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Australian Industrial Relations Commission Transcripts |
AUSCRIPT PTY LTD
ABN 76 082 664 220
Level 4 179 Queen St MELBOURNE Vic 3000
(GPO Box 1114J MELBOURNE Vic 3001)
DX 305 Melbourne Tel:(03) 9672-5608 Fax:(03) 9670-8883
TRANSCRIPT OF PROCEEDINGS
O/N 0751
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION
COMMISSIONER SMITH
C2001/4366
AUSTRALIAN MUNICIPAL, ADMINISTRATIVE,
CLERICAL AND SERVICES UNION
and
BOROONDARA CITY COUNCIL
Notification pursuant to section 99 of the
Act of a dispute re payment of wages
MELBOURNE
10.45 AM, THURSDAY, 16 OCTOBER 2001
Continued from 17.9.01
PN1
THE COMMISSIONER: In this matter the parties have agreed that the Commission should deal with the issue between them by way of a recommendation by consent of section 111AA. Now, I have been forwarded a document by Mr Lunny - a two page document, dealing with the introduction, terms of reference, methodology and time lines. Is that the document that I am working for the consent arbitration, Mr Lunny?
PN2
MR G. LUNNY: It is, as I understand it, Commissioner and agreed to by the ASU.
PN3
THE COMMISSIONER: Mr Harvey.
PN4
MR K. HARVEY: Yes, Commissioner, it is agreed.
PN5
THE COMMISSIONER: Thanks. Very well, well in looking at the provisions of the Act before I continue with the matter, I must be satisfied that all parties have made a genuine attempt to agree about those aspects of the matter. I am satisfied that they have made a genuine attempt to agree and have not been able to agree and that they have agreed to comply with the Commission's recommendation and I am satisfied in that regard as well. Sorry, now there is a change of appearance. Mr Harvey.
PN6
MR HARVEY: Yes, Commissioner. On this occasion I appear on behalf of the Australian Services Union. Appearing today with me is MR B. MILLER. I would point out that Mr Miller will also be a witness in this case.
PN7
THE COMMISSIONER: Thanks, Mr Harvey. Any change on your side, Mr Lunny?
PN8
MR LUNNY: No, no changes.
PN9
THE COMMISSIONER: Thanks. Has there been any agreement as to who will start? The person with the lectern.
PN10
MR HARVEY: Yes, Commissioner, if it is convenient and I think it was originally our application, or our notification. So, I propose to start.
PN11
THE COMMISSIONER: Thanks, Mr Harvey.
PN12
MR HARVEY: Thank you, Commissioner. Commissioner - - -
PN13
MR LUNNY: Sorry. Before my friend gets into full flight, Commissioner. Could we have the usual order with respect to witnesses. I think it appropriate that my friend's witnesses, apart from his instructor of course, be excluded from hearing the evidence of their fellows.
PN14
MR HARVEY: I am content with that, Commissioner, so long as Mr Miller is allowed to stay, but also that therefore the witnesses for the council would also be excluded as well.
PN15
MR LUNNY: I am not too sure I am comfortable with the exclusion of our witnesses when the case is being presented. I am certainly happy to have them excluded in reciprocal fashion when we lead our case.
PN16
THE COMMISSIONER: But will the evidence of the witnesses go to evidence that will be given by any of your witnesses? For example, Mr Nevins, you will be in the same position with Mr Pawsey, but - - -
PN17
MR LUNNY: Yes. Well, the answer is that it may or it may not do, but generally speaking my understanding of the process is that not all witnesses be excluded.
PN18
THE COMMISSIONER: Mr Harvey?
PN19
MR HARVEY: Well, Commissioner, I think - I think the situation is that - that evidence that will be given by our witnesses will go to evidence which will be apparently later given by the council's witnesses, so I think all witnesses other than the instructing you know, witnesses, should be excluded at this point, if the Commission pleases.
PN20
THE COMMISSIONER: Well, as I apprehend some of the witness statements, it will go to conversations held between parties in the environment of negotiations at the time. I think that is a cautious approach I ought to adopt, so with the exception of those instructing, the other witnesses I will make necessary recommendation that they leave the room. In relation to those witnesses that are instructing, it would be probably helpful if they could be called at an early stage. So, how have we got this? Mr Nevins is going to be a witness, Ms Dennis, Mr Murphy and Mr Wright. Those people. Yes, Mr Harvey.
PN21
MR HARVEY: Thank you, Commissioner, and I was intending to call Mr Miller as the union's first witness.
PN22
THE COMMISSIONER: Thank you.
PN23
MR HARVEY: If the Commission pleases, Commissioner, you have been through the formalities with regard to this matter, so I won't repeat them. Suffice to say that this matter has been before the Commission on one or two occasions previously and conciliation has taken place, but now in terms of the agreement between the parties which the Commission has a copy of as to how this case should be handled. The purpose of today's hearing, therefore, is to provide an opportunity to examine witnesses and to make submissions on the material that has been exchanged between the parties and provided to the Commission. Commissioner, given that this matter has been before the Commission on a number of occasions and that we are going to call witnesses, I don't intend to say very much in opening.
PN24
THE COMMISSIONER: Do you want me to mark the outline of submissions?
PN25
PN26
MR HARVEY: Thank you, Commissioner. The - I think suffice to say in opening, Commissioner, just in two paragraphs basically, that this matter involves a dispute about the correct application of an agreement which is known in shorthand as a LAWA or a Local Area Workplace Agreement, applying to certain employees of Boroondara City Council. The full title - the full glory of the title of the agreement is the Boroondara City Council Local Area Workplace Agreement Number 1, 1999 (Parks and Gardens - Reactive Trees Maintenance). That agreement has been provided to the Commission by the Council in their documents filed last week. I don't propose to hand up another copy, Commissioner, but - - -
PN27
THE COMMISSIONER: I have a copy.
PN28
MR HARVEY: I am not sure that the one you have, Commissioner, is the certified copy, but I do have a copy of the certificate of certification, if you would like that, Commissioner.
PN29
THE COMMISSIONER: Yes, please. Thank you.
PN30
MR HARVEY: Do you wish to mark that, Commissioner?
PN31
THE COMMISSIONER: No, that is all right, thank you.
PN32
MR HARVEY: That certificate shows that that agreement that I just referred to was certified by Commissioner Frawley in Melbourne on 7 April 1999 and the agreement came into force from 7 April 1999 and to remain in force until 4 April 2002. Now, Commissioner, as you will undoubtedly be aware, the nub of this dispute which we are considering today, relates to clause 15.1.6 which is on page 9 of my copy at the top. It deals with wage increases applicable under this agreement and that particular clause reads:
PN33
It is agreed between the parties that the annualised salaries as set out in schedule 1 will be adjusted annually during the term of the agreement by three per cent or the cost of living, as determined as of 31 March whichever is the greater, with the first increase to occur on 1 July 1999 and annually thereafter.
PN34
That is the end of that particular sub-clause. I think as the Commission will be aware, this dispute resolves around the fact that the Council has agreed only, and as I understand part of this conciliation process, to apply a three per cent increase from 1 July. The union and its members believe that the increase should be higher and, in fact, should be six per cent in line with the rise in the consumer price index as published by the Australian Bureau of Statistics for the 12 months to the end of the March quarter 2001. That is all I have in the way of opening submissions, Commissioner. I propose to now call my first witness, Mr Barry Miller.
PN35
THE COMMISSIONER: Please sit down, Mr Miller?---Thank you, Commissioner.
PN36
MR HARVEY: Barry, could I just ask you to state for the record your full name and address, please?---Barry Desmond Miller. I reside at 405 Main Road, King Lake Central.
PN37
Thank you. Have you prepared a statement of the evidence that you wish to give to this Commission today?---I have.
PN38
Could I show you a copy of that statement, or a copy of a statement. Can I ask you whether this is statement of the evidence that you prepared prior to this hearing?---That is correct.
PN39
Mr Miller, is there anything you wish to correct in this statement at this point?---No - - -
PN40
Sorry, Commissioner, do you have a copy? Yes.
PN41
Sorry, is there anything you wish to correct?---No.
PN42
Could I just take you to a couple of things I noticed in the statement. In paragraph 3 at the end of that, there is a reference to a manager of human resources, Mr Jeff Pawsly, l-y?---Incorrect spelling of the name, yes.
PN43
And it should be?---w-s-e-y.
PN44
Pawsey. Thank you. And in the next paragraph in the second line, the second line is "where". Is that word correct?---It should be "were".
**** BARRY DESMOND MILLER XN MR HARVEY
PN45
Just w-e-r-e?---Yes.
PN46
PN47
MR HARVEY: Thank you, Commissioner.
PN48
Now, Barry, I just have a few questions of clarification with regard to this statement. In the second paragraph, you say that your involvement in the negotiations for the Reactive Trees Local Work Area Agreement commenced with a round of meetings. Can you just tell the Commission when those meetings commenced?---Without my diary, I just can't recall the exact date, but they were a round of meetings that were conducted with horticultural, trees and mowing to start the process off. I think it was in May.
PN49
In May of which year?---'98.
PN50
1998. And in the next paragraph you said these meetings led to a series of negotiation sessions. When did those negotiation sessions occur?---They were ongoing for the balance of the year.
PN51
So through until towards the end - - -?---Round November I think it was, before we concluded.
PN52
And when was this agreement voted on by the employees concerned?---I think, from memory, it was in November or December of that year. I didn't actually attend the voting. That was conducted by our local shop stewards.
**** BARRY DESMOND MILLER XN MR HARVEY
PN53
And the negotiations that you refer to in paragraph 3, the negotiation sessions, did you attend those negotiations?---Yes, there were quite a number of them. I can't recall exactly how many, but I attended all sessions.
PN54
All sessions. Thank you. In the fourth paragraph, you say:
PN55
When the quantum and timing was being discussed -
PN56
I take it that means quantum and timing of wage increases, does it?---That is correct, yes.
PN57
Thank you. You say:
PN58
was being discussed, all parties involved in the negotiations were aware that the Federal Government was to introduce a Goods and Services Tax.
PN59
How do you know that all parties were aware of that government intention?---Well, the government had made perfectly clear that it was standing on a platform of tax reform and that GST was part of that platform. It was on every current affairs program, every paper, and I think everybody's lips on every street corner at the time.
PN60
Was that public information, then, discussed by the parties in the course of their negotiations?---It was, because our concern was that where goods and services tax had been introduced overseas, that inflation had run rampant, as I have said in my statement. Our concern was that inflation would outstrip the wage increases that were in the agreement.
**** BARRY DESMOND MILLER XN MR HARVEY
PN61
Right. In the next paragraph in the last sentence, you say the wording being changed in the final document to cost of living, the discussions between the parties said something. Can you say who was involved in those discussions that you are referring to there?---It was the single bargaining unit made up of myself and the shop stewards and Mr Pawsey representing the City of Boroondara.
PN62
Was anybody else involved in those discussions on behalf of the City of Boroondara?---No, I think Mr Pawsey was the main representative of Council.
PN63
Thank you. In the next paragraph, you refer to a letter dated 11 June 1998. I would like to show you a letter. I think this letter is also in the - should be in the Commission's file, Commissioner. If it is not, I have a copy. Do you have one, Mr Lunny?
PN64
MR LUNNY: Yes, I have, thanks.
PN65
MR HARVEY: Would you have a look at that letter please, Barry. Is that the letter referred to in your statement?---Yes, it is.
PN66
I would tender that letter.
PN67
THE COMMISSIONER: It is attached to the statement.
PN68
MR HARVEY: Yes, thank you, Commissioner.
PN69
Just a couple of questions about that letter. It is addressed - who is Wendy McMannis that it is addressed to?---Wendy McMannis is the assistant secretary of the Services and Energy Branch of the ASU.
**** BARRY DESMOND MILLER XN MR HARVEY
PN70
And Michael Kennedy, who signed it?---The ex-chief executive officer of the City of Boroondara.
PN71
And can you tell us whether that letter is written about the LAWA or the agreement that we are considering in the Commission today?---It was an exchange of correspondence between Boroondara and the union that took place at that point in time. We were also in dispute over an enterprise agreement, and how the agreement would deal with local work area agreements, so while it is answering questions in relation to the enterprise agreement, it refers to the local work area agreements that were being negotiated or were in operation at the time and it, in my view, shows that Council's position clearly was to increase enterprise agreements or local work area agreements by two per cent or CPI.
PN72
Can you take the Commission to the part of the letter where you say that it says - it refers to an agreed position of a percentage increase or a CPI? Can you find that for us?---Yes, Commissioner. It is on page 4 of the document. It is dot point 4 and it is a response to the questions asked by Ms McMannis and the chief executive officer is saying clearly that it is the intent of his memos of 1 August and 21 November that there would only be changes in wording that needed to be changed for technical reasons, and that it was to provide an annual increase of two per cent or CPI with a minimum of $12 to be paid, and that was in local work area agreements that were being negotiated.
PN73
I think you said that was on page 4. Is that actually the bottom of page 3?---Page 3, I beg your pardon. It is page 4 of the fax. I am reading the wrong one. Yes, page 3 of the document.
PN74
And it is the last paragraph on that page?---Yes, the last paragraph. That is correct.
**** BARRY DESMOND MILLER XN MR HARVEY
PN75
Yes, thank you. And why would you say that this letter is relevant to the agreement that we are considering today, if it is?---Well, the Council's position and the union's position at the time was the same, that any increases that were to apply were to be subject to CPI. As I indicated, not only the local work area agreements, but the then enterprise agreement which had been tabled by Council, also offered a two per cent salary increase or CPI and not only was the CPI to apply to the enterprise agreement, it was to apply to all allowances that were covered by the award and were part of the enterprise agreement and local work area agreement.
PN76
Thank you. In the sixth paragraph, you refer in the last sentence to:
PN77
As well as a similar offer for a salary increase or CPI in a rejected enterprise agreement.
PN78
What agreement are you referring to there?---The proposed agreement that was put forward by the City of Boroondara. It was enterprise agreement number 2, 1998, which expressed the views of the unions and the chief executive officer that CPI would apply to any increases.
PN79
And can you tell us what that agreement provided with regard to wage increases?---It was two per cent, which was the going rate at Boroondara at the time. It was offering two per cent or CPI.
PN80
And what happened to that agreement?---It was eventually rejected by, I think, from memory, around about a 75 per cent majority of membership, because other issues in the document which the membership found unacceptable.
PN81
In the last paragraph you say that:
PN82
The increase offered was always expected by members to be topped up by CPI if it exceeded the base three per cent.
**** BARRY DESMOND MILLER XN MR HARVEY
PN83
How do you know that this is what members expected to occur?---Well, that was discussed at the time and, as I said, as a union official, we expressed our concern as to what would happen to inflation as a result of GST, and members were not happy, in effect, with the three per cent. They, in fact, wanted more but I think the only factor that sold the document to them was the fact that if the increases that were offered were to be outstripped by inflation, they would receive the higher rate of pay. Clearly understood by all parties.
PN84
Did you brief the union's members about this agreement?---During the course of the report back meetings, yes.
PN85
And what did you say to members about the meaning of the clause that we are considering today?---Well, my view and, I think, all of those around the table - well, I don't think, I know, all of those around the table was that there really was no difference. CPI, cost of living, means the same thing.
PN86
And is that what you told members that the clause meant?---Yes. That is why I wasn't prepared to argue about it, because our view was it means exactly the same thing and that would be confirmed by any person you would stop on the street and ask.
PN87
In the last paragraph, you also say:
PN88
It was expected by members to be topped up by CPI if it exceeded the base three per cent, as it did in July 2000 when the agreement was honoured by the City of Boroondara.
PN89
I expect that evidence may be given later, that this is not, in fact, the case, but could I just ask you now, what you are basing that final statement on. That is, that it was topped up?---My understanding was that it was topped up to the CPI of 3.2 at the time. When we started to discuss this particular issue I asked my shop steward to check with payroll to determine what increases were paid the previous 12 months and he advised me, after speaking to payroll, payroll advised him that 3.2 per cent was the figure that was paid, so that is what I based that statement on.
**** BARRY DESMOND MILLER XN MR HARVEY
PN90
When did you obtain that information from the shop steward?---Probably about a month ago.
PN91
So a month ago, this year?---Yes, yes. This year.
PN92
So at the time you drew up your statement, you believed that last sentence to be correct?---Yes.
PN93
Thank you. I have no further questions, Commissioner.
PN94
PN95
MR LUNNY: Mr Miller, when the agreement was being negotiated, you indicated the GST was clearly on the horizon?---Yes.
PN96
Back in early 1999?---Yes.
PN97
Your concerns about the impact on wages and inflation, but no-one could have appreciated what the precise impact could have been then, could they?---Well, as I said in my statement - - -
PN98
Well, the precise impact?--- - - - evidence from overseas indicates that, and we can only go on what evidence is being provided by other countries.
PN99
You wouldn't have known what the, sort of, tax reform mix was going to be then?---Not at that point in time, no.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN100
No. You wouldn't have known about the potential for tax cuts to offset any GST increases?---No, that is correct.
PN101
And no-one, presumably, at that time, had any appreciation of the extent to which the reforms would receive Democrat support or not, in the Upper House?---That is correct, but we wanted to wear braces with our belt just to make sure.
PN102
Fine. You wanted to make sure that your members wouldn't be out of pocket because of the introduction of the GST?---If it was to increase inflation.
PN103
And they wouldn't be out of pocket as a consequence of the GST?---That - well, by out of pocket, I mean that if the cost of living went up by X amount, then their wages would go up to meet that.
PN104
Their real wages? Their real wages or their disposable income would go up to meet it?---Their wages would go up.
PN105
Right?---And that is what the agreement says.
PN106
Now, you have said here that CPI had been used in previous drafts. Is that correct? Because they only remained drafts, didn't they?---CPI was the position that the union and it's members maintained at all times. Council had a different interpretation.
PN107
The question is a fairly simple one. You said that CPI was used in previous drafts, yes or no?---There are drafts that are available that have the current document in it.
PN108
Is that true - - -?---I believe from early - - -
**** BARRY DESMOND MILLER XXN MR LUNNY
PN109
Is my question sufficiently clear?---Early drafts did have CPI in it.
PN110
Thank you?---The negotiations went to that position.
PN111
But you have also said in here on this occasion Council rejected the warranting of CPI and instead adopted an alternative formula, cost of living. Is that correct?---Yes.
[11.00am]
PN112
Now, generally, one would conclude that a deliberate change of wording indicates a deliberate change of meaning, wouldn't you, normally?---No, you see if there was - - -
PN113
You wouldn't normally conclude that?---The answer is no. If there was to be any change in interpretation it would have been done in a definition in the agreement. There is no definition in the agreement which supports your statement.
PN114
There is no definition which contradicts it, is there?---Well, if there is no definition in there one would accept that CPI and cost of living mean exactly the same thing and that was what was being discussed around the table at all times.
PN115
And if it can be shown that there was a very respectable body of opinion which says, cost of living and CPI is not the same thing. What would you say to that?---Well, I would ask you to produce that because any evidence that I have seen along those lines is all based on very rubbery summations.
PN116
And no doubt you will be producing evidence to that effect. Now, Mr Kennedy in his letter did refer to an annual increase of 2 per cent or CPI. His letter, by the way, at the front of - the first page - says the following:
**** BARRY DESMOND MILLER XXN MR LUNNY
PN117
Having refrained from criticism of the union's approach to this issue the inaccurate inappropriate and intemperate comments in your letter of 9 June require response.
PN118
Now, unfortunately we don't have the letter of 9 June?---It wasn't what - my letter?
PN119
It was presumably Ms McManus' letter?---Not my letter.
PN120
Well, it is the ASUs letter?---Mm.
PN121
So we don't really know the questions that Mr Kennedy is actually answering from the dot points that you took us to, do we, in the absence of - - -?---I would tend to think that those questions are contained in the first part of the letter, are they not?
PN122
I don't think so. They are Ms McManus' questions?---Mm.
PN123
But Mr Kennedy does refer to on two occasions the value of real wage levels being supportive and that is what the thrust of a clause like 15.1.6 is all about, is it not - to protect the value of real wage levels despite economic circumstances changing outside the workplace. Now if you - - -
PN124
MR HARVEY: Sorry, is this a question in there, Commissioner.
PN125
MR LUNNY: I am asking him to confirm that that would be his understanding?---My understanding is that the council committed to provide a wage increase of 3 per cent - - -
**** BARRY DESMOND MILLER XXN MR LUNNY
PN126
Well, yes, he was saying that, but my question is the value of real wage levels being protected - - -?---What is real?
PN127
That is the thrust of the clause, 15.1.6?---What is a real wage. A real wage is what you take home.
PN128
It is the value of your spending power, the disposable income?---No, your real wage is what you take home.
PN129
Yes, and it can go up and go down in certain ways. It can go up for a wage increase - - -?---Well, I would hope that their take home wages wouldn't go down.
PN130
And it can also go up through a reduction in income tax. Now, the letter that you refer to in your exhibit was written in June 1998. Now, GST wasn't on the radar screen then, was it? I think Mr Howard - - -?---I think GST has been on the radar screen with John Howard since Adam was a pup.
PN131
But I think at that stage he was still telling us it was never going to be part of the agenda?---Well, do you believe everything you hear a politician say?
PN132
Well - - -?---We know what the party' political agenda was and that was to bring a GST to Australia.
PN133
But when Mr Kennedy wrote that letter he could not have had in contemplation - although John Howard may well have done - the introduction of a GST and how it might affect an enterprise agreement across council as a whole or LAWAs. He can reasonably have done that?---It may be the case but he has also said that - - -
**** BARRY DESMOND MILLER XXN MR LUNNY
PN134
Well, never mind what he also said?--- - - - CPI would apply.
PN135
Well, he said that in a draft. Was that draft ever certified?---No, it wasn't.
PN136
No?---But it was put to the vote of the members of all staff and rejected.
