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Industrial Relations Act 1984
s23 application for award or variation of award

Tasmanian Trades and Labor Council
(T12940 of 2007)
Private Sector Awards
Public Sector Awards

See end of Decision for Awards varied



HOBART, 16 July 2007

Wage Rates - State Wage Case 2007 - application amended - application to vary private and public sector awards - award wage rates to be increased by $22.70 per week - wage related allowances to be increased by 3.8% - meal allowance increased to $14.10 - State Minimum Wage rate determined at $527.10 - s.35(1)(b) - operative date ffpp 1 August 2007

Amended Wage Fixing Principles

[1] This is an application by the Tasmanian Trades and Labor Council (TTLC) lodged pursuant to s.23(2)(b) of the Industrial Relations Act 1984 (the Act) to vary all private sector awards to:

(i) increase all award rates and allowances by 4.0%;

(ii) increase the minimum wage to $523.95 per week;

(iii) obtain a special increase of rates of traveling allowances in all relevant awards; and

(iv) the extent necessary to effect the changes amend the Principles of the Commission.

[2] The TTLC advised the Commission and the other parties prior to the hearing, that it would seek to amend its application "having had the benefit now of the national accounts to the end of March which weren't available at the time of the original application."

[3] Accordingly the application was varied, with no objection, to:

(i) increase all award rates and allowances by an amount of 4.5%;

(ii) to increase the minimum wage to $527.10 per week; and

(iii) to increase the rate for the meal allowance in awards to $14.10 per meal.

[4] The TTLC further varied the application, again without objection, to have any increases granted apply to all public sector awards as well as all private sector awards.

[5] The operative date for any variations would be the first full pay period to commence on or after 1 August, 2007.

[6] The TTLC submission embraced the National and State economies; issues going to the impact of previous wage increases on employment, matters of equity and fairness and the relative bargaining position of many lower paid workers. In advancing this submission Mr Cocker said:

"It is our submission that the indicators for both the Australian economy and the Tasmanian economy show that both economies remain strong, and that all forecasts indicate that this will continue.

It is our submission that the rises applied for are reasonable and moderate outcome, that they are required to maintain both the real and relative positions of the award and minimum wage-reliant workers in Tasmania, and in buoyant economic times there should be no discounting of wages from this objective."1

Australian Mines and Metals Association (AMMA)

[7] The AMMA advised the Commission that "All members of AMMA engaged in Tasmania are trading corporations and by virtue of section 16 of the Workplace Relations Act 1996 are not subject to the Tasmanian jurisdiction.

AMMA does not intend to appear at this hearing or make further submissions."

Association of Independent Schools of Tasmania

[8] The above Association advised that it did not intend making any submission to the Commission in respect to the application "at this stage, though this decision may be subject to change." The Association did not appear in the proceedings and has not provided any submissions.

Tasmanian Chamber of Commerce and Industry Limited (TCCI)

[9] The Tasmanian Farmers & Graziers Employer's Association (TFGEA) was represented by the TCCI and supported its submissions.

[10] Mr Buchanan, appearing for the TCCI, submitted that the Commission should not proceed to determine the TTLC application but await the determination of the Australian Fair Pay Commission (AFPC) to enable that decision to be taken into account in our deliberations. It would then be appropriate for the Commission to invite the parties to provide further submissions to allow comment on the decision of the AFPC.

[11] He said that there was "....a genuine public interest issue. We do have a situation where I think there is great confusion out there and I am not looking to ascribe as to who is right and who is wrong in all of this, but the reality of the public interest is there is confusion."

[12] Further he said that "....there is a potential for vastly different outcomes between the federal system and determinations from this Commission, that is not in the public interest and it is something we should address."

[13] In respect to the claim that increases are needed to maintain equity for the low paid Mr Buchanan referred to the Household Income and Labour Dynamics in Australia (HILDA) Survey which he said indicated that wages have grown very strongly at the bottom of the wages distribution and there have been significant increases. He said that "...the argument that the lowest paid in the community are doing poorly isn't actually borne by that sort of statistic and I think that is quite a significant bit of data."

[14] Mr Buchanan questioned who were the low paid workers that the claim by the TTLC seeks to protect; to that end he referred to a comment by Professor Harper of the AFPC in a recent address to the Press Club where Professor Harper said:

"While acknowledging the role of minimum wages in securing the social security net, I must point out that the AFPC is not constituted primarily as an anti-poverty commission.

