IN THE TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984

This appeal by the Minister for Public Administration is against a decision of Mr Commissioner Gozzi dated 17 September 1987 in which he determined, among other things, to:

(a) include in the award for the first time an allowance described as "Accommodation Purchase Allowance", and

(b) authorise the controlling authority to discontinue payment of "Mainland Allowance" at his discretion after giving an employee 4 months notice of his intention to do so. In addition he decided that any disputes arising in relation to this provision could be referred to the Tasmanian Industrial Commission for hearing and determination.

Grounds for appeal were stated thus:-

1. The Commissioner erred in that he handed down an award which is not in accordance with the original intent of the applicant.

2. The Commissioner erred in that he handed down an award which does not provide for either efficient or effective management of personnel located in Tasbureau mainland offices.

3. The Commissioner erred in that he included in his decision an inappropriate provision referred to as the "Accommodation Purchase Allowance".

4. The Commissioner erred in that he included in his decision an inappropriate provision referred to in Attachment 1 as a mechanism designed to remove the need for paying certain allowances.

5. Such other grounds that are deemed appropriate.

A number of other matters were determined by the Commissioner, but as no appeal was taken against them they need not be considered for the purposes of this appeal.

The first matter to be considered therefore is the Commissioner's decision to include in the award a new allowance intended to subsidise in part the cost of home purchase in the Sydney, Melbourne, Canberra and Adelaide metropolitan areas.

There is no question that an Accommodation Purchase Allowance as such was not part of the revised claim made by the controlling authority who now comes before the Commission as appellant. Nevertheless it is equally clear that considerable discussion on this aspect arose during proceedings. It arose largely out of submissions made by the representative of the Tasmanian Public Service Association and was intended to be a supplementary option to a single or all-purpose accommodation rental allowance.

It is important to note however that the TPSA was not an applicant in those proceedings.

The record is equally clear that at no stage did the applicant seek to further amend his claim to include reference to any such allowance in his already amended application.

Subsections (3) and (4) of Section 20 of the Act make provision for the Commission to depart from the strict text of a specific claim before it in appropriate circumstances. But this we think should be understood to be directed more to the notion of including in an award complementary provisions intended to preserve the efficacy of a particular award. To suggest that such a provision gives authority to include an entirely different allowance in an award without any formalised application being made would be, we feel, to place too wide an interpretation on the statute.

The claim before the Commission clearly was for a review of an existing allowance. And in this regard the appellant is on record as having conceded during proceedings that some adjustment was necessary. It was claimed by the controlling authority that the fairest method to achieve this objective was to establish two allowances. The first allowance was intended to take the form of a broad rental subsidy payable to all Tasmanians, regardless of marital status, transferred to tourist offices in different cities on the Australian Mainland. In this regard different standards were proposed for Sydney, Canberra, Melbourne and Adelaide.

The second allowance proposed by the controlling authority in his original amended application was intended to compensate for alleged "excess living costs incurred". This latter proposal contemplated a flat amount of $500 per annum being paid to an officer with dependants resident with him, or $250 per annum being paid to an officer with no resident dependents.

As already stated, we can discover no evidence of a formal claim having been filed for an accommodation purchase allowance, although the TPSA certainly requested that such a provision be included in the award. However that may be, to simply request that something be done without completing the formality of filing an application does not constitute the making of a bona fide application.

We are therefore of the opinion that it would be inappropriate for an applicant's claim to be widened in this way without the need for there first to be lodged a separate application, or for an existing application to be amended to embrace a new subject matter.

In deciding to include a new provision which he called Accommodation Purchase Allowance, the Commissioner said, inter alia:

"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."

Decision, p.14
Underlining ours

We would observe in relation to that statement that in our opinion it would be incorrect to prescribe such an allowance, the purpose of which was neither intended to compensate for disagreeable working conditions, nor expenses necessarily incurred in or in connection with the job, or some other matter directly related to skill or professional qualifications.

Of even greater concern to this Bench is the fact that the original decision contained, at the request of the parties including the appellant it seems, a taxation factor. The purpose of this was to, in effect, make an otherwise taxable allowance "tax free".

In money terms, this involved increasing the quantum of the assessed basic allowance of $3,622.15 per annum by no less than $2,542.85, in the case of the figure proposed for Sydney. That amount was the addition necessary to in effect make the proposed allowance "tax free".

In our opinion such an exercise is not in the public interest and transgresses the notion of wage fixing generally. Moreover it begs the question of industrial tribunals becoming involved in Commonwealth taxing arrangements.

On close examination of the various amounts proposed it is possible to deduce from the decision under appeal that an employee transferred from Hobart to Sydney might attract a tax free allowance of $6,125 per annum. In 5 years this would amount to a $30,615 subsidy towards the purchase of a home. If he was then able to secure a transfer or promotion to, say, Adelaide, after selling his Sydney home (which under normal circumstances could be expected to have appreciated considerably) he could retain the capital gain. On taking up a position in Adelaide, provided he purchased a home in that city, regardless of the cost of his new dwelling he could attract a further tax free allowance of $2,642 per annum by way of subsidy on the purchase of his Adelaide home.

Such a proposition appears to be at odds with the purpose surrounding the payment of Mainland Allowance.

As we understand it, the intention of such an allowance is not to acquire equity but to meet reasonable additional costs of rental charges until appropriate accommodation can be found.

Mainland Allowance appears to be payable as an on-going arrangement, regardless of whether the recipient is in fact transferred, seconded or has found suitable accommodation. Clearly an accommodation purchase allowance intended to, as the Commissioner said in his decision, "encourage recipients to gain some equity in a dwelling" must be regarded as outside the scope of the Commissioner's charter, and for that reason alone must be disallowed.

In any case, we think the appeal could have succeeded because of the use of tax free calculations. Such an exercise, we believe, is not the role of a wage-fixing tribunal. We note that the principle of tax free allowances was also advanced by Mr Jarman who in these proceedings presented as representative of the appellant. Furthermore, we have observed that the concept has been applied to the Accommodation Rental allowance, against which no appeal has been taken.

We also note with concern that in arriving at an amount considered by him to be reasonable for inter city accommodation purchase allowances, the Commissioner included a component for mortgage interest based on an arbitrary figure of 15% per $1,000 borrowed.

Bearing in mind that since the date of his decision interest rates have fallen significantly, it becomes clear that such an exercise, even if approved of by this Bench, would be in need of constant review in order to make a calculation using that component a logical one. Moreover, proposed annual reviews of allowances based upon annual reviews of residential property markets in Australia published by the Real Estate Institute of Australia may or may not address this and other problems in a manner considered appropriate. It may be that if there were to be annual reviews, each year the entire exercise would need to be reworked. We have reached this conclusion bearing in mind the factors that could influence calculation of fair and reasonable allowances at any given time.

Accordingly this part of the appeal is upheld and the Commissioner's decision is quashed.

The second part of the appeal goes to the question of whether or not the Commissioner was entitled to decide that discontinuance of a Mainland Allowance payment to an individual may occur at the discretion of the controlling authority after having given 4 months' notice of an intention to do so.

Mr Jarman argued that the Commissioner erred in accepting the TPSA argument in preference to the controlling authority's claim that there should be a 5-year limit on payments made.

In this regard we think the Commissioner was entitled to reach a conclusion different from that postulated by the appellant. However, in his Reasons for Decision the Commissioner appeared to differ from the appellant for reasons that do not appear clear. For example, while vesting in the controlling authority the power to determine whether "the circumstances" of an employee have changed sufficiently to justify discontinuance of the allowance, he gave no examples of what might constitute such a change.

Having already prescribed an Accommodation Purchase Allowance as well as a Rental Allowance, together with an Excess Living Cost Allowance, it is difficult for us to imagine what circumstances could change except possibly the acquisition of permanent accommodation. This again appears to beg the question of just how long a bona fide rental subsidy should be paid to a transferred employee.

The effect of the Commission's decision is that the controlling authority now has the discretion to cease paying an allowance at any time after 4 months. For that reason we are not prepared to interfere with this part of the decision. However, we note with concern that this allowance, like the Accommodation Purchase Allowance, also has a significant "tax free" component.

In summary, we have formed an opinion that the appellant has discharged the onus put upon him in relation to Grounds 1, 2 and 3. We are not satisfied that that requirement has been met in relation to grounds 4 and 5.

In allowing the appeal in part, the Commissioner's Order will be varied by excluding the Accommodation Purchase Allowance and by effecting consequential adjustments to the remaining part of the Order, including Item 3.3, "Review of Accommodation Allowances".