T33 (13 June 1985)
|
IN THE TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984
REPORT ON FINDINGS
Introduction Three applications to amend the provisions relating to kilometreage allowance were lodged with the Public Service Board in December 1983, with one prior application, A752 of 1982 being lodged in December 1982. With the commencement of the Tasmanian Industrial Commission, the applications previously before the Board, A752 of 1982, A852, A855 and A925 of 1983 were referred to the Commission and were all incorporated in application T33 of 1985, the matter currently before us. Application T33 of 1985 was listed for mention only on 20 February, 1985 and as a consequence of that hearing the matter was referred to the President of the Commission in accordance with Section 24(4)(b) of the Tasmanian Industrial Relations Act, 1984. The President determined that the matter should be dealt with by a Full Bench, before which proceedings commenced on March 20. Background The methodology to be relied upon for adjusting kilometreage allowances has previously been the subject of in-depth analysis. On the last occasion this matter was under review, Commissioner L A Koerbin, as he then was, co-ordinated an extensive analysis which culminated in a decision in August 1980, with retrospective effect to March 1980. In his decision Commissioner Keorbin, amongst other things, decided to continue the adjustment of kilometreage rates by the movement in the Six Capital Cities "All Items" Index. This was regarded as a "short term" solution by the Commissioner, however it led to automatic adjustments being made to rates and, as a consequence, officers have regularly been reimbursed taking into account the increase in costs as reflected in the "All Items" Index. It is interesting to note that in the proceedings before Commissioner Koerbin, the Association requested the application of the "Motor Vehicle Operation" component of the Transportation Section of the "All Items" Index, a proposition not relied upon by the applicants in the matter currently before the Commission. The Current Applications As we feel it will assist the parties, we have decided to identify, in one section of this decision, the various aspects we have been asked to consider in this matter by the applicants (hereinafter referred to as the "Association") and the Controlling Authorities. For its part, the Association represented by Mr J Guersen, who also appeared for the Hospital Employees' Federation (Tasmanian Branch No.'s 1 and 2), requested us to -
Level of Understanding When this matter initially came before the Public Service Board in July 1984, the parties were referred into conference with the objective of -
We were informed by Mr Guersen and Mr Westwood that in the ensuing negotiations a "level of understanding" or a "degree of agreement" had been achieved. The common ground can be summarised as follows:
The Commission's Task The issues involved in the applications before us are complex. Whilst the parties were able to identify some broad areas of agreement, they were a long way apart on the question of what should constitute an appropriate method of adjusting the present rate. The parties have, in determining what they consider to be an appropriate amount for Rate A, relied upon divergent criteria which, if applied to the existing Rate A, would have the effect of achieving a vastly different end result. The applicants have founded their calculations on data published by the R.A.C.T. and the N.R.M.A. By contrast, the respondents have primarily based their calculations on the use of the Hobart Transportation Group of the Consumer Price Index. Another significant area of difference was the treatment of the cost of capital component. Mr Guersen submitted that cost of capital should be reimbursed having regard to "opportunity cost" or the foregone yield on capital invested in a motor vehicle which would have been available to an officer had he been able, in lieu of purchasing a vehicle, to invest his funds in the most attractive investment alternative available to him. However, Mr Westwood in his submissions suggested to us that cost of capital should be treated as the costs that would be incurred in actually borrowing funds for the purchase of a vehicle. These costs should be amortized over the loan period, which for the exercise before us was said to be three years. Against this background it is our task to decide whether changes should be made to the existing "formula" used to increase kilometreage rates, the basis of and extent of any change, and the date of operation. We now turn to consider more fully the submissions, material and sworn evidence put before us. In doing so each identifiable matter will be dealt with separately. This will be followed by a decision, where appropriate, or a finding on the merit. 