I say this not to down play the importance of minimum wages in providing a safety net for low-paid Australians but to acknowledge that minimum wages can only ever be a bit-player in this regard.

They are not targeted narrowly enough to address genuine disadvantage. For example, significant numbers of low paid workers live in high income household."2

[15] A survey of TCCI members known as The Tasmanian Survey of Business Expectations was tendered by Mr Buchanan. He noted that the opinion expressed in that survey was that "... the composite Business Barometer Index shows us that a downturn for the economy in the near future is imminent if the downward trend of recent quarters continues."

[16] We note that the survey also said that "The availability of suitably qualified employees remained the outright number one constraint on business. Direct and indirect labour costs and insurance were the next largest constraints."

[17] The TCCI submitted that any increase should be no more that the Consumer Price Index (CPI) of 2.1% which would represent an increase of $10.60 on the minimum rate paid as a flat award increase.

The Minister for Justice and Workplace Relations

[18] It was submitted on behalf of the Minister for Justice and Workplace Relations (the Minister) that "an increase of $20.00 to all Tasmanian private sector awards of the Commission and a similar adjustment to the Tasmanian minimum wage, pursuant to sections 35(1)(b) and 47AB of the Act, is appropriate and will provide a fair and effective safety net of minimum wages for all award covered employees. It is also the government's position that all work related allowances should be increased by an amount of 3.35% which represents the percentage adjustment of the $20 increase at the trades persons rate as expressed in the metal and engineering award."

[19] The Minister agreed with the claim by the TTLC to increase to $14.10 per meal the meal allowance found in the relevant awards.

[20] Mr Evans, on behalf of the Minister, said that the increase it proposed reflects the submission it made to the AFPC along with the States of Victoria, South Australia, Western Australia, and the Australian Capital Territory and the Northern Territory, Further it was submitted that the increase proposed is both reasonable and responsible and will not have a detrimental effect on either employment or individual businesses.

[21] In respect to the claim by the TTLC for a percentage increase the Minister said that consistent with the submission in the 2006 State Wage Case that the issue about flat wage increases and the consequential effect of a compression of relativities is a matter that should be determined separately from this application.

[22] It was submitted that the Tasmanian economy continues to perform strongly and that the outlook for 2007 and 2008 is positive.

[23] In respect to the Commission's wage fixing principles the Minister was of the view that no change was necessary other than any consequential change required to reflect the Commission's decision.

The Minister administering the State Service Act 2000

[24] The Minister administering the State Service Act 2000 (MASSA) did not oppose the amendments proposed by the TTLC and in particular supported the amendment to flow any increases to wages and allowances which may result from this decision to public sector awards.

[25] Mr Baker, appearing for the MASSA, provided a history of wage fixing principles and submitted that "Whether those principles remain relevant in the context of wage fixing parameters as we know them today is a debate which I am sure we will all have at some stage in the near future."

[26] He also discussed processes currently being undertaken in respect to public sector awards of this Commission and advised that the Tasmanian Government is engaged in an exercise to "review wage classification standards and structures and to develop a new contemporary model to replace the old."

[27] Further he said that "today there is in excess of some 50 enterprise/industrial agreements and some two dozen plus awards that have application to the employees in question. Our quest is to reduce both the award and agreement coverage into a single, consolidated award document if possible."

[28] Mr Baker submitted "...fundamental to that review, that is hand-in-glove, is a requirement to review and rationalize the industrial agreements that pertain to them. Therefore, if you rationalize the agreements, rationalize the awards that underpin them and the content contained therein, a mechanism is necessary to enable the parties to those awards and agreements to place the content into a prescriptive format, providing security of outcome. We contend that such security of outcome may be achieved by consolidation of wages and conditions into a single award document that would have application of up to 13,000 employees. I pose the question whether the Commission can amend its principles in the manner sought."

[29] It was said that the proposed amendment to the principles was in the public interest and did not offend the Commission's statutory obligations pursuant to sections 19, 23 and 36 of the Act. The variation will only impact on public sector awards and agreements. Mr Baker said that the amendment provides no opportunity for a party to a public sector award to seek a variation to it other than through the existing wage fixing principles which will continue to provide consistency of outcome for all parties who appear before the Commission either in the private or public sectors.

[30] Mr Baker submitted that the current wage fixing principles required amendment to allow the exercise being undertaken to be finalized.

