T13142 and T13143
TASMANIAN INDUSTRIAL COMMISSION
Industrial Relations Act 1984
Tasmanian Trades and Labor Council
Minister administering the State Service Act 2000
Wage Rates – State Wage Case 2008 – applications to vary private and public sector awards – Private Sector Awards – Public Sector Awards, other than named awards - award wage rates to be increased by $19.00 per week - wage related allowances to be increased by 3.1% – meal allowance increased to $14.60 - State Minimum Wage rate determined at $546.10 - s.35(1)(b) – operative date ffpp 1 August 2008
REASONS FOR DECISION
Application by the Tasmanian Trades and Labor Council (TTLC)
 T13142 of 2008 is an application by the Tasmanian Trades and Labor Council made 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 existing allowances relating to work or conditions by the amount of 4.2% or such higher figure as may be indicated by the Wage Price Index (WPI) for the year ending March 2008;
(ii) to increase the minimum wage payable to adults without regard to the work performed, to $549.30 per week or such higher figure as may be indicated by the WPI;
(iii) obtain a special increase of rates of meal allowances in all relevant awards;
(iv) to seek an increase to $66 in the minimum rate applying to any Supported Wage System;
(v) to the extent necessary to effect these changes amend the Principles of the Commission.”
 T13143 of 2008 is an application by the Minister administering the State Service Act 2000 (MASSA) made pursuant to s.23(2)(b) of the Act to vary all Public Sector Awards to:
(i) “increase all wage rates where applicable and all existing allowances relating to work or conditions in Public Sector Awards from a common operative date of on or from the first full pay period to commence on or after 1 August 2008, to reflect any increase that may be determined by the Tasmanian Industrial Commission pertaining to the minimum wage payable to adults under its awards;
(ii) increase rates of meal allowances in all relevant Public Sector Awards;
(iii) to review and amend if necessary the Wage Fixing Principles of the Tasmanian Industrial Commission as determined in July, 2007, in Matter T12940 of 2007.”
 The matters were joined and heard concurrently.
The application to vary all Private Sector Awards
Australian Mines and Metals Association (AMMA)
 AMMA advised that it did not propose to be heard on the application but sought that its position be recorded.
Tasmanian Chamber of Commerce and Industry Limited (TCCI)
 The TCCI, which also represented the Tasmanian Farmers and Graziers Employers Association Incorporated (TFGEA), advised that they had reached an agreement with the TTLC which had been incorporated into a Memorandum of Understanding (MOU).
 The MOU provides:
“1. Wage rates in all State private sector awards may be increased by an amount of $19.00 per week including junior, apprentice and trainee rates (on a proportionate basis) as from the first full pay period on or after 1 August 2008.
This increase can be reduced to the extent of any over award payment or enterprise bargaining increase currently being paid by the employer.
2. Wage rates in State private sector awards will increase by $19.00 per week as from the first full pay period on or after 1 August 2008 where:
· Existing wage rates have been varied to include the wage increase arising out of the 2007 State Wage Case, and
· A period of 12 months has elapsed since the wage rates in the award were increased to reflect wage increases arising out of the 2007 State Wage Case.
3. The State minimum wage may be increased by $19.00 per week to $546.10 per week as from the first full period on or after 1 August 2008.
4. Existing allowances, except meal allowance, relating to work or conditions be increased by 3.1% as from the first full pay period on or after 1 August 2008.
5. Meal allowances in State private sector awards where the current rate is $14.10 per meal be increased to $14.60 per meal as from the first full pay period on or after 1 August 2008.
6. That the minimum weekly wage payable under the Supported Wage provisions be increased to $66.00 per week (where this has not already occurred) as from the first full pay period on or after 1 August 2008.”
