TASMANIAN INDUSTRIAL COMMISSION
Industrial Relations Act 1984
s23 application for an award or variation of an award
Tasmanian Trades and Labor Council
(T10230 of 2002)
Private Sector Awards
[T10288 of 2002]
Private Sector Awards
[T10289 of 2002]
Private and Public Sector Awards
See end of Decision for Orders
PRESIDENT P L LEARY
DEPUTY PRESIDENT R J WATLING
COMMISSIONER T J ABEY
HOBART, 11 July 2002
Wage Rates - State Wage Case July 2002 - applications to vary private sector awards in a manner consistent with the Australian Industrial Relations Commission decision in Print PR002002 - Safety Net Review 2002 - Award rates increased by - $18 per week - Wage related allowances increased by 3.55% - Meal allowances increased to $11.90 - Supported Wage increased to $56 per week - Operation ffpp 1 August 2002 - State Minimum Wage determined at $431.40- s.35(1)(b)
REASONS FOR DECISION
 These are a number of applications made pursuant to s.23 of the Industrial Relations Act, 1984 (the Act) by the Tasmanian Trades & Labour Council (TTLC) to:
1. increase all award rates and existing allowances relating to work or conditions, in private sector awards of the Tasmanian Industrial Commission (TIC), from a common operative date of, on and from the beginning of the first full pay period to commence on or after 1 August, 2002, in accordance with the decision of the Australian Industrial Relations Commission (AIRC) of May, 2002, contained in Print PR002002 - Safety Net Review - Wages;
2. vary a number of nominated awards of the TIC to increase the meal allowance by 2.4% being the movement in the Consumer Price Index (CPI) June 2001 to March, 2002;
3. vary clauses in awards of the TIC to increase the Supported Wage payable from $51.00 per week to $56.00 per week to reflect the decision of the AIRC;
4. provide for a minimum wage that is payable to adults without regard to the work performed of $431.40 per week;
5. and, to the extent necessary to effect the changes, amend the Principles of the TIC.
 One of the applications by the TTLC seeks to vary awards to reflect the decision of the AIRC in the Safety Net Review of March, 2002, and was not opposed by the Tasmanian Chamber of Commerce and Industry Limited (TCCI). The AIRC "decided to award an increase of $18 per week in all award rates."
 The TTLC and the TCCI referred to a Memorandum of Understanding reached between them which provides that:
"1. Wage rates in private sector awards be increased by the safety net adjustment of $18.00 per week including junior, apprentice and trainee rates (on a proportionate basis) as from the first full pay period to commence on or after 1 August 2002.
The safety net adjustment be reduced to the extent of any over award payment or enterprise bargaining increase currently being paid by the employer.
2. Wage rates in private sector awards will only increase by the safety net adjustment as from the first full pay period on or after 1 August 2002 where:
existing wages rates have been varied to include the arbitrated safety net adjustment arising out of the August 2001 State Wage case, and
a period of 12 months has elapsed since the wage rates in the award were increased to reflect the safety net adjustment arising out of the August 2001 State Wage Case.
In awards where the variation for a safety net adjustment arising from the August 1999, August 2000, August 2001 or August 2002 State Wage Case decisions is by consent and does not result in an increase in the wage rates actually paid to employees or increase the wage costs for any employer, any applicable 12 months' delay between variations may be waived.
3. Existing allowances relating to work or conditions be increased by 3.55% as from the first full pay period on or after 1 August 2002."
 The Minister for Industrial Relations noted that a State election was to be held on July, 20. Mr Pearce, representing the Minister, said ".....from the outset I wish to make it clear on behalf of the government that it intends to and will respect the conventions which attach to caretaker government. Accordingly we will refrain from articulating any particular position relating to the application of the Trades and Labor Council, which is the focus of these proceedings. However, I would take the opportunity to inform the Bench and the parties of the position adopted by the incumbent government in the most recent safety net review of wages proceedings before the Full Bench of the Australian Commission. That position is of course a matter of fact and on the public record. In those proceedings the Labor states of Tasmania, New South Wales, Victoria, Queensland and Western Australia joined together in the presentation of a combined submission. Central to that submission was support for the granting of the ACTU claim in full, predicated upon expectations of a relatively favourable economic outlook. In the alternative joint Labor states sought the granting of the maximum wage increase which was consistent with the evidence to ensure the maintenance of a genuine safety net for the low paid. In its 2 May decision the Australian Commission determined, inter alia, an $18 per week increase to the minimum wages safety net."
