T299
When this application to vary the Mainland Allowance provisions contained in Clause 8(1)(3) of the General Conditions of Service Award was lodged with the Commission in December 1985, it was envisaged that the existing allowance be increased by the amount of movement in the Consumer Price Index for the period June 1983 to June 1985. However, as such adjustments had already emanated from National Wage Case decisions handed down during this period, the parties, at an initial hearing in February 1986, agreed with me that the application could be let lie and utilised as the vehicle for a comprehensive review of the allowance foreshadowed by them. Subsequently, in preparation for the full blown case that was to follow, the parties requested that the Commission visit nominated mainland tourist bureau locations to hear from the employees concerned and to undertake accommodation inspections. Proceedings recommenced in Brisbane on 11 May 1987, continuing in Sydney and Melbourne and concluding in Adelaide on 15 May 1987. During the course of the visit to the above locations the Commission took evidence from expatriate Tasmanians. In all thirty-two employees (including managers) presented detailed information on costs and other associated factors which was based on a questionnaire format agreed between the parties. The questionnaires were circulated and completed prior to the visit of the Commission, thus enabling those employees involved the opportunity of being more thoroughly prepared than what may have otherwise been the case. Consequently, the itemised documentation so provided is an important information source which was relied upon by the parties in these proceedings. After allowing time for the parties to collate and analyse the information provided by employees, the hearing of this matter resumed in Hobart on 7 July 1987. History of Allowance Mr Jarman, representing the Minister for Public Administration (the Minister), commenced his substantive submission by traversing the history of the allowance which, it appears, was first paid in 1917. I was referred by Mr Jarman to comments made in 1973 by the then Director of Tourism, when in correspondence to the then Public Service Board, he said: "Despite exhaustive enquiries and research, there does not appear to be an existing and reliable formula by which new Mainland rates can be established." Exhibit J2. Similarly in 1983 Commissioner Koerbin, as he then was, in a letter to the Minister for Tourism indicated that the allowance had not been reviewed on merit since it has been included in the award in 1973. He suggested that all aspects of the allowance should be closely scrutinised, particularly in light of certain difficulties that had arisen regarding staffing of mainland tourist bureaux, and the reluctance on the part of Tasmanian staff to transfer to mainland offices. Mr Jarman submitted that his research of the allowance revealed that over the years:
This brief resume of the history of the allowance serves to background the matter currently before the Commission. Having had the benefit of being involved in the comprehensive exercise undertaken, including discussions with the employees `interviewed', and having heard the submissions of the parties, I concur with Mr Jarman and Mr Buchanan, representing the Tasmanian Public Service Association (the Association), that the existing allowance provisions are inadequate to meet the objectives referred to above by Mr Jarman. Allowance Proposals Detailed documentation and submissions for the restructuring of the existing allowance provisions were put before the Commission by the parties. Mr Jarman developed his submission on the basis that the allowance should be comprised of two separate components; one to meet the generally higher cost of rental accommodation on the mainland, and the other as a contribution towards meeting other excess costs incurred by tourist officers living and working on the mainland. Mr Buchanan considered that the allowance should encompass three elements, these being:
The respective allowance propositions, in respect of quantum, put before the Commission on behalf of the Minister and the Association, are as follows:
The submissions made by the parties in support of the makeup of the above proposals were predicated upon the detailed documentation submitted as evidence whilst at the mainland bureaux as well as information on dwelling purchase coasts published by the Real Estate Institute of Australia, albeit that in respect of the Institute material provided, the parties focused their attention on separate data segments. Accordingly, the relied upon material, whilst derived from the same source produced different outcomes as reflected in the above table. The other significant difference between the two proposals is that the Association is seeking an accommodation purchase allowance, specifically to meet additional costs incurred by employees financing the purchase of a mainland dwelling. Accommodation Costs At page 33 of Exhibit J1, an extract from the `Daily Mirror' dated 16 March 1987, headed `Rental Crisis Reaches Point of Disaster', the desperate rental situation facing Sydney residents is outlined. Comment is made in the article that rental costs had increased by 25% over a 12 month period, that affordable accommodation was almost impossible to find, and that by the end of this year the situation will have worsened. The article also refers to survey figures just then released by the New South Wales Master Builders' Association showed that Sydney's average weekly rent for a three bedroom unfurnished house was $267.25 per week. The average rent for an unfurnished two bedroom unit was quoted as being $159.60 per week. It is interesting