[31] The proposed amendment seeks to vary principle 13 in the following terms:

"13.3 Consistent with this Principle and Principle 6.2 by extension, public sector awards may be varied from time to time to reflect salary rates and conditions of employment as may be agreed between the parties bound by relevant public sector awards."

[32] There was no objection raised by any party to the proposed amendment to principle 13.

The Economic Summary

[33] Wage/Price Environment

In relation to wage movements in the wider community over the past 12 months, the following picture emerges:


March 07

Feb 07

Feb O7

March 07













Source: ABS catalogue 6302.0, 6345.0

Average Annualised Wage Increases for All Current Wage Agreements

All sectors



Private sector



Public sector



Source: DEWR trends in Federal Enterprise Bargaining March Quarter 2007

[34] Mr Buchanan submitted that the claim of 4.5% represented a premium over CPI of 2.4%, an amount unprecedented in recent memory. He contrasted the position in Western Australia, whereby the 4.8% increase amounted to a premium of 1.3% over the W.A. CPI of 3.5%.

[35] Mr Cocker acknowledged that the claim did represent a premium over CPI, but said that this must be seen in context. Whilst the headline rate may be 2.1%, the key sub-components of Food (4.7%) and Housing (2.9%) were of most impact for the employees likely to be affected by this application.

The Economy; State and National

[36] The following summary and commentary has been distilled from the submissions of the parties, together with a range of publications including the Commonwealth's Mid-Year Economic and Fiscal Outlook 2006-07, Commonwealth and State budget papers, ABS data and economic surveys.

[37] On any objective measure the national economy continues to perform strongly. The growth estimate for 2006/07 is 2.5%, which, largely due to the drought, is down from the previous Commonwealth Budget forecast of 3.25%. However GDP is forecast to accelerate to 3.75% in 2007/08.

[38] Employment growth at 3.1% over the year to April 2007 has been stronger than expected leading to the unemployment rate falling to a 30 year low.

[39] Global economic conditions are very favourable with continued high economic growth forecast for China and other major trading partners.

[40] This positive economic performance, sustained over a number of years, has also seen a significant shift in the respective wages and profit share of national income. Between March 2001 and March 2007, the profit share has increased from approximately 24% to 28%. In the same period, the share of national income going to wages has declined from 56.3% to 53.3%.

[41] Of particular relevance to this decision is the performance of the Tasmanian economy in the national context.

[42] An examination of key economic indicators points to a strong economic performance over recent years, with the Tasmanian economy generally matching, and in some cases exceeding, the national economic performance. It would seem however that this strong growth plateaued in the first half of the current financial year, although indicators in recent months suggest that the earlier growth pattern may have returned. Treasury forecasts for 2007/08 point to robust economic growth across most indicators.

Gross State Product

[43] Notwithstanding the inherent volatility of this indicator, Tasmania's estimated average GSP growth rate over the past five years has been 3.7% pa compared with the equivalent Australian figure of 3.3%. During this period, only Western Australia and Queensland have had higher average annual growth rates.

[44] At the time of the 2006/07 Budget, Treasury forecast economic growth of 3.5%. This has been revised downward to 2.5%, due primarily to a decline in private investment and only modest growth in consumer spending over the first half of the year. Other factors have been the increase in interest rates, the drought and late frosts.

[45] Treasury considers that the economic climate continues to be favourable and forecasts economic growth of 3.5% in 2007/08. This forecast assumes the commencement of the pulp mill project. In the event that this does not eventuate, the forecast is revised downward to 3.0%.


[46] A key feature of the Tasmanian economy over the past five years has been the very high growth in investment. Private investment in Tasmania has been more volatile than nationally over recent years reflecting the small size of the State and the timing of a small number of large investment projects, particularly energy related projects. The completion and/or winding down of these major projects resulted in a decline in private investment in the first half of 2006/07.

[47] The outlook for residential construction is positive, with both the number and value of building approvals reaching record levels in the past year. In the year to March 2007 the number of residential building approvals in Tasmania increased by 9.4%, compared with a decline of 2.3% nationally.

[48] Treasury believes that prospects for a return to higher levels of private investment in 2007/08 are strong, with a number of major infrastructure projects currently being assessed, and the continuing improvement in national and international economic conditions.

Labour Market

[49] The Tasmanian labour market in 2005/06 was characterised by sustained growth in the level of employment and participation rate. This trend was reversed in early 2006/07, although there has been a subsequent recovery in employment growth rates.