 Mr Pearce referred to the current wage fixing principles and said: "Principle 4 pronounces existing wages and conditions of the Commission's awards to constitute the safety net underpinning work place bargaining. The principle also contemplates the review and adjustment from time to time to the safety net to ensure its relevance. In our submission it cannot be said that the application of the Trades and Labor Council is anything other than a furtherance of that object. The Commission, upon satisfying itself as to the public interest considerations of section 36, has the discretionary power to act to grant that which is sought by the applicant pursuant to section 35(7) and (8). Finally, in accordance with section 20, the Commission, in exercising its jurisdiction under the Act, is mandated, amongst other things, to act according to equity, to do such things to effect conciliation, and importantly to settle claims by agreement between the parties. On the latter point, the Commission would be cognisant of the level of agreement which permeated the State wage cases in recent years, notably '96, '97, '98, 2000 and 2001."
 Ms Fitzgerald, on behalf of the TTLC referred to the decision of the AIRC and in particular where the AIRC had regard to the likely economic effects of a safety net adjustment. It said:
"A number of the parties made submissions about the impact of the safety net adjustment on productivity growth, and noted there is no direct evidence of the effect of safety net increase or bargaining increases on productivity. There is no evidence to support the contentions that safety net adjustments are an impediment to productivity improvement within firms paying them, and that productivity improvement will be necessarily greater in firms paying bargained wage increases. There is, however, material which suggests that sectors characterised by high award reliance, such as the wholesale and retail sector, and the hospitality sector, have contributed to the improved productivity growth of the past decade. The strong productivity growth enjoyed over recent years does not suggest to us that safety net increases awarded since 1997 have been detrimental to aggregate productivity growth. In our view the safety net adjustments awarded will not constrain productivity growth."
 Further the Full Bench had noted the impact of the increase in the minimum employer superannuation contribution effective from 1 July, 2002, and said "the increase in superannuation is a factor we have taken into account in deciding the present applications." The AIRC concluded that "Whilst real growth can adversely affect aggregate employment growth, the extent of such effect will depend upon the prevailing economic circumstances and the extent of the real wage movement, and that the limited addition to aggregate wages growth associated with our decision will not have a significant real wages effect."
 Ms Fitzgerald provided a history of the establishment of the federal minimum wage. She said:
"In 1997 the Federal Commission decided to determine a minimum wage to be called the Federal minimum wage for full-time adult employees in a conservative response to an application by the ACTU for a living wage. The Federal minimum wage was established as the wage below which no full-time adult employee working under a Federal award was to be paid. The ACTU had sought the minimum wage payable under the Metal Industry Award, for example, to go to $380.00 per 38 hour week. The Commission set the Federal minimum wage for full-time adult employees at $359.40 and for junior, part-time and casual employees a proportionate amount. The Commission stated in that decision which was print P1997 at page 77 that it decided not to link the level of the Federal minimum wage with any defined benchmark of needs but rather to equate the Federal minimum wage with the minimum classification rate in most Federal awards, that is the rate of the C14 classification in the Metal Industry Award."
