IN THE TASMANIAN INDUSTRIAL COMMISSION
Industrial Relations Act 1984
Application was made by the Tasmanian Chamber of Industries (T.C.I.) for those private sector awards that still contain a basic wage and margins format to be converted to a total wage.
Each of the awards concerned was listed.
In his opening address, Mr. Abey said that the T.C.I. had not made the application lightly because, as a concept, there are some distinctly attractive aspects of a split wage. He expressed the view that it is unfortunate that the notion of a basic wage and margins configuration, where expressed in certain awards of this Commission (and earlier tribunals), has degenerated to the stage where it is now meaningless.
To illustrate his point, Mr. Abey pointed to the fact that the basic wage is currently only $108.20, which in the historical sense was described by him as laughable. Given that situation, he argued, the only feasible remedy now is to abolish the present concept in favour of a total wage.
Reference was made to the fact that the idea of a basic wage had its genesis in the "Harvester Decision" of Mr. Justice Higgins in 1907. This was regarded as being necessary "to meet the normal needs of the average employee regarded as a human being living in a civilised community".
However, that proposition clearly has long since ceased to be applied.
Mr. Abey reminded us that margins were likewise introduced to recognise the skill component in an employee's labour.
In his book entitled "A New Province of Law and Order", Justice Higgins is reported as having said:
Such precepts were described by Mr. Abey as laudable, had they been maintained over the years. However, the fact is that they had not.
Reference was then made to the National Wage Case of 1967 (Metal Trades Award, 1952) (C.Nos. 1855 of 1965, 3 of 1966; 958 of 1967).
Mr. Abey quoted the following excerpt from page 658:-
He pointed out that this was said in 1967. But nearly 20 years later still no such assessment has been made. He then referred us to the following additional observation by the Bench:
We were reminded that the decision of the Full Bench in 1967 to introduce a total wage was taken against vehement opposition by the trade union movement. He said it was significant however that despite the numerous reviews of wage fixing principles that have taken place since that time, no attempt has been made by the trade union movement to reintroduce the concept of a basic wage and margins.
Evidence was produced by way of an analysis of relative movements in the basic wage and margins applicable to a base tradesman and a 3rd year shop assistant. This exercise was intended to illustrate that from 1 June 1967 to 4 November 1985 the basic wage had been ignored, whereas wage increases have been applied willy-nilly to the margin, and in a manner which has had no regard for the original intent of the marginal component - namely skill.
It was submitted by Mr. Abey that it would therefore be farcical in the light of these circumstances for relativities between margins to be given any credence whatsoever.
Reference was also made to the common rule determination made on 17 May 1974 by the (then) Chairman of the Wages Boards. This was in relation to an application by the Tasmanian Trades and Labour Council for a general wage increase and was prompted by the decision by the Commonwealth Conciliation and Arbitration Commission in the 1974 National Wage Case.
Mr. Abey drew attention to the fact that the Chairman at that time had put the various parties on notice that they should be prepared to consider a change from the two-tiered structure, and in future adopt a more realistic expression of wage rates in Wages Boards Determinations.
However, it appears the only serious attempt to restore some meaning to the basic wage concept was made by the T.C.I. in 1981. And while the Chairman of Industrial Boards commended the initiative and objectivity of the applicant in those uncertain times, he none the less rejected the only serious attempt made to restore some meaning to the two-tiered structure.
It was further submitted by Mr. Abey that the basic wage concept has long since been abandoned by every other State jurisdiction, except New South Wales.
The minimum wage was introduced in both Federal and Tasmanian awards in 1966. The T.C.I.'s current application does not seek to delete that.
Attention was also drawn to the fact that awards of this Commission, that apply to the public sector exclusively, contain total wage rates. In addition, a sizeable proportion of awards applying to the private sector likewise express wage rates in terms of a total wage. According to the exhibit presented by Mr. Abey, there are presently 25 private sector awards containing wage clauses stated in this way.
For all of these reasons, we were urged to standardise the prescription and convert all remaining awards to the total wage concept.
Mr. Abey requested that we give a decision "in principle", with a prospective operative date. This could be determined as coincident with the date of a National Wage decision, or at some other convenient time, having regard to the physical difficulties associated with implementation of such an exercise.
He also acknowledged that there could be some consequential adjustments of minor consequence if the application succeeded. He instanced cases of certain allowances now being tied to movements in the basic wage. In such circumstances, it was suggested that individual Commissioners should be given licence to make the necessary conversion where deemed necessary.
Mr Taylor, appearing for the Australian Mines and Metals Association, supported the T.C.I.'s application, but made it clear his support should be seen as no more than an interim measure only.
He went on to explain briefly his Association's philosophy on wage fixation in Australia generally, and commented that it is recognised by his organisation that in view of the long history of centralised wage fixation in this country, further change will have to be made by evolution rather than by drastic change.
Finally, Mr. Taylor indicated that his Association would not oppose the application to convert from basic wage and margins to total wages at this time. But A.M.M.A. support was conditional upon any decision of this Commission not being regarded as an "in principle" decision intended to stand ad infinitum.
At the conclusion of the employers' primary submissions the Commission adjourned proceedings until 11 March to enable the Tasmanian Trades and Labour Council and others to prepare their replies.
In the event the T.T.L.C. opposed the T.C.I.'s application and favoured the retention of the basic wage concept. In his opening remarks, Mr Lennon submitted that it was important to consider the matter before the Commission in the context of:-
It was pointed out by Mr. Lennon that although the basic wage was deleted from Federal awards in 1967, the A.C.T.U. had unsuccessfully appealed that decision to the High Court.
However, it needs to be understood that the High Court was not then asked to determine what type of wage system should prevail, but rather, whether the Conciliation and Arbitration Commission was duty bound to hear an application by the A.C.T.U. to increase the basic wage. The A.C.T.U. application was lodged after the Full Bench had announced its decision to abolish the basic wage concept in favour of the total wage. At or about the same time a further application was lodged by the A.C.T.U. relating to another award. This was used as a vehicle to attempt to obtain a writ of mandamus to compel the Full Bench of the Commission to hear the application, rather than dismiss it out of hand.
Mr. Lennon pointed out that in his decision in the High Court matter, Sir Garfield Barwick had observed that the basic wage concept had undergone considerable development during the history of the Federal system. At first it was considered as a minimum wage to supply the basic needs of a man and his family. But in the course of time a new consideration began to enter into the determination of the basic wage. Although it remained basic in the sense that it still related to the provisions of basic and minimum needs of the worker and his family, it also became the base of a wage structure with the employment covered by the award.
It was submitted by the T.T.L.C. that the Arbitration Court (and later the Arbitration Commission), in considering the figures which set the basic wage, also had regard for the capacity of industry to pay. In this way the worker became entitled to some part of the prosperity of industry by reason of the basic wage element.
Mr. Lennon went on to point out that the then Chief Justice had added that the basic wage concept had not been a fixed concept, but rather it had developed and, though it might seem to have reached its most expansive phase, there could be no certainty that it would not suffer further development.
Furthermore it was said that there was no one sum to express the basic wage. It was different in various cities and towns.
As a consequence, Mr. Lennon suggested it is not fair to conclude that because the High Court case was lost, it necessarily followed that the High Court was in opposition to the A.C.T.U. position at that time.
During the Harvester Decision of 19072, Mr. Lennon pointed out that it was suggested that that decision followed closely upon the introduction of the Excise Tariff Act of 1906 which raised the cost of living for employees. Higgins specifically undertook to ascertain the amount that should constitute a minimum wage which could be treated as fair and reasonable for an unskilled labourer and his dependents.
The decision recognised at the same time that tradesmen and others should be compensated in addition for the skills which they exercise in their work.
In 1920 gradings were introduced for "machinists" by Justice Higgins in the Metal Trades Award as a further refinement in the area of margins for skill.
Of historical significance was the increase of 12/- (shillings) awarded in the basic wage in 1961 to restore its purchasing power to that of the previous year. During that case, Sir Douglas Copeland (an economist who was called as a witness by the unions) commented as follows:-
Mr. Lennon submitted that the 1961 proposal if put into practice today would form the basis of quite a good system.
It was further submitted that the arguments advanced by the A.C.T.U. against the abolition of the basic wage in 1967 are equally valid today.
Those arguments are:-
Notwithstanding the T.T.L.C's preferred position not to disturb the basic wage and margins arrangement in the many private sector awards where it still appears, thereupon it proceeded to advance a secondary argument, without prejudice to its preferred position.
Mr. Lennon submitted that if the Commission was not disposed towards retaining the status quo, it might give serious consideration to creating a new provision in all awards, which would be called the "Basic Wage" Clause, where, as Mr. Lennon put it, the basic wage would rest in peace. The Commission could, at the same time, express wages as total wages in all awards (i.e. not basic wage and margins) and still retain the notion of a basic wage.
This, it was argued, "would provide a safety net for the future".
We believe the T.T.L.C's secondary position is summarised fairly well in the following examples from transcript pages 33 and 34.
The T.T.L.C.'s opposition to the application was supported by the Federated Miscellaneous Workers' Union, the Shop Distributive and Allied Employees' Association, the Federated Ironworkers' Association, the Australasian Society of Engineers, the Allied Engineering and Ironworkers' Association and the Federated Clerks' Union.
We have given full consideration to all of the arguments put to us in support of and in opposition to the T.C.I. application which was in the following terminology: "Conversion of Basic Wage and Margins to total wage".
It is important to emphasise from the outset that we do not view the conversion of the two-tiered wage structure (to the extent that it currently exists) into a single component, or total wage, in the same light as an attempt to abolish the concept of a primary or basic wage and secondary wage expressed as margin for skill.
Had that been our task, coming to a decision may have been far more difficult, and the result may well have been different.
In reaching our decision we note that not only did trade union representatives go to considerable lengths to emphasise the deep historical significance of the basic wage in Australia's industrial relations history, but the T.C.I. also made it quite clear that it did not make the application lightly, bearing in mind that as a concept there are some distinctly attractive aspects to a split wage.
Furthermore, The Australian Mines and Metals Association (Incorporated), Tasmanian Branch, went to some pains to emphasise that while it supported the T.C.I. application to convert the basic wage and margins to a total wage at this time, it did so with two qualifications, namely:-
It is obvious therefore that we have not been called upon to consider the competing philosophies of a basic wage and margins concept or a total wage arrangement at all.
Rather it has been argued before us that the present primary and secondary wage components should simply be added together to create a single or total wage rate.
It follows that our decision is not a decision "in principle", directed against the idea of a basic wage and margins. On the other hand, however, there is, in our view, an abundance of evidence to support the application before us in its present form. And as no violence can be done to the principle involved, which was the main concern of those who opposed the claim, we can discover no persuasive reason to refuse the T.C.I. application.
In our view once the necessary conversion to a total wage is made, the cost savings and convenience alone justify such a course. This we consider is very much a matter of public interest; similarly the fact that nationally and even locally the vast majority of awards already contain such a prescription. This method of expressing wage rates also lends itself better to computerisation, and thereby gives added width to the application.
For all these reasons it is our decision that all awards, orders and agreements that still contain basic wage and margins components be converted to a total wage. If, in giving effect to our decision, it is found that award provisions make use of the basic wage or margins as a vehicle for the measurement or adjustment of allowances or for any other purpose, individual members of this Commission should make the necessary changes to facilitate the way in which such clauses are to apply in the future. No employee shall profit or lose by virtue only of any such alteration in expression.
In the event that the conversion to a total wage coincides with the date of a wage increase, then the method to be adopted will be to first add the basic wage and margin and then apply any increase to the result.
The parties generally acknowledged that a prospective date is appropriate in the circumstances and conversion to a total wage will unquestionably impose some strain upon resources, within and outside the Commission.
We therefore decide that the operative date for conversion to a total wage will be the date which coincides with that of the next National Wage adjustment pursuant to Principle 1.
In the event there is no adjustment the date will simply be the date of decision of this Commission in that matter.
Orders will follow in due course.