1. Officers Required to Use their own Vehicles One of the Association's major concerns related to officers who have been required to use their own vehicles for work. Mr Guersen tendered Exhibit G.1. which illustrated the extent of the problem from the Association's point of view. The exhibit revealed, as at 20 March, 1985, that out of 1,586 officers authorised to use their own vehicles, 206 were required to use their vehicles as a condition of employment. These officers were reimbursed as if they had been required as a "prerequisite to appointment" to provide a privately-owned vehicle, i.e. any officer travelling less than the minimum 4000 kilometres for the year was reimbursed as if he had in fact travelled that minimum distance. (Transcript p.33) Mr Guersen stated that there were many more officers who by virtue of custom and practice, or for some other reason, were also required to use their privately-owned vehicles, but that they were not reimbursed the 4000 kilometre minimum when that distance had not been travelled. Whilst, Mr Westwood disputed the extent of the problem, indicating that officers who supplied their vehicle as a prerequisite to appointment numbered far less than the 206 officers the Association contended were required to supply their vehicles, he acknowledged that some other officers were required to use their vehicles in the performance of their duties. The difficulty in this matter is not in determining whether all officers who are required to use their vehicles should be reimbursed as if it was a prerequisite for them to provide a privately-owned vehicle. This is accepted. It is more a problem of identifying who these offices are. Decision On what has been presented to us we agree that a legitimate problem has been identified by the parties. Whilst it would be a relatively simple task for us to establish an arbitrary cumulative distance to be travelled in any one year after which an officer may be reimbursed according to a "required-user" rata, we feel that such a prescription would be far too broad and would not deal with the specific problem identified. On balance, therefore, we are of the view that the parties should immediately apply themselves to the task of specifically identifying those officers who, by virtue of duties they perform, are in fact "required" to provide a vehicle. Clearly those officers should be reimbursed as if it was a "prerequisite to appointment" for them to provide a privately-owned vehicle. Further, to expedite the resolution of this particular matter, we are of the view that those officers identified as "required" users should be grouped, for reimbursement purposes, in the prerequisite category. We are of the view also that the parties should prepare a draft order for our perusal on an appropriate form of words to reflect the "required to use" circumstances to be specified in subclause (4) of the kilometreage provisions. Those officers, jointly identified by the parties as "required-users", are to be reimbursed retrospectively to the date of this decision. 2. Engine Capacity We were asked to vary subclause N 2(1) by deleting the existing horsepower measurements of engine size and inserting in lieu thereof new measurements based on cubic capacity. The change from horsepower to litres was jointly sought. However the Association requested the insertion of a savings clause, which was opposed by the Controlling Authorities. We are in agreement that the present horsepower ratings should be deleted in favour of two new categories, "2 litres and above" and "Less than 2 litres". Savings Clause The Association submitted the following form of words as a proposal for a savings clause:
The Controlling Authorities did not agree with a savings provision of any kind. On balance we are of the view that a savings clause should not be inserted into the Award. There will do doubt be some officers who will not continue to be reimbursed at the 2 litre and above rate and therefore will not benefit from the revised levels of reimbursement. However, other officers will benefit as a consequence of their vehicles falling into the higher category when previously their vehicles fell into the less than 16 h.p. category. This is really a "swing and round-about" type of situation which it is not possible to cater for when regard is had for the total situation. The revised rates of reimbursement will offset to a significant extent any perceived loss of reimbursement. 3. Basis of Adjustment to Existing Rates and a Formula for Future Rate This particular matter was understandably the crux of the submissions put before us. To facilitate a precise appreciation of the submissions made, we feel it desirable to summarise the respective positions of the parties. Dealing firstly with the Association's case Mr Guersen contended that the existing kilometreage rates of 28.04 cents and 24.00 cents per kilometre for Rates A and B respectively are inadequate and accordingly fail to properly reimburse officers for expenses incurred. To demonstrate the Association's view on this matter, Mr H Kyle, District Valuer, Lands Department, was called as an expert witness. In essence, Mr Kyle's sworn evidence was as follows:-
(a) Fixed Costs i.e. registration, insurance, drivers licence and R.A.C.T. membership. (b) Capital Costs i.e. total capital outlaid for the purchase of the vehicle plus fixed costs. (c) Cost of Capital, which, was calculated on the basis of a 17 per cent return on capital. (d) Depreciation, which, was based on 22.5%, being the rate used by the Taxation Department. (e) Operating Costs i.e. petrol, oil and services, repairs and tyres, being actual costs incurred.