PN137
Well, that is fine. So, where is the precedent in the draft which was never certified?---Well, it shows what the council's position was and the council's position was to pay salary increases that were subject to the Consumer Price Index.
PN138
The council's position prior to the introduction of a GST and the presumed impact that that would have could well be different in '98 than it was in '99. Now, you have seen the exhibit produced in the last hearing, have you not? I think it was exhibit L1, Commissioner, which indicated the increase in your members' disposable income as a result of the diminution in personal income tax. Have you seen that?
PN139
THE COMMISSIONER: Do you want me to pass that to - - -
PN140
MR LUNNY: Do you recall that, Mr Miller?---I recall it. I am not an economist. Thank you.
PN141
I don't think you have to be an economics guru to gauge the impact of those tables?---Well - - -
PN142
MR HARVEY: Sorry, Commissioner, I - having not been involved in the prior proceedings I am not sure what the document Mr Lunny is referring to is.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN143
THE COMMISSIONER: It was an exhibit tendered on the 4th of the 9th and - - -
PN144
MR HARVEY: Thank you, Commissioner, Mr Lunny has given me a copy of it.
PN145
THE COMMISSIONER: Oh, good, thank you.
PN146
MR HARVEY: Thank you.
PN147
MR LUNNY: Do you accept that that is a fair reflection of the take home pay realities.
PN148
MR HARVEY: Commissioner, I don't think the witness is in a position to answer that question. It is not a document that was prepared by him and he doesn't - he is not here in a capacity of being able to speculate on those sorts of issues.
PN149
THE COMMISSIONER: Mr Lunny?
PN150
MR LUNNY: Commissioner, this document was tabled at proceedings over one month ago.
PN151
THE COMMISSIONER: Yes.
PN152
MR LUNNY: He could have checked with his members as to whether they took issue with the statistics.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN153
THE COMMISSIONER: Yes.
PN154
MR LUNNY: And we are entitled to presume that in the absence of any protest to the contrary they are a fair reflection. Mr Pawsey will in due course give evidence that he prepared them but I am just interested in Mr - - -
PN155
THE COMMISSIONER: Well, that can be a fair question to Mr Pawsey but Mr Harvey's point is probably a valid one, is it not.
PN156
MR LUNNY: In terms of the realities I don't think it is. This was put to the union and it was used in argument and relied upon in argument previously and it has hitherto been unobjected to. And I think we are entitled to presume that silence in these circumstances equates to a quasi consent. Let me ask the witness.
PN157
Is there any reason why you suppose these are not true figures?
PN158
MR HARVEY: I renew my objection. You know, Mr Miller has not been asked to examine this document by anybody as far as I know in the last month and I am not sure why he should be asked to make any presumptions about it at all, Commissioner.
PN159
THE COMMISSIONER: I think it is a fair objection, Mr Lunny.
PN160
MR LUNNY: I am happy to proceed and let me proceed by putting this to you. If it could be demonstrated, Mr Miller, that your lowest paid member received an increase of 3.5 per cent and your highest paid member received an increase of 6.5 per cent in disposable income, a result of these increases, would it not be true to say that their spending power, their real wages, have been advanced as a result of those income tax cuts?---No, can you explain to me which of my members' salary has gone up by 6.5 per cent because I don't think they are aware of it? What they are looking for - - -
**** BARRY DESMOND MILLER XXN MR LUNNY
PN161
The salaries haven't gone up, the net pay - - -?---What they are looking for - - -
PN162
The salaries haven't gone up - - -?---No.
PN163
- - - the net pay - - -?---What they are looking for is a 6 per cent increase in their gross salary based upon the commitment given by the council in the local work area agreement.
PN164
Mr Miller, I know you are studiously trying to avoid the point but I will make it again. If your members received, in terms of the dollars in their pocket, an increase of 6.5 per cent at the top end and 3.5 per cent at the bottom end, and that was consequential upon an increase in the CPI at the same time, would not they go to balance each other out as a minimum and advance significantly some of the employees - - -?---I can't answer that - - -
PN165
- - - in terms of their spending power?---I can't answer that question because I don't know which of my members have received the alleged 6.5 per cent salary increase.
PN166
Well, let me come at it another way?---You can put it any way you like. I told you what my response it.
PN167
There is no need to be argumentative?---I am not being argumentative.
PN168
If it can be demonstrated that the impact of the GST on CPI of 6 per cent was 3 per cent - are you following my argument? The fact could be demonstrated and at the same time income tax cuts delivered a net benefit to your members disposable incomes of, say 3 per cent, or 3.5 per cent, in terms of their spending power in the community, they would balance each other out, would they not? It is not a hard formula to follow?---Mm, I - - -
**** BARRY DESMOND MILLER XXN MR LUNNY
PN169
Is that a grudging acceptance?---No, it is not. I don't accept what you are saying because nobody can demonstrate or has demonstrated to my belief that the GST is equal to 3 per cent. The spike is equal to 3 per cent. I simply repeat again, the agreement between my members and the council and the union is that their gross salaries will be increased by 6 per cent and - - -
PN170
Where does it say that? Where does it actually say that? I am having a problem with that?---Well, you have got a problem with it, you have got a problem with it, I am sorry.
PN171
Where does it say your salaries will be increased by 6 per cent?---It says in the agreement that they will be increased by the cost of living. the cost of living is consumer price index and that the council has used consumer price index in the past to determine increases on and above that in the local work area agreement. So I think it is quite feasible to accept that the consumer price index which is running at 6 per cent at this point in time is the figure that would apply over and above the 3 per cent.
PN172
But you see extrapolations go too far because the cost of living was deliberately chosen as an alternative to the previous term, CPI. Now, you don't change those wordings unless you intend to change the meaning?---Well, if you intended to change the meaning then why didn't your client put it in a definition in the agreement? They didn't - - -
PN173
Well, that is a completely different issue?---They didn't, they didn't.
PN174
That is an entirely different issue. If you wanted it to mean - - -?---No, it is not.
PN175
If you wanted it to mean CPI why didn't you put it in the agreement?---Because we clearly accept and understand that the cost of living and CPI are exactly the same, one and the same.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN176
Well, that is something that - council did not proceed on that basis and that is why we are here, I guess?---And that is why we are here, yes, because you are reneging on - your clients are reneging on the agreement.
PN177
There is no reneging about it, if you don't mind. You are here to answer questions not cast insults?---I am not casting insults.
PN178
MR HARVEY: And with respect, Commissioner, Mr Lunny is here to ask them not to make arguments from the bar table at this point. That can be done later.
PN179
MR LUNNY: It takes two to tango. All I am trying to do is get some questions answered.
PN180
THE COMMISSIONER: Please go on.
PN181
MR LUNNY: Well, we have agreed that this LAWA is silent on the definition of the cost of living. That is correct, is it not? That is not a hard one?---Well, there is no definition.
PN182
Thank you. But other LAWAs to which the ASU is a party at Boroondara go further and define the term, do they not?---There are local work area agreements that have a definition in it, yes, but not this agreement and not any agreement that my branch was involved with.
PN183
Just answer - I would appreciate it if you would just answer the question?---I am answering the question.
PN184
It is a witness box not a soap box?---I am answering the question.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN185
So you have LAWAs which are undefined and you have got LAWAs which have a definition; is that correct?---That is correct.
PN186
The employees concerned are all members and many of them would be common memberships of the ASU?---They are members - all of them are members of the Australian Services Union but there are two branches to the Australian Services Union.
PN187
I don't need to know about that?---Well, I think you do.
PN188
I don't need to know about that. They are members of the ASU, that is enough. They shop in the same supermarkets, they fill up in the same petrol stations, they live in broadly the same communities.
PN189
MR HARVEY: Is this a question?
PN190
MR LUNNY: I am coming to a question, thank you.
PN191
It wouldn't be fair, would it, for one group to be better advantaged than the other simply because of the absence of a definition?---Is it fair - I would say, no, and to elaborate on that I would ask you, is it fair that the council has 33 local work area agreements with different rates of pay in it?
PN192
You have said it is not fair, I am happy with that answer. We are not talking about the legal analysis here we are talking about basic fairness, vis a vis, fellow Boroondara employees. Now, for you to say that one group should receive 6 per cent, and presumably - sorry for you guys, it is the finder that is going to be 3 per cent, 4 per cent. That wouldn't be fair, would it?---The whole process at the City of Boroondara is unfair in that it rolls over local work area agreements. And there are people on different rates of pay at any given time. And at this point in time, this agreement is what applies in this particular work group. And as we proceed with local work area agreement renegotiations, I am sure the conditions will increase and better themselves in agreements that are sub-standard to that now.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN193
But you have accepted that the differential treatment on cost of living would not be fair?---Yes.
PN194
Now, you took part in the discussions between Council and your union at the offices of Clayton Utz on 11 September this year, didn't you?---Yes.
PN195
Do you recall that those discussions were agreed to be in confidence and without prejudice?---Correct.
PN196
But the union has now gone on the record, has it not, with respect to the various proposals put?---I understand that that particular issue - - -
PN197
MR HARVEY: Commissioner, if Mr Lunny is referring to one of our other witness statements, we do take his point. And we were going to clarify that when we got to dealing with that particular witness. If that is what Mr Lunny has in mind.
PN198
MR LUNNY: Well, I don't know how you are intending to deal with it, because it is really a case of - to an extent the toothpaste is out of the tube, in the sense that you are now aware, Commissioner, as you were at the last hearing, precisely what offers were put backwards and forwards between the parties.
PN199
THE COMMISSIONER: Yes, but if you say it is objectionable - - -
PN200
MR LUNNY: I am not objecting.
PN201
THE COMMISSIONER: No, but isn't that the point? If something is objectionable then it is put out of the mind of the decision maker.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN202
MR LUNNY: I am not objecting, because I don't think we can put the toothpaste back in the tube. But I wanted to take, free of any suggestion that we would be in breach of the without prejudice provision, take the witness to those discussions.
PN203
THE COMMISSIONER: Well, that is - I don't mind if you do that, but I certainly wouldn't want you to think that if you believe something is objectionable, it shouldn't be taken into consideration, that it is not beyond a member of the Commission to put it out of their mind. It is acting judicially if nothing else.
PN204
MR HARVEY: Commissioner, can I address you on that point, because I think it - and we may as well clear it up now - that there were certain discussions which I wasn't involved in and not aware of the context, except I did notice it in one of the witness statements of one of our other witnesses. And I consider that those - and I have since been advised formally, including by Mr Miller, that those discussions were without prejudice. And therefore we are proposing to strike out any references to that in the other statement. And it would be our submission that neither side should actually refer to those discussions, because if they have any impact at all, I think they would be prejudicial on a proper consideration of this matter in this hearing.
PN205
THE COMMISSIONER: Mr Lunny.
PN206
MR LUNNY: I think it is a little bit too late for that actually, Commissioner. They have been put in discussions at our last conciliation hearing.
PN207
THE COMMISSIONER: Yes.
PN208
MR LUNNY: And they have also appeared on the record by way of a witness statement filed and served in this Commission, and seen by all sorts of people.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN209
THE COMMISSIONER: Well, there is only one person deciding the matter.
PN210
MR LUNNY: Yes.
PN211
THE COMMISSIONER: It depends where you think the prejudice is going. If you are concerned and you raised it as a matter of concern that something was done without prejudice, it should remain silent. And if Mr Harvey believes it is appropriate to be struck from it - I am desperately trying to think of the provision, and I can't, he is referring to.
PN212
MR LUNNY: Yes.
PN213
THE COMMISSIONER: So, if it is struck out, I will just put it out of my mind in terms of what I decide.
PN214
MR LUNNY: But the point I need to take the witness to, and I would insist on taking the witness to, because the material is now out about those discussions is that both parties were very near a ..... which did not go to the extent of what the union is now saying their legal entitlement is.
PN215
THE COMMISSIONER: Yes, but that is a difficulty we face in every conciliation in the Commission that parties are trembling on the verge of agreement and then for whatever reason they don't agree and the matter remains agitated and then parties are entitled to take a public position and a section 111AA is akin to a public position that you want to take to have agitated. So even if you were close it says nothing other than you were close and at the end of the day you didn't reach agreement.
PN216
MR LUNNY: That is fine, Commissioner. I don't have any other questions for Mr Miller.
**** BARRY DESMOND MILLER XXN MR LUNNY
PN217
THE COMMISSIONER: Thanks, Mr Lunny.
PN218
MR LUNNY: Thank you.
PN219
PN220
MR HARVEY: Yes, just one point in re-examination, Barry. I think if I understood the exchange correctly that you agreed with Mr Lunny that the wording in the agreement about wage increases was changed, that is, it was changed - Mr Lunny's question was deliberately changed from CPI, the cost of living. I think you agreed with him on that, is that correct?---Yes.
PN221
But despite that change did your understanding of what those words meant change in any way?---At no time whatsoever.
PN222
And your understanding of those words were?---That cost of living and CPI were exactly the same.
PN223
Thank you. That concludes my examination of this witness.
PN224
THE COMMISSIONER: Thanks, Mr Miller, you can return to your seat?---Thank you, Commissioner.
PN225
PN226
PN227
THE COMMISSIONER: Please sit down, Ms Dennis.
PN228
MR HARVEY: Andrea, just for the record, could I ask you to state your full name and address again, please?---Andrea Joan Dennis. Flat 2, 27 Abercrombie Street, Balwyn.
PN229
Thank you. And, Andrea, have you prepared a statement of the evidence you wish to give to this Commission today?---Yes, I have.
PN230
I show you a statement - and when the Commissioner's associate hands it to you could you look at that and indicate whether that is a statement you prepared in advance?---Yes, it is.
PN231
Are there any changes or corrections you want to make to that statement at this time?---Yes, there is an addition which I would like to put in.
PN232
What is that?---The third last paragraph which starts "I expected to receive as a minimum payment".
PN233
Yes, and what is the change?---The addition that I would like to put in is that the other - my fellow staff members also believe this.
PN234
Where will that go, the end of that sentence?---Yes, after the word "CPI".
PN235
Sorry, could you just repeat the words slowly so that we can all write them down?---Okay. I'll start with the end of that sentence which I have interpreted to be CPI, "This is also the interpretation that my fellow team members had".
PN236
The interpretation that?---"...my fellow team members had".
**** ANDREA JOAN DENNIS XN MR HARVEY
PN237
Thank you. Are there any other changes or additions?---That's all.
PN238
Now, with this change or this addition, is what is said in the statement true and correct to the best of your knowledge?---To the best of my knowledge it is true and correct.
PN239
Commissioner, I know you have a copy of that statement. It is unsigned. Do you wish the witness to sign it?
PN240
PN241
MR HARVEY: Thank you, Commissioner.
PN242
Andrea, I just have a couple of little extra questions. In your third paragraph you say:
PN243
I remember one meeting which took place at the Hawthorn Town Hall towards the end of the negotiations.
PN244
Do you recall when that meeting - the approximate date of that meeting?---It probably would have been about within four weeks of the vote to accept or reject this agreement taking place.
PN245
Four weeks prior to it?---Yes.
**** ANDREA JOAN DENNIS XN MR HARVEY
PN246
And do you remember when that vote to accept or reject it was?---I cannot recall the exact date but the vote, I believe, was taken the day before - that our tenders were due to go in.
PN247
And that was approximately when?---I think that was early to mid-November. I can't remember the exact dates.
PN248
No, that's fine. Now, in the fifth paragraph you say you asked Geoff, I take it that's a reference to Mr Jeff Pawsey?---That's correct.
PN249
And it says you asked him for a definition between the cost of living and CPI. Do you remember when you asked him that?---It was at the meeting at Hawthorn Town Hall and the question was raised because the words of the agreement said "cost of living" and we said "Cost of living. Is that the same as CPI?" And we were told that they were pretty much interchangeable.
PN250
And in your next sentence you say this "Jeff also passed onto the work group as a whole". Can you tell us how he did that?---We all went through the agreement prior to its vote to accept or reject that and this was explained as part of that. There were a couple of team members who raised the issue of cost of living and they asked the same question "Is cost of living and CPI the same?" and the same answer was given.
PN251
And when you say "we all went through it", who was the "we" in that case, who was in the room, so to speak?---The horticultural services team members, the reactive tree maintenance team members, the people that were at work on that day, and Mr Pawsey and myself.
[11.29am]
PN252
So all the employees who were at work on that day, plus Mr Pawsey representing the council?---Yes.
**** ANDREA JOAN DENNIS XN MR HARVEY
PN253
Thank you. And you may have answered my next question, but the next paragraph which is the one we just looked at with your addition, we said:
PN254
Which I have interpreted to be CPI.
PN255
How did you come to that interpretation?---Because when I raised the point of cost of living, Mr Pawsey said that cost of living and CPI were interchangeable, that they meant the same thing.
PN256
Right, thank you, I have no further questions, Commissioner.
PN257
PN258
MR LUNNY: Ms Dennis, you said that when this agreement was being negotiated, you were aware that the GST was going to be introduced?---Yes.
PN259
But that nobody, not you, not Jeff Pawsey, were sure how it would affect any of us?---Yes.
PN260
You were aware of the potential effect - unaware of the potential effect. At the start of paragraph 4?---I was aware that it was going to be introduced but at that point I, not being an economist, certainly had no idea of how it would affect myself or anybody else.
PN261
There were not any - - -
PN262
THE COMMISSIONER: You make an assumption that economists do.
**** ANDREA JOAN DENNIS XXN MR LUNNY
PN263
MR LUNNY: There were not any handy crystal balls around at the time?---No, no.
PN264
But you are now aware of not just the potential effect; you would now be aware of the actual effect, would you not?---I am only aware of the effect the GST has had on me and my household.
PN265
Well, was one of those effects an increase in your disposable income by way of income tax cuts?---They were not particularly noticeable.
PN266
Well, I am not asking you for the quantum. You did receive income tax cuts?---I believe so, yes, I believe we did.
PN267
You do not know whether you received income tax cuts?---I do not know. I do not know if I actually received them or not.
PN268
Didn't you notice the difference in your pay - - -?---No.
PN269
- - - from one week to the next or one month to the next?---Unfortunately the way my pay has been structured is I have got money coming out into a number of different accounts and paying off a bank loan, so I - a lot of the time I find it difficult to actually quantify my pay slip.
PN270
Well, will you proceed on the basis there were tax cuts?---Yes, I will proceed on that basis.
PN271
So almost simultaneously you were receiving more by way of your disposable income and at the same time the cost of goods and services that you were required to purchase also increased?---Yes.
**** ANDREA JOAN DENNIS XXN MR LUNNY
PN272
Now, let us imagine, for the sake of argument, that they were 3 per cent each, about 3 per cent more of my disposable income, but I was required to pay 3 per cent more because of the GST, in effect. If that was the case, they would cancel each other out, wouldn't they?---If that was the case, they would. But one thing that I am certainly finding is at the end of the week that I do not have enough money to be able to save any more. And that has only happened since GST has come in.
PN273
If they did cancel each other out, but the GST component of 3 per cent paid for by the tax cuts was included again in the CPI statistic of 6 per cent and you got a wage increase of 6 per cent, you would be getting compensated for the GST component twice, wouldn't you? Compensated by way of a new tax regime, and then getting paid for it on the GST?---I am not sure. I am not sure that I actually understand what you are saying. Is it possible to rephrase that?
PN274
I am certainly happy to put it again?---Okay, thank you.
PN275
I think we agreed that if there was an increase in the cost of goods and services of 3 per cent, but at the same time your disposable income increased by 3 per cent - - -?---Yes, I understand that part, and I have no argument with it.
PN276
Right. So they balance each other out. But if that 3 per cent of the impost of the goods and services tax was also including the calculation of the CPI and you received a 6 per cent wage increase, you would be receiving compensation for the GST impost twice, wouldn't you?---I don't believe so.
PN277
Why not?---Because there are things which the GST was not supposed to affect. Things like food and rent, and they certainly have gone up by more than 3 per cent.
PN278
But we are acting on the hypothesis that it is 3 per cent, 6 per cent. And one - if they were truly balanced out, and you then had that 3 per cent added to the CPI and paid as a wage increase, you would be getting it twice, wouldn't you?---That is not what I believe.
**** ANDREA JOAN DENNIS XXN MR LUNNY
PN279
Well if you weren't getting it twice, would that be fair? To the council? It would be double dipping, wouldn't it, if you got it twice? It is not that hard.
PN280
MR HARVEY: I am not sure whether the witness is in a position to answer the question of whether it is fair to the council or not, Commissioner, which is the way Mr Lunny phrased the question. I don't think she is in a position to answer that.
PN281
MR LUNNY: Well, let us put it on a general level of fairness, would it be fair?---Who am I to say what is fair or not?
PN282
Well, you are a member of the community who has got the same sort of standards as the rest of us?---Yes, and one thing I am finding as a member of the community is that my costs, in order to run my household, have gone up by 6 per cent.
PN283
That is a different question I am afraid. And let us imagine that Boroondara employees across the board had an entitlement to have their wages adjusted to the cost of living, but some got 6 per cent for the cost of living, and some got 3 per cent. Would that be fair?---We were only talking about this agreement.
PN284
Well, I am not only talking about this agreement. I am talking about general equitable principles here. And asking you to agree or disagree on what would be fair. And I don't think it is that hard. I know you are trying very, very hard not to agree with me, but I will put it to you again?---I am also trying very hard to understand what you are saying. And I am not completely sure that I do understand what you are saying.
PN285
If some employees who were entitled to a cost of living increase got 6 per cent, and some employees who were entitled to a cost of living increase got 3 per cent, would that be fair?---What is the definition of "cost of living"?
**** ANDREA JOAN DENNIS XXN MR LUNNY
PN286
I don't have any more questions for the witness, Commissioner.
PN287
THE COMMISSIONER: Thank you. Ms Dennis, what band are you in, at the council?---Band 3A. Sorry, 3D.
PN288
THE COMMISSIONER: Mr Harvey?
PN289
MR HARVEY: No further in re-examination, Commissioner.
PN290
PN291
MR HARVEY: Can I take it is fine for the witness to remain in the hearing room now?
PN292
THE COMMISSIONER: Yes, of course.
PN293
PN294
MR HARVEY: Paul, can I ask you again, just for the record to state your full name and address please?---My name is Paul Gerard Murphy, and I live at number 75 Government Road, The Basin.
PN295
And Paul, have you prepared a statement of the evidence that you wish to give to this Commission today?---Yes, I have.
PN296
Could I show you a statement? And I ask you whether that is the statement that you prepared in advance of today's hearing?---Yes. I believe it is.
PN297
Are there any changes or corrections you wish to make to that statement at this time?---No, thank you.
PN298
Commissioner, I tender that statement.
PN299
PN300
MR HARVEY: Thank you. Paul, I just have a couple of questions with regard to that statement. At the second paragraph, in the last line you refer to a horticultural, or the horticultural services document. Could you just explain to the Commission what that reference means? What is that particular document?---The Parks and Gardens Department of the City of Boroondara was divided into two groups for the period of compulsory competitive tendering. They - we both fell under different LAWAs. So one of them was a Reactive Trees Maintenance LAWA, and the other one was Horticultural Services. That is the document I am referring to, is their LAWA.
**** PAUL MURPHY XN MR HARVEY
PN301
Thank you. And in the fifth paragraph you might be able to help us here. We have already begun to get into questions of economics. But I notice that you say there that the LAWA was supposed to deliver an annual pay increase of 3 per cent or equal to the inflation rate. Can you tell the Commission how the words "the inflation rate" were actually expressed in the agreement?---I imagine by the words "cost of living".
PN302
Right. And how did you, as a member of this work group, understanding cost of living? What did that actually mean?---I understood it to be based upon the consumer price index, the basket of goods, so to speak.
PN303
All right. Thank you. I have no further question of this witness, Commissioner.
PN304
PN305
MR LUNNY: You say:
PN306
With hindsight I believe that council was aware of the impending implications of the GST for I can see no other reason for the use of words like "cost of living" instead of "CPI" in the agreement.
PN307
Now that means, doesn't it, that the phrase "cost of living" was consciously adopted as an alternative to CPI or the inflation rate. That is what that means, isn't it?---Not to me.
PN308
With hindsight I believe that council was aware of the impending implications of the GST for I can see no other reason for the use of words like "cost of living" instead of "CPI" in the agreement.
**** PAUL MURPHY XXN MR LUNNY
PN309
?---Yes.
PN310
That means that somebody somewhere thought they were different, doesn't it? It was hindsight that they selected those words?---My interpretation would be that somebody somewhere did believe that, but I didn't consciously believe it at the time.
PN311
Well, you - but somebody somewhere intended that it was going to have a different meaning from CPI or inflation or perhaps CPI or inflation would have been used as an alternative?---Sorry, what was the question?
PN312
Some - you would agreed that somebody somewhere intended a distinction to be made between those alternative competing terms - cost of living, CPI, inflation?---With hindsight, I believe that. I wouldn't necessarily agree that that was fact.
PN313
Now you say - you say that no-one has been able to calculate the impact of the GST on the CPI with any accuracy - any confidence or accuracy?---I do say that.
PN314
You do. So the only official figure for cost of living is the CPI?---As I understand it.
PN315
What if a reputable body like the Reserve Bank had made an estimation of the impact, wouldn't that provide a fairer view of the true cost of living in the GST regime?---I would look to the Australian Bureau of Statistics for that figure, and did, and was unable to find anything.
PN316
What about the Reserve Bank of Australia?---In my opinion that would not substitute for an Australian Bureau of Statistics figure.
**** PAUL MURPHY XXN MR LUNNY
PN317
Not a reputable economic financial institution with its finger on the Australian economy, pulse of?---Sorry, I - I don't understand the question.
PN318
Would you agree the Reserve Bank is a reputable body with responsibilities for the management of the Australian economy - - - ?---I would agree to that.
PN319
- - - with its finger on the pulse of it?---Yes.
PN320
Now you have suggested your responsibility as team leader was to ensure that your pre-services team received an "equitable deal". That is correct, isn't it?---That is part of my responsibility as team leader, yes.
PN321
How would you define "equitable deal"?---How would I define it? Fair day's pay for a fair day's work.
PN322
For fair and reasonable?---Fair and reasonable would be okay.
PN323
Let us imagine, Mr Murphy, that the impost of the GST whacked an extra 3 per cent on to the CPI statistic. Are you prepared to go along that line?---I can imagine, if you wish me to.
PN324
Okay. Now let us imagine that at the same time as receiving that extra increase in what you have to pay for your goods and services you receive, by way of tax cuts, an equivalent increase in dollars in your pocket of 3 per cent. They would neutralise each other, wouldn't they, they would balance each other out?---Under your scenario, I would imagine.
PN325
How much did the tax cuts, in your case, amount to?---I don't know.
**** PAUL MURPHY XXN MR LUNNY
PN326
What band are you?---Band 6.
PN327
Band 6 - would it surprise you to know that council's estimate is that you receive a 6.5 per cent increase as a result of the tax cuts?---That would surprise me.
PN328
How much do you calculate you receive?---I haven't calculated it.
PN329
Well, if it could be shown that in your case they maybe not even just balanced each other out but you actually gained as a result of the GST, and that figure of 3 per cent in the increase costs of goods and services was also part of a CPI index of 6 per cent, and you got a wage increase of 6 per cent, you would be getting compensated twice, wouldn't you, in that scenario?---I am not an expert on the matter, I don't know. I am not quite sure I understand your scenario.
PN330
It is quite a simple one?---All right.
PN331
You introduce the GST, it increases CPI by 6 per cent - sorry, it increases it by - let us say 3 per cent to reach a figure of 6 per cent, but 3 per cent of that is compensated by way of tax cuts. You are actually 3 per cent worse off. If somebody comes along and says, "Well, I now want a 6 per cent increase," you are being compensated twice, the GST impact on CPI in that scenario, wouldn't you agree?---Under that very simple scenario, you may be able to draw that conclusion.
PN332
But that is the simple scenario we are faced with here, isn't it?---Not in my opinion.
PN333
That would be double dipping in that scenario, wouldn't it?---Under your scenario you may call it that. I don't - I don't agree.
**** PAUL MURPHY XXN MR LUNNY
PN334
Well, and if it was would that be fair and reasonable? Would that be equitable?---I am not fit to judge fair and reasonable under those conditions because I don't necessarily agree that the scenario takes into account all the variables.
PN335
If there were a range of Boroondara employees, all of whom had an entitlement to 3 per cent or the cost of living, and one group was provided with a 6 per cent wage increase for the cost of living and other groups were provided with say - let us say a 3 per cent cost of living increase, would that be fair?---It would be fair if all employees fell underneath the one sort of banner, I believe, and they were able to negotiate under that banner. But that is not the case in this scenario.
PN336
I don't have any further questions, Commissioner.
PN337
THE COMMISSIONER: Thanks, Mr Lunny. Mr Harvey?
PN338
MR HARVEY: No, nothing by way of re-examination.
PN339
PN340
PN341
MR HARVEY: Matthew, just for the record can I ask you to again state your name and address, please?---Matthew James Wright, 652 Riversdale Road, Camberwell.
PN342
Now, Matthew, have you prepared a statement of the evidence that you wish to give to this Commission today?---I have.
PN343
Could I show you a document and ask you to identify it, please?---Thank you.
PN344
Is that the statement that you prepared in advance for this hearing?---Yes, it is.
PN345
If I ask you whether this is true and correct or not - we have, in your absence, had a discussion which I think I should now refer the Commission to about a couple of paragraphs in your statement. They are on page 2 and it is the - one, two, three, four - fifth and sixth paragraphs, start off "in a meeting held" and "this was to be paid". I think I might just say this Commissioner.
PN346
THE COMMISSIONER: Yes.
PN347
MR HARVEY: These paragraphs refer to some discussions which were held on a without prejudice basis. Is that your understanding of those discussions?---That is correct, yes.
PN348
Are you happy, for the purposes of this hearing, to delete both those two paragraphs from your statement?---Yes.
PN349
Yes, well, if we could just put a line through those two, Commissioner, I think they are the offending ones, and - - -
PN350
THE COMMISSIONER: The fifth and sixth paragraphs.
PN351
MR HARVEY: Yes, on the second page. And we don't seek to rely on anything said in those paragraphs or said previously, and we would ask the Commission not to consider those paragraphs.
PN352
Matthew, are there any other changes that you wish to make, or corrections you wish to make to your statement?---Yes, in the last paragraph, on the first page - - -
PN353
Yes?---- - - the first sentence should read:
PN354
This proved to me that council at that time was aware...
PN355
Right. So the word "was" to go in before the word "aware"?---That is correct. And I think the "at" is presently an "a".
PN356
That is "council at that time"?---Yes.
PN357
Thank you. Are there any other changes?---No, that is all.
PN358
PN359
MR HARVEY: H5.
PN360
Now, Matthew - sorry, could I just ask you whether that statement was true and correct with all those changes?---That statement is true and correct.
PN361
Thank you. Just a couple of extra questions, Matthew. In the sixth paragraph on the first page, you say that:
PN362
The increase delivered at 1 July was paid at 3.2 per cent which was what the CPI at that time was running at.
PN363
No evidence may be given, later on today, that that increase was actually 3 per cent not 3.2 per cent. But can you - can you say - you go on then to say that you spoke to the pay office about this and they confirmed it. Can I just ask you when you got that information from the pay office?---Approximately four weeks ago.
PN364
Right. And when you spoke to them they said:
PN365
You got 3.2 per cent last year.
PN366
?---Yes.
PN367
Okay, thank you. And I notice you have also referred to that at the top of - in the first paragraph on the second page, in the last sentence, which said:
PN368
My opinion is further entrenched by the council passing on the 3.2 per cent CPI.
PN369
Is that the basis - is the advice from the pay office the basis on which you made that statement?---That is correct, yes.
PN370
Thank you. Just a couple of other things, in the eighth paragraph, on the first page, you refer to a Mr Mark Jeweller. Who is that?---The present manager for parks and gardens.
PN371
Thank you. And in the third last paragraph of the statement, which is on page 2, you refer to correspondence from Mr John Nevins to the Australian Services Union branch secretary, Darryl Cochrane. Can I just hand you a copy of a letter and ask you to identify that, please? Could you look at that letter for me, please?---Yes, that is the letter that I - - -
PN372
That is the letter you are referring to in your witness statement?---Yes.
PN373
Yes, I think that probably is - is that attached to the - - -
PN374
THE COMMISSIONER: The letter of the 6 August?
PN375
MR HARVEY: Yes, attached to the witness statement?
PN376
THE COMMISSIONER: Yes, it is attached, yes.
PN377
MR HARVEY: Okay, thank you. I have no further questions of this witness.
PN378
THE COMMISSIONER: Thanks, Mr Harvey. Mr Lunny?
PN379
MR LUNNY: Commissioner.
PN380
You say that when this LAWA was signed you had heard of the GST but you were under the impression that it may not be introduced- - -?---That is - - -
PN381
- - - because there was a long way to go between the utterances of the politicians, then getting it through the Senate and all the rest of it, wasn't there?---I believe so.
PN382
You said even if you knew it was going to be introduced you would not have known the extent of its impact on your group agreement?---That is right.
PN383
But you know the impact now, don't you?---Yes, because these issues have arisen.
PN384
And if we revisit the impact of it being introduced in July 2000, one of the first things that happened was a raft of income tax reductions. Are you conscious of that?---Yes.
PN385
Which would have increased - not your gross salary, or wage, but would have increased your disposable income?---Yes.
PN386
Which band are you currently on, Mr Wright?---Band 3.
PN387
Have you done your own calculations on how much you benefited in terms of disposal income as a result of the tax cuts?---At the time, I did - at the time I did - did calculate that.
PN388
And what was that figure?---Roughly around - I think it was around $25 a fortnight that I had extra.
PN389
Would that suggest a statistic consistent with Boroondara's payroll statistic of just under 4 per cent?---I'm sorry, I didn't understand that.
[11.56am]
PN390
3.8 per cent is the figure which Boroondara has provided for band 3. Now, you may not be in a position to answer or not, I don't know, but does it sound consistent?---I'm sorry, I don't understand it. What's 3.8?
PN391
Is the increase in your disposable income - - -?---Oh, okay, yes.
PN392
- - - the difference between the dollars you had before the income tax reform and the dollars you had afterwards?---Okay. I don't know what council's estimation of that is.
PN393
Okay. So you got the income tax cuts and at the same time there was an impost on goods and services?---Yes.
PN394
Now, if the impost on the goods and services impacted on the CPI, but the increase in your disposable income didn't impact on the CPI, then the CPI wouldn't fairly reflect upon the impact on you as an individual of the tax reforms, would it?
PN395
It would reflect on the increase in the cost of your purchases but it wouldn't reflect on the commensurate increase in your purchasing power?---No, it's - I would say it would certainly have a large effect on me.
PN396
No doubt have an effect but the point I'm making is that if you receive, for argument's sake, a 3.8 per cent increase in your disposable income, dollars in your pocket, and at the same time you are required to pay 3 per cent more because of the GST, they would cancel each other out wouldn't they?---In theory, on paper it would.
PN397
So if it could be shown that in a CPI of 6 per cent some 3 per cent of that was related to the GST impact, that that had already been compensated by commensurate tax cuts already, you are left with a real, not compensated for increase of 3 per cent in that scenario, wouldn't you?---Well, no, I don't think - it depends how the situation is being viewed.
PN398
Well, let's try and view it quite simply and I will go through it again. You have got a CPI of 6 per cent. It could be demonstrated that 3 per cent of that was because of the extra goods and services impost?---If it could be demonstrated.
PN399
Yes. But that 3 per cent had already been compensated by way of increases in your disposable income with the tax changes, then the uncompensated bit that's left is the 3 per cent in that scenario, is that right?---In that scenario?
PN400
And if you were then paid a 6 per cent salary increase you would be getting doubly compensated, wouldn't you?---No, I don't think so.
PN401
Why not?---It's not the way I see it.
PN402
That's not the way you want to see it, but I'm putting to you a very straightforward proposal. You have got the compensation for the 3 per cent. That leaves you 3 per cent out of pocket. You get instead 6 per cent. You are being doubly compensated. It's not a hard one?---Okay. The understanding at the time of the signing of the LAWA was that we were to receive 3 per cent or the rate of inflation at the time. We understood that we were going to receive 3 per cent or the consumer price index.
PN403
That was in advance of any details, any detailed knowledge, about how the GST would shape up, if it shaped up at all, yes?---Yes.
PN404
That was in advance of any understanding of how the reforms, how they were going to be mixed, in terms of tax imposts and tax concessions, all completely oblivious to those details but we know what those details are. Is that correct?---That is correct.
PN405
If it could be shown that you were getting compensated twice, 3 per cent by way of tax cuts, 3 per cents by way of wage increases, that wouldn't be fair, would it?---If it could be shown that way.
PN406
And would it be even more unfair if other fellow Boroondara and ASU members who were entitled to a cost of living increase on an either or basis were to receive 3 per cent as opposed to somebody elses 6 per cent?---No.
PN407
That wouldn't be fair?---Not if they had an either or basis in that clause.
PN408
I don't have any further questions, Commissioner.
PN409
THE COMMISSIONER: Thank you, Mr Lunny. Mr Harvey.
PN410
MR HARVEY: I have nothing by way of re-examination.
PN411
PN412
MR HARVEY: Commissioner, that concludes the witness evidence on behalf of the union in this matter. What I was proposing to do at this point is there is a number of documents, I think, on both sides, that the parties were simply proposing to tender from the bar table. They have been exchanged in the main. Mr Lunny has given me a couple of late-breaking ones just before the hearing today but in the main, they have been exchanged and I was going to tender those at this point.
PN413
THE COMMISSIONER: Are those the two documents, one of the CPI and the benefits and impact of Government reforms
PN414
MR HARVEY: Sorry?
PN415
THE COMMISSIONER: Are those the two documents that have been forwarded to me?
PN416
MR HARVEY: They have been forwarded to you. The three are and plus something I also want to mention in a minute, Commissioner, the union forwarded a one-page document from the Australian Growth Statistics just headed up, Prices and Consumer Price Index.
PN417
THE COMMISSIONER: Yes.
PN418
MR HARVEY: I would like to tender that.
PN419
THE COMMISSIONER: And there is Chapter 3, Living Standards, the Impact of Wage Cost.
PN420
MR HARVEY: And then there is Benefits of - - -
****
PN421
THE COMMISSIONER: Benefits.
PN422
MR HARVEY: Yes.
PN423
THE COMMISSIONER: Very well, well, what I will do, I think - - -
PN424
MR HARVEY: I have separate copies of that.
PN425
PN426
MR HARVEY: And you have made your own confession, Commissioner.
PN427
THE COMMISSIONER: Prices, Consumer Price Index, I will mark as Joint 2.
PN428
MR HARVEY: Well I am not sure that it is Joint.
PN429
THE COMMISSIONER: Isn't it.
PN430
MR HARVEY: No.
PN431
THE COMMISSIONER: I am sorry.
****
PN432
MR HARVEY: No, this is an ASU - - -
PN433
PN434
MR HARVEY: Thank you, Commissioner. There is one other document which has not been exchanged. Last week at the exchange of documents, the Council indicated or provided us with an outline of evidence from a Dr Duncan Ironmonger from Melbourne University and indicated, in effect, that they would be calling him as a witness today. In his outline of evidence, he referred to a Reserve Bank of Australia table, I think it is referred to his statement and we asked the counsel that he bring the full document with him. Mr Lunny has advised me immediately before the hearing today that they won't be calling Dr Ironmonger today to give so I am not exactly sure how they propose to get that evidence on the record but in any case Mr Lunny has also advised that they only have a one page extract that they were intending to rely and the union would therefore seek and I have got Mr Lunny's consent to this, I think to tender the entire statement on monetary policy that was referred to in Dr Ironmonger's outline of evidence.
PN435
THE COMMISSIONER: Yes.
****
PN436
PN437
MR HARVEY: And while I am telling you about it, I advised Mr Lunny to read every word of it carefully.
PN438
MR LUNNY: I shall do so with great pleasure.
PN439
MR HARVEY: And I will take him to the relevant two paragraphs later. Commissioner, I am not sure how you wish to proceed at this point but I was proposing to speak to some of those documents really only in final submissions and - - -
PN440
THE COMMISSIONER: You should get all the evidence on - - -
PN441
MR HARVEY: Yes and I was going to suggest that we go to the other witness evidence for the and then the parties would make final submissions to you, Commissioner, if the Commission pleases.
PN442
THE COMMISSIONER: Thank you, Mr Harvey. Mr Lunny.
PN443
MR LUNNY: Commissioner, in view of the circumstances, I don't really intend to do more than proceed straight to the testimony of the witnesses. I did advise Mr Harvey that we wouldn't be calling Dr Ironmonger. His evidence went only to the existence of Reserve Bank of Australia statistics which I hope would be acceptable as exhibits handed up in closing submissions at an appropriate time. Therefore the witnesses we have today are Mr Pawsey and Mr Nevins.
****
PN444
THE COMMISSIONER: Yes.
PN445
MR LUNNY: And I proceed, if you are agreeable, to call Mr Pawsey.
PN446
THE COMMISSIONER: Do you want me to mark your outline of submissions.
PN447
PN448
MR LUNNY: Mr Pawsey, can you describe your position as an employee of Boroondara and your experience in local government?---Yes, my current role is that of Manager, Employee Services. It previously had a title, Manager, Human Resources. My experience in local government commenced in December 1993 with the former City of Camberwell.
PN449
Did you, in preparation for this hearing, settle an outline of evidence?---Yes, I did.
PN450
Can I ask you to confirm this is the outline you prepared?---Yes, it is.
PN451
Can I take you to paragraph 17 of that outline?---Yes.
PN452
Is there anything you wish to put by way of elaboration on that paragraph?---Yes, I would like to clarify the reference to advice and that is the advice I refer to as:
PN453
Advice received from Dr Ironmonger who suggested that he in turn received advice from the Reserve Bank of Australia that indicated the impact of the introduction of GST on the CPI was between 2.9 and 3 per cent.
PN454
Thank you. Otherwise do you give evidence that your statement is true and correct?---Yes.
PN455
**** JEFFREY PAWSEY XN MR LUNNY
PN456
MR LUNNY: One issue has arisen, Mr Pawsey, and that is with respect to the wage increases granted in July 2000 and I think you refer to that in paragraph 9 and there seems to be some sort of dispute over whether the payment made was 3 per cent or indeed 3.2 per cent. Have you got anything to put on that?---Yes, I believe that some confusion has arisen and I will attempt to clarify that. As, in fact, is the case with the matter before the Commission, the cost of living under this particular agreement was determined as at 31 March. It is my belief that the salary increase paid to those employees covered by this agreement which was effective on 1 July last was, in fact, in the order of 3 per cent, that I further submit that there are a number of other agreements with the cost of living determined as at 30 June last year and those employees, in fact, I understand, received 3.2 per cent increase.
PN457
Okay. Now most of the LAWAs currently in operation refer to a certain percentage increased or the cost of living?---That is correct.
PN458
Some have a definition of cost of living while others seem to be silent. Why is that?---I believe that those agreements or those two categories of agreements reflect the time at which they were negotiated and certified. I submit to the Commission that the nine agreements that have been referred to previously are agreements that were certified by the Commission on or before May of 1999 and that the subsequent agreements which I believe number 15, in fact, were certified by the Commission from July 1999 onwards.
PN459
And what is the predicality of the date line?---I believe that the significance of the timing is that clearly there was an election fought in 1998 that was largely done so on the basis of the imposition of the GST. It was true at that time, certainly from Council's point of view, that there was a lack of clarity as to what the outcome of that would be. In fact I would submit from memory that even after the election, given the narrow victory that the Government achieved, that there was still largely uncertainty as to whether the GST would ever be introduced and I further submit that it was only as we moved along into the following year and perhaps on the basis of things as they became clearer but I also believe that a lot of things didn't become clearer until perhaps early in the year 2000. That we realised that we were likely to be dealing with a situation that required further clarification and that clarification was included in agreements by way of a definition of what precisely we meant by the cost of living.
**** JEFFREY PAWSEY XN MR LUNNY
PN460
Mr Pawsey, before the term "cost of living" was adopted, previous references, at least in draft forms, were made directly to the CPI as an index or benchmark. Is there any reason for that change?---Yes, the agreements, the previous agreements that had existed or the agreement that existed in Boroondara was a '95 agreement that contained no reference to CPI but rather to a percentage or dollar increase. There has been reference to an agreement, a second agreement, that was in fact voted down by the staff at Boroondara in June of 1998 and certainly within that agreement there was reference to the CPI. In fact, subsequent to that agreement being voted down by the staff, there were further negotiations with the ASU and in a draft document which has a date of August 1998 on it, again there was reference to salary increases including the CPI. However as we move into the LAWA documents and because of information that became available, there was a deliberate and quite thoughtful approach as to whether in fact we wanted to align ourselves with the CPI and whilst we didn't quite know what we were dealing with, the decision was taken that in fact we would refer to something to be known as the cost of living.
PN461
Do you recall ever telling anyone that cost of living and CPI were the same thing?---I don't believe that I have made that statement. In fact I repeat the evidence I have already given that at the time we were negotiating this agreement, which was late in 1998 with a vote taken on the agreement early '99, that there was simply a lack of information around so even if I did make that statement, I certainly don't acknowledge that I did - it would have been on a baseless foundation.
PN462
To your knowledge did Council employees enjoy a reduction in income tax following the introduction of the GST?---Yes.
PN463
Did you prepare a summary of the impact of the income tax cuts in terms of increased disposable income?---The summary that you in fact refer to, in fact, was prepared by Mr Mark Stevens who is the Senior Payroll Officer at the City of Boroondara and Mr Stevens reports to me as his manager and yes, that document was prepared.
**** JEFFREY PAWSEY XN MR LUNNY
PN464
Prepared at your instructions?---Yes.
PN465
I think this is already an exhibit in the previous matter, Commissioner.
PN466
THE COMMISSIONER: Yes, double one, isn't it.
PN467
MR LUNNY: Yes.
PN468
THE COMMISSIONER: And it is somewhere here. I retrieved it from Mr Miller only to have lost it. I have it. Thank you, Mr Lunny.
PN469
MR LUNNY: Do you consider that they are a faithful reflection of the income tax benefits enjoyed?---To the best of my knowledge they represent that situation.
PN470
Of a wage increase reflecting the CPI of 6 per cent was granted, would these figures be taken into account?---No.
PN471
Do you think that would fair?---No, I don't.
PN472
What would be fair?---I believe a fair outcome would be one that represents the payment of a salary increase to staff that preserved and protected what we have described as the cost of living and one consistent with market movements.
PN473
Do you have a feeling for the quantum of a fair increase?---Given the information that is available regarding the GST and its impact on the CPI, I believe 3 per cent is an appropriate figure.
**** JEFFREY PAWSEY XN MR LUNNY
PN474
No further questions at this stage.
PN475
THE COMMISSIONER: Could I ask just one question, Mr Lunny, and then before you sit down so that you can - the exhibit that I am looking at which is L1 shows that there were increases from 3.5 to 6.5 in take home pay. What should I do, if anything, about that difference in benefit, if I am to take into account the benefit and the 3 per cent. I suppose the answer that is that 3 per cent is the greater?---Yes.
PN476
So somebody at the top of the band gets minus 3.5 per cent but the clause provides for 3 per cent, I follow. Thank you for answering my own question?---Thank you.
PN477
PN478
MR HARVEY: Mr Pawsey, were you the principal negotiator for Boroondara City for this agreement that we are considering today and I mean the reactive trades one?---Mr Reed, who is the former Manager of Parks and Gardens and I represented .
PN479
Mr Reed, was it?---Yes.
PN480
Between the two of you, you negotiated agreement on behalf of the council?---That is correct.
PN481
To your knowledge, did you attend all the negotiating sessions?---I believe so.
**** JEFFREY PAWSEY XXN MR HARVEY
PN482
And who attended - can you tell us who attended for the union and representing employees?---Look it may have varied but my memory tells me that certainly Mr Miller on behalf of the MEU, Ms Dennis who was the Shop Steward at that time, the two team leaders, Mr Dupru and Mr Murphy. I believe Mr Wright also attended and they would be the names that I would recognise at this stage. It may be that from time to time others appeared but I have no immediate recollection of that.
PN483
Thank you. When the agreement was finalised can you tell us how it was explained, you know, the terms of agreement were explained to the employees that it was proposed to cover?---Well, look, like all negotiations with the union, the majority of explanations, and in fact the support provided by Mr Miller, is the primary guide to the employees. I mean, clearly in terms of explanation, in terms of determining positions etcetera, Mr Miller would have played a primary role.
[12.22pm]
PN484
Did you - or did the Council, I should say first - did the Council put out anything in writing to the employees about the agreement by way of explanation?---Apart from draft copies of the agreement, I don't believe so.
PN485
Did you yourself address meetings of the work group concerned with this agreement?---To the best of my knowledge I would have attended one meeting, one meeting only, and that would have been the meeting called for the staff to vote on this agreement and another agreement.
PN486
Was that the one held - was that held at Hawthorn Town Hall?---No, I believe that would have been held at the Kew depot, where most of the staff in the Parks and Gardens area and certainly the Horticultural Services team are located.
**** JEFFREY PAWSEY XXN MR HARVEY
PN487
There has been evidence given today by Andrea Dennis that - she says that there was a meeting that took place at the Hawthorn Town Hall towards the end of the negotiations, and during this meeting Council's Human Resources Manager, Jeff Pawsey represented the Council on the issue of 3 per cent or the cost of living was raised. Do you recall that meeting?---Well, it would have been one of a number of meetings held at that location to discuss and negotiate these agreements.
PN488
And Andrea Dennis, at the time, or in her witness statement and in her evidence, said that she was aware that the GST was going to be introduced but unaware of the potential effect, and she said she asked you how GST would effect Parks and Gardens teams agreement. Do you recall her asking you that?---Look, I can't recall any specific discussion, but it more than likely would have been the subject of some discussion at the time.
PN489
Right. And she goes on to say that she asked you for a definition between the cost of living and CPI and were told by you that that they were basically interchangeable. Is that correct?---I don't believe I have ever used the word "interchangeable" and I certainly - - -
PN490
Leaving aside the word interchangeable then, what did you tell her in answer to that question?---Well, as I have indicated previously, look, there was almost a total lack of clarity about the GST. And I assume we are either talking late 1998 or early 1999.
PN491
I think it is late 1998 we are talking about, yes?---Okay. Well, look, there had just been an election. As I said before my recollection of that outcome there was absolutely no certainty about there ever being a GST. That there was a clear position from the Democrats that they were going to reject it. The detail about the GST was simply not in the public domain at that stage. And any discussion about GST at that time would have been in the context of what was known, what was almost nothing.
**** JEFFREY PAWSEY XXN MR HARVEY
PN492
Well, it depends a little on what you mean by late 1998. But I think it is common ground, is it not, that this agreement was sort of finally considered by employees sometime around November 1998?---No, it is not common ground. If I can take you to my evidence to item 3:
PN493
The agreement was voted on and accepted by staff at the meeting held on 24 February 1999.
PN494
Yes?---If that is the date to which you refer.
PN495
That puzzles me, because I see that in your outline of evidence, and I also notice it is in the application for certification of this agreement?---Mm.
PN496
But it seems from evidence that has been given earlier today that final meetings on this did take place in or around November. Are you saying that is not correct?---No, I am not saying that is not correct. If I can perhaps explain. Certainly I have drawn that date from the document referred to, which is the statutory declaration. In fact I think both statutory declarations provided to the Commission at that time, both would cite the date of 24 February. I wouldn't disagree with the proposition that you put to me that the negotiations for this agreement, and the other agreement referred to, may well have been concluded prior to the end of 1998. But what I would further put to you was that these agreements were negotiated in the context of compulsory competitive tendering. They were critical to the acceptance by Council of a bid put in by the respective teams. And it is further my understanding that there was, in fact, a delay in putting the agreement to a vote until such time as the - I think it was the tenders that had been submitted were, in fact, done so, and a decision by Council was imminent.
**** JEFFREY PAWSEY XXN MR HARVEY
PN497
All right. So it is possible - Mr Miller, I think, passed me a note to confirm that it maybe that union members voted on this in November or around November it was accepted by them, that the work group as a whole didn't finally sign off on it until say sometime in February?---Mr Miller may have conducted some informal vote, if we are using that terminology at some stage. That is something I can't comment on, and don't have any knowledge of. But I do believe that the formal meeting of staff covered by this agreement was, in fact, conducted on 24 February 1999.
PN498
Okay. By 24 February 1999 wouldn't you have thought there was a fair amount of information on the public record about the impact of the goods and services tax, if it was to be finally passed through the Parliament?---Look, I don't have an intimate knowledge of when Parliament sits, so I might only speculate to an extent in this sense. But I believe the answer to your question is, no, there wasn't, and part of the reason for that is that I don't know when Parliament reconvened in 1999. But I certainly don't believe there was a substantial informed body of information available at that point in time.
PN499
Would you be surprised if I told you that the Australian Treasurer, Peter Costello, actually announced to the Australian Parliament on 12 August 1998 the introduction of a new tax system, and tabled voluminous documents in the House at that time?---It wouldn't surprise me.
PN500
Would it surprise you to know that the legislation actually passed through the lower house, the House of Representatives, by December 1998; would that accord with your recollection?---It would surprise me, but I am not an avid fan of reading parliamentary proceedings, so you will have to bear with me there.
PN501
I do not blame you for that but it is possible it would have been in the newspapers as well, is that true?---I think it was consuming the newspapers, I would certainly agree with that.
**** JEFFREY PAWSEY XXN MR HARVEY
PN502
So you would accept that around the time say from late 1998 until early 1999 there would have been a fair amount of public discussion about at least the likelihood of the introduction of a GST?---I absolutely agree, but I also believe it is true to say that it was much closer to the date of implementation before the Australian community knew exactly what form and structure the GST was going take, and certainly the introduction of tax cuts.
PN503
Yes, and what do you understand those dates to be?---I would contemplate that that sort of detail was available early 2000.
PN504
Yes, okay. But the actual facts, when was it proposed, the GST for example to take affect?---1 July 2000.
PN505
Right, thank you. Now, in evidence that has been given, and which really has not been contradicted to this date, we have had evidence that you were asked about the impact of this GST, which I think we have just established would have been at least on the public record of being discussed in the late 1998, and therefore it is quite possible, if not likely, that you would have been asked about its impact?---That is quite possible, yes.
PN506
Right, and do you recall specifically being asked about it?---As I said, I think I said before, I can't deny it was asked but I can't remember the detail of being asked.
PN507
You can't remember the detail of what?---I can't remember that particular discussion, if that is what you are asking.
PN508
Yes, I am asking you whether you can recall that particular discussion?---No.
**** JEFFREY PAWSEY XXN MR HARVEY
PN509
I think you were present in the room when Andrea Dennis gave her evidence about that, and she quite specifically said that she asked you about it and you gave her an answer?---But I also seem to recall evidence whereby it was acknowledged that there wasn't a great deal of information about the GST readily available to people, so maybe the evidence to which you refer, if I could have a copy of it, but I seem to detect some contradiction in the evidence that was tendered. How can I possibly offer advice on something when the very people who were asking that question acknowledged that there wasn't information around. I am trying to be helpful but I don't think I can be that helpful.
PN510
Well, I am sure you were trying to be helpful, but this is important so I would like you to try and remember particularly, because there are two aspects to this, and the first one is the question of whether the question of the introduction of the GST was raised with you. So is your answer to that, you think that is a likelihood that that happened?---Well, let me acknowledge that but also put to you the issue of GST was clearly on our agenda as well, as I have already testified. I mean, it was a clear movement from previous agreements that had specifically referred to the CPI to this and other agreements that specifically referred to a thing called the cost of living. So clearly there was some information around. Clearly a decision had been taken by Council to move away from CPI and refer to a thing called the cost of living.
PN511
Yes, I will come to that in a minute, but I think in answer to Mr Lunny in your earlier testimony, you said you couldn't deny making a statement, but then you went on to say that if you did make that statement it was on a baseless foundation, do you remember saying that to Mr Lunny?---I do recall saying that, yes.
PN512
So you are conceding that it is possible that he did make the statements that have been attributed to you?---If you are asking me, did I make the statement that CPI and cost of living were one and the same, I would have to say I have no recollection at all of ever making that statement, and I make no admissions along that line.
**** JEFFREY PAWSEY XXN MR HARVEY
PN513
Then why did you tell Mr Lunny that if you did make the statement it was on a baseless foundation?---Well, I don't know - you know, there has been no quote given as to the statement I have supposed to have made. I have acknowledged that no doubt there was some discussion, and in the context of that discussion some words may have been said. I can't recall those words, and I haven't heard anybody specifically quote me in respect of those. So I am answering your question based on what I know to be the case.
PN514
Okay. The uncontested evidence to date, Mr Pawsey, because Mr Lunny did not ask Andrea Dennis anything about this, so it is uncontested to this point, she says - and I think I quoted this to you before:
PN515
I also asked Jeff for a definition between cost of living and CPI and was told that basically they were interchangeable.
PN516
That is sworn evidence before this Commission today. Do you deny that?---Yes, I do. I think you have already asked me that question.
PN517
Yes?---And the word "interchangeable" is not one that I would use.
PN518
How would you describe it then if you didn't use the word "interchangeable"?---I might well have said that they may be one and the same.
PN519
You might well have said that that may well be one and the same?---That is right.
PN520
Thank you. Now, the sworn evidence also is that, and I quote:
PN521
This view Jeff also passed onto the work group as a whole just prior to the vote to accept or reject the current LAWA.
**** JEFFREY PAWSEY XXN MR HARVEY
PN522
Is that statement correct, in your view?---I can't recall if that matter was raised at the meeting held to conduct a vote.
PN523
You have no recollection of that?---That is right.
PN524
Well, on the basis of the answer you just gave me before, then it is possible you might have said to that work group as a whole that CPI and cost of living were essentially one and the same thing?---No, I don't - I don't believe that is what I have said, in answer to your question. So if I can rephrase for your benefit, or restate, what I said was I may have indicated that CPI and the cost of living may have been - may be one and the same. May be, that is not exactly what you have put to me.
PN525
Yes, okay, maybe one and the same?---That is right.
PN526
So in what respect is that qualification may work. I mean, what are you getting at in using the word "may"?---Yes, if I can take you to earlier evidence that I have given regarding the salary increases that were paid. As at 1 July last year, and with respect to cost of living as at 30 June Council took a view that the rate - the CPI rate of 3.1 per cent at that time, as I understand it to be, had no extraneous influences on it, and Council accepted that as being - as representing the cost of living movement for that 12 month period. Clearly in the environment of GST that is a view that wasn't taken obviously in these proceedings.
PN527
Do you think it would be, you know, fair and reasonable for employees covered by this agreement to conclude from what you told them that cost of living and CPI were, or likely to be, one and the same thing in the Council's view?---Well, again I refute your suggestion to me that I said that they would be or most likely be one and the same. You know, I mean, I will repeat it again for you. What I may have indicated is that it could possibly be the case that they might be one and the same. I never said that they were going to be or were likely to be. Getting back to your primary question was, do I consider it
**** JEFFREY PAWSEY XXN MR HARVEY
to be fair and reasonable, I have a prejudice position here, but, no, I don't believe it is fair and reasonable. Given the totality of the changes that were brought about by the government given that on 1 July significant tax relief was delivered to the Australian employer, the taxpayer. Given that there is a body of evidence that suggests that the impact of GST on the CPI was the order of 3 per cent that to now pay 6 per cent,no, would not be fair nor reasonable.
PN528
I understand that and we will come to that in a minute. But what I am suggesting, Mr Pawsey, at the time that you made the statement that they, for example, maybe one and the same thing, do you think it would be fair and reasonable for the employees who heard you utter those or similar words to conclude from that that it was Council's view that, you know, CPI and the cost of living were basically the same thing?---No, I don't believe so.
PN529
Why not?---Because I have just said we didn't hold a view that they would necessarily be the same thing. As I have also said there is a clear body of evidence that said that Council, up to a particular point in time, was more than willing to include within agreements reference to the CPI. Clearly at another point in time they had moved from that position. Surely, that suggests that there was a movement in thinking as well. Surely that suggests that the outcome wasn't necessarily going to be the same. Surely that suggests that it was clear on Council's part that they were using a different standard.
PN530
Doesn't that - and I understand your evidence - doesn't that whole argument you just advanced depend on whole people understood the meaning of the words, cost of living?---The meaning of the words, cost of living, and in fact the total agreement was the responsibility of the ASU and of the representatives working on behalf of the staff to explain the document. I mean, that document was negotiated over a period of many, many months. That document was subject to a number of changes. That document was the subject of some meetings with the staff. Meetings that I didn't attend. I don't know what was said at those meetings. I wouldn't even speculate what was said at those meetings. To rely totally on anything that I may or may not have said, I think, puts a totally false picture on the outcome.
**** JEFFREY PAWSEY XXN MR HARVEY
PN531
Well, let us just think about that for a minute. You have already said in earlier evidence today when I asked you how the agreement was explained to the employees to be covered by it, which is the responsibility of the employer, you said to me - as well as the union - but the responsibility of the employer - you said to me that is what Mr Miller did, for example. It was one of his key functions to explain these agreements. Is that correct?---That is right.
PN532
Right. What do you think Mr Miller told the employees covered by the agreement, that cost of living meant?---I have got no idea. I mean I can only answer that question if I attended those meetings. I clearly wasn't invited and I clearly didn't attend those meetings. I can't even speculate as to what was discussed there or what questions were asked or what answers were given.
PN533
Had the union been persistently pursuing the issue of getting an actual CPI, you know, increase or CPI reference into these agreements?---That may have been one of their claims at one stage, but the reality of the outcome was that CPI wasn't included in the document. Cost of living was.
PN534
Yes. That is right. But my question was not going to that, but the question of - sorry, I have forgotten what my question was, but - - -?---I will answer that one.
PN535
Thank you. The point I am trying to get to is that - I know what it was. The question that the union has been pursuing words, you know, agreement language that actually said CPI. We will pay you 2 per cent or 3 per cent, or CPI, whichever is the highest. Is that correct?---I don't have information available to me of what was in earlier drafts. I will accept that that was a claim put on the table at some stage.
PN536
Right?---But I can only go to the outcome, and that was the outcome was something different.
**** JEFFREY PAWSEY XXN MR HARVEY
PN537
The outcome was something different in terms of words. The outcome was some words which said cost of living rather than CPI?---Mm.
PN538
All right. But how do you think the union understood that? Understood the difference?---Well I would hope they understood it be something different to the CPI.
PN539
And did you explain that?---If you are going to call a cow a horse, then obviously you are talking different language. It was something quite different.
PN540
But if you said that the definition of a cow is a four legged animal, and the definition of a horse is a four legged animal, and you only called it a four legged animal, people wouldn't really know the difference between a cow and a horse then, would they?---Yes. You are absolutely right.
PN541
Right. So if somebody said "Well, why have you put in cost of living? Does that mean the same thing as the CPI?". And you said "Well, it may well mean the same thing", they would be entitled to conclude, wouldn't they, that it meant the same thing?---No.
PN542
Why not?---No. Because you are conveniently overlooking the body of information that was available at that time. You are clearly overlooking the uncertainty of the introduction of GST at that time. Evidence tendered by your own witnesses to that effect. You are clearly extrapolating information that suits your case, and I acknowledge the validity of that. But the truth of the matter is there was no really informative information available at that time. There was a chance that there would be no GST. We certainly didn't have the details of the GST. We certainly didn't, to the best of my knowledge, have details of the proposed tax cuts. There were so many things not known at that time that any conversation regarding the meaning of life as far as the GST was concerned was a relatively uninformed discussion.
**** JEFFREY PAWSEY XXN MR HARVEY
PN543
THE COMMISSIONER: Mr Pawsey, do you go so far to say that the - you had an agreement that the impact of the GST on the CPI would be taken into consideration when looking at the cost of living?---I don't believe I can go that far, Commissioner. Because again, you know, I am steadfast in my view that there was so much information lacking at that time that an informed discussion of that nature was just simply not possible. We certainly had a view that it was going to be different. We didn't know what those differences were going to be, and they would reflect in this system. You know, that we just didn't have the information available to us.
PN544
I see. Is that a convenient time, Mr Harvey?
PN545
MR HARVEY: Yes, Commissioner.
PN546
THE COMMISSIONER: 2.15? We will adjourn to 2.15.
PN547
MR HARVEY: Yes. Normal requirement. I mean, I will be continuing cross-examination after lunch - - -
PN548
THE COMMISSIONER: Yes.
PN549
MR HARVEY: So Mr Pawsey should be advised not to discuss his evidence with anybody over the lunch break.
PN550
THE COMMISSIONER: Thank you, Mr Pawsey. Matter is adjourned until 2.15.
LUNCHEON ADJOURNMENT [12.44pm]
RESUMED [2.17pm]
**** JEFFREY PAWSEY XXN MR HARVEY
PN551
THE COMMISSIONER: Yes, please. Thanks, Mr Harvey.
PN552
MR HARVEY: Thank you, Commissioner. Mr Pawsey, during the lunch break did you discuss your evidence with anybody else?---No, I did not.
PN553
Excellent. Now before the luncheon break I was trying to get clear from you your evidence as to what you might have told employees covered by this agreement in the lead up to voting on it about what the relationship might or might not have been between cost of living and the CPI. I am sure you recall that and I am - and I don't want to go over that. The transcript will show what your answers to those questions were. But would it be fair to say that it is the council's view, I expect, that cost of living does not mean the same as CPI?---No, that is not council's view at all.
PN554
Council's view is that cost of living does not necessarily equal - - -?---Sorry. I didn't think you used the word "necessarily". Can you - - -
PN555
No, I didn't?--- - - - repeat your question again please?
PN556
Yes. The question is, if - I presume it is the council's view that cost of living does not mean the Consumer Price Index or changes in it?---No. That is not council's view.
PN557
Well what is council's view?---Well, one of your two questions used the word "necessarily". Council's view is that in relation to the period up to June last year, then in fact there is demonstrated evidence that we did regard the cost of living as being represented by the CPI. But we have also clearly indicated that in the environment of GST, 1 July 2000 up to this point in time, that we don't believe cost of living and CPI are one and the same thing.
PN558
That is council's view now?---Yes.
**** JEFFREY PAWSEY XXN MR HARVEY
PN559
What was council's view then, in the second half of 1998?---As I thought I have explained a number of times, but I am happy to do so again, council's view in the latter part of 1998 was that there was - there was the likelihood of the introduction of a GST. That there was very little information of a substantive nature available to it. But that it was prudent to not include in agreements specific reference to the CPI, but instead to include in agreements reference to the cost of living.
PN560
And why wasn't it prudent?---Well, I think it was really prudent in the sense of what wasn't known. That there was the likelihood of an introduction of a new tax regime, called the GST. And there was a lack of information, if you like, to actually inform a well-informed and a well-developed position in relation to that.
PN561
So there was at least, if we can say the council has a mind, that we can say that in council's mind that, you know, there may have been some difference between cost of living and CPI?---I can't speak for council's mind. What I can say to you is that we clearly - - -
PN562
Perhaps I should have asked you about yours, sorry?---Well, are you asking what I had in my mind?
PN563
Yes, yes?---Council had clearly moved from a position of specific reference in agreements to the Consumer Price Index to a position of referring to a cost of living. In my mind, that represented a change. A change in words, a change in terminology, and possibly a change in outcome.
PN564
And with that in mind, did you specifically advise anybody, and particularly those people covered by this agreement, that there was now, perhaps a different understanding of the meaning of cost of living and CPI?---I don't believe that I provided any - well, I can tell you categorically. I did not provide any advice to people covered by this agreement. As I have indicated in my evidence previously the giving of advice in relation to this agreement is a matter for the ASU to be doing that, and I didn't provide any advice at all.
**** JEFFREY PAWSEY XXN MR HARVEY
PN565
So you provided no advice that the council had a view that, you know, there was some difference between the expression "cost of living" and CPI?---It may be semantics but I may well have answered a question in relation to the issue, but I don't believe I was giving advice. And the answer to the question would have expressed the uncertainty of it all, the lack of information that was available. And, as I have said to you before, this is the very evidence that your own - a number of your own witnesses have led. There were - there were - there was very little information available. But there was a lot of uncertainty. Part of that uncertainty was whether in fact we would even have a GST.
PN566
But did you go out and make it clear to people - this is what I am trying to get at. You tried to make it clear to people, to say "Look, if you are equating CPI with cost of living, don't. Because that is not our view"?---No, I didn't go out and make that clear. It wasn't my role to do so.
[2.23pm]
PN567
Well, okay. I think you have answered that question. Okay. Well, if we then go back to the time this agreement was negotiated, and the words were written into the agreement that there be wage increases of 3 per cent or the cost of living as determined at 31 March. Now, in your view at that time - so that is either late '98 or early '99 - how was that cost of living to be determined?---Again, I think there wasn't a clear answer to that question. We didn't know. As I have said a number of times before, we didn't know about many of the things that were going to be introduced as part of the GST package and legislation. I don't believe, for example, at that point in time we knew about the quantum of tax cuts. I don't believe we knew at that point in time, maybe even that the GST was going to be 10 per cent. I don't believe we knew at that point of time that we knew that food wasn't going to be included in the GST. I mean, these are all, in my view, important elements of the introduction of that new tax regime. And I repeat, from my knowledge and I am not an expert in this field, but I don't believe any of that detail was even at that point in time. So to speculate what I might have had in mind is false speculation.
**** JEFFREY PAWSEY XXN MR HARVEY
PN568
Well, I agree with you that a number of those details weren't known at the time. But when you, as a negotiator and a council employee responsible for this agreement, wrote those words in or agreed to those words being written in, the cost of living as determined as of 31 March, you must have had some idea of how you were going to determine cost of living?---No formative idea, no.
PN569
Well, how then - I mean, wouldn't you say that is - I am not trying to be judgemental but wouldn't you say it has been negligent to sort of write into an agreement some words that you don't know what they mean or how they are going to be applied?---Well, let me try and help you to clarify this and perhaps even to help myself. Certainly we would be looking - there would certainly be agreement that we were looking at that point in time to accept a measurement that would be available to us and I think, yes, you can accept that measurement; in part would be the CPI. But that was only one of the measurements, and it may have been the only measurement. But as we now know, there are other measurements that have been taken into account with respect to the impact of various things in relation to GST. So if your question is about the significance of the date, then the significance of date is two-fold, one of which is to draw a line in the sand in the context or - yes, in the context of when the figure would be determined and, yes, I would acknowledge, too, that the one likely measurement that we were going to use at that stage was going to be the CPI. But I don't agree if you are suggesting that that was a confirmed and only measurement that we would be likely to use.
PN570
Did you say to people - did you say to the union in the negotiations or the employees involved that there may be other measures that we are going to use, rather than CPI?---I certainly didn't say it to the employees because, as I said again, I have never addressed the employees in relation to explaining the agreement as such, nor providing advice in relation to the agreement. It is a role that Mr Miller has performed and performed admirably.
PN571
What about during the negotiations then?---Well, no. I mean, during the negotiations I do not recall this issue as being a major item on the agenda in relation to the negotiation and nor, as I have said repeatedly before - I mean, to suggest that I had the knowledge that is now available at that point in time is to suggest that I am an absolute genius, and I plead - I am not a genius.
**** JEFFREY PAWSEY XXN MR HARVEY
PN572
I won't go into that either way?---Don't pursue that one. Thank you.
PN573
The - I am not - but the issue really, Mr Pawsey, is not really whether you are a genius, or could foresee what was going to happen, or what have you. But I started this section of my questioning by saying, you wrote some words into an agreement; I mean, you negotiated on behalf of council with the union, you wrote some words in and you must have had a meaning. In fact, Mr Lunny suggested that you sort of changed your position on it from CPI at one point to cost of living so you must have had a reason. So I am not asking you about, you know, whether you could predict the future. I am just asking you what you meant by those words when you wrote them in?---Council had previously had a position of - sorry, let me start again. Council has consistently had a position of endeavouring to ensure that our employees were not disadvantaged by movements, movements that would not be covered by the wage increases. Up until the point of time that we are talking about now and specifically expressed in two agreements, two enterprise agreements, one of which was put to a vote and failed and the other one that was simply abandoned a couple of months later. There was specific reference and within that context of the CPI. Subsequently in relation to the LAWAs that were negotiated, and this LAWA in particular, we moved from the position of having it underwritten, if you like, by CPI; to have it underwritten by a thing called cost of living. I mean, the criticism of the agreement with all due respect is a criticism that both parties share responsibility for and, as we didn't define precisely what we meant, if that had have been the case I am sure we wouldn't be here today. And the words in that agreement, by the way - thank you for the acknowledgment of the authorship, but at the end of the day that agreement was reached between two parties and there were a number of words that were changed throughout the discussions, etcetera, that would have had as their author the ASU through Mr Miller.
PN574
Certainly, but it is also fair to say that, I mean, to a certain extent if two parties negotiated agreement that there - wouldn't you think it is reasonable that they could expect to rely on what they understood at the time to be the meaning of the words that they negotiated?---Well, I think we are, aren't we?
**** JEFFREY PAWSEY XXN MR HARVEY
PN575
Well, I think that is why we are here?---The issue is, there is a difference of opinion about that. But certainly I am relying on that, council is relying on that, and I would, with respect, submit that is exactly what you are doing as well.
PN576
There is a difference of opinion now. What I am putting to you is that there really wasn't a difference of opinion then; would you agree?---Well, in the sense that both parties signed off that agreement, you can say there was no disagreement. I think that is a fairly logical commonsense statement. To the extent that the question is, was there absolute clarity about what was meant and what the outcome would be, I think the answer to that question is, no, there wasn't absolute clarity about it. There was if anything more lack of clarity in existence at that point in time. What has unfolded since by subsequent events has now largely determined a position but at that point, as I have said a number of times, there was - the issue about GST at that stage was more renowned in the context of this matter before the Commission today for what wasn't available by way of information and outcomes than the contrary position.
PN577
Yes. Well, I would like to leave aside the GST issue because in one sense it doesn't really matter. I mean, what matters is what the agreement says and it has been your evidence that the explaining of the agreement was left, for example, to Mr Miller and the unions; that is your evidence. And so do you expect that Mr Miller went out and said that cost of living when he was asked meant consumer price index changes?---I think that is a question you should be asking Mr Miller. How can I speculate about a meeting that I wasn't there, in a conversation I wasn't involved with? Sorry, I mean, if I am avoiding answering your question, please ask it again but I don't know how I can speculate or comment on a conversation I wasn't present for and I wasn't aware of the nature of the conversation, the questions that were asked, the advice that was given. I mean, I am sorry, I don't believe I can truthfully answer that question except to say I don't know.
**** JEFFREY PAWSEY XXN MR HARVEY
PN578
I understand that point, but I am asking on the basis really of your participation in the negotiations sitting across the table, for example, from Mr Miller and negotiating this agreement. Perhaps I am asking you for your - whether you had a clear understanding of what Mr Miller thought about the meaning of those words as a result of your participation in those negotiations?---Well, again, I can't interpret what Mr Miller knew or didn't know. I can't interpret what he understood the position, what he didn't understand to be the position. Suffice to say, however, that being involved with negotiations over a period of time - it isn't uncommon, I certainly wouldn't accuse Mr Miller of this but things that are said at these that you clearly understand, it is often a different story when you hear them repeated later on and I am certainly not suggesting for a moment that might have been the case here. But I can't speak about Mr Miller's mind, that is something that you should be taking up with him.
PN579
Okay. Did you tell, you know, the union negotiators at any stage in those negotiations: Look, council does not accept that cost of living means CPI?---I can't recall ever making that statement. But I can equally - can't recall making any other statement about the opposite side of your question.
PN580
I don't think that question had an opposite side, but we might move on from that point. I think we have trawled the depths of that as far as we can go.
PN581
THE COMMISSIONER: Well, there is just one question that arises from that, please, Mr Harvey.
PN582
MR HARVEY: Certainly, Commissioner.
PN583
THE COMMISSIONER: From the draft of this agreement, the draft had CPI, as I understand the evidence earlier?---That evidence is not from me, Commissioner. Look - - -
**** JEFFREY PAWSEY XXN MR HARVEY
PN584
Well, is that correct, earlier drafts and that drafts that you put up has CPI in it?---My practice is that once an agreement is certified, the drafts are destroyed. I, in all honesty, can't - I can't go to a record to substantiate that.
PN585
Now, the document that was put up earlier and voted down, I thought there was something - - -?---Sorry, that was - that was not the LAWA, that was an enterprise agreement that was put to a vote I believe it was in June 1998.
PN586
I see. Thank you. Sorry, Mr Harvey.
PN587
MR HARVEY: Thank you, Commissioner. Yes, we might just explain that so that we are all aware of it. Prior to these LAWAs being negotiated, I understand that sort of one enterprise agreement would basically cover the whole of the council's staff; is that more or less correct?---If you - excuse me, if you are referring to the agreement that was put to a vote in June 1998, yes, that was an agreement that would have covered all staff.
PN588
And that is the one that was defeated, was it?---Yes.
PN589
All right. Prior to that, certified agreements or enterprise agreements which applied to Boroondara City Council employees applied to employees across a range of departments?---Yes, there was an enterprise agreement in place - put in place in 1995 and - however, during the life of that particular agreement and in the context of compulsory competitive tendering where various services were put out to tender a number of what has been referred to across the local government as LAWAs were, in fact, developed and many of those with the MEU branch of the ASU.
PN590
Right. So these agreements, and this one in particular and the other LAWAs, were the first time we had gone down this path of doing these agreements which covered as few as, say, 13 people in this case?---Mm.
**** JEFFREY PAWSEY XXN MR HARVEY
PN591
Commissioner, I was wondering, there is one document I would like the witness to look at. It is headed up: Local Area Workplace Agreements. I think it is in the material - well, it is in the material that the company supplied to us, and it should be in your material as well, Commissioner. That looks like it, Commissioner. I don't know that it has been specifically marked but it is not our exhibit. If I could just - Mr Pawsey, have you got a copy of that?---Yes, I have.
PN592
So these are representative of all of the LAWAs that were negotiated?---This is a snapshot document that I think I compiled in the last three months.
PN593
Okay, thank you. Now, when we look at these, just to get it clear - and I have counted there is 30 on that list, other people tell me there were 33 LAWAs. Do you know what, which figure is correct?---I believe the current situation is probably 30 or 31.
PN594
Okay, thank you. Now, you have broken up this document into three schedules. There is schedule 1, schedule 2 on the first page, and schedule 3 on the third page - - -?---Yes.
PN595
- - - on the second page, sorry, do you see that?---Yes.
PN596
Schedule 1, we won't spend any time on because those agreements, as I read this document, all had a percentage salary increase in them and that has been paid, so there is no issue about those. That is just what happened, that is your understanding?---Yes. Yes, the documents refer to a specific percentage increase.
PN597
And in schedule 2, these are said - and the words under the brackets - in brackets under schedule 2 that these are the percentage salary increases - sorry, percentage salary increase or cost of living, dash, no definition. So that means the relevant clauses in those agreements said there will be X percentage increase or cost of living?---Mm.
**** JEFFREY PAWSEY XXN MR HARVEY
PN598
So they left it like that, same as the agreement we are looking at now?---Yes, yes.
PN599
Thank you. And those in schedule 3 then have the percentage salary increase or cost of living with the definition that the council has referred to in its submissions?---That is correct.
PN600
Thanks. Now, looking at that - and I think you answered this question this morning for Mr Lunny - you said I think that there was some difference in the timing of the negotiations of the agreements in schedule 2 and schedule 3?---I think the question that I responded to was specifically in relation to salary increases that were paid as at 1 July last year and in response to that, because there seemed to be some confusion over the quantum as to whether it was 3 per cent or 3.2, my response was that it is my belief that this particular LAWA was one that generated a 3 per cent increase because - sorry.
PN601
Sorry, we will come to that particular one in a minute. But I thought in answer to a question from Mr Lunny, you said there were sort of two categories of agreements and that was dependent on the time at which they were negotiated, and you said some were negotiated before May '99 and some from July 1999 onwards; am I misunderstanding - - -?---I think we are confusing issues here. What I indicated was - and I can't recall the question now but I think I can recall my answer, was that there was - we had moved from a position via the enterprise agreements that I had referred to before where there was specific mention of CPI to a position in relation to these LAWAs as an example where we had changed CPI to cost of living, and these LAWAs did not contain a definition of cost of living. I think my further evidence in respect to that was that according to information that I have - the files that I have in my office, I believe that those LAWAs in terms of date of certification, the last dated one in terms of certification was May 1999, and then I further went on to say that - - -
PN602
Sorry, can I interrupt you there?---Yes.
**** JEFFREY PAWSEY XXN MR HARVEY
PN603
The last date of certification was May 1999 for ones which didn't have a definition in them?---A definition, yes.
PN604
Yes?---And then I further went on to say that, according to a perusal of my records in the office, the ones appearing in schedule 3 which are ones containing a definition, the first certified agreement there was certified in July '99.
PN605
Okay. Now, if we look at those in schedule 2?---Yes.
PN606
All of the agreements, with two exceptions which are identified as getting 3 per cent or a cost of living adjustment as of 30 June, got a 3.2 per cent increase rather than a 3 per cent increase?---Mm.
PN607
Now, is that correct? Well, perhaps we should go to them?---So your question is that these agreements showing a 3.2 per cent increase were based on the cost of living as at 30 June; is that your question?
PN608
That is right?---Yes, that is correct.
PN609
And there actually appears to be two exceptions to that. The second one which is called Finance said it was to get 3 per cent or cost of living, and that is as of 30 June; that only got 3 per cent. And the next one on the list is the same, 3 per cent on cost of living as of 30 June, also only got 3 per cent. Is there possibly a mistake in there?---Possibly is. I mean, certainly I didn't prepare this document for - to be tendered as evidence. I prepared it as an internal document and, yes, that may well be a mistake.
PN610
all right. So if we just leave those two aside for a minute, but what that - leaving those two aside, what that shows is that an agreement which was measuring cost of living as of 31 March actually got a 3 per cent increase, and those measuring it at 30 June got a 3.2 per cent increase?---Mm.
**** JEFFREY PAWSEY XXN MR HARVEY
PN611
Okay. Now, how - what I want to know is for those that were to be measured at 30 June, where did the extra .2 of a per cent come from?---I believe that the published CPI for that period was 3.2.
PN612
So you looked at the CPI, you found it was higher than the 3 per cent in the agreement, and paid 3.2 per cent?---On the basis that there were no other factors that were evident at that point in time to indicate there wasn't, in effect, the cost of living.
PN613
And those increases were paid, for example - let us have a look at one. There is one there saying: School crossing supervisors - I am almost plucking it at random - 1 August 2000 got a 3.2 per cent increase?---Yes.
PN614
You say there were no other factors involved so you paid the 3.2 per cent?---Yes, and whilst it doesn't say so, I believe that that was also the cost of living as at 30 June.
PN615
Right. Well, that is probably the wrong one to pick, but I am not disputing you on that. Let us have a look at the next one, 1 December 200 for statutory planning?---Mm.
PN616
Again, 3 per cent on cost of living as of 30 June, got 3.2 per cent?---That is right.
PN617
Based on the CPI is what you have just said?---Mm.
PN618
And then you say there were no other extraneous factors or whatever you took into account?---No.
PN619
Are you aware that wholesale sales tax fell in the financial year ended 30 June 2000?---No, I can't say I was aware of that.
**** JEFFREY PAWSEY XXN MR HARVEY
PN620
Well, one of the earliest events in the new tax system, which was not just about the GST, was that wholesale sales tax of 32 per cent fell to 22 per cent in that financial year ended 30 June 2000. Did you take that into account in assessing the increase?---No.
PN621
No. Thank you. And even in respect to those agreements which did have a measurement date as of 31 March, the ones that just got 3 per cent, why did they only get 3 per cent?---I believe, it is my belief that the CPI up to that period of time was a figure of either 3 per cent or less than 3 per cent. In fact, I think it was less than 3 per cent. So it actually received the higher of the 3 per cent or the cost of living at that point in time.
PN622
Okay. Now, one thing puzzles me, looking at this list of agreements, is that with one exception - sorry, there is a couple of exceptions. There is virtually no agreements with last increase shown as being this year; for example, even the ones we are talking about now, reactive trees maintenance, there is no increase shown for 1 July 2001?---That is right.
PN623
Why is that?---The purpose of this document when I prepared it was to show the position in terms of the last payment of increases.
PN624
So do I understand that none of these agreements shown in either schedule 2 or 3, other than the ones specifically mentioned there - perhaps we ought to go to that. Well, I will withdraw that question and go to - the first one in schedule 2 is: Aged planning and development?---Mm.
PN625
The last increase shown in this is 27 April 2001?---Yes.
PN626
That is shown as getting 3 per cent on cost of living as of 30 June. I presume that means 30 June 2000?---Yes, it would, yes; clearly it would have been.
**** JEFFREY PAWSEY XXN MR HARVEY
PN627
It just seems a very long time ago for that agreement but that is possible, is it?---Well, look, I mean, if I put that there and it is correct, it would be 30 June last year.
PN628
Okay. And on the next page there is one which is corporate information which says there was a 3 per cent or cost of living, bearing in mind this is with the definition, due to be paid on 1 April 2001 and then the last column says it is not yet determined. What is the reason for that?---Well, at the point in time I prepared this - and as I have indicated, I am not too sure exactly when I did - that statement would have been the position at that time. I mean, one of the things that is very true is that if - if you are awaiting publication of CPI figures at the end of each quarter, you know that the ABS are going to take probably a month and a half to release them so I would offer that as the explanation.
PN629
All right. Now, are there any other - now, I understand that you said that this was prepared at a certain point of time, but are there other agreements in amongst there which actually have pay rises built into them for, say, 1 July this year which are not shown there?---Well, all agreements that are current would, I believe, be generating increases 12 months from the date of the last increase. What I haven't actually detailed there are the notional - sorry, the nominal expiry date of those agreements.
PN630
But I guess we can take from - I am not sure now if it was in your outline of evidence, but you say that in addition to employees covered by this agreement, I think there is something like in excess of 209 employees who might be covered by agreements which had this cost of living increase in it without a definition. I think that is what you said in your - - -?---Yes, at point 11 there are 200 and - some 209 employees covered by the remaining seven agreements.
PN631
Right. So some of those agreements - so those dates aren't changed here but some of those agreements on these, either schedule 2 or schedule 3, would have operative dates of 1 July this year or - - -?---I believe so, yes.
**** JEFFREY PAWSEY XXN MR HARVEY
PN632
Right, and they - and what have they been paid?---Well, at this point in time until this issue is resolved, we don't know the final outcome and I think, because I am not absolutely certain of this, that we have made no payments to this stage until this matter is resolved.
[2.48pm]
PN633
Okay now the 3.2 per cent which you have mentioned.
PN634
THE COMMISSIONER: I am sorry, so that I can just understand your last answer, do I understand your answer to be that the result of this case will then flow to those other agreements in schedule 2?---It is more than likely, I mean, depending on what the Commission rules. If there is what I might describe as a black and white answer, and let us say that answer is 6 per cent.
PN635
Yes?---Then I don't know that there would any other expectation except that Council will be required to pass that on to the other employees covered by those other agreements with the same issue that we have in dispute here.
PN636
Is it your view that this case and its evidence can be treated as representative of these other awards - these other agreements?---To the extent that a number of these agreements are, in fact, agreements with the ASU, some with the MEU branch, most I think, with the services and energy branch, yes, I think the issue is the same issue, Commissioner.
PN637
Thank you. Thank you Mr Harvey.
PN638
MR HARVEY: I think I should perhaps say that we are not asking the Commissioner or the Commission to make that decision as such, I think it is common ground with Mr Lunny that we are asking this matter to be decided on the facts of this agreement and then the parties - - -
**** JEFFREY PAWSEY XXN MR HARVEY
PN639
THE COMMISSIONER: I am not sure it is common ground with Mr Lunny in the sense that he raises the question of inequity that might arise.
PN640
MR HARVEY: Yes, I guess he raises the question of inequity between schedule 2 and schedule 3 agreements. That is right. Well perhaps Mr Lunny will - - -
PN641
THE COMMISSIONER: Speak for himself.
PN642
MR HARVEY: - - - speak for himself. I am sure he will but just from the union's point of view, it would be our submission when determining this matter and it is between the parties as to how it might flow or otherwise but I understand that there are agreements between the branch and the council about that matter.
PN643
THE COMMISSIONER: Thank you.
PN644
MR HARVEY: I am sorry, I was looking at schedule 3, now all of those agreements, as far as I can see, except the - there is two, the Hamer Court Hostel and the Infrastructure Services Admin Support are showing here as just getting 3 per cent, perhaps we will leave that aside. All the rest of them got 3.2 per cent. Is that correct?---I believe so based on the document before me.
PN645
And these agreements all have the definition that we have been referred to earlier in that agreement - in those agreements?---Yes.
PN646
Now how did that definition bear on the payment of that increase of 3.2 per cent?---Sorry, could you just ask that question again?
PN647
Well what the - I will rephrase it. What the clause in those agreements says and I will paraphrase it slightly because I haven't got it in front of me?---That is all right, I think I am aware of the clause.
**** JEFFREY PAWSEY XXN MR HARVEY
PN648
I am sure you are. It says they will get cost of living, no, no, there will be something as measured by the CPI less an amount attributed by the Federal Government to a once-only effect of the introduction of the Goods and Services Tax. All right. That is the definition?---Mm.
PN649
How does that definition bear on the what was actually paid under these agreements?---Because these agreements had increases payable before or as at 30 June 2000, there was, in fact, no impact of GST. So the increases were payable on 1 July but as at 30 June, for example, so the GST didn't come into effect until 1 July 2000 is my understanding and therefore there was no impact on the CPI in the context of the GST. Hadn't yet happened.
PN650
Do any of these agreements and I think the answer must be, yes, but you can tell me, of course, any of these agreements in schedule 3 have had an increase due this year, for example, infrastructure design, last increase was 1 July 2000, wouldn't they have got one this year?---Yes and - - -
PN651
What did you pay them?---Pardon?
PN652
What was paid?---We paid 3.2 per cent.
PN653
And how did you arrive at that figure?---The - we sought and received independent advice from Dr Ironmonger as you already aware through previous submissions and we also sought independent advice through the Victorian Employer Chamber of Commerce and Industry and the advice provided by Dr Ironmonger was that the net position was 3 per cent. The advice provided from VECCI was that the net position was 3.2 per cent and the executive management group decided to award the higher of the two and hence the 3.2 was granted.
PN654
Are you aware of how VECCI arrived at their figure?---They - if you ask me as someone who understands the rhythms of mathematics and economics, etcetera, no I don't, but their advice was provided that explained what they believed to be the impact of GST and the net position as they put it to us was a figure of 3.2 per cent.
**** JEFFREY PAWSEY XXN MR HARVEY
PN655
Okay. But in fact then did you give them a copy of your definition and - that appears in those agreements and say, apply this?---No, no, we made contact with the person in VECCI who provides, as I understand, economic advice, and we asked for advice on this particular issue which they provided to us.
PN656
Do you know what the cost of living figure was determined to be at 31 March 2001, which is - - -?---The net position or the - sorry the CPI figure, is that what you?
PN657
The CPI firstly?---My understanding is that it was - published CPI was 6 per cent for the 12 months ending 31 March this year.
PN658
And have you other advice as to what you believe the net position is at 31 March?---Again we sought advice from the same two sources. Dr Ironmonger's advice was that there was a net position of 2.9 per cent and VECCI's advice was there was a net position of 3 per cent.
PN659
Okay. Do you and I presuming the answer to this question is no. Do you know the amount of increase in the CPI which has been attributed by the Government to the impact of the GST?---No, I don't.
PN660
Have you sought to find out?---I haven't, no.
PN661
THE COMMISSIONER: Then I take it VECCI's advice and Dr Ironmonger's advice wasn't based on that either?---Well, sorry, the advice we sought was specifically the advice that I have said we sought and then as we wanted to know what the net position was, the advice provided, no doubt, went to those issues, but if you are asking me did I seek advice about the advice about that, the answer to no, I didn't. On behalf of the organisation we were looking at CPI, what was the impact of the GST, what was the net position, so that was the specific advice we sought and I am sure the advice provided took into account factors such as you have mentioned but I didn't go to that part of the advice.
**** JEFFREY PAWSEY XXN MR HARVEY
PN662
MR HARVEY: Well, with respect, you are not actually sure that it went to that?---I am not actually sure.
PN663
That it went to the question of the definition in the - - -?---Without actually seeing a copy of the advice in front of me, let me agree with what you are saying.
PN664
At paragraph 13 of your witness statement, have you still got that with you?---Yes.
PN665
You have said:
PN666
Any increase in pay to employees covered by this agreement as claimed by the ASU will create significant disparities throughout the council.
PN667
I don't wish to be picky but this is not a claim by the ASU fairly stated, this is not an additional claim that we have put on the council?---I believe it is.
PN668
Well wouldn't you say it is fair to say that this is an issue that arises from what is already in the agreement?---I acknowledge that as well.
PN669
And in paragraph 15 of your outline of evidence you say:
PN670
Similarly the precise extent to which a Goods and Services Tax (GST) would impact on the Australian economy was not known when the agreement was made.
PN671
You have said that before, already in evidence?---Correct.
**** JEFFREY PAWSEY XXN MR HARVEY
PN672
So obviously you agree with that statement but you knew that it may have some impact, at the time you just didn't know what, the precise extent of it?---We perhaps knew more about the possibility of it having an impact rather than knowing that it would have an impact.
PN673
But at the time, even though you knew there was even a possibility, in this particular agreement that we are talking about and those in schedule 2, you didn't actually seek to qualify cost of living in the way you have qualified it in the schedule 3 agreement?---No and I think both parties would readily acknowledge in hindsight, we both erred.
PN674
One sort of final thing. We have established that there used to be one agreement covering the whole of the city council employees. We have now moved to these 30 plus LAWA. Can you explain the thinking behind moving from one agreement to many agreements?---It has been subject of much debate but put simply it is top management view that councils are somewhat unique in terms of their structure and organisation functions. I have heard estimates of 80 plus services to 100 plus services. It is true to say that we operate in quite a diverse field of operational activities that no organisation in their right mind would ever regard as being appropriate to what might be described as core business and by way of example, I mean we have libraries, we have engineers, we have garbage collectors, we have drainage people, we have social workers, we have got finance people, we have got human resources people and the thinking was purely and simply one of a need to recognise the differences that exist across those organisational and occupational categories. It also needs to be borne in mind that much of the initial activity with respect to the development of LAWAs was, in fact, a creature of compulsory, competitive tendering. So that if you like, I think, was the catalyst, it was certainly the kick-starter to LAWAs right across the local government sector. In our particular case, senior management took a view that, in fact, that had advantages and those advantages were that you could deal with people at a local level, you could deal with people about circumstances that applied to their workplace, you could deal with people in terms of their market position, their market competitiveness and, in fact, there are a number of LAWAs that, in my view, would never have been possible in terms of the outcomes they have produced to employees if we had of had an enterprise agreement because there are a significant number of agreements that have delivered to the employees and benefits to council, that, as I say, would not have been achievable through an enterprise agreement.
**** JEFFREY PAWSEY XXN MR HARVEY
PN675
Well what sort of benefits were those particular ones that you referred to?---Well benefits to the council are, if I can use the word "flexibility". I mean we have derived benefits from those agreements that allow for flexibility in terms of operations etcetera, in terms of employees, there are a number of agreements that have delivered high salary outcomes for example. There is at least one agreement currently and in fact there were a number previously that had bonus eligibility. There are and were agreements that because of the marketplace they operate in have actually delivered somewhat different outcomes and they clearly have been to the benefit of those employees who have worked in that environment and been able to come to that sort of agreement with the organisation.
PN676
So these agreements have been specifically tailored, if I could say that, to the particular circumstances of a particular section of the council's staff?---Yes, not in totality, I mean, let us be very clear, I mean, it would be true to say and I will say it instead of you asking me that there is a significant amount of commonality across agreements simply because some of those things are required by the Act and so you state the same dispute resolution clause, for example. Operation dates and that sort of thing so there is certainly a core of all of those agreements that you might pick up one agreement, another agreement, by the time you get to the tenth one you know you have read that nine times previously but equally there are elements of those agreements that are unique to that particular workplace but equally there are some agreements, in respect of salary increases, for example, it might be exactly the same so there are differences and some of those differences are significant. Some of those differences are very minor.
PN677
Right. And those commonalities and differences are designed to take into account what really is common but what is unique to some of the workplaces?---I think that is a fair representation.
PN678
And that is how they have deliberately been designed and negotiated?---Mm, mm.
**** JEFFREY PAWSEY XXN MR HARVEY
PN679
Thank you. I have no further questions, Commissioner.
PN680
THE COMMISSIONER: Thank you, Mr Harvey. Mr Lunny.
PN681
PN682
MR LUNNY: Mr Pawsey, several of the ASU witnesses have confirmed a very low level or a non-existent understanding of the ultimate impact of the GST when this agreement was negotiated and signed. Would you accept their evidence as correct?---Yes.
PN683
Mr Miller's evidence was that despite his having sought a direct reference to CPI, the wording was changed in the final document to refer instead to the cost of living. Do you accept that evidence?---No, I don't, I have nothing before me to actually confirm that is the case. I won't refute it but I can't accept it.
PN684
You wouldn't suggest for one minute that there is a contrary view from yourself?---No, not necessarily.
PN685
You said there could be occasions when the cost of living and the GST might be one and the same?---And the CPI be one and the same?
PN686
Sorry, CPI might be one and the same?---Yes.
PN687
If there was no GST would that be one of those occasions when there might be an alignment?---Yes, and in fact the salary increases discussed in recent evidence supports that view.
**** JEFFREY PAWSEY RXN MR LUNNY
PN688
So those increases in the LAWAs that my friend took you to, pre GST, which were 3.2 per cent based on CPI, you would consider that would be a fair and reasonable reflection of cost of living?---Yes.
PN689
Do you believe the terms "cost of living" and "CPI" are the same for all contingencies?---No.
PN690
Ms Dennis gave evidence in her written statement that you told her that those terms were:
PN691
Basically the same.
PN692
In giving oral evidence she said:
PN693
She was advised that they were pretty much the same.
PN694
Do you recall specifically making that statement to her or anyone else?---No.
PN695
If you did make that statement, could it seen as consistent with your suggestion that the expression you used, is that they might well be one and the same?
PN696
MR HARVEY: Commissioner, it seems to me that Mr Lunny is putting an awful lot of words in the witness' mouth at this point. He is asking him basically to agree with statements that he is making, which might be appropriate under cross-examination, but not in either examination or re-examination, Commissioner.
PN697
MR LUNNY: I am just taking the witness to his own evidence and asking him if he can basically confirm it, Commissioner. If you think it is objectionable, given that we are not bound strictly by the rules of evidence - - -
**** JEFFREY PAWSEY RXN MR LUNNY
PN698
THE COMMISSIONER: I will hear the answer, Mr Lunny.
PN699
MR LUNNY: Yes?---I will have to get you to ask that question again. I am sorry.
PN700
If you had made the statements attributed to you by Ms Dennis, would that be consistent with your concession that you had suggested that in some circumstances they might well be one and the same?---Yes.
PN701
Thank you. I don't have anything - one more question. With respect to the proliferation of LAWAs, can you confirm that one umbrella or Council wide agreement was offered and made available to the Boroondara unions and their members in 1998?---Yes, that is correct.
PN702
But that it was rejected?---Yes.
PN703
I don't have any other questions, Commissioner.
PN704
THE COMMISSIONER: Why was it rejected, because it didn't break it up into LAWAs?---No, I think - well mathematically it was rejected because there - - -
PN705
Wasn't enough money?--- - - - was a vote of three to one against.
PN706
Yes?---But clearly I think the underlying reason for it's rejection was a very strong emphatic, sometimes vitriolic, campaign by the union to actually encourage people to vote it down.
**** JEFFREY PAWSEY RXN MR LUNNY
PN707
Because the money wasn't enough in their view?---Well, that agreement also premised Council's position in relation to pursuing LAWAs, because the quantum in that agreement from memory was 2 per cent, $12 or CPI. But my memory tells me that in that agreement there was also basically a movement to LAWAs for groups to obtain higher salary increases. And that was clearly the thing at that point in time, and it is probably still the same thing today if we were having that discussion that would cause the union to object to it.
PN708
PN709
PN710
MR LUNNY: Mr Nevins, would you please describe your position at Boroondara and outline your local government experience please?---I am the Director of Works and Governance at the City of Boroondara. That has Parks and Gardens, the engineering areas, Capital Works, governance and communications. I have held that position for approximately two years. For approximately four and a half years prior to that, I was a director of Strategic Management and Support, which is the corporate resources area of Boroondara.
PN711
And can you just describe where your position fits into the management structure at the Council?---I report directly to the CEO. I hold a level 2 position at Boroondara. And the manager of Parks and Gardens reports to me.
PN712
And in preparation for this hearing, did you settle an outline of evidence?---Yes.
PN713
Can I ask you to confirm that this is the outline you developed?---It is.
PN714
Do you give evidence that it's contents are true and correct?---Yes.
PN715
I would ask that that be accepted as part of Mr Nevin's evidence-in-chief.
PN716
**** JOHN NEVINS XN MR LUNNY
PN717
MR LUNNY: I think it is trite that many Councils have adopted the use of local area work agreements or LAWAs, Mr Nevins, including Boroondara. What would you say is their principal utility?---The primary benefit of the LAWA in my opinion is the need for them to be linked to a business plan, and the business plan to be developed and agreed to by the entire work team, and for the LAWA to be voted on by the whole team. That process involves discussion of the LAWA, discussion of the business plan process itself, and I believe generates good team ownership.
PN718
And what benefits might flow from that?---The primary benefit is a commitment to continuous improvement. It is not always possible to see what form that continuous improvement would take, but it is the good will and the cooperation of the work force and the shared commitment of the management and the work force to continually be looking at better ways of doing things.
PN719
Has those views changed as a result of the replacement of compulsory competitive tendering with the concept of best value?---The views haven't. The context has changed but not the views.
PN720
Do you believe that the LAWAs initiative of Boroondara has served it well as a Council?---Yes, I do.
PN721
Were you involved in the adoption of the term "cost of living" when it came to drafting the LAWA and other LAWAs at the centre of this issue?---Yes.
PN722
Can you explain the rationale for using that term as opposed to alternatives such as CPI or the inflation rate?---At the time there was a lot of public debate at the Federal government level about the introduction of the GST. And it was believed that with the introduction of the GST, it would be accompanied by reductions in income tax rates. It was our understanding that the introduction of the GST would bring with it a one off impact to the Consumer Price Index, there would be a spike in the CPI, and there would be - the Federal government was saying there would be compensation paid in the form of reduced direct tax
**** JOHN NEVINS XN MR LUNNY
rates. Our intention was a deliberate intention to change from CPI to cost of living, so that there wouldn't be any double dipping. And at the time this LAWA was being put together, there was also, as I recall, statements from the Federal government, the Prime Minister and the Treasurer, that there would be - the Australian Bureau of Statistics would produce an alternate set of CPI figures that showed the CPI adjusted for the impact of the GST. And they were saying - the statements from the Federal government were that there would be - no one would be worse off as a result of the GST, and that compensation was to take the form of - primarily take the form, as I understood it, of reduced personal tax rates. That was why we moved to cost of living.
PN723
And how would you contrast the terms?---As we were discussing them at the time, the cost of living in our mind was to be the CPI adjusted for the one off impact of the GST, that was compensated for by reductions in personal income tax rates. That was our intention. Our intention was to have a fairer outcome for all employees and the community by taking into account the benefit of reduced taxes as well as the movement in CPI.
PN724
Can I ask you, are there any budgetary constraints imposed on the Council with respect to securing it's own revenues?---Yes, there are. There is the directions that are given by the Minister for Local Government on rate increases. Under the previous government they were mandated. Under the current State government they are issued as guidelines. There is also the very real constraints that we have to deal with in terms of the community's elected representatives, in the form of councillors, who are very conscious about rate increases. They have clearly stated that they see Boroondara as a good employer, that we don't set the rates in the community but we compensate our employees fairly compared to other employers. There is also the very real issue that Boroondara, like most other local governments in Victoria, we have a significant financial problem to deal with, in terms of replacing our existing infrastructure. We are probably about three million dollars short per annum in income compared - short of what we need to have to sustain the existing infrastructure at the City of Boroondara.
PN725
[3.17pm]
**** JOHN NEVINS XN MR LUNNY
PN726
What are the current guidelines with respect to rates?---The current guidelines are the - for this year the State Government issued a guideline that - I think it was it in the order of 2.5 or 2.8 per cent for the rate increase for the financial year that we are now in. That was the guideline that was issued. Our rates went up by 4 per cent.
PN727
And how do you believe cost of living should be defined, if it is consistent with your adoption of the 10 in 1999?---CPI adjusted for the benefit of the employees of the tax cuts that we all received following the introduction of the GST. So I had been looking for a CPI figure based on - I believe that the RBA figures, as advised to us by Dr Duncan Ironmonger, I think it was somewhere in the order of about 3 per cent.
PN728
I don't have any further questions, Commissioner.
PN729
THE COMMISSIONER: Thanks, Mr Lunny. Mr Harvey.
PN730
PN731
MR HARVEY: Mr Nevins, can you tell me what your position was at the Boroondara City Council in the last few months of 1998 and early 1999?---At the end of 1998 I was in the position of Director of Strategic Management and Support. As around the end of January 1999 up until around Easter, I was the acting CEO.
PN732
Were you involved at all in the negotiation of the agreement that is before the Commission today?---Not directly with any of the parties, no.
PN733
Sorry, I didn't hear that?---Not - not directly. I was not involved in any negotiations with any of the employee representatives for this LAWA.
**** JOHN NEVINS XXN MR HARVEY
PN734
You have said though, in your evidence, that you had something major to do with the adoption of the - of the term "cost of living"?---Yes.
PN735
What - but you weren't involved in the negotiations to this agreement, so how can you - can you explain, you know, how the two things fit together?---Yes. At the time I was and I still am a member of the executive management group at Boroondara which comprises the directors and the CEO. And at the time that this LAWA was being put together, Jeff Pawsey reported to me - when I was the Director of Strategic Management and Support. And part of my accountabilities at that point - at that time were to oversee our LAWA processes. I wasn't directly involved in many of those but I was certainly involved in the corporate consideration of those LAWAs. And it was - we were very conscious of the GST debate that was occurring at that time and for that reason we moved away from the use of CPI to the cost of living. So it was done in a corporate role, not in a direct role.
PN736
I understand. At which time can you say that the council moved away from this definition?---It was in the - it was around the time that the GST debate took off. Now that - I would need to check exact dates but the GST debate, as I recall it, took off in the lead up to the last federal elections. And following that federal election the State - the Federal Government said, "We now have a mandate for the introduction of a GST." And it was at that stage we said, "Okay, it looks like there is going to be a GST. It will have a one-off impact on the CPI, it is not appropriate for us to continue to using - use the term CPI because that will give rise to double - double dipping in terms of compensation."
PN737
I have forgotten the exact date of the last federal election but I think you are absolutely spot on about that. And would you be surprised if I told you that the - that Peter Costello, the Treasurer, announced the - in parliament the introduce of the GST on 12 August 1998?---I have to accept - - -
PN738
Was that about the time, perhaps, that you were, you know, considering a change in the language used in these agreements?---It could be, I couldn't say with any authority now.
**** JOHN NEVINS XXN MR HARVEY
PN739
All right. But you - you seem to have a very clear understanding of the reason why council changed its view?---Yes.
PN740
And that was because of the impact of the GST, is your evidence?---In changing for the word CPI to cost of living, yes.
PN741
So you were aware of the GST and as a result of that you deliberately changed the words from, say, CPI to cost of living?---Yes.
PN742
And Mr Pawsey, about this time, reported to you?---Yes.
PN743
You were on the executive team of the council?---Yes.
PN744
And you told him, in effect, to go and change the words in the agreements that he was negotiating from CPI to cost of living?---I don't recall that he was in the middle of any discussions at that time. It was a - it was a policy decision that we took at that time and I recall it very clearly. Because in my previous position I had responsibility for the budget as well and I was very conscious of the potential impact on our wage budget. Our wage budget at that time, was about $29-$30 million. So additional - at that time people were speculating on the impact of the GST on CPI and there were numbers - 6 per cent, 8 per cent, 10 per cent, nobody really knew, people were guessing. But to have that sort of flow-on effect into - into our budget would have been - a 10 per cent impact on our budget would have been $3 million, that would have been a 6 per cent rate increase in its own right. We were very very conscious of - of how we - of the LAWAs that we entered into and how we described any future wage movements.
**** JOHN NEVINS XXN MR HARVEY
PN745
And can you tell me - you may have told me, if you have I have forgotten - exactly when council made this policy change?---I can't tell you exactly but it was certainly in the lead - around the time of the federal elections. There was - there was speculation of a - well, as I recall it, in the lead-up to the last federal elections the - the Liberal - the Coalition said that they were - they ran on a platform of introduce a GST. That was opposed by the Labor Party. Once - and when the Coalition was elected they said, "Okay, we are now going to introduce the legislation."
PN746
In any case, we can say that that policy change must have been made before this agreement was negotiated?---Yes.
PN747
Or finalised, sorry, before it was finalised?---Before - well, I can't say with any certainty on that, it was - - -
PN748
Well, the words "cost of living" appear in this agreement, not CPI?---Yes, yes.
PN749
So you made that decision?---Yes, the organisation did. But I don't believe it happened during the course of negotiations.
PN750
It may have happened prior to the negotiations commencing?---It could have.
PN751
Good - - - ?---I - this is where it gets a little murky because the tender process for parks and gardens took - by the time that the tenders were advertised and then the contract awarded it was - could have been in the order of a year, a year and a half. It was - it was a long time.
**** JOHN NEVINS XXN MR HARVEY
PN752
All right. But in effect, at some point - and I asked you before whether you told Mr Pawsey to go out and change the words in this agreement from CPI to cost of living. You said, "No, no, I don't think it was - he had any agreements on foot at the time, so it was before then." But you had a view that because of the impact of the GST, you had to take out the word CPI and - or not use the word CPI anymore and you had to use cost of living. That is correct? That is your evidence?---Yes. Yes, we were conscious of the likely impact of a GST. And, yes, it arose from discussions at the executive management group level and Jeff and I had a quite a lot of discussions in my - in my office on the matter.
PN753
All right. So you told him about that and the reasons for it?---Yes.
PN754
Yes. Did you tell him to communicate that to the people he was negotiating with, the reasons for the change in the language used in agreements?---I don't recall giving Jeff a direction to do that but I would have thought it was clearly understood by all parties, certainly people I spoke to about it but that is - that is my understanding.
PN755
Well, what sort of people do you speak to?---Well, other people at work, the people that reported to me at the time, members of the management group, staff, other team members in the corporate - in the areas that I was director of at that - at that time.
PN756
But you are talking about people who report to you, or people at a general sort of senior executive level for the council?---There were also other areas that - there was the finance area, the people there they knew about it. People in records knew about it because I had been having discussions with them. The other directors that - at that time that I spoke to said that they had been talking about it. I can't - I can't go and name who they spoke to, though.
PN757
That is all right. But one of those people was Mr Pawsey?---Yes.
**** JOHN NEVINS XXN MR HARVEY
PN758
Quite clearly so. He understood exactly why council was changing its position on these words?---I believe so, yes.
PN759
But you don't recall telling him to advise the people who he was negotiating with the reason for that?---I would have - I would have just assumed that Jeff would have done that as pat of the process.
PN760
And do you then, then, he also - you would assume that he had also passed it on to the people that the agreements were actually covering, or the workers in this case?---Clearly.
PN761
Yes. Okay, thank you, I have no further questions, Commissioner.
PN762
PN763
MR LUNNY: Mr Nevins, just to confirm or otherwise whether the EGM would have some ultimate sign off in creating and certifying LAWAs?---I beg your pardon?
PN764
Whether the EGM, which is the executive management committee - - - ?---Thank you.
PN765
- - - would have had the ultimate decision on whether LAWAs were proceeded with?---Ultimately it resided with the CEO and the relevant director. But certainly the executive management group would have had an influence over that final decision making process. But the ultimate accountability was with the relevant director and the CEO.
**** JOHN NEVINS RXN MR LUNNY
PN766
But it wouldn't have been the responsibility of Mr Pawsey?---No, not at all.
PN767
No more questions, Commissioner.
PN768
PN769
THE COMMISSIONER: Do you have any more evidence, Mr Lunny?
PN770
MR LUNNY: That is it.
PN771
THE COMMISSIONER: Thank you. Is there any material that you wanted to tender at this stage, before we go to final submissions, or do you want to include it in your final submissions?
PN772
MR LUNNY: I was intending to hand it up as we address.
PN773
THE COMMISSIONER: Good.
PN774
MR HARVEY: Sorry, Commissioner, I was just consulting.
PN775
THE COMMISSIONER: That is all right. Do you want some time to consult?
PN776
MR HARVEY: No, Commissioner. We are into final submissions then, as I see it.
PN777
THE COMMISSIONER: Yes.
PN778
MR HARVEY: Commissioner, sorry, were you asking Mr Lunny about whether there was anything else he wanted to tender or - is that right?
PN779
THE COMMISSIONER: Yes, and he said he would be tendering some material in final submissions.
PN780
MR HARVEY: That is all right, because he gave me some before. I was wondering whether he had changed his mind. Commissioner, the - in the very strong submission of the union, the central issue in this dispute is clear. This case is not about how much the CPI should be discounted for the effects of the new tax system, including the GST. Rather, Commissioner, this case is about whether employees covered by this agreement are entitled to the full benefits of this agreement as it was negotiated, explained to workers, voted on and certified by this Commission.
PN781
We say, of course, that they are so entitled to the full benefits and these full benefits should be paid in full as - as we say they were originally intended. Now this is not a small matter, Commissioner. This particular agreement only covers 12 to 13 employees. But we say that this matter goes to the very heart of the integrity of the agreement making process in this Commission, and the confidence that employees are entitled to have in agreements that they make, and the confidence they have that they will be honoured by their employer and, if necessary, enforced.
PN782
We believe that going beyond the mere amounts of dollars which are important, or percentages or other things, it is a matter of important public interest that the processes of agreement making laid down in the Workplace Relations Act by the Parliament of Australia are honoured and given full and proper effect. Now, Commissioner, we have - we have heard a lot about the evidence that has been put to this Commission in the last few hours about what this agreement means and what the words in it mean and how they should be applied.
PN783
But having listened to that evidence, the ASU submits that it remains, in our view - and we think should be the view of the Commission - that the clear and intended purpose of the relevant clause in the agreement was that employees would be paid on certain dates wage increases at a specified percentage rate, or at a level equal to the previous 12 months CPI rate. Now I have used CPI, which - but any case, whichever was the highest at the time.
PN784
Now I will have to address the evidence that Mr Nevins just gave us because I think it was highly significant, but I will do that at a later point. But I think that what we understood at the time to be the meaning of this agreement was understood by us, and by the employees, and it was understood by them because that is what we negotiated; that is what Mr Miller negotiated across the table from Mr Pawsey; and that is, without wishing to deny what Mr Pawsey has said in the witness box on oath, that that is, we believe, the information that was given to employees who voted on this agreement.
PN785
But the words may have been changed to cost of living but that was meant to mean one and the same, or what have you, as CPI. I think, Commissioner, you will probably have to go and look at the transcript to sort of unpack some of those things that were said. And it is difficult, without the benefit of transcript, then to quote back to you exactly, you know, what was said on the record earlier today. But a number of things have been said which are important.
PN786
But it is - while the term consumer price index or CPI is not used in this agreement, and that is obvious, it has been the clear evidence of those on the employee side who negotiated the agreement and voted for it that cost of living meant CPI. That evidence has been given today by Mr Barry Miller who negotiated the agreement for the union, on behalf of its members. He said he was present - I think he said he was present at all of the negotiation sessions. It is also the evidence of Andrea Dennis who was a shop steward for the union at the time and who participated in those negotiations.
PN787
Her evidence, I should say, Commissioner, was unchallenged by Mr Lunny in cross-examination on this point - on the point that she said she had raised with Mr Pawsey what - what the term cost of living meant. And her evidence was that he said they were interchangeable terms. Now in the witness box, Mr Pawsey said he didn't use, you know, the terms "interchangeable" and qualified his remarks. But he said:
PN788
I may have said something like that.
PN789
Or:
PN790
I may have said it was the one and the same thing.
PN791
He definitely said, because I wrote it down:
PN792
That if I did make a statement like that it was on baseless information.
PN793
I am going to come back to that point, Commissioner, because the last evidence that we have just heard throws some doubt on Mr Pawsey's statement that it was on "baseless information". If he had been advised by the executive group of the council, or Mr Nevins that:
PN794
We were changing it and we were changing it for a certain reason.
PN795
- Mr Pawsey's evidence in fact was, with the greatest respect to him, was a little all over the shop on this point because he was saying at the time that:
PN796
Well, we had an idea that there might have been a GST coming in but we didn't really know what it meant, or even whether it would come in, or whether it would be 10 per cent, or whether food was going to be included in it or not.
PN797
So I mean, it was all vague and uncertain, and I think that is why he was saying that, you know, if he gave any advice like that it was on a baseless basis, I think is more or less what he said. So he was, I have to say - and I think it is fair to characterise his evidence as saying:
PN798
Well, you know, I don't remember saying that but if I did, you know, I really couldn't have said that because we didn't really know at the time what it meant.
PN799
But in any case, I think there is clear evidence from the union's side, from Mr Miller, but also Ms Dennis - and as I say, Ms Dennis's evidence, when it was given, was not challenged by Mr Lunny. And her evidence was quite clear. She said that she:
PN800
...remembered one meeting which took place at the Hawthorn Town Hall towards the end of the negotiations. During this meeting council's human resources manager, Jeff Pawsey, represented council and the issue of 3 per cent or cost of living was raised.
PN801
Ms Dennis said:
PN802
I was aware the GST was going to be introduced but was unaware of the potential effect. I asked Jeff Pawsey how GST would affect the parks and gardens team's agreement and was told not to worry because it would affect all of the tenders and not just ours. But nobody, myself included, was sure how it would affect any of us. I also asked Jeff for a definition between the cost of living and CPI and was told that basically they were interchangeable. This view Jeff also passed onto the work group as a whole, just prior to the vote to accept or reject the current LAWA.
PN803
That was her evidence. That was unchallenged at the time. She was not cross-examined on that evidence by Mr Lunny. Mr Pawsey, as I have just said, had a slightly different view about that. He couldn't remember saying precisely those things. He said he didn't say "interchangeable" but he may have said something else. He said he may have said that under certain conditions they were "one and the same". What he definitely told me under cross-examination was he didn't say to the opposite.
PN804
He didn't say:
PN805
Look, it is not - cost of living no longer means CPI, or it won't mean that in the future. That is why we have changed it.
PN806
He didn't specifically - he said he didn't specifically say that to Mr Miller in negotiations. He didn't say it to the employees, at all. He said he wasn't involved in those meetings and he in fact said, in his evidence that:
PN807
The job of explaining the agreement to the employees was Mr Miller's job.
PN808
And Mr Miller, in his evidence - - -
PN809
THE COMMISSIONER: That is right, when you have reached agreement.
PN810
MR HARVEY: I am sorry, Commissioner?
PN811
THE COMMISSIONER: That is right when you have reached agreement.
PN812
MR HARVEY: When you have reached, sorry?
PN813
THE COMMISSIONER: Agreement.
PN814
MR HARVEY: Yes.
PN815
THE COMMISSIONER: What you are putting is there was no agreement. There was no meeting of minds.
PN816
MR HARVEY: Well, I am probably going to go so far as to say, Commissioner, as I think there was a meeting of those minds at the time.
PN817
THE COMMISSIONER: Yes.
PN818
MR HARVEY: But I am not sure that if what Mr Nevins has said is true - and I am not dispute that it is - that if what he said was true, it wasn't communicated by Mr Pawsey to Mr Miller or the negotiating team, and it wasn't communicated by Mr Miller to our members.
PN819
THE COMMISSIONER: Yes.
PN820
MR HARVEY: I think that is a fair way to put that evidence.
PN821
THE COMMISSIONER: Yes.
PN822
MR HARVEY: Because Mr Pawsey definitely said:
PN823
Well, I didn't say, "Look don't equate cost of living with CPI anymore, that is past history. We are not in that ball game anymore, we are in a new one."
PN824
There is some doubt about Mr Pawsey's evidence. We would say to the Commission that you should prefer the unequivocal evidence of Mr Miller, and in particular Ms Dennis, but also to the extent it goes to it, Mr Murphy and Mr Wright - who I think Mr Pawsey indicated were at some of the meetings from time-to-time and were involved in the process. The evidence from the union's side on what this agreement was intended to mean, what we say it means, is quite clear.
PN825
It is equivocal in a sense now for two reasons from the employer's side, from the council's side, because Mr Pawsey wasn't 100 per cent sure of what he said or when he said it. And he said he didn't say it to the work group. On the other hand, Mr Nevins was of a very firm view that council had, from an early time - that is the last federal election, which is quite early - and before this agreement was negotiated, that they had come to a different view about this and that is why they were changing the language.
PN826
But he didn't tell Mr Pawsey to pass it on. He assumed that Mr Pawsey would have passed it on. But I think the evidence is that Mr Pawsey didn't pass it on and he certainly didn't contradict a view that the union might have had, or the members might have had, that cost of living essentially meant the same thing as CPI. So our submission on that point is that we are entitled to rely on an agreement that was negotiated in good faith with a common understanding, as we say it, of what it meant. And it wasn't contradicted at any stage - even though it appears that the council may have had - had the ability to contradict it, because according to Mr Nevins they changed their view at a point before this agreement was finalised and signed off.
PN827
So we say that the parties who at least negotiated the agreement across the table clearly understood and knew what they thought - or what the accepted use or the meaning of, you know, cost of living or CPI meant at the time. And we submit that it was the understanding of the people who negotiated the agreement, or at least what they said across the table was, effectively the two were the same. The - I have gone through what Mr Pawsey said and, Commissioner, I am sure you will look at the transcript to check it.
PN828
But the history of this - agreement making in this council is that, you know, there were one - there was one agreement covering the whole thing, I think that was in '95. Then there was a '98 agreement proposed and it was voted down. The council moved to LAWAs for various reasons and ended up with 30-plus agreements. People understood the need for that. It was explained by Mr Nevins that it was part of the CCT environment and they needed to tailor agreements to the particular circumstances of particular work groups so that they could effectively compete in a CCT environment, put in internal bids for their own jobs. As I understand it, LAWAs had to be, you know, in place before bids went in so all this - all this was happening, 33 agreements were being negotiated over a period of time.
[3.44pm]
PN829
The people knew what they were doing, particularly with regard to their own local areas, but also the common issues that I think Mr Pawsey had referred to in the agreement. It appears to us, although having heard Mr Nevins' evidence, what I had written in advance and on the basis of reading his witness statement or outline of evidence, Commissioner, because a lot of what he said in his evidence in chief wasn't actually in his outline of evidence, I have to say, so I was going to say and perhaps I will still, that it appears to the union that the council now regrets the words that it agreed to back in late '98/'99 and now finds that it doesn't want to pay the increases that members expected.
PN830
Mr Nevins' evidence is that they knew what they were doing at the time, but we would still say that if Mr Nevins and the very senior management knew what they were doing at the time, it wasn't communicated to people and that doesn't get them off the hook, because we say that we are entitled to rely on the accepted meaning of the words in the agreement and that certified agreements, no matter what they say and how uncomfortable they may be for the employers or the employees in particular cases, certified agreements are what they are and they have a life and we have to stick by them for the term of that agreement.
PN831
There is very little flexibility, in fact virtually none in the Act, to walk away from the terms of a certified agreement. You can't change them like you can change awards now. They are locked in place. Moreover, Commissioner, it is clear, it is even more clear after Mr Nevins' evidence that the parties were aware of the proposed introduction to the GST at the time the agreement was negotiated. Now, the level of that obviously varies if we accept all the evidence on face value. Mr Nevins seemed to be quite well aware of the detail. Mr Pawsey was less so, but we can say with confidence that both the union and the council were aware of the proposed introduction of the GST at the time.
PN832
Mr Nevins says his awareness dated back to the last Federal election when the Liberal and National Parties made it part of their policy. At the very least I have referred to the fact that it is on the public record that the Treasurer announced it to the Parliament on 12 August 1998, well before this agreement was negotiated and I think people would have been generally aware that there may have been some impact on the level of the consumer price index if the full 10 per cent was introduced across the board or even to part of goods and services. The legislation, as I understand it, was introduced the same year and passed in the Lower House in 1998, but did I think it is fair to say take a fair while in 1999 to get through the Upper House in the negotiations with the Democrats and so forth, but this agreement was negotiated in the second half of 1998 and according to the application for certification and the evidence of Mr Pawsey today was made by employees on 24 February 1999 and certified in early April.
PN833
I think it is common ground amongst all of us that obviously at that time, even at the date of certification, we couldn't have all been fully aware of the absolute impact of that agreement because I don't think the deal with the Democrats and the final legislation had gone through at that point, but it was obviously well on the public record. Now, in addition to that, Commissioner, and this has been quite clearly confirmed by the evidence that has been given today that this council has applied this agreement and other agreements in previous years in the way that our members expected, that is by comparing the outcomes, the percentage increases in this agreement, against movements in the consumer price index.
PN834
Under this agreement and it now seems quite clear on this, I think, despite what we might have said, might have been said by employee witnesses, that a three per cent increase was paid in July 1999 and Mr Pawsey I think indicated that at the time they looked at the CPI for the year ended 31 March 1999 and discovered that it was less than three per cent, so they paid the three per cent. Now, while obviously it is the percentage amount specified in the agreement that was paid, it was clear from Mr Pawsey's evidence that in paying this amount, the council had compared the percentage amount in the agreement with CPI and considered that CPI was lower and therefore paid the three per cent.
PN835
CPI I confirm for the year ended 31 March 2000 was - sorry, Commissioner, that should have been 2000 - the amount paid last year was three per cent and CPI for that year was under three per cent, the year to March and if there is any doubt about this, Commissioner, which I am sure there isn't now, given the evidence, what happened to those agreements that were to receive increases based on the cost of living to June 2000, they all got 3.2 per cent. Why? Well, it is ironic, I suppose, that this figure of 3.2 per cent keeps coming up, but 3.2 per cent was higher, the CPI was 3.2 per cent in the year ended June 2000, so it was higher than the three per cent and it was paid and I acknowledge that in the evidence that has been given, that the council considered that there was no extraneous impact on the CPI at that time, so they paid the 3.2 per cent, but there has also been evidence given that they weren't aware or didn't take into account the effect of the reduction in the wholesale sales tax which occurred during the course of that year.
PN836
They base it on the CPI. There was no use of any other figure or any other index adjusted or otherwise. Well, we can speculate as to why that happened. I mean, evidence has been given about it as to why it was, but it obviously wasn't a problem with regard to this particular agreement, because CPI was less than the three per cent specified in the agreement, so it was paid and even if I could say with regard to the 3.2 per cent, it wasn't much of a difference. It only became a problem this year and, of course, it is common ground that CPI has been running at an annual rate of about six per cent for each of the first three quarters of the previous financial year, so it certainly becomes an issue and it is common ground that CPI at the March quarter this year was six per cent and we say as a result of that that the workers are entitled to be paid this amount.
PN837
I think it is critical, Commissioner, to consider what the evidence was that goes to what the parties had in their mind or might reasonably have been expected to have in their mind about the words in this agreement and the evidence we have heard today, of course, largely goes to that issue, but even without that, Commissioner, I think we are also entitled to submit that the ordinary meaning of the words used in the agreement is also clear. Whatever the parties might have intended them to mean, we would also say that they are clear and that there is no real doubt or ambiguity about it. There has been evidence - sorry, there wasn't because Dr Ironmonger wasn't called, but you could say that economists in this country might debate the differences between cost of living and CPI or whether CPI reflects the cost of living and so on and so forth and economists may, as economists are wont to do, split hairs about these matters, but I think one of the reasonably clear facts, Commissioner, is that economists didn't negotiate this agreement, nor did they vote on it.
PN838
Ordinary wage and salary earners and members of average Australian households did and on this basis again we say that they are entitled to the benefit and agreement that expresses their understanding of these words and we say, subject to what Mr Nevins said, the meaning attributed to those words by their employer at the negotiating table, or thereabouts. We also say, Commissioner, really, that the ordinary meaning of these words also coincides with the normal and accepted industrial meaning of these words and practices associated with those words in industrial awards and agreements language and practice.
PN839
The CPI has been used primarily in this Commission to measure real changes in the value of wages and salaries and you would be fully aware, Commissioner, that for many years wages were indexed by this Commission against movements in the CPI as a measure of changes in the cost of living.
PN840
THE COMMISSIONER: There is always debate about that point. CPI measures movement in prices. There is always a debate about the impact of prices in relation to oil and whether that ought to be passed on to wages, devaluation issues, whether that ought to be flowed through to wages.
PN841
MR HARVEY: You are absolutely right, Commissioner. There was and I am old enough to remember I think the period after the election of the Hawke Government when indexation was reintroduced and for a period of time workers under awards got the CPI and then all those debates kicked in as to whether we should discount it for this, discount it for that, something else, but you are perfectly right, Commissioner, but it was the CPI that was used and I understand and I will come back to what you said about the CPI measuring changes in prices, because that is an important point, Commissioner, but CPI was always in those indexation days, that was the sort of starting point, often the finishing point, but often not after a while, because it got discounted so heavily that I think we all lost interest in it and moved away from it, but according to the ABS, the original use of the CPI itself was to measure the impact on changes in retail prices on wage and salary earners and that is what its use is for and that is what the industrial parties understood it to mean.
PN842
Now, the council in its outline of submissions I think says that it is no longer used solely for that purpose and they are right. I accept their submissions in that regard, because it appears, as they say, in 1998 that the Bureau of Statistics changed the definition a bit so it is not just wage and salary earners as such, but Australian households as a whole and I was going to ask Dr Ironmonger, who is an expert on household expenditure surveys and the like, to elaborate on that, but we don't have the benefit of his evidence today, but even so, in 1998 when this agreement was negotiated, I am sure what was in people's minds in industrial relations was that CPI had been used for years to measure changes in the real value of wages and effectively changes in the cost of living.
PN843
THE COMMISSIONER: In your submission, is it the end of it if I conclude that the union and the employees had a bona fide belief that the cost of living meant CPI? Is that the end of it as far as you are concerned and therefore it ought to be passed on?
PN844
MR HARVEY: I think so, Commissioner.
PN845
THE COMMISSIONER: The test being bona fide.
PN846
MR HARVEY: Yes, yes, Commissioner. I think it is, because I think the employees are entitled to rely on an agreement they negotiated in good faith on both sides, yes, Commissioner. I might just refer to one exhibit on this point, Commissioner, and that is exhibit H6, earlier on which is just the one page from the Bureau of Statistics, taken from their Web site the other day. I think it speaks for itself, but I will just read the first sentence:
PN847
The description of the CPI commonly adopted by users is in terms of its perceived uses ...(reads)... or a measure of changes in the cost of living.
PN848
They go on to say:
PN849
In practice, the CPI is a measure of changes over time in prices of a constant basket of goods and services acquired by metropolitan households in Australia.
PN850
And what you were alluding to before, I think, Commissioner, about the CPI actually measures changes in prices of goods and services, that is true and they go on to explain that in the next paragraph:
PN851
So the simplest way of thinking about the CPI is to imagine a basket of goods and services ...(reads)... of this basket as the prices of items in it change.
PN852
So it is technically and as an economist you would say that is what it is. I mean, it is also I think worth going on, if you read the rest of that, that, of course, it is not just any basket of goods and services and again this is something I wanted to develop with Dr Ironmonger, but I think it is reasonably clear from this and the other material that the council has submitted that the basket of goods is not a random basket of goods and the contents of it are determined largely by household expenditure surveys, whereby the ABS goes out and actually surveys what households are spending their money on to see what ought to be in that basket and also how the things in the basket are weighted, so it is an index of price changes in a basket of goods and services which is reflective of the purchases of households of wage and salary earners and I think what they have said, what the ABS has said in their own description, is fair, that one of the uses of it is in the hands of the common people, including those of us negotiating agreements, is that one use of it is a measure of the changes in the cost of living.
PN853
In our view this has been reinforced in the particular agreement in front of the Commission as a result of employees being told that in effect or by and large or they are one and the same or most times they are one and the same thing and people were led to that and we say quite clearly that if the council had another meaning in mind and according to Mr Nevins they did, they should have said so, but they didn't. They let the words stand as ordinary people, as ordinary union officials and union members understood them, they let them stand and they let them go through. Now, of course, it is also very clear now, Commissioner, that the council did have another meaning in mind at a point.
PN854
I think Mr Pawsey said there were certain agreements, those in schedule 2 were negotiated or certified before a certain date and some certified afterwards and in the latter group they had another set of words. They didn't say cost of living. They actually said, as I put it to Mr Pawsey, they said changes as measured by the Australian Bureau of Statistics and they gave the reference to the publication, the ABS publication, which is the CPI, but then went on to say that it should be discounted in a certain manner and they wrote that into other agreements. Now, we simply say about that, Commissioner, a number of things.
PN855
One is they put it in those other agreements, but they didn't put it in this one. If they wanted it and particularly now on the evidence of Mr Nevins, if they wanted it, presumably they could have had it in this agreement, but they didn't have that or any other qualification on cost of living. They just said cost of living. They didn't say discounted by this or discounted by that. They just said cost of living, so we say they now can't seek to rely upon words which appear in other agreements tailored for other groups of employees for other specific purposes. They can't rely on those words and try and import them into this agreement now without doing a substantial injustice to employees who negotiated and voted on this agreement in good faith.
PN856
Now, we have also said that the council has previously applied other agreements in the way understood by the union and its members, that is by comparing them to CPI movements and adjusting them where necessary and this has applied in actual fact as Mr Pawsey I think indicated quite clearly, this has applied to both agreements where the council did and did not have its now preferred wording or the wording in the other agreements, so whether or not they had that new definition in the schedule 3 agreements, they didn't apply it anyway. They actually looked at CPI in the first instance, so they didn't go to that definition they had.
PN857
Now, going further than that, Commissioner, the ASU submits that it would be unfair to discount the CPI in any way for the purposes of wage increases under the terms of this agreement, obviously for the first reason, that such discounts were not contemplated by the agreement and hadn't before been practiced in any way. Moreover, and I think more importantly, if we are looking at this issue of discounts and, of course, we are saying you shouldn't really think about that at all, you don't need to think about it, let's just stick with the words and the agreement we have, but if the council is saying they should impose on workers under this agreement the particular clause that they have referred to in their outline of submissions, we say that it would be totally unfair for the following reasons. Firstly, as I have already said, it is not in their agreement, it doesn't appear. Secondly, it hasn't even been applied by the council to those workers, even where it is in that agreement. They have got it in a number of agreements in schedule 3, but have made no attempt to apply that agreement. What they have applied is something else, as Mr Pawsey has said. Thirdly - - -
PN858
THE COMMISSIONER: Sorry, you say what they have applied is the view of VECCI and Dr Ironmonger?
PN859
MR HARVEY: Yes, specifically VECCI and the Reserve Bank of Australia. That is what they have applied. He said with regard to agreements that it had wage increases due in them this year.
PN860
THE COMMISSIONER: Yes.
PN861
MR HARVEY: They sought some other advice and got something via Dr Ironmonger and I will go to that in a minute, that it was three per cent I think for the year ended June. VECCI unusually generously said, no, no, it was 3.2 per cent and for the year ended March the Reserve Bank said it was 2.9 and VECCI again not so generously said it was three per cent, but what I am saying, Commissioner, and I put this to Mr Pawsey quite specifically, I said, well, did you apply the definition that you have got in those other agreements? Well, not really, what we applied was those. I said, well, did you point out that definition to them? Did they take that into account? And he said, you know, to be fair, that he couldn't be sure about that, he didn't know, he hadn't looked at the fine detail to see whether they had or not, but what we are saying is that they didn't apply it.
PN862
The third thing, as I was saying, is that the methodology that they have got in their agreement is vague and uncertain and unreliable, in any case they didn't use it, but what they said was we will get an amount that the Federal Government attributed to a one off and I will take the Commission to what the Federal Government said it might be, but in any case and our last submission on the point that it is unfair to impose any such discount on workers under this agreement via this means is that we say it is not practical or reliable to discount it in the way proposed and we already have some good evidence for that. We have now been given two figures.
PN863
In the outline of evidence, we understood that the council was going to be relying on the advice of the Reserve Bank of Australia obtained via Dr Ironmonger. They now said, well, actually we didn't do that either, because we got some other advice which hadn't been mentioned before from VECCI and we erred on the side of generosity and we gave 3.2 per cent this year to those people who were due for an increase this year, so even though they got the advice, they didn't use it. They got some other advice, they used that and we obviously, without trying to be smart, they have erred on the side of generosity, so I am not criticising them for that, but there's two different figures, so what are we to make of that?
PN864
Two different figures already, but their clause actually said something else. It calls for a discount in line with the amount of any increase attributed by the Federal Government to a once only increase as a result of the GST and that is what they are proposing, you know, how we ought to read cost of living in this agreement, but what is this amount that they are referring to? Does the council know what it is? Well, the answer is either no or they haven't told us. Have they applied this figure anywhere? No, they haven't. They have applied other figures and, as I say, what they have done instead, called an expert, Dr Ironmonger, whose credentials we obviously don't challenge and they have provided - and he has provided them with a figure produced by the Reserve Bank of Australia which, happily for the council, arrives at a deduction of three per cent, leaving an increase of three per cent which was what was in the agreement, anyway, as a base.
[4.15pm]
PN865
Now, one of the questions that arises from that, of course, is that if they were relying on the Reserve Bank of Australia which I thought until a little while ago that they were, their estimate may or may not be a good one. I mean, it might be right and at this point, Commissioner, I would like to refer to the statement of monetary policy released by the Reserve Bank in August of this year which is exhibit H9 and I presume Mr Lunny was going to table this, anyway, because what was in the council's documents when they provided them to us last Thursday afternoon was some advice and it is on the Commission's file, but some advice saying that in effect the Reserve Bank had this table in their statement of monetary policy dated August, table 13, which gave a figure for the CPI ex tax changes. It is on page 53, Commissioner, at the bottom half of the page.
PN866
THE COMMISSIONER: Thank you.
PN867
MR HARVEY: And down there it says CPI ex tax changes and it has got a March quarter and a June quarter figure we don't need to worry about and then the year ended March quarter 2001 showing a figure of 2.9 and 3.0 which is what the evidence of Mr Pawsey was and there is a note, (b), which says:
PN868
RBA estimate adjusts for the direct price effects of tax changes associated with the introduction of the new tax system.
PN869
You know, looks pretty good for the council and that is what Dr Ironmonger included in his report. What he didn't include in his report is the words that appear immediately above the table, Commissioner, and I would draw your attention to them, that there is a heading there that says recent developments in inflation, another heading consumer prices. If you go a little over half way down, Commissioner, there is a sentence which I am going to read which starts:
PN870
Over the year to the June quarter petrol prices contributed a little under half a percentage point to inflation ...(reads)... although the latter estimate is subject to considerable uncertainty.
PN871
Now, I would say, Commissioner, that that is a fairly severe qualification to what is contained in the table. I don't know - I was going to ask him, but I don't know whether Dr Ironmonger passed on that comment, that it was subject to considerable uncertainty to the council. I suspect on the basis of what I read that he didn't and if you turn to page 59, Commissioner, we find a very similar statement under the heading half way down the first column, inflation outlook. The second sentence there reads:
PN872
The uncertainties in disentangling the effects of the tax changes, coupled with the recent volatility in the inflation data, mean that any judgment about the rate of underlying inflation is subject to considerable uncertainty.
PN873
So, Commissioner, what looks on the face of it to be a rock solid, iron clad Reserve Bank of Australia, how can you argue with that sort of statement about what the impact of the new tax system on the GST is suddenly looks a little wobbly. Perhaps it doesn't matter, Commissioner, because as it turns out, the council hasn't used that anyway. They have used something provided to them by VECCI and at the moment we have absolutely no evidence or even submissions at this point, subject to what Mr Lunny will say in a little while about how VECCI came to their conclusions and I am not sure whether VECCIs is going to be any better or any worse than the Reserve Bank's, except I am happy that it is slightly more generous than the Reserve Bank.
PN874
So this leads us into a whole area of difficulty, Commissioner, to say that - for the council to say to us that you ought to rely on this figure or the council to say to the Commission you ought to rely on this figure. You are going to end up being asked to make a decision if we go down this path, Commissioner, on which sort of economic advice or which authority you prefer to discount wages which we say shouldn't be discounted, anyway. One of the other issues, though, with, say, using the Reserve Bank figure is that this figure wasn't produced until 14 August this year.
PN875
The wage increase for our members was due on 1 July, so any assessment made at that time wouldn't have been able to rely on the benefit of the Reserve Bank. I don't know when VECCIs figures were produced, but it obviously wasn't a figure that anybody knew of in advance. The Reserve Bank does put out these statements on a regular basis. I checked the previous one for May this year and it didn't have that line in the equivalent table. They haven't done it before, as far as I can see, so this is a figure which was only available six weeks after the increase was due, in any case. I don't think in our submission we should rely on that. The use of this particular figure can't have been contemplated by the parties back in 1998/99. Whatever they were thinking of, it is absolutely certain that they were not thinking of the Reserve Bank or, I would say, for that matter, VECCI figures, that those figures, anyway, are unreliable and we say they shouldn't be relied upon and we wouldn't have agreed to have wages and conditions of our members governed by such an uncertain and unreliable figure.
PN876
THE COMMISSIONER: What do you say it would have been determined at as of 31 March?
PN877
MR HARVEY: Sorry, Commissioner?
PN878
THE COMMISSIONER: What do you say it would have been determined at as of 31 March?
PN879
MR HARVEY: We would have relied on the consumer price index, Commissioner, because that is how we understood the agreement.
PN880
THE COMMISSIONER: Does that come out on 31 March?
PN881
MR HARVEY: Yes, it is quarterly CPI figures, yes. There is one and I think it is common ground that it was six per cent for the year ended 31 March. We haven't sought to find a reliable figure, although we have had a look around to see what might be there, but everything that we have looked at appears to have these problems associated with the ones that have been brought up. We do know and I think Mr Nevins alluded to this, but in any case it is in the documents provided to the union and the Commission last week, that the ABS did its own investigation of these matters to see if they could come up with a figure.
PN882
I can't exactly recall now what Mr Nevins said about it in his evidence, but they have - the council has included the relevant paper. I don't intend to go to it, other than to say - I had better try and identify it for you, Commissioner. There was a special article and I think it is the one called Prices, special article measuring the impact of the new tax system on the September quarter 2000 consumer price index. As I say, I am not going to go into it. It is not really part of our case, but what they say about that is they did attempt to come up with a controlled tax rate measure - sorry, constant tax rate measure and in the end gave up.
PN883
It said in there that they didn't think it was reliable and they weren't going to do it again. It wasn't their ball park, so the ABS did attempt it, thought it was unreliable and shied away from it, hasn't been doing it, so if we were being really precise or following the spirit of the letter, of the words the council says they prefer in these other agreements, you would really want to go and have a look at what the Government did say that the impact of the new tax system would be. Now, we don't concede that you should do that, of course, Commissioner, but that is what the words the council have used in the other agreements are, but what is this figure?
PN884
We have got no evidence from the council. I think I asked Mr Pawsey whether they went looking for it, whether they had it. He said they hadn't, but for the record, I believe it is to be found in exhibit H7, Commissioner, which is headed up chapter 3, living standards and I should explain, this is an extract from the report of the Senate Committee inquiring into the GST. It is chapter 3 and down the bottom of the first page it says that the impact on price inflation was - sorry, at paragraph 3.4 it says:
PN885
The Government has claimed that the price effect of the GST will be to lead to a 1.9 per cent increase in the consumer price index in 2001/02.
PN886
I am not exactly sure why that year is chosen, but it goes on to say:
PN887
The ANTS -
PN888
which stands for a new tax system -
PN889
- publication makes the following comment. The increase in the cost of living associated with the introduction of the tax reform package ...(reads)... CPI of 1.9 per cent in 2001/02.
PN890
Again, I am not sure why that year is picked, because I would have thought the impact was in the previous year, then it goes on to qualify that figure by saying:
PN891
It excludes the impact of tax package on tobacco prices.
PN892
But then the Senate Committee report goes on down at paragraph 3.8 on the second page and says:
PN893
In response to questioning by the select committee, officials from the Department of the Treasury indicated that the impact of the CPI of the ANTS package in the first year of its implementation -
PN894
which they say there is 2000/2001 -
PN895
- could be 2.5 per cent. This figure was later revised upwards in response to a question on notice from the committee. In their answer, the Treasury indicated the initial inflation effect of the GST would be 3.1 per cent.
PN896
So it seems to us, Commissioner, that it is fair to say that it is all over the place. You pays your money and you picks your answer as to what the impact has been and we shouldn't rely really on any figure that is bandied about. Now, just for completeness, Commissioner, I should also refer to exhibit 8 which we have also provided. This is a Government publication this time from the Department of the Treasury. It is one of their taxation publications on tax reform and I am using this only because the previous one was the Senate Committee which may or may not have had the right views about this, so this is a Treasury document itself. On page 4 of this Internet copy, it has a heading there saying:
PN897
The impact on industry costs and consumer prices.
PN898
And a table starts towards the bottom of that page. It has got various industry categories which we don't need to worry about, an impact on industry costs and then an impact on consumer prices and if we turn over two pages to page 6, the bottom of the table is there. It has got an all industry average and the all industry average for the impact on consumer prices is given at 2.2 per cent, but there is an asterisk there and then it also - the asterisk says:
PN899
The prices impacts relate to the private final consumption expenditure deflators.
PN900
And it says:
PN901
This compares with the CPI effect of 1.9 per cent.
PN902
Which is effectively just confirming what the Senate Committee said that the Government had said it should be, so perhaps that is the figure, 1.9 per cent, that the council should be relying on, if that is the words they have got in their other agreements. Now, Commissioner, given the time, there is only a couple of little things that I want to say in conclusion. One is firstly that some mention has been made or is likely to be made following his line of argument from Mr Lunny today about the unfairness of applying a six per cent increase in this agreement when other people aren't getting six per cent.
PN903
Something was made of that in questioning, but I think it is fair to say and Mr Pawsey confirmed it at the end of my cross-examination of him, that these are all individual agreements. Some agreements have the words cost of living in it. Some agreements have the other set of words in it, saying it should be discounted in a particular way, but they are individual agreements. They were deliberately designed that way. Mr Pawsey agreed with me that they were tailored to meet the needs of particular sections of the workplace. They were part of the LAWA process related to compulsory competitive tendering and therefore they needed to be particularised.
PN904
They had some common elements, but they also had particular elements to them which were beneficial both to the council and to the individual employees and we accept that. Even though we didn't particularly like the CCT process much, we understand that there was tailoring of it and they are individual agreements and people understand that, so it is not unfair, if that is what the submission is going to be, to say, well, you have got a benefit in this agreement which is not in this agreement over here. There are 33 agreements. It wasn't our idea to negotiate 33 agreements. They are different. They have some words the same and some words that are different.
PN905
THE COMMISSIONER: Do I understand correctly that the agreement that I am looking at was used as a basis for tendering for the work?
PN906
MR HARVEY: Yes, it was, so we would say that a question of unfairness doesn't really arise in this. There may be some other considerations, but unfairness is not one of them. The only other thing I would like to say in concluding is that I am not sure at the end of the day what Mr Lunny is going to say about previous exhibit L1, but all we would say about that and I neglected to ask Mr Pawsey some questions about that, but that is the document which goes to what the changes in the income tax arrangements were as a result of the introduction of the new tax system, including the GST.
PN907
That is, income tax is clearly part of that package and had some effect. There is also a much - well, there is a broader range of things which impact on employees' take home pay. There were changes to a wide variety of things, including family payments, but also what somebody's take home pay is is not just done in isolation of working out what band they are on, but what dependents they have and so on and so forth, so I just say that it is a little more complicated than that.
PN908
THE COMMISSIONER: But that would only be further advantage, wouldn't it?
PN909
MR HARVEY: Well, it may or may not, Commissioner. I am not sure on that point.
PN910
THE COMMISSIONER: Yes, I don't know what it is taken on, whether it is taken on a single person's - - -
PN911
MR HARVEY: Well, I presume that those figures are taken on a single person, because I don't think the council would be in a position to say what people's - you know, a dependent's situation was, so I am just saying that that would be presumably on a single person and it is probably a bit more complicated than that, but I am not making any submissions on what the final outcome of that was, so, Commissioner, I have come to the end of what I want to say in submissions on behalf of the union. Obviously, it is difficult to sort of unpack immediately the sort of full implications of everything that is said in witness evidence because I get to stand up immediately after, say, Mr Nevins has finished his evidence today and I thought his evidence was extraordinary and I am not for one minute saying any of it was wrong or misleading or untruthful.
PN912
I am not saying that at all. I am saying it is extraordinary in that he appeared to have a very clear view of what the changes in the words meant from CPI to cost of living. He seemed to be absolutely under no doubt whatsoever as to what that meant and why they changed them and what the council was on about and all I can say about that is that if that is true and again I accept that it is true, that he communicated that in one way or another to Mr Pawsey who reported to him at the time, I think he said, that whoever was responsible for negotiating agreements which came up after council made a different decision, a policy change on what should be going into agreements - well, he communicated it to Mr Pawsey. He said he didn't tell Mr Pawsey to tell us about it.
PN913
He assumed that he would have, but I think the evidence on this point is reasonably clear, that Mr Pawsey didn't communicate that to anybody involved in the negotiation or voting on this agreement, so we are entitled I think to say still, despite that evidence by Mr Nevins, that the parties one way or another - you know, we thought cost of living meant CPI. We didn't have any information to the contrary from Mr Pawsey who negotiated this agreement. He had something in the back of his mind as a result of what Mr Nevins had told him.
PN914
He didn't communicate it to us and he clearly I think in his evidence told me that he didn't, even before I heard Mr Nevins' evidence, he said he didn't say anything to the contrary. He didn't say, oh, no, don't go into this thinking that cost of living still means CPI, it doesn't mean that any more. He didn't say that. He said he didn't say that to Mr Miller. He didn't say that to the employees. In fact, he said, quite clearly his evidence was, well, that wasn't his job to communicate what this agreement meant to the employees, that that was Mr Miller's job and that is how they had sort of done it in the past and that is the way it went, so I think we can assume that he would have thought that Mr Miller would have said to employees if they had asked that cost of living meant CPI and in going beyond that, I think that is a clear and incontrovertible position that we have got.
PN915
In addition to that - I am not going to go over this again - but the other evidence on this is some fairly clear evidence from the employee side, from the employees that were involved in the process, that they were actually told something quite positive from their point of view by Mr Pawsey about it, in fact, that cost of living and CPI, well, don't worry about it, it is basically the same thing one way or another. That was communicated to them. The contrary was not communicated to them, that is clear. Now, there is obviously some disagreement about that. Mr Pawsey in his evidence in chief and in cross-examination wasn't - qualified that or sought to and said, no, well, I didn't put it that way, I didn't say it clearly and if I did say something, it was on baseless information were the words that I think we will find when we read the transcript, but if a choice is to be made between preferring Mr Pawsey's evidence on this matter