to note that the Master Builders' Association recognised the trend towards shared accommodation. This was borne out on the inspections, where in Sydney this arrangement was prevalent. In one case a young tourist officer was paying $70 a week (1/4 share) for a house badly in need of renovation. In general terms, also the standard of accommodation inspected of Sydney tourist officers, in terms of value for money, left much to be desired. I agree with Mr Jarman that in Melbourne the standard of accommodation was noticeably better, however costs on a shared basis were not too dissimilar. In Adelaide accommodation costs appeared more reasonable than either in Sydney or Melbourne and whilst Canberra was not visited I accept the submissions that its accommodation costs are high. Perth was not visited, however the proposals advanced by the parties do not produce compensatory allowances for excess accommodation costs for that city. Accommodation Allowance I have previously indicated that the allowance proposals put forward by the parties differ. With regard to accommodation costs, the Minister contemplates an all in "Accommodation Allowance" (to cover rental costs particularly, but to also apply to those employees purchasing a dwelling); whilst the Association advocated that both an "Accommodation Purchase Allowance" and an "Accommodation Rental Allowance" should be awarded by the Commission as alternative allowances. Both parties developed their respective proposals from information supplied by the Real Estate Institution of Australia. Minister's Proposals Using the March 1987 `Market Facts' figures, Mr Jarman relied on the average median costs indicated for purchasing a dwelling in each of the mainland cities subject to this application; based on ranges for established houses, established units and town houses and new houses. Taking Sydney as an example, the methodology adopted by Mr Jarman is as follows -
It was submitted on behalf of the Minister that as income tax would be payable on the amounts calculated on the foregoing basis, a `taxation factor' should be added to ensure that the gross allowance to be received does in fact fully compensate employees for the additional costs involved. I have no difficulty with that concept having regard to the nature of the allowance, particularly when it is considered the expenses incurred which are being compensated for are, on advice given to the parties, not tax deductible. Accordingly, to produce a net figure for Sydney of $2,236 per annum, and based on a tax component of 41.25 cents in the dollar (40% income tax plus 1.25% medicare levy), the gross accommodation allowance necessary for that city is $3,806 per annum. The accommodation allowance advanced on behalf of the Minister for each of the other mainland locations is set out on page 5. Because the `Market Facts' figures relied upon by Mr Jarman produce a lower weekly cost for Perth and Brisbane than Hobart, he submitted that no accommodation costs reimbursement for these two cities is justified. Mr Jarman advocated that the accommodation component of the allowance be reviewed and adjusted annually having regard to the `Market Facts' information provided by the Real Estate Institute of Australia. Association's Proposals The Association developed its two accommodation cost reimbursement allowance proposals from data contained in the Real Estate Institute of Australia publication `Annual Review of Major Residential Property Markets in Australia June 1985 - June 1986'. This particular publication collates all the monthly `Market Facts' details previously referred to and relied upon by Mr Jarman. Accordingly, the difference in approach between Mr Buchanan and Mr Jarman, in establishing a working base upon which the accommodation component of the allowance is founded, is that Mr Buchanan used figures which take in fluctuations over an entire 12 month period whereas Mr Jarman relied on the `Market Facts' information for March 1987 only. Essentially Mr Buchanan submitted that median figures over a 12 month period provide a more accurate base as highs and lows are evened out, whereas distortions may result in single monthly figures, where there may be a small number of abnormally high or low priced sales. I accept that the possibility of distorted figures is minimised by the use of annual data, and that it produces a more solid platform upon which to construct mainland allowances. Consequently, I have decided to base the allowances awarded herein on the June 1985 - June 1986 figures put forward by the Association. The only difficulty is that this data, relied upon by the Association, is now over twelve months old. In the circumstances, therefore, I consider it appropriate that the allowances now determined by me be again updated, having regard to the June 1986 - June 1987 information, which I understand will soon be available. I would anticipate a short hearing to bring the allowance completely into line with the most recent data. I agree with the parties that subsequent 12 monthly reviews would then be appropriate. Accordingly, these will take place following the publication of each `Annual Review of Major Residential Property Markets in Australia'. The other difference in approach between the parties was that whereas the Minister compared Hobart Accommodation costs with the mainland capital cities, the Association's comparisons were based on a Hobart-Launceston average. As Launceston prices are lower than those in Hobart this obviously produces a greater differential with each of the mainland capitals. Whilst I recognise that tourist officers have been transferred to the mainland from locations in Tasmania other than from its capital city, I have decided that in determining mainland allowances, which in effect are allowances for living and working in mainland capital cities, the comparisons made should relate to Hobart for the establishment of base data for the purposes of that comparison. In any event the vast majority of transferees to mainland capital cities are from Hobart. Consequently, in relation to Exhibit B3, the difference in prices between the mainland cities in question and Hobart ($60,675 average price) is reduced by $7,650, which in turn impacts on all of the figures relied upon by Mr Buchanan in that exhibit. The revised differences in values are as follows:
Accommodation Purchase Allowance I am prepared to endorse the concept of an Accommodation Purchase Allowance proposed by the Association. Whilst I support the Minister's claims for a highly mobile and efficient work-force, I do not agree that the purchase of a dwelling would in any way impact adversely on that objective. I am of the view that if an employee is able to gain some equity in a dwelling then he/she should be encouraged to do so. Obviously a concern may arise that an employee, in those circumstances, as Mr Jarman put it:
That may well be the outcome in some cases, however each eventuality must be able to be considered on its merits. I do not hold to the view that because an employee purchases a dwelling, a decision has been made by that employee not to continue to pursue a career with the department. The Association, in extrapolating the difference in values between Tasmanian and mainland housing, applied a 15.5% per annum housing loan interest rate to calculate the additional financing cost for each $1,000 above Tasmanian prices. Given the fact that recent reductions in interest rates have seen housing loan interest rates drop to the 15%, I have decided to use this latter figure for the purpose of calculation. With the reintroduction of negative gearing in the federal budget handed down on 15 September 1987, and its likely effect on interest rates, there may, however, be a need to adjust this rate when the allowance is updated to take into account the June 1986 - June 1987 information previously referred to. Applying a 15% interest rate for a 20 year mortgage period produces an extra $13.17 for each monthly instalment ($158 per annum for each additional $1,000 borrowed for a mainland dwelling. For Sydney, therefore, an appropriate Accommodation Purchase Allowance is calculated as follows:
The tax factor of 1.702 is necessary to offset taxation payable on the allowance at the rate of 41.25%. Having regard to the foregoing, the accommodation purchase allowance appropriate for the remaining capital cities are as follows:
I am of the opinion that these allowances represent an equitable amount, on the information put before me, for those employees transferred who choose to purchase a dwelling in their new location. Accommodation Rental Allowance The methodology employed by Mr Buchanan to derive this allowance is the same as relied upon by the Minister for his proposed accommodation allowance in that the Association also considered that a 10% return on investment is a reasonable percentage factor to interpolate in the formula in order to calculate a rental component. Again the Association utilised the REIA's annual review figures for June 1985 - June 1986, which produces results in some cases not dissimilar to those put forward by the Minister. Using 10% of the differentials between Hobart and the mainland capital cities already decided upon for calculation of the Accommodation Purchase Allowance, and taking into account the tax factor previously referred to, the following results are achieved:
As with the Accommodation Purchase Allowance an adjustment based on the latest annual figures for June 1986 - June 1987 will be required in the near future. Having endorsed the formula proposed by the Association, except for the inclusion of Launceston data, the mechanics for the variation should be straight forward. Excess Costs and/or General Allowance As previously indicated, both parties considered that a further cost reimbursement is also necessary, additional to the allowance(s) to compensate for accommodation expenditure. As shown in the table on page 5, the Association proposed a figure of $3,690 per annum, whilst the Minister advocated $500 per annum for employees with dependants and $250 per annum where there are no dependants. Mr Jarman, in support of the amounts put forwarded on behalf of the Minister, said:
This observation made by Mr Jarman was supported by summary sheets (Exhibit J1 at pages 43-51) which itemised those cost items considered by employees to impose an additional financial burden on them. For example, the summary of costs highlighted payments made for such items as rental bond, mortgage payments, rates, house and contents insurance, electrical charges, gas and other fuel charges, motor vehicle insurance (including compulsory 3rd party), motor vehicle registration, daily travelling costs and the cost of STD telephone calls to Tasmania. I was also provided with extra cost factors under the heading of `Other Issues' which were nominated by individuals as being additional to those solicited in the questionnaires previously referred to. Costs under this particular heading include excess water, baby sitting, wood and oil for heating, medical insurance, car parking, kindergarten charges and the higher cost of participating in hobbies and sports. Mr Jarman submitted:
In framing this aspect of the allowance the Minister's proposal contemplates that:
Mr Buchanan, in his Exhibit B5, detailed extra costs considered to be incurred by mainland tourist officers. He calculated average costs for medical benefits, STD telephone calls, contents insurance, car registration, petrol, bus fares and car insurance. The additional costs identified in that manner were derived from, in some cases, actual comparisons with costs on the mainland (e.g. medical cover) and from the amounts indicated in the questionnaires completed by tourist officers. It was recognised by Mr Buchanan that some of the excess costs calculated in this way are subjective. Nevertheless, a total net excess costs figure of $1,447.90 per annum was proposed by the Association. Additionally, Mr Buchanan sought an additional 50% loading, being an intangible cost component for baby sitting, lack of contacts and close friends to assist with mechanical and household repairs and the like, preventative measures for burglary (in Sydney in particular), and the inclination not to use public transport in the evenings thereby incurring taxi fares. The difficulty associated with applying an intangible cost factor was recognised by Mr Buchanan when he said:
It is clear that the parties well understand that the calculation of an excess costs allowance, over and above that for accommodation, entails a certain amount of subjectivity. I agree with Mr Jarman that the mainland allowances now put into place are not and cannot by their very nature be a `cure all'. However, if I am to facilitate the objectives of the department in bringing this matter to the Commission, then I must give due regard to the expenses incurred which are demonstrably in excess of those in Hobart. Having regard to the information before me, I have decided that a reasonable level for the excess cost allowance component is $750 per annum for employees with dependants residing with them and $375 per annum for employees without dependants. In reaching that conclusion, I recognise, as Mr Jarman said in the presentation of the Minister's proposal for this component of the allowance:
Whilst endorsing the concept of a general excess cost allowance for all mainland capitals, I would have preferred that the parties considered this aspect of the allowance on a city by city basis, as was the case for the accommodation allowance. Whilst this may be a time-consuming exercise, I believe that it would provide a solid base for the future, albeit that some generalisation will not be able to be avoided. In relation to the allowances herein determined it is appropriate to reflect on the comments made by Mr Jarman when he addressed the need for a proper foundation for the allowance to be established. In setting the background to that particular submission, Mr Jarman said:
In my opinion the allowances herein determined will go a long way to alleviating some of the problems encountered by the department as identified above. With the additional excess cost allowances, the overall allowance package should meet the genuine concerns of expatriate Tasmanians in respect of additional costs incurred by them when taking up a position on the mainland. It should ameliorate one area of concern and have an uplifting effect on the employees involved. I am aware of a number of other issues raised by employees, some of which were addressed by Mr Buchanan in these proceedings. They are not germaine, in my view, to the determination of mainland allowances, however I will, as agreed by the parties, say more about this later in this decision. Duration of Applicability of Allowance to Individuals Mr Jarman proposed that the allowances in question should only be payable to expatriate Tasmanians at a mainland locality for an initial five year period, subsequent to which payment should only be continued at the discretion of the controlling authority. He supported this proposal by reference to a 1983 decision of Olsson P., concerning the variation of the Teachers (Non-Metropolitan) Conditions Interim Award in South Australia (ref. AILR Vol. 26 No. 3, 62). His Honour decided, inter alia:
Mr Buchanan, on this issue, submitted:
He indicated that if the controlling authority considered that circumstances no longer warranted payment of compensatory allowances, then with due notice the allowances may be discontinued. I am persuaded to the Association's view on this issue. I recognise that a review mechanism is appropriate as to whether payment should continue to be made, in the light of changed circumstances which may arise affecting individual employees. If the controlling authority has reached the conclusion that an allowance is no longer appropriate for a particular employee, then I consider it reasonable that 4 months' notice in writing be given to the employee concerned and to the Association. As indicated by the parties, in the event of a dispute on this point, the matter will be referred to the Commission. I would anticipate that by the giving of 4 months' notice, enough time will be available for any consequential adjustments to be made by the employee concerned and for any disputes to be resolved. Wage Fixing Principles and Public Interest The upgrading of the current mainland allowances has been the subject of discussions and negotiations for quite some considerable time. When the matter first came before me in February 1986, the parties foreshadowed their intention to place proposals before the Commission at a later date in support of a variation to the allowance. Indeed the Commission, at that time, encouraged the parties to make the application a vehicle for the purpose of a comprehensive review of the allowance. Prior to the involvement of this Commission in this matter, as far back as 1983, Commissioner Koerbin, as he then was, saw the need for a substantive examination of the allowance on merit considerations. The history of the allowance, as it relates to considerations by the Public Service Board and this Commission, in the first instance, makes it appropriate that this matter should be considered in accord with the wage fixing principles enunciated in the Full Bench Decision in matters T.432, T.435 and T.440 of 1986. The decision to implement a new format for the mainland allowance sits comfortably with the allowances principle stipulated in that decision. In my opinion, the determinations made herein are clearly in the public interest. As far as costs are concerned, the Minister's proposal shows that if the Commission had endorsed the submissions made on his behalf an annual cost of $210,000 per annum would result. In terms of the 1985/86 departmental salary budget, an increase of 0.018% was forecast. Even though the allowances determined by me are ahead of those proposed by the Minister, the overall additional impact will not produce cost outcomes out of step with the projections made. Other Considerations: I stated earlier in my decision that I would comment on other factors raised as concerns by the Association in these proceedings and by employees at the mainland bureaux. The parties will recall that they were in agreement that I include a brief summary of the general overview gained by me and I will canvass the issues raised under the following headings: Extension of Allowance The Association requested that I consider the extension of the allowance to those employees recruited on the mainland to work for the department in the bureaux in question. As no detailed submissions were made or evidence presented on this issue, I am not in a position to make a finding. I would indicate through, that my prima facie position is that the status quo, having regard to the philosophy of the allowance should be maintained. Tasmanians Recruited on the Mainland An example was given of a Tasmanian recruited in Melbourne to work in a mainland capital. At the time of her recruitment she was on her way back home to Burnie. She applied for an advertised position in Melbourne and subsequently was declared not eligible for the allowance. I note that in Mr Buchanan's Exhibit B6, the Director of Tourism in 1978 notified the Association that the department would be supportive of an award variation to extend the allowance to Tasmanians recruited from outside this State. Prima facie, my view is that the type of circumstance above could well be accommodated by appropriate variation to the clause, giving such discretion to the controlling authority. I would, however, caution against the allowance being made applicable in all cases to Tasmanians recruited on the mainland. Clearly each case would be required to be considered on the merits. Air Fares Mr Buchanan submitted that expatriate Tasmanians should be permitted, by way of entitlement, one return air far to Tasmania per year. This submission was predicated on the many examples given by employees of air travel undertaken in excess of the current entitlement. My only observation on this issue is that biannual air fare arrangements are reasonably common as an entitlement. In some regions of Australia, usually classified as remote because of isolation or where there is some other condition such as extremes of climate, annual air fares for the employee, spouse and dependant children are provided by the employer. The abovementioned circumstances are obviously not encountered by tourist officers at the mainland bureaux visited. Recreation Leave This condition of employment is prescribed by the Tasmanian State Service Regulations 1985, and in any event variation to the quantum of annual leave is a Full Bench matter. Conclusion The review of mainland allowances has been a comprehensive exercise. An important part of this was the visit to mainland bureaux and the ensuing discussions with employees as well as the taking of evidence. It became clear to me that in addition to rectifying deficiencies with the allowance, the salary and classification structure should be given urgent attention. Salary and Classification Structure The structure currently in place does not, in my view, facilitate the objective of the department, supported by the Association, of creating a dynamic environment which in turn would impact positively on the overall efficiency, flexibility and mobility of employees, as well as providing necessary incentive. The structure is cluttered, particularly at the lower levels and is in need of reform. Departmental Resources I am of the opinion that induction training should be given to employees relocated on the mainland. Many employees, during my visit, left me with the impression that when they first arrived in their new location they were confronted with problems regarding resettling not previously envisaged. Naturally this has a detrimental effect and must impact, initially at least, on work performance. It may assist, particularly if a streamlined transfer system is put in place, for dossiers to be prepared on each capital city, for the information of employees. In any event a central personnel function should be able to address this particular issue. Transfer of Employees I recommend that appropriate transfer arrangements be negotiated with the Association to create further movement at the tourist officer level. Obviously, no matter what structure is put in place, promotional opportunities are not going to be limitless. To counteract stagnation and to maintain a high level of enthusiasm a transfer rotation system would be advantageous. Operative Date The operative date for the new mainland allowance provisions now determined will be from the beginning of the first full pay period commencing on or after the date of this decision. My order is attached hereto.
R.K. Gozzi |
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