 Mr Cocker, appearing for the TTLC, said in respect to the MOU:
“The outcomes in points one to five of this document, I submit, reflect the precedents that have been established in the 2006 and 2007 wage hearings for considering these matters. In those two decisions the Commission has indicated that the wage price index is the most appropriate indicator to form the basis for wage adjustment. And that is the figure that has been applied, the 3.6 per cent. It has indicated its preference for the adjustment to award levels is to take the flat amount of the minimum wage rise, in this case $19, and add it to the levels in each of the awards. It has indicated that the non-meal allowance adjustment is to be achieved by expressing the flat rise as a percentage of the C.10 level of the Metal and Engineering Award. In that case $19 is 3.1 per cent, and the meal allowance adjustment, which is achieved by the application of the CPI figure for meals and eating out.”1
 And further he said:
“Finally, if the Commission pleases, point 6 in the memorandum is the adjustment, the minimum rate to apply to supported wage clauses and we submit that that arises from a previous Full Bench decision in matters T13120, 13121, 13122, 13123 and 13124, where the Full Bench considered the appropriate level for that minimum rate, and adjusted it to $66 and we would seek to have that flow through to the remainder of the private sector awards.
It is our submission that the rises outlined are reasonable and moderate outcomes, but are required to maintain both the real and relative provisions of the award and minimum-wage‑reliant workers in Tasmania. We recognise that this year, in this decision, there is a small discount to CPI as the numbers turn out. Examining the CPI for Tasmania – or particularly for Hobart as the ABS provides – the weighted basket for the first quintile household consumption provides the CPI figure of about 3.74 per cent.
However, in the interests of working within an accepted fair and reasonable principle, and considering that the 2007 decision provided a significant premium above the CPI, we will not pursue that difference. In its decision of T12395 July 2006 the Commission indicated at paragraph 52 that one of its key considerations is the state of the Tasmanian economy and the likely effect of the proposed award or agreement on the economy of Tasmania with particular reference to the level of employment. It is our submission that the indicators for both the Australian economy and the Tasmanian economy show that both of these economies remain strong, and that the forecasts indicate that this will continue.2
 Mr Cocker noted that Tasmanian budget paper number 1 states at page 2.1 that:
“Economic conditions in Tasmania continue to support above-trend economic growth despite the less favourable global outlook and the tightening of monetary policy in Australia in response to inflationary pressures. The economic recovery that began in 2001–2002 has continued in 2007-08 with strong jobs growth, investment close to record levels and growth in export sales. The unemployment rate is at a record low level. An additional 4000 jobs are expected in 2008-09 with unemployment remaining about 5 per cent. Continued strong economic and employment growth is expected by 2008-09, driven by public and private-sector investment, consumer spending and increases in the volume of mineral-related exports due to increased mining activity in the state.”3
 Mr Cocker also submitted:
“………..this is an important decision for the workers who remain affected by the Tasmanian minimum wage or who are on Tasmanian award rates. These are workers who, for whatever reason, are not in a position to bargain and rely on a just and equitable decision of this Commission to maintain the value of their wages and to share in the general prosperity. I ask the Commission to give prime consideration to the memorandum of understanding from the parties in making its decision on this matter.”4
 The submissions of Mr Cocker were supported by Mr Jacobson from the Health Services Union of Australia, Tasmania Number 1 Branch and Mr Wishart from the Australian Education Union, Tasmanian Branch.
 Mr Mazengarb, on behalf of the TCCI, submitted:
“As the TCCI is in accord with the applicant, I do not intend to go through an extensive economic analysis of the state of the Tasmanian economy, but I do intend to provide some key economic indicators which in effect support the position by the applicant. Such indicators have primarily been sourced from the Australian Bureau of Statistics and alluded to in the State Treasurer’s pronouncements relative to the 2008-2009 state budget.
……Tasmania at March 2008 was the nation’s strongest economy. The State’s economy had expanded by 8.1 per cent through the year to March 2008. Consumer spending for the March quarter was up 2.3 per cent, this being a record high. This in actual fact represented the strongest growth in Australia. The average debt level in Tasmania was only 55 per cent of the national average. Private investment was up 2.2 per cent in the March quarter. Nearly one billion dollars was spent in the March quarter, which was a record high, and represents the strongest growth in investment nationwide. Dwelling investment was up 3 per cent in the March quarter as compared to a point 1 per cent rise nationally.
For the March quarter Tasmania had the most affordable housing in Australia. The average loan was $90,000, as compared to $140,000 nationally. With regard to employment, there was a record 233,300 Tasmanians with jobs, with full-time jobs at a record high. There was a record 4.4 per cent unemployment rate with a large fall in the long-term unemployed.