[50] In the year to April 2007, total employment grew by 1900 (0.9%), despite the decline in the first four months of the year. There is some indication that full-time employment is increasing at a higher rate than part-time employment, reversing a long-term trend.

[51] The Tasmanian participation rate in 2005/06 increased by 1.7 percentage points, to a level not seen since the early 1990s and compared to a national increase of 0.5% over the same period. The participation rate has eased during 2006/07, with a rate of 60.2% recorded in April 2007, 4.7 percentage points below the national rate.

[52] The unemployment rate has fallen to 4.8% in May 2007, compared with 6.5% 12 months earlier. Part of this improvement is a consequence of a decline in the participation rate.

[53] Treasury forecasts that total employment will increase by 2.25% in 2007/08, compared with the Commonwealth Government's budget forecast of 1.5% for the national economy over the same period.


[54] Exports in 2005/06 declined by 1.1% from the previous year, with strong growth in non-ferrous metals and ores being outweighed by declines in agricultural products.

[55] In the first half of 2006/07, exports on a volume basis have returned to growth, reflecting continuing strength in the minerals related sector.

[56] Treasury considers that the outlook for the Tasmanian export sector continues to be strong, particularly in light of the favourable economic prospects for Tasmania's main trading partners and the favourable price outlook for commodities.


[57] According to Treasury a key difference between the economic performance of Tasmania and Australia as a whole over the past 15 years has been labour productivity. Tasmania's labour productivity in 2005/06 remains the lowest of all states and is around 85% of the Australian level. Over the longer term Tasmania's labour productivity has been growing at around 1.5% annually, compared with national growth of around 2.75% annually.

[58] There are however some encouraging signs. Largely as a consequence of the high levels of investment in recent years, productivity growth over the last five years has increased at an average of 2.2% per annum, compared with the average annual growth rate of 1.6% nationally. Tasmania's productivity growth has been higher than all states and territories, except Western Australia, over the past five years.


[59] Population growth has been easing since 2003/04, when net interstate in-migration reached its peak. In recent quarters interstate in-migration and out-migration flows have been very similar, with the result that population growth has been due to natural population increase and net overseas in-migration.

[60] In the year to September 2006 Tasmania's population grew by 3120 (0.6%). Treasury forecasts that the population will grow by 0.7% in 2007/08.

[61] Treasury has identified a number of potential risks for the Tasmanian economy. They include the following:

· Weaker economic conditions in the USA, in part due to the weaker housing sector.

· The possibility of a major depreciation in the American dollar.

· Increasing oil prices leading to lower global economic growth.

· Possible interest rate increases which might impact negatively on the consumption outlook.

· A decline in investment should major projects currently in the approval phase, not proceed.

[62] Whilst acknowledging these risks Treasury concludes that "the underlying economic fundamentals for both the national and Tasmanian economies appear sufficiently robust to prevent any major decline in economic activity and employment."3

[63] In terms of business sentiment Mr Buchanan submitted that the TCCI Survey of Business Expectations March Quarter 20074 painted a far less rosy picture of the economic future than was generally being portrayed. The survey noted that "The longer term outlook for both the national and Tasmanian economies declined in the December Quarter 2006" and "the Composite Business Barometer Index shows us that a downturn for the economy in the near future is imminent if the downward trend of recent quarters continues."

[64] Mr Cocker submitted that the TCCI survey was heavily weighted towards manufacturing and a more reliable picture is presented by the Sensis Survey of Small and Medium Businesses. He said that the latest (May 07) survey reported that Tasmanian business confidence was the second highest of any State or Territory with 74% of respondents having a positive outlook for their businesses compared to 5% being negative.

Impact on Employment

[65] In the 2006 State Wage decision5 the Full Bench noted that the effect of minimum wage/safety net adjustments on unemployment had been a vexed issue for some time. Observations of the AIRC in the 2005 Safety Net review decision were reviewed together with the 2006 publication "Boosting Jobs and Incomes - Policy Lessons from Reassessing the OECD Jobs Strategy". This latter report concluded:

"Recent developments suggest that a moderate legal minimum wage generally does not undermine employment, but also that adequate allowance for wages below that level for youth and possibly other vulnerable groups is essential."

[66] The Full Bench went on to note the lack of relevant research directed to the effect of safety net adjustments on unemployment in Australia generally and concluded that there was no sustainable argument against a wage increase or an increase in work related allowances.

[67] In the current matter Mr Buchanan said that the TCCI did not resile from submissions put in previous State Wage cases going to a negative link between wage increases and employment, but acknowledged that there was no new evidence to put to the Commission on this occasion.

[68] We are quite satisfied that in terms of aggregate outcomes, given the limited application of this decision, a wage increase of the magnitude we propose, will not impact negatively on the Tasmanian economy.

[69] We do acknowledge however that the cost impact will not be uniform across all industry sectors and employers. For example, it is widely accepted that this decision is likely to have greatest impact on the industry sectors of Retail and Accommodation Cafes and Restaurants, where there is a preponderance of both unincorporated businesses and award reliant employees.

[70] The impact on these sectors was discussed in the recent Western Australian State Wage case.6 The Full Bench noted that against the backdrop of a $20 wage increase in 2006 employment in the retail sector had grown by 1.3% in the year to February 2007 and that employment in accommodation, cafes and restaurants sector had increased by more than the state average over the same period.

[71] The Full Bench concluded:

"We have been particularly careful to see if any of the economic indicators presented to us show any effect of the $20.00 increase to award rates of wage and to the WA minimum wage we gave in June and August 2006 (op. cit. at [2] above). The economic evidence before us on that occasion was that the strength of the WA economy would "swamp" any increase in the WA minimum wage given the small numbers of employees affected. That appears to have been the case. There is no evidence before us that the increase we gave on that occasion had any negative consequences. We have been similarly assured on this occasion that the strength of the State economy is such that an increase in the minimum wage beyond mere maintenance of its real value would similarly have little effect."

[72] The two most recent State wage increases in Tasmania have been $17 from 1 August 2005 and $20 from 1 August 2006. Against this backdrop total employment in the abovementioned sectors reveals the following:


Total Employment (000)


May 05

May 06

May 07


Accommodation, Cafes & Restaurants





Retail Trade










% of total employment (Tas.)





Source ABS 6291.0.55.003 table 05

[73] Whilst employment figures move around from year to year, it is apparent that against the backdrop of the wage increases referred to above, total employment in these sectors has increased both in absolute terms and as a proportion of the total employed workforce in Tasmania.

[74] We suspect the strong improvement in the accommodation etc sector is directly related to 14.2% increase in visitor expenditure in the 12 months to December 2006 and more recently reported improvement in hotel occupancy rates. Similarly the fluctuation in the retail sector appears to be consistent with movement in retail sales over the period.

[75] We conclude that the overwhelming determinant of employment levels is the demand for products and services in the various industry sectors. There is no evidence to suggest that the wage increase we propose will have a negative impact on employment either in aggregate terms, or in those industry sectors most affected by this decision.

[76] We do however express a note of caution. The impact of increased labour costs on employment levels would likely be more significant if the economic circumstances were significantly less robust than they are now and forecast to be in the future.

Should we await the determination of the AFPC?

[77] In our 2006 State Wage Case decision we addressed the submissions of parties who at that time were seeking that we not make any determination prior to a decision of the AFPC. We repeat what we then said and our position remains the same.

[78] We said:

"The Commonwealth Minister submitted that not to await the determination of the AFPC would be "most undesirable" and further argued that for this Commission to make a decision could result in "disparate minimum wage outcomes across Australia," which, it was submitted, seems to provide no difficulty to the TTLC in conjunction with peak unions in other States. It was claimed that "such an outcome will make life difficult for those operating businesses and employees working within those businesses." No evidence was presented to support this possibility although it could well be an inevitable result.

However we are required, by statute at ss 35(1)(b) and 47AB, to determine a minimum wage for Tasmania which will operate as a safety net for the purposes of bargaining, either collectively or individually.

This Commission has never suggested that WorkChoices seeks to end a "consistent national approach" in respect to minimum wage adjustments, we have noted however that we are not bound by any determinations made by the AFPC. We are required by reference to s.35(7) " have regard to a decision of the Australian Commission ...." In the past this Commission has adopted, in general terms, decisions of the Australian Commission and mostly by the agreement of the parties. There is no agreement in respect to this application and the Commission is required to act within its statutory responsibilities and determine the claim before it.

There are no specific requirements prescribed in the Tasmanian Act which we must consider when determining a claim for an increase in the minimum wage. Nonetheless we think it appropriate that we have regard to our public interest considerations as prescribed at s.36(2) of the Tasmanian Act, to:

(a) consider the economic position of any industry likely to be affected by the proposed award or proposed agreement;

(b) consider the economy of Tasmania and the likely effect of the proposed award or proposed agreement on the economy of Tasmania with particular reference to the level of employment; and

(c) take into account any other matter considered by the Commission to be relevant to the public interest."7

[79] And further we noted:

"We have previously noted that it seems to be accepted that Tasmania has the largest number of employees who rely on safety net increases, as such we are of the view that to delay any determination would disadvantage those employees.

The expected effect of WorkChoices will result in a smaller number of employers and employees being subject to awards of the Tasmanian Commission, and whilst there is no specific data or publicly available statistics which are relevant to this group, it is expected that the number is significant albeit a certain number will be State public service employees who are not subject to this determination but are party to the State Service Agreement. Nevertheless, the then Minister for Industrial Relations the Hon Judy Jackson, in her second reading speech in the Tasmanian Parliament, estimated that some 30% or 40% of employees may be affected by our decision although we do not rely on that estimate and acknowledge that there is a wide variance between the parties as to the number of employees who could be affected by our decision.

The majority of those employees are not party to bargaining arrangements and rely for any wage increase on State Wage Case determinations."8

[80] We again reject the application to defer making any determination on the application before us to await the decision of the AFPC.

[81] It should be noted however that since the time of hearing this application the AFPC has issued its decision. Likewise we are aware that the Industrial Relations Commission of New South Wales and the Western Australian Industrial Relations Commission have each handed down decisions in respect to State Wage applications. We have noted those determinations each which awarded flat, but different, wage increases but we do not rely upon them.

[82] The statutory requirements of this Commission are found at s.35(10A) of the Act where it is prescribed that:

"A Full Bench of the Commission must convene and conduct a hearing annually to determine the Tasmanian minimum wage specified in s.47AB."

[83] Whereas Professor Harper describes the role of the AFPC in the following terms:

"The setting of minimum wages, including pay and classification scales, has been added to the mix of policy instruments that focus on the national economy.

The legislative charge to the AFPC is to promote the economic prosperity of the people of Australia. This places the AFPC among a small number of public agencies with responsibility for implementing national economic policy."9

Do we award a flat or a percentage increase?

[84] The claim by the TTLC seeks to increase wages in all awards by 4.5%. The TTLC submitted that the claim it makes, if successful, would result in increases to award rates starting at $22.70 per week ranging up to $37.90 per week with a minimum wage for Tasmania of $527.10 per week.

[85] Mr Cocker submitted that

" is safe to say that this claim is brought on behalf of those workers who are not in a position to bargain. It should be recognized I think that there is a widening of the differential between bargaining outcomes and award minimum wages which will further encourage those employers who actively resist bargaining by the employees. There is evidence that the incidence of employees under awards and certified agreements primarily reflect the preferences of their employer. There is, and will remain after the granting of the current claim, a significant gap between award wages and the outcomes from bargaining arrangements. Therefore there is still considerable incentive for employees to seek to collectively or individually make arrangements in excess of the minimum."10

[86] The 4.5% increase was opposed by the TCCI. It was argued that an across the board percentage increase would result in very significant increases at the top of some classification scales. The TCCI submitted that the impact of such claim would be "far too great."

[87] It was submitted by the TCCI that "...from our point of view a flat increase is preferable than a percentage one. It is an argument that has been run and commented on, it was commented on in last year's decision by this Commission........I note in the new South Wales decision that they did talk about this concern about the compression of relativities and I think it is a fair concern."11

[88] Mr Buchanan said that "What we expect of the minimum wages system and anybody charged with reviewing and setting the minimum wages is that minimum wages would support more bargaining."

[89] And further: "But I guess what we would say is a significant real wage increase, which is what this is about, being delivered automatically without any need to improve productivity or efficiency is going to necessarily have a number of effects on bargaining."

[90] The TCCI said that the Commission "...should maintain your traditional position and award a flat increase."

[91] There was no objection to the increase sought for award meal allowances or to an operative date of first pay period on or after 1 August, 2007.

[92] The Tasmanian Minister submitted that a flat increase, albeit an increase of $20 per week, rather than a percentage increase " is the most appropriate way to providing an equitable increase for the lower paid whilst maintaining an effective safety net for award reliant employees."

Wage Price Index or Consumer Price Index?

[93] The TTLC makes its claim based on a Wage Price Index (WPI) of 4.5% and submitted that the WPI is a measure of labour costs for employees and any movement in the WPI will reflect both changes in wage rates and compositional change in the labour force. Mr Cocker said that " as the WPI is not affected by compositional change it is the best measure to assess the impact of wage changes to the employer." He said that the WPI is the Reserve Bank's preferred measure of wages growth.

[94] The TCCI opposed any increase based on the WPI claiming that the Consumer Price Index (CPI) was a more appropriate figure to consider and that the AFPC decision "effectively is looking at the CPI."

[95] We discussed in our State Wage decision of 2006 the issue of the WPI and the CPI. We said:

"It was submitted that the WPI "is designed to measure changes in wage movements rather than [wage] levels and unlike the Average Earnings on a national Accounts basis (AENA) it does not incorporate non-wage costs. The WPI is constructed measuring the cost of purchasing the same quality and quantity of labour input. It is analogous in its construction to that of the CPI. Hence, the WPI is less subject to compositional change and therefore less volatile than the other measure of wage movements. As the WPI is not affected by compositional change, it is the best measure to assess the economic impact of wage changes to the employer. The WPI is the Reserve Bank of Australia's preferred measure of wages growth.

In its Safety Net Review decision of 2005 the Australian Commission said that it had previously accepted that the WPI was the most useful indicator for its purposes.

Accordingly we agree with the Australian Commission and adopt the WPI as the "most useful" indicator in our determination of the TTLC claim."12

[96] In the prevailing economic environment we maintain that view and adopt the WPI as the appropriate index to consider.


[97] In this matter no party argued against an increase in award rates or work related allowances. As was the case last year the difference between the parties is as to the quantum of any increase.

[98] We are aware of the continued compression of relativities by the awarding of flat wage increases. However it is our view that flat rate increases provide an equitable adjustment for the lower paid whilst maintaining an effective safety net for award employees.

[99] Further we are very conscious of the different minimum wage rates which will continue to apply in Tasmania for employees covered by awards of this Commission and those employees covered by the Workplace Relations Act, 1996. It may well be that as a result of the current industrial relations system that each State will have a similar result as well as a different quantum of minimum wage.

[100] Having considered the arguments presented to us and having regard to our statutory responsibilities we have decided in this matter to award a flat increase in award rates of $22.70 per week. This figure represents the WPI rate of 4.5% which we consider to be the appropriate and relevant measure for any wage increase.

[101] Any increase awarded as a result of this decision will apply only to those employees who are unable, for whatever reason, to negotiate an agreement with their employer.

[102] We support enterprise bargaining and encourage parties who are not subject to an agreement to consider the benefits of an enterprise specific arrangement.

[103] Nothing was put to us which would indicate that the $20 per week increase awarded in our 2006 decision has had any serious impact on employment.

[104] The 2006 decision of the AFPC awarded $27.36 to employees on less than $700 per week, $22.04 for employees in excess of $700 per week and set the minimum wage at $511.76 per week.

[105] In respect to that decision Professor Harper said in his address to the Press Club:

" seems that our 2006 decision, in addition to delivering real wage increases for the lowest paid, produced no adverse economic outcomes at the aggregate level."13

[106] All work related allowances in public and private sector awards will be adjusted by 3.8%. This is the equivalent of a $22.70 increase at the C10 level in the Metal and Engineering Industry Award.

[107] Meal allowances will be increased to $14.10 per meal in accord with past practice and the agreed formula.

[108] Pursuant to s.35(1)(b) and s.47AB of the Act we declare that the minimum wage for Tasmania will be $527.70 per week.

[109] The increases provided by the decision will take effect from the first pay period on or after 1 August, 2007.

[110] Variations to rates and allowances should, in respect to weekly rates be rounded to the nearest 10 cents, in respect to daily rates be rounded to the nearest 5 cents, and in respect to hourly rates be rounded to the nearest cent.

[111] Principle 13.3 will be amended as proposed by the MASSA and with the consent of all other parties. TCCI has agreed to the amendment. However TCCI will need to be advised and consulted on any changes to awards which may affect private sector awards with similar classification scales and wage scales.

[112] Accordingly Principle 13.3 will now read as follows:

"Consistent with this Principle and Principle 6.2 by extension, public sector awards may be varied from time to time to reflect salary rates and conditions of employment as may be agreed between the parties bound by relevant public sector awards."

[113] The amendment to principle 13 will allow the incorporation of agreement rates of pay and conditions into public sector awards. Accordingly classification rates may not necessarily reflect true work value assessment.

[114] The current wage fixing principles will be amended where necessary to reflect the terms of this decision.

[115] Orders will be issued in due course to give effect to this decision.

P L Leary

Mr S Cocker for the Tasmanian Trades and Labor Council
Mr T Jacobson for the Health Services Union of Australia, Tasmania No 1 Branch
Mr T Lynch for the Community and Public Sector Union (State Public Services Federation Tasmania) Inc
Mr N Buchanan for the Tasmanian Chamber of Commerce and Industry Limited
Mr P Baker for the Minister administering the State Service Act 2000
Mr J Evans intervening on behalf of the Minister for Workplace Relations

Date and place of hearing:
June 21

1 Transcript PN 19 - 20
2 Exhibit R3
3 Budget paper No.1 Ch 2 - Tasmanian Economy
4 Exhibit R4
5 T12395 of 2005
6 2007 WAIRC 00517
7 Decision T12395 of 2006 paras 49-52
8 Supra paras 56-59
9 Exhibit R3
10 Transcript PN166, 167
11 Transcript PN439
12 T12395 paras 92-94
13 Exhibit R3

Awards Varied:
Aerated Waters
Administrative & Clerical Employees
Architects (Private Industry)
Automotive Industries
AWU (Tasmanian State Sector)
Baking Industry
Barristers & Solicitors
Broadcasting & Television
Building & Construction Industry and Correction Order
Building Trades
Business Services
Butter & Cheesemakers
Catholic Education
Child Care & Childrens Services
Clay & Mud Products
Cleaning & Property Services
Clerical & Administrative Employees (Private Sector)
Clothing Industry
Community & Health Services (Public Sector)
Community Services
Concrete Products
Custodial Officers
Dairy Processing
Dental Employees
Disability Service Providers
Draughting & Technical Officers (Private Industry)
Electrical Engineers
Electrical/Electronic Trades (Public Sector)
Estate Agents
Farming & Fruit Growing
Fibreglass & Plastics
Fire Service
Fish, Aquaculture & Marine Products
Fuel Merchants
Furnishing Trades
General Conditions of Employment
Governor of Tasmania Staff
Hairdressing, Health & Beauty Industry
Health & Fitness Centres
Hotels, Resorts, Hospitality & Motels
Ice Cream Makers
Impact Fertilisers Enterprise
Independent Schools (Non-Teaching Staff)
Independent Schools (Teachers) Tasmania
Laundry & Dry Cleaning
Leather Canvas & Sheet Plastic Fabrication
Legal Practitioners & Apprentice-at-Law
Licensed Clubs
Meander Dam Development Project Enterprise
Meat Processing Industry
Meat Retailing
Medical Diagnostic Services (Private Sector)
Medical Practitioners (Private Sector)
Medical Practitioners (Public Sector)
Metal & Engineering Industry
Metal Trades (State Employees)
Metalliferous Mining & Processing
Miscellaneous Workers
Miscellaneous Workers (Public Sector)
Mobile Crane Hire
Monumental Masons
National Training Wage (Tasmanian Private Sector) and Correction Order (2007) and Correction Order (2008)
North West Water Authority Enterprise
Nurses (Tasmanian Public Sector) 2005
Nursing Homes
Operational Employees
Optical Industries
Parliamentary Staff
Photographic Industry
Plant Nurseries
Port Arthur Authority
Printing Authority of Tasmania
Professional Employees
Professional Engineers & Scientists (Private Industry)
Public Accountants
Public Vehicles
Quarrying & Lime Processing
Restaurant Keepers
Retail Pharmacy
Retail Trades
Rubber Trades
Security Industry
Shearing Industry
Shellfish Industry
Silviculture & Afforestation
Southern Regional Cemetery Trust Staff
Surveyors (Private Industry)
Tasmanian Ambulance Service
Tasmanian Information Technology Industry
Tasmanian Museum & Art Gallery
Tasmanian State Service National Training Wage
Tasmanian TAFE Teachers
Teaching Service (Tasmanian Public Sector)
Technical Employees
Totalizator Agency
TOTE Tasmania Racecourse 2005
Tourism Tasmania
Transport Workers General
Veterinary Services
Wholesale Pharmaceutical
Wholesale Plant Bakeries
Wholesale Trades
Zinifex Hobart Smelter Enterprise
Zinifex Rosebery (Mining)