It was established that out of the 54,650 kilometres travelled by Mr Kyle, 33,911 kilometres had actually been travelled; in the performance of his duties. The remainder was a combination of Mr Kyle's vehicle being "on call" and private travel. Private travel was estimated by Mr Kyle to have been approximately 2,500 kilometres each year. With respect to the cost of 28.37 cents per kilometre calculated by Mr Kyle, that cost was said to be the actual cost, or whole cost, of the car. The most significant component of that cost was the total cost of capital. Mr Westwood contended that Mr Kyle, in order to reduce costs, particularly capital costs, should have considered purchasing a cheaper vehicle. The type and size of vehicle for which an arbitrary reimbursement should be made in circumstances where there is a requirement or indeed a prerequisite to provide a privately owned vehicle will be canvassed later in this decision. A further point of challenge by Mr Westwood was the manner in which opportunity cost of capital should be treated. His contention was that reimbursement for capital outlay should be based on the rate required to be paid, for borrowing capital, as opposed to opportunity cost of capital. Mr Kyle's evidence was of interest, however his assessment of actual costs would need to be adjusted when regard is had to the "on call" calculations included by him. His evidence clearly demonstrated the very real concern regarding the amount of reimbursement which should be fairly and properly made when there is a clear requirement for an officer to provide a vehicle. Existing Running Costs The applicant's claim is based on Principle 9(a)(i) of the Wage Fixing Principles. In an endeavour to demonstrate compliance with this Principle, the Association presented exhibits designed to illustrate to us that existing rates of kilometreage reimbursement are below actual running costs, for various vehicles, contained in the exhibits. Vehicle running costs for 10,000 kilometres per year over three years were calculated by the Association to be -
The above figures are based on a published survey of motor vehicle running costs conducted by the R.A.C.T. and R.A.C.V., but were calculated by the Association applying some important modifications. The Association's analysis of costs commenced with the cost of vehicle purchase as at October 1984, the time the R.A.C.T. published their survey results. Also included in the analysis were fixed costs, capital costs and operating costs. As far as petrol costs are concerned, the information provided by the Association did not, of course, take into account the most recent increase in the cost of petrol. The decided basis for adjusting kilometreage necessarily incorporates such increases. It is not intended to canvass all the information put before us in Exhibits G5. However, the Association's treatment of Capital Costs warrants further analysis. The Association submitted that in considering Capital Costs, account should be taken of vehicle purchase price, a fixed cost which is the actual amount of capital outlaid, each year, for a privately-owned vehicle. In addition to capital outlaid, the Association said there are two other components which make up total capital charges. These were said to be Cost of Capital, i.e. interest foregone on capital outlaid, and Depreciation. Interest foregone (cost of capital) was equated to mortgage rates available in Hobart. A rate of 14% per annum was used. Depreciation was calculated at 22.5%, being straight line depreciation as allowed by the Commissioner of Taxation. With regard to Cost of Maintenance, the Association's proposal on vehicle costs included the cost of a set of four new tyres after 45,000 kilometres. As all of the Association's cost figures were based on a vehicle life expectancy of three years, we are of the view, taking cognisance of the type of new tyres available, that we should exclude this cost from consideration. National Road Maintenance Authority Out attention was directed by the Association to the apparent acceptance by the Federal Commission of the N.R.M.A. survey results, published twice a year, as the proper or correct basis by which kilometreage rates should be adjusted. The N.R.M.A. rates are based on 15,000 km travel, whereas the current cut off point in the Award we are dealing with is 10,000 km. After 10,000 km is travelled different rates apply. However, it is of interest to note, that the N.R.M.A. ranges for 15,000 km as at December 1984 are as follows:-
In concluding this part of the summary of the case put by the Association, it is appropriate to comment that, for the purposes of rate comparisons, the adjusted figures for 10,000 km travel as outlined in Exhibit G5 were incorrectly calculated with regard to Operating Costs. The operating costs should be virtually identical per kilometre, for both 10,000 km and 15,000 km travelled. The principal fallacy is illustrated by the allocation of a higher cost per kilometre for cost of petrol when travelling different distances. This clearly is not the case. The net effect of the correction of this error in calculation is to bring the rates outlined in Exhibit G5 into closer proximity to the ranges of N.R.M.A. rates, referred to above. The 60.1 cent per kilometre rate is reduced by approximately 3 cents per kilometre. We now turn to the Controlling Authorities' case Mr Westwood submitted Treasury-prepared figures for our consideration. In broad terms, costs were analysed under the same heads as those presented by the Association, i.e. Capital Charges, Fixed Costs and Variable Costs (termed "Operating Costs" by the Association). However, the results of the various analyses were, needless to say, considerably different. Taking the Commodore 3.3 litre SL 6 cylinder Manual as an example, the resultant difference in approach amounted to 27.1c per km. That is to say the figures produced by Treasury indicated a cost of 33c per km, whilst the information presented by the Association indicated the cost, based on 10,000 km per year over three years would be 60.1c per km. (57 cents, if the calculation error is taken into account). One of the principal reasons for the variation in costs can be attributed to the different approach adopted by the parties to the treatment of capital costs. In the Commodore example the Controlling Authorities contended that over a three year period capital charges would amount to 23c per km whilst the Association's figure was 37.1c per km. In this regard, as already outlined, Mr Westwood submitted that if the total purchase price was borrowed to purchase a vehicle for work purposes, capital charges should be based on the interest payable on the total loan. That is how Treasury treated this cost of capital component in the figures submitted by Mr Westwood. In other words, the total of the interest for a 3 year period was amortized over the period of the loan. The point was made by Mr Westwood that opportunity cost should be disregarded as the proper measurement of cost of capital. His reasoning was that there should be no compensation to officers for capital the officer may or may not have. In his view, the appropriate basis for reimbursing an officer for the cost of capital is to say "well it would have cost you so much to borrow the money and that is the rate at which we will compensate you". Regarding fixed costs it was submitted that driver's licences and R.A.C.T. membership should not be included in any rate calculations. It was also argued that the cost of insurance should be that of a driver with a no-claim bonus. Variable costs ("operating costs" - using the Association's terminology) were assessed at a lower value by Treasury principally because service costs were deemed to be very much lower than the corresponding maintenance charges referred to by the Association. Actual Distances Travelled An area of major significance was traversed in these proceedings dealing with the question of how to strike a general rate which will properly compensate both employees who have a high capital investment and travel a small distance, and those employees in a converse situation. Mr Westwood's Exhibit W1 (as amended) indicated the average distance travelled for the financial year 1983/84 was 2,463 km per employee. In that period a total distance in excess of 3,590,000 kilometres was travelled by employees at a total cost of approximately $935,000. One of the consequences of averaging is, of course, that the real situation can become distorted. This fact was recognised by the parties. Quite obviously, one of our tasks is to put this problem into proper perspective. In this regard, Mr Westwood said that the Controlling Authorities considered that the present rates "are fair and adequate" for employees whose main reason for possessing a vehicle is for private use. However, he contended that where an employee is required to provide a vehicle for work purposes, the "unfair" burden imposed by the capital charges involved should be redressed. On this issue the Association and the Controlling Authorities were in agreement. The Association relied upon the evidence of Mr Kyle (a valuer), however Mr Westwood regarded valuers to be in a completely separate category. He identified the problem there as one relating to the strict interpretation of the provision that in order for a reimbursement to be made equivalent to 4,000 km travel an essential element was for the employee to provide a privately-owned vehicle, i.e. a prerequisite must be first established. This of course ties back to the submissions made by Mr Guersen, who requested us to accept the argument that "required to use", in fact, should have the same connotations for reimbursement as exist where it is a prerequisite to provide a vehicle. We have accepted the view of the parties on this point as indicated earlier in this decision. Indexation - CPI All Items Index It was submitted to us by Mr Westwood that the Transportation group of the "All Items Index" for Hobart is the most relevant statistic available in Tasmania reflecting transportation costs movements. As already noted, the Association requested the application of the "Motor Vehicle Operation" component (the Private Motoring sub-group) of the Transportation group in its submission in 1979/80 for an increase in kilometreage rates at that time. A comparative exercise between the All Items All Capital Cities' Index and the Hobart Transportation group index was presented by Mr Westwood, taking the adjusted 1980 rate A of 19c per kilometre as the base. This comparison showed only a marginal difference between the adjustment of the 19c rate by the All Capitals All Items Index and the Hobart Transportation group index. The latter component provided a greater increase. However, the following exercise properly establishes the difference between uses of respective indexes.
The current rate A of 28.04c per kilometre is higher than the notional 27.95c per kilometre as a result of the Short Term Wage Indexation Guidelines (SWIG) which resulted in an adjustment of 5.2% operative from 6 November 1981, which had the effect of lifting the kilometreage rate above the CPI level as from that date. The kilometreage rate has remained above the CPI level, notwithstanding that the December 1982 quarter CPI figure of 3% was not applied to the rate. To put the comparison between the increase in the All Capitals All Items and the Hobart Transportation group into perspective, the respective percentage increases indicate the following -
Therefore, if the Hobart Transportation group percentage increase of 54.95% (for the period March 1980 to December 1984) is applied to the March 1980 rate A of 19c per kilometre, the notional rate as at December 1984 is 29.44c per kilometre. This rate is 1.49 cents per kilometre above the All Items produced rate of 27.95c per kilometre. On the foregoing calculations, the "marginal difference" referred to by Mr Westwood between the All Capitals All Items increases and the Hobart Transportation group increases is not, in the strict sense, correct. The actual difference in the application of the increases being 1.49c per kilometre. However, the manner in which adjustments have been made to date, and because of the effect of SWIG, the difference in the actual rate of 28.04c per kilometre and the 29.44 per kilometre, which would have been produced by the percentage increase in the Hobart Transportation group, is not quite as great i.e. a difference of 1.40c per kilometre. It should be noted that the Hobart Transportation group includes the "Urban Transport Fares" sub-group which distorts the relevance of the use of the entire group index increases. Decision As previously stated, and as borne out by the summary of the respective submissions made to us, the end result is a wide disparity in the respective rates proposed to us. Against this background the parties have requested us to not only assist with the establishment of new rates, but also to find a formula which will stand the test of time and which can be used to periodically adjust the rate of kilometreage allowance. In dealing with this particular issue, we feel it is important that in framing our decision we do not interfere with the overall fabric of the concept of which reimbursement of kilometreage is based. We agree that officer required to provide their privately-owned vehicles or where there is a prerequisite to do so, the consequential reimbursement should recognise the "true" expenses involved. Obviously this concept does not logically adapt itself to circumstances where officers are merely authorised to use their privately owned vehicles. For this latter category of user there can be no justification for a rate of reimbursement which equates to the required or prerequisite rate and which includes a cost of capital component. The different reasons for vehicle ownership between the different categories should be patently obvious. In our view, an argument can reasonably be sustained that an officer who falls within the prerequisite or required group has little choice but to have or acquire a vehicle for his job. An officer authorised to use his privately owned vehicle usually has a vehicle purchased principally for private use. In coming to a view on this matter we agree with the Association that it is important in this decision to endeavour to establish a solid foundation on which future adjustments can be based. In considering what the platform for the base should be we are mindful of the differences in the rates suggested to us. For instance, the existing rates in the Award are considerably apart from those developed relying on N.R.M.A. and other information. Earlier in this decision we compared, for illustration, the N.R.M.A. ranges for vehicles both more than and less than 2 litres. Even on that comparison, without further extrapolation as proposed by the Association, the rates when compared to the Award rate vary significantly. There are many variables in the examples provided to us and even the N.R.M.A. rates are based on costs which do not equate to Tasmanian circumstances. Whilst we acknowledge Mr Guersen's assertion that N.R.M.A. survey results may have been accepted as authoritative in other places, we believe, on balance, that the view put forward by Mr Westwood that we should only consider Tasmanian conditions and circumstances should prevail. We appreciate that Mr Guersen did not suggest we rely on N.R.M.A. figures, but nevertheless it is appropriate for us to indicate that the variables such as cost of registration, insurance, licensing and others have persuaded to us to consider favourably the overall proposition that our deliberations are best on what the costs are in this State. Turning now to the all important question of what the appropriate levels of reimbursement should be based upon. From the respective view points of the parties there is agreement that some form of adjustment should now take place. The Controlling Authorities have proposed that Rate B (currently 24 cents per kilometre) become 27 cents per kilometre and that Rate A (currently 28.04 cents per kilometre) become 31 cents per kilometre, and that a new six cylinder rate of "no more than 33c per kilometre" be introduced. The applicants' proposals have been detailed earlier in this decision. Both the Association and the Controlling Authorities dated their calculations pre the National Wage Case decision which resulted in a 2.6% increase as from the first pay period on or after 6 April 1985. We now have at our disposal, however the March 1985 quarter CPI index numbers, and we are therefore able to incorporate the relevant index number in the calculations that follow. Base for Adjustment As the parties now advocate the abandonment of All Capitals All Items Index, a view which we support having regard to the significant disparity between the "theoretical" application of the All Items Index as detailed earlier, and the application of the Hobart Transportation group index, we make the following recommendations -
(a) the base index number for future adjustments is therefore 90.9 (March 1980, Hobart Transportation Private Motoring Sub-group index number); (b) this index number becomes a fixed component in the formula for future adjustments; (c) as at March 1985, the index number for the Hobart transportation, Private Motoring Sub-group, is 144.4; (d) therefore the resultant percentage increase (for the period March 1980 to March 1985) in the Hobart Transportation Private Motoring Sub-group is 144.4 ÷ 90.9 X 100 - 100 = 58.86%; Modifications to this formula are however required, for reasons which will follow. The formula does, however, provide a catalyst for that further refinement. The object of establishing a new "vehicle" for adjustment is to establish a fixed component in a formula that can be used on future occasions. The establishment of such a "vehicle" is, we consider essential, if what we have been requested to do, i.e. establish a new methodology which will stand the test of time, is to have any chance of success. If, as we have agreed, the total Hobart Transportation Private Motoring Sub-group index percentage increases are to be preferred, then what has been set out should meet the criteria. The "Required to Use" category and the Cost of Capital It was argued by the applicants that any formula to be used for calculating the kilometreage rates for the "required to use" and "prerequisite" category should contain a further component in recognition of the "cost of capital" that such a user would have to pay if he purchased a vehicle for employment purposes. We agree that, for such users, there should be reimbursement for cost of capital, and further analysis is required, particularly as to the manner in which cost of capital should be catered for in circumstances where there is a requirement or where there is a prerequisite for an officer to provide a privately-owned vehicle. Our research demonstrated that the cost of capital using the examples relied upon by the parties, produced a mean percentage of approximately 23% for cost of capital as a component of total running costs. But to simply apply that percentage as a "cost of capital factor" to the result reached by applying the recommended formula outlined by us would be to totally disregard the reality of the history of the establishment of kilometreage rates. It is evident that account was taken of, as it was then termed "interest on outlay" and "income foregone" in decisions previous to Commissioner Koerbin's decision in August 1980. This is particularly obvious when cognisance of material put before the Public Service Board in P.3 of 1973 is considered. Thus the 19 cents per kilometre rate determined by Commissioner Koerbin already contains consideration of the cost of capital component. In other words, some recognition of the factor now referred to as cost of capital is already incorporated in the base rate of 19 cents per kilometre, although this component is admittedly indefinable. However, we do feel that it may not have been fully recognised in those earlier decisions that this component is in the vicinity (at present) of 23%. Accordingly we have decided that for the "required to use" category, a further percentage increase of five per cent should be added to the result reached by application of the recommended formula. We point out that in actual fact the further five per cent "loading" decided upon is arguably higher than required to lift the cost of capital component to the 23% referred to. It is however, obviously impossible to extract the actual component for this cost from the present rates. Five per cent is therefore struck as an equitable figure having regard to the particular circumstances referred to. In our view, this cost of capital loading should not be further adjusted in the future. That is to say the five percent is to be regarded as an immutable percentage which is to be applied as the added cost of capital loading when rates are adjusted in the future. It is to be noted that this loading is only to be applied to rate adjustments relating to the "prerequisite" or "required to use" categories. We also take the opportunity now, whilst dealing with cost of capital to "flag" a view which may be expounded on in future hearings, namely that the prerequisite and required to use rate should not continue to include the cost of capital component once 10,000 km have been reimbursed for in any one year. In submissions to us the parties certainly did not advocate this, quite the contrary. However it is a matter which may bear closer examination in the future and we simply raise it for the attention of the parties. The Base formula for Rate A As a consequence of the foregoing analysis, the initial five-step formula for calculating the present applicable kilometreage Rata A is established as follows:
The relevant modification in this Base formula, which is required for the "prerequisite" or "required to use" category, is as follows:
The percentage increase to March 1985 has been applied to the March 1980 Rate A (19c) and a further five percent loading is added to the new rate to compensate for cost of capital. Authorised to use Category We are of the view that occasional use of a privately-owned vehicle should not attract a level of reimbursement comparable in any way to the prerequisite or required to use rate. In our view the "authorised" user rate should not include a component for the reimbursement for the cost of motor vehicle purchase and the cost of capital. Nor should that rate totally reimburse for all of the other components contained in the Private Motoring Sub-group which may be used as the basis for calculating the prerequisite/required rate. Authorised use should relate to the casual or occasional use of a privately-owned vehicle for work purposes and the rate of reimbursement should reflect this. A realistic discount would be in the order of twenty-nine per cent, if the motor vehicle purchase component is removed from the Hobart Transportation Private Motoring Sub-group. Allowing a further reduction of one per cent for other fixed cost components, the appropriate reduction is 30%. The relevant modification to the Base Formula, already outlined, is thus:
Existing Allowances to apply for Interim Period In the circumstances therefore, because of the result by the 30% reduction, it is our view that the existing kilometreage rates, as adjusted by the April 1985 National Wage Case decision should continue to be reimbursed to "authorised" users until the "new" authorised rate catches up to the rates presently prescribed (as adjusted by the 2.6% increase). However no further increases should be applied to the present adjusted rate until the "new" authorised rates do in fact catch up. Formula - Conclusion The above formula can remain constant and be used to further adjust kilometreage rates. The fixed or permanent components of the formula are the March 1980 Hobart Private Motoring Sub-group index number (90.9), and the base rate A of 19 cents per kilometre. The necessary percentage increase is determined by dividing 90.9 into future relevant Hobart Transportation Private Motoring Sub-group index numbers as they become available from A.B.S. The rates produced by utilisation of the recommended Base Formula are consequently arrived at on the basis that it is our view that the Hobart Private Motoring Sub-group, as now produced by A.B.S. is the most appropriate adjustment mechanism for the reimbursement of motoring costs. Rate B and Excess Kilometreage We are of the view that the present percentage differential between rates A and B should be maintained. Similarly the existing percentage differential between the initial 10,000 km and excess kilometres should also be maintained. Vehicle Size We are of the opinion that any reimbursement of kilometreage should take into account the type and size of vehicle an employee should be reasonably expected to provide to facilitate the performance of work required. It follows therefore that this should be a compelling factor in determining the appropriate kilometreage rates. It is therefore not our intention to examine the mechanisms which may be required to establish rates which take into account the many different vehicle makes and models that are available in the market place. Because of the many variables that already abound in an exercise of this nature, to add one more dimension, which would go beyond what is currently in the Award, would make this exercise almost impossible. We are of the view the categories of vehicles in the Award, and the amendment to substitute litres in lieu of horsepower, adequately reflect what may be regarded as what an employer may be "reasonably expected to provide". Part-Time Employees Mr Westwood submitted that officers who "have to provide a vehicle" should be reimbursed a proportion of the 4000 kilometre minimum payment provided for in clause 4N, sub-clause 2 (4) of the Award. We accept the proposition that a pro-rata payment should be made in circumstances where a total of 4000 kilometres is not travelled in any one year. The pro-rata payment should be based on the relationship actual hours worked have to full-time hours for the work performed. Retrospectivity As this matter has now been in "progress" for some considerable time, initially before the Public Service Board, and then subsequently there was a long period of negotiation and discussion between the parties themselves, some seven to eight months, the notion of retrospectivity is put into proper perspective. In all, the matter was before this Commission a relatively short period when it is considered hearings were completed on March 26 this year. In all of the circumstances and given the fact that kilometreage allowances have been recently increased by 2.6%, as a consequence of this Commission's National Wage Case decision, we are of the view that the "new" allowances should operate from the date of this decision. Timing of Future Rate Adjustments Accordingly the following adjustments should now be made:
We are of the view that subsequent percentage increases should be calculated on a six-monthly basis, after each March and September quarter index number becomes available from A.B.S. The operative date for the consequential increases to be the first full pay period commencing on or after the "availability" date. Other Matters 1. Motor Cycles:
2. Use of Vehicles in Remote Areas:
Wage Fixing Principles The matters before us were developed within the framework of Principle 9 (a)(1) of the Wage Fixing Principles which is as follows:
On what has been presented to us and as a consequence of our proposed formulas for calculation, we are satisfied that the matter can be appropriately dealt with in accordance with Principle 9(a)(1). The new rates foreshadowed in this decision will provide for the reimbursement of expenses incurred, and that is the intention stated in the particular Principle. Public Interest The proposals contained in this decision will not offend the public interest provisions in the Tasmanian Industrial Relations Act 1984. The reality is that kilometreage allowances recognise reimbursement of expenses incurred. The alternative to making such reimbursements is to provide officers with vehicles for their use for the performance of their duties, where this is a requirement. Orders We would request, subject to further discussions with a member of this Bench, draft orders to be prepared by the parties for our perusal. |