With regard to productivity, following revisions to ABS data, productivity in Tasmania is now better than first thought. Labour productivity is now at 93 per cent of the Australian average. This in actual fact is placing Tasmania ahead of Queensland and South Australia. In an independent analysis of the 2008-2009 Tasmanian state budget, Saul Eslake, chief economist with the ANZ Banking Group stated last week, on 14 June:
‘The substantial improvement in the revenue outlook since last year’s budget has allowed the government to commit to new spending initiatives totalling more than one billion dollars over the next four years, while adhering to all of the requirements of its fiscal strategy and leaving the budget in a very strong financial position.’5
And in the final statement, he said:
‘Net financial assets, that is the excess of financial assets over debt will rise from 969 million dollars at the end of the current financial years to an expected 1.66 billion by June 2012.’
Now, that’s on the positive side, but other recent data suggests that government and business should or will proceed with caution. This recent data indicates that whilst Tasmania’s economic fundamentals remain strong, global and national economic conditions are becoming less favourable. Tasmania as an export-orientated economy is particularly vulnerable to a downturn in these external conditions.”6
 It was submitted by MASSA that:
“The Minister for Workplace Relations supports the memorandum of understanding as tabled in Union 1 this morning. …………it is true to say that the economy is fairly buoyant. And so my remarks in respect of the economy will be brief. They will mirror what has been put by both Mr Cocker and by Mr Mazengarb. And I quote from the budget paper number 1 at section 2.8. This is a summary of – just a summary:
‘The sustained recovery in Tasmania’s economic performance which commenced in 2001-02 is expected to continue throughout 2008-2009 and beyond. And that is supported by some major public and private public-sector investment projects. Global conditions remain favourable, although not to the same extent in recent years. The current tight monetary policy may constrain growth prospects, particularly as national consumption rates decline. However, the above trend economic growth is expected throughout ’08-09 as a result of positive overall conditions, and the unemployment rate as has been previously pointed out to the Commission is expected to remain at the current record low levels.’
However, there is one constraint on the economy. I think that was pointed out by Mr Cocker, and that is the lack of readily available skilled labour, particularly in certain areas. And those underlying demographic trends may in fact hinder growth in certain areas.”7
The application to vary Public Sector Awards
 Mr Baker, appearing for MASSA, agreed that all public sector awards, other than a number of named awards which contain actual rates of pay, should reflect the increase to the minimum wage, all classification rates and work related allowances. He noted that the Minister would now be the largest employer in the State system.
 The Commission indicated at the hearing that it would approve the terms of the MOU. No party submitted that there should not be any increase or an increase less than that which has been agreed.
 Having heard the submissions of the parties we are satisfied that the increase provided by the MOU is unlikely to have any serious impact on employment or the economy albeit we note the constraint referred to by the parties in respect to the lack of available skilled labour.
 Accordingly the classification rates in all public and private sector awards, other than those referred to and noted by title by Mr Baker, will be increased by $19.00 which represents the WPI rate of 3.6%.
 All work related allowances in public and private sector awards, other than those referred to by Mr Baker, will be increased by 3.1%.
 Meal allowances in the relevant awards, other than those referred to by Mr Baker, will be increased to $14.60 per meal.
 Pursuant to s.35(1)(b) and s.47AB of the Act we declare that the minimum wage for Tasmania will be $546.10 per week.
 The increases provided by this decision will take effect from the first pay period on or after 1 August 2008.
 Variations to rates and allowances should, in respect to annual salaries be rounded to the nearest dollar; weekly rates be rounded to the nearest 10 cents; daily rates be rounded to the nearest 5 cents; hourly rates be rounded to the nearest cent.
 The parties have been requested to consider whether the current Wage Fixing Principles are still relevant and should be maintained or if any amendment is necessary. The Commission will list the matter for further consideration in due course.
 In the meantime the principles will be amended where necessary to reflect the terms of this decision.
 Orders will issue in due course to give effect to this decision.
P L Leary
Date and place of hearing: