IN THE TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984

REASONS FOR DECISION

The application before the Commission, made by the Tasmanian Public Service Association (the Association), seeks to adjust, by the movement in the Hobart Consumer Price Index for the period March 1986 to March 1987, being 12.36%, nominated expense related allowances contained in certain specified public sector awards.

The allowances so requested to be increased and the awards which provide for them are as set out in `Attachment A' of this decision.

Mr Sevens, representing the Minister for Public Administration (the Minister), supported the Association's claim subject to certain exceptions which will be dealt with later in this decision.

It was submitted by Mr Geursen, appearing on behalf of the Association, that the variations to the allowances sought to be made are in accord with Principle 6(a)(i) of the Commission's Wage Fixation Principles.

The Association's Claim

Mr Geursen submitted that expense related allowances provide for a reimbursement of costs where either immediate expenses have been incurred by employees on behalf of their employer or where there has been an accumulation of costs over a longer term, as in the case of tool allowances.

The Association expressed the view that expense related allowances should be updated on a regular basis by movement in the Hobart consumer price index.

It was submitted that adjustments should be made in March and September of each year, following the release of the relevant data by the Australian Bureau of Statistics.

Mr Geursen indicated that it was not the intention of the Association for the Commission to examine each of the nominated allowances having regard to equity and merit.

Rather on this occasion, the allowances should be adjusted to reflect, as far as possible, general changes in levels of expenditure.

It was submitted that the adequacy of the adjustments made in that manner may be tested from time to time by way of a `full inquiry' to ensure `that indexation has delivered the goods'.

Datum Point for Adjustment

The June 1986 National Wage Case decision of the Australian Commission was in response to union applications to adjust wages and salaries based on CPI movements in the September and December 1985 quarters.

Accordingly, it was submitted by Mr Geursen that the subsequent decision by this Commission had the effect of adjusting expense related allowances for the 6 month period ending 31 December 1985.

Given that situation, we agree that 31 December 1985 is the correct datum point for the consideration of whether or not a further adjustment to expense related allowances is now appropriate.

On that premise, the Association constructed an index with a base number of 100. By application of each quarterly movement in the CPI since December 1985 to the base number, the following exhibit was produced by the Association:

The above methodology relied upon by the Association, which produces an increase of 12.36%, was challenged by Mr. Stevens.

He submitted that percentage changes between quarterly CPI index numbers should be calculated in accordance with the formula used by ABS and which was illustrated in his Exhibit S1, an extract from the `Consumer Price Index March Quarter 1987' catalogue.

The ABS formula, using the Hobart CPI, produces the following percentage increase:

We consider that the latter approach is more appropriate in this instance, as it produces the percentage change for the period as a whole, as opposed to the quarter by quarter approach which obviously involves a rounding off at each quarterly interval.

Hobart or Eight Capitals CPI

Mr Geursen encapsulated the view of the Association as to the appropriateness of the Hobart CPI to adjust expense related allowances when he said:

"The Hobart index broadly reflects the expense level changes in Tasmania. Obviously the General Conditions of Service (Award), with a few minor exceptions, deal with expenses in Tasmania."

In brackets ours

and later:

The submission made on behalf of the Minister on this issue was that the appropriate basis for adjustments to be made to the various allowances is movement in the CPI for the weighted average of the eight capitals; which for the period in question is 11.96%.

The view advanced by Mr Stevens was that Tasmania is part of the centralised wage fixing system and as such the eight capitals CPI provides the starting point for National Wage Case deliberations.

For reasons detailed later in this decision, we are of the opinion that the weighted average of the eight capital cities CPI is the appropriate index in the current circumstances.

In the `Kilometreage Allowance case' (T.33 of 1985) a comprehensive review was undertaken before a Full Bench which resulted in derivation of a formula for adjustment of that particular allowance by reference to movement in the Private Motoring subgroup of the Hobart CPI Transportation group.

However, in this matter, detailed reviews of the allowances sought to be adjusted are not being made.

Accordingly, the merits of the basis of adjustments have not been able to be canvassed to the extent necessary to persuade us to alter the existing method of adjusting the type of allowance in question.

Similarly, we refrain from awarding automatic six monthly CPI adjustments for the various expense related allowances.

As has been the general practice in the past, it is a matter for State Wage Case Full Benches of this Commission to determine how and when salaries and allowances are to be varied, if at all.

Obviously, as with the Kilometreage Allowance case, if an allowance is the subject of a comprehensive review, the Commission may decide on an appropriate method of adjustment distinct from straight application of such decisions.

Until that occurs, however, all such allowances are generally subject to State Wage Case decisions, such as the latest one which immediately preceded this application, and the mechanisms for adjustment determined therein.

Travelling Allowance

Mr Geursen indicated that it is the Association's intention to put a full substantive case before the Commission in the near future to increase this allowance.

That being the case, the Association requested the Commission `intervene' to ensure:

"... that if a member produces receipts which demonstrate that the actual cost was higher (than the allowance covers), that they should be entitled to be reimbursed for those actual costs by way of the authority of this General Conditions of Service Award."

In brackets ours Transcript p.32

Essentially Mr Geursen suggested that Clause 8(0)(3.3) of the General Conditions of Service Award be varied to remove the authority vested in the controlling authority to determine whether or not special circumstances exist which justify payment in excess of or at variance with the rates specified in the award.

The rationale advanced by the Association was that the award should be varied so that in the event of disagreement between the controlling authority and an employee as to the existence of `special circumstances' the matter could be referred to this Commission.

As Mr Stevens had not been made aware, prior to the hearing, that the Association was going to raise the issue of a proposed variation to the travelling allowance claim, his submission that the parties should confer on this issue raised during proceedings was imminently sensible.

As the Association has announced that it intends to launch into an in-depth review on this allowance, detailed discussions between the parties as a precursor to coming before the Commission are appropriate.

Accordingly, at this time, we will not entertain a variation to the existing clause; suffice to say that, prima facie, the whole clause appears to be in urgent need of reassessment.

Submissions on Behalf of Minister

As previously indicated the Minister supported the Association's claim subject to certain exceptions; some of which have already been identified in this decision thus far.

Mr Stevens further submitted that the Minister did not support the adjustment of all of the allowances nominated by the Association.

Mr Stevens said:

"Our non-opposition (to the claim) is based on the premise that all the allowances mentioned must be clearly demonstrated by the applicant to be expense related."

In brackets ours Transcript p.46

In that context, several allowances were cited by Mr Stevens which, in the opinion of the Minister, are not totally expense related, but also include a disability or some other non expense component.

Allowances falling within this category were said to be Camping Allowance; District Allowance and Sea Victualling Allowance.

Mr Stevens suggested that the onus should be on the applicant to demonstrate which part of these allowances are expense related.

Whilst Mr Stevens' point is apposite, account has to be taken of the history of movements in these particular allowances and the fact that they have also been adjusted by previous State Wage Case decisions.

If we take on board the thrust of the Association's arguments, as we do, and the need for proper merit reviews of public sector allowances to be undertaken, we consider it reasonable at this point in time for these allowances to be adjusted on the same basis as pure expense related allowances, as occurred prior to the awarding of the flat $10 1^st tier National Wage increase.

In this regard there is no impediment to the Minister making application for an examination of particular allowances which he considers should be adjusted on a different premise to the one relied upon to date.

Mr Stevens himself acknowledged how all allowances have been adjusted in the past. He said:

"... this case is a unique case. It's one that's made unique by the fact that the National Wage Case decision, as we all well know was a flat $10 increase and before all allowances, expense related or otherwise, have been increased by whatever the National Wage Case decision was.

Transcript p.48

Board and Lodging and Meals on Duty

Mr Stevens request that these allowances be increased by 11.96% as they are expense related `allowances' for the employer.

Whilst the Minister is not the applicant in this case Mr Geursen agreed to the adjustment of these `allowances' being considered by the Commission as part of this matter.

Adjustment of Allowances

Given the history of movement of the allowances in question we have decided to increase all of the allowances, subject to this decision and as identified in `Attachment A' hereto, by 11.96%.

This type of adjustment is contemplated by the current wage fixing principles adopted by this Commission. Principle 6(a)(i) is as follows:

"Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect the relevant change in the level of such expenses."

Whilst doing so, we reiterate our endorsement of the approach, foreshadowed in these proceedings, that detailed reviews of specific allowances be undertaken.

In the meantime it would not be in the public interest to withhold the increases flowing from the application of the movement in the consumer price index over the designated period.

Operative Date

The operative date for the adjustment of the allowances in question will be from the beginning of the first full pay period commencing on or after the date of this decision.

We have requested individual Commissioners to issue the necessary orders giving effect to our decision.

The relevant orders are attached hereto.