 In respect to the creation of a State minimum wage Ms Fitzgerald said:
"The Federal Commission clearly decided to set a floor below which a wage actually paid to an employee for ordinary time should not fall. In determining the actual quantum and indeed the safety net adjustment, the Commission in 1997 took account of contemporary economic factors including levels of productivity; inflation; the desire for high employment; living standards generally and the needs of the low paid, as indeed the Commission has in subsequent living wage cases. With regard to other relevant jurisdictions, the jurisdictions of New South Wales, South Australia, Queensland and Western Australia, the Federal minimum wage has been adopted in these jurisdictions. While in 1997 at the State wage case we did not seek to flow on the Federal minimum wage and to establish a State minimum wage, the effect of the flow on of this and past safety net adjustments and the reformatting of awards has resulted in the adult full-time entry level classification in most awards being the Federal minimum wage. Therefore for the majority of private sector awards the establishment of a minimum wage for all adult full-time workers will have no actual effect. However, I understand that there are some awards in which the adult entry level rate of pay is below the current Federal minimum wage which was $413.40. Some, because of the minimum rates adjustment - some because the minimum rates adjustment requirements have not been completed; some because past safety net adjustments have not been applied; some perhaps because no one relies on the award for their wages and conditions and some perhaps because the entry level rate is set at less than 80 per cent of the tradesperson's rate. However, I argue that whatever the reason awards in this jurisdiction like the Federal and other State jurisdictions must ensure that the Federal minimum wage be established as the floor."
 Mr Watson referred to a TCCI publication, "The Tasmanian Economy July 2002". This statistical overview with commentary noted that the State economy had remained resilient in the face of a slowdown in national and world growth that occurred during late 2001.
"All things considered and apart from its labour market the Tasmanian economy since the last State Wage Case has performed admirably."
 The Tasmanian economic indicators of State Final Demand, Business Investment, Residential and Non residential Building Activity and Business Confidence compared favourably with the national position over the past 12 months.
 The commentary concluded with the following observations as to the future outlook:
"This analysis confirms in large measure a growing perception that the Tasmanian economy is increasingly on track. It is not yet firing at the level we would otherwise like but it is definitely making steady progress.
Tasmania's labour market remains an area of concern. As is clearly evident this indicator is some significant distance away from commencing its road to recovery.
However in all other areas Tasmania's most recent growth cycle looks set to prevail.
The Tasmanian economy should remain sound given the ongoing strong performance of the National economy and the inevitable resurgence of Tasmania's export destinations."
 We are satisfied that the grant of the application for the safety net adjustment would not offend the public interest requirements of s. 36 of the Act. Accordingly awards will be varied in terms consistent with Memorandum of Understanding referred to above.
 The application to vary the meal allowance in awards of the TIC by the movement in the CPI, June 2001 to March 2002, is not opposed and the meal allowance in all awards will increase from $11.60 to $11.90 effective from the first pay period on or after 1 August, 2002. This application is granted as we are of the view that it is consistent with the Wage Fixing Principles and the methodology previously adopted by the Commission when varying the meal allowance provisions. In addition we believe it to be more efficient and effective to review this allowance at the same time as the State Wage Case hearing.
 The TTLC and the TCCI have also agreed that the supported wage be increased in accord with the decision of the AIRC in Print PR918422. In respect to the supported wage we endorse the agreement between the parties. Accordingly the supported wage will increase from $51.00 to $56.00 per week effective from the first pay period on or after 1 August, 2002.
 The application to introduce the federal minimum wage into awards was not opposed by the TCCI where the award rate is presently at the level of the federal minimum wage or in excess thereof. Nevertheless we are of the view that the application requires further consideration inasmuch as the current provision in awards is not consistent. During proceedings a number of issues were identified which may require attention. To that end we determine the following:
where awards provide the lowest adult weekly wage rate either at or in excess of $431.40, the minimum wage will be reflected as $431.40 and contained in a separate clause in the award in the form set out in a new Wage Fixing Principle attached to this decision. This will be operative from the first pay period on or after 1 August, 2002;
in awards where the minimum wage can apply as a result of this decision, there will be no `flow on' of its application to any award conditions which rely on an amount prescribed for the minimum wage; eg. where the annual leave loading is reliant upon a minimum wage or some other amount for calculation;
pursuant to the provisions of s.35(1)(b) of the Industrial Relations Act, 1984 (the Act), the minimum wage will be $431.40 per week;
in respect to awards:
(a) where the lowest adult weekly wage rate prescribed therein is less than $431.40; or
(b) the minimum rates adjustment process has not been completed; or
(c) where the award is reliant upon a minimum wage or some other amount for the purpose of calculating the annual leave loading;
each member of the commission will, in their respective area of responsibility, convene a conference of the parties who have a statutory or registered interest in each of the awards that fall into the category specified above;
 Those conferences will consider:
1. the relevance of the award; the parties may be required to show cause why a particular award should not be set aside;
2. the specific conditions prescribed in the award and the effect on additional costs, if any, that may result with the introduction of a minimum wage of $431.40;
3. whether or not the particular circumstances of the award warrant the phasing in of the minimum wage over a period of time, however we are of the view that within a period of no longer than three years all awards of the TIC will reflect a minimum wage amount being the same as the federal minimum wage;
4. the progress of the award reformatting and minimum rates adjustment process for that award and the impact, if any, with the introduction of a minimum wage of $431.40;
5. the effect of registered agreements in the area of the award under review and the impact, if any, with the introduction of a minimum wage of $431.40;
6. where awards are reliant upon a minimum wage or some other specified amount for the purpose of calculating the annual leave loading whether the annual leave loading should be converted to a loading being 17.5% of the relevant award rate;
7. any award variations required to be made as a result of the conference process will require a separate application made for that purpose.
 As can be seen we propose a cautious approach, under the direction of the Commission, to ensure the implementation of a new minimum wage does not impose an additional cost burden on employers but provides employees with a minimum wage consistent with employees in all other States.
 In due course members of the commission will issue orders, in their respective areas of responsibility, giving effect to this decision.
P L Leary
Ms L Fitzgerald for the Tasmanian Trades and Labor Council
Mr P Tullgren for the Australian Liquor, Hospitality and Miscellaneous Workers Union - Tasmanian Branch
Mr P Griffin for the Shop, Distributive and Allied Employees Association, Tasmanian Branch
Mr T Kleyn for the Health Services Union of Australia, Tasmania No 1 Branch
Mr I Paterson for the Australian Municipal, Administrative, Clerical & Services Union
Mr M Watson for the Tasmanian Chamber of Commerce and Industry Ltd, the Tasmanian Farmers and Graziers Employers Association Inc., the Australian Retailers Association Tasmanian Division and the Victorian Automobile Chamber of Commerce with Mr N Behrens.
Mr T Pearce intervening on behalf of the Minister for Industrial Relations
Date and place of hearing:
Architects (Private Industry)
Australian Cement Holdings Enterprise
Automotive Industries and Correction (11.8.2003) and Correction (5.9.2003)
Barristers and Solicitors
Broadcasting and Television
Building and Construction Industry and Correction Order
Business Services and Correction Order
Butter and Cheesemakers
Child Care and Childrens Services
Clay and Mud Products
Cleaning and Property Services
Clerical and Administrative Employees (Private Sector)
Community Services and Correction Order
Disability Service Providers
Draughting and Technical Officers (Private Industry)
Electrical/Electronic Trades (Public Sector)
Farming and Fruit Growing
Fibreglass and Plastics
Fish, Aquaculture and Marine Products
General Conditions of Employment
Hairdressing, Health & Beauty
Health and Fitness Centres
Hotels, Resorts, Hospitality and Motels
Independent Schools (Non-Teaching Staff)
Independent Schools (Teachers) Tasmania
Laundry and Dry Cleaning
Leather, Canvas and Sheet Plastic Fabrication and Correction Order
Licensed Clubs and Correction Order
Meat Processing Industry
Medical Diagnostic Services (Private Sector)
Medical Practitioners (Private Sector)
Metal and Engineering Industry
Metal Trades (State Employees)
Miscellaneous Workers (Public Sector)
National Training Wage (Tasmanian Private Sector)
North West Water Authority Enterprise
Pasminco Hobart Smelter Enterprise
Photographic Industry and Correction Order
Plant Nurseries and Correction Order
Port Arthur Authority
Printing Authority of Tasmania
Professional Engineers and Scientists (Private Industry)
Quarrying and Lime Processing
Restaurant Keepers Award
Retail Trades Award
Silviculture and Afforestation
Southern Regional Cemetery Trust Staff
Surveyors (Private Industry)
Wholesale Plant Bakeries