state context and was very much borne out in the submissions of Ms Fitzgerald and, to a large extent, those of Mr Watson, wherein it stated: "Although the adjustment will entail costs the strength of the economy in recent years suggests that safety net adjustments of this order are compatible with continued strong economic growth and reduction in unemployment. In addition, material adduced by the Joint Coalition Governments to which we were referred earlier suggest that safety net adjustments affect significantly fewer employees than they did five years ago. We also intend to maintain the requirement introduced in the April 1999 decision that at least twelve months must have elapsed since the rates in the award were increased in accordance with the last safety net adjustment before the award is varied as provided for in this decision. The purpose of this requirement is to avoid the cost pressures which might arise if more than one safety net adjustment is implemented within a twelve month period."16 Mr Willingham reminded the commission that the $15 increase, sought to be applied to private sector awards of this commission, would be the only increase that the employees were likely to receive in a 12 month period. It should also be borne in mind, he said, the restraint of employees and the forbearance that they had shown, both in the more difficult economic times of a few years ago and even now when, by common acclamation, economic circumstances were improving. In conclusion, Mr Willingham said it was the government's view, that the provisions of s.36 of the Act, which the bench was required to take into account, were clearly not offended by this application. He added, there was no doubt that predictions, in years gone by, about relatively modest increases of this nature, had not affected the general economic indices in this state and certainly have not affected the level of employment or unemployment. Finding At the conclusion of the hearing on 24 July 2000, we advised the parties that we endorsed their agreement as detailed in Exhibit TTLC 2. We now confirm that decision for the following reasons: The commission is required to have regard for s.36 of the Act, which states:
Given the degree of consensus between the parties, their submissions in respect to the state of the economy, the economic impact of any decision to grant the claim, and the needs of the low paid, we are satisfied that the granting of the application is justified and sustainable in the Tasmanian context and therefore is consistent with the public interest. Therefore, we hereby determine that: 1. Wage rates in private sector awards be increased by the safety net adjustment of $15.00, including junior, apprentice and trainee rates (on a proportionate basis) as from the first full pay period to commence on or after 1 August 2000. The $15.00 safety net adjustment be reduced to the extent of any over award payment currently being paid by the employer. 2. Wage rates in private sector awards will only increase by the $15.00 safety net adjustment as from the first full pay period to commence on or after 1 August 2000 where:
3. Existing allowances relating to work or conditions be increased by 3.14% as from the first full pay period on or after 1 August 2000. Form of the Orders Arbitrated safety net adjustments shall be shown as a separate amount against each classification in the award. Where the minimum rates adjustment process has been completed in awards of the commission, the base rate and supplementary payment may be combined into single award base 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. 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. In due course members of the commission will issue orders, in their respective areas of responsibility, giving effect to this decision. Review of the Wage Fixing Principles Whilst noting that the Full Bench Decision - Review of Wage Fixing Principles of 6 July 2000 (T8413, T8483) expressed the view that the next review of the Wage Fixing Principles should not occur until the time of the first State Wage Case Safety Net Adjustment Review that commences on or after 1 July 2001, we are of the view nevertheless, for clarification purposes, that if an application were made for a flow on of any national wage decision before 1 July 2001, then either party would be at liberty to seek a review of the Wage Fixing Principles.
DEPUTY PRESIDENT Appearances: Date and place of hearing: 1 T8413 and T8483 of 1999 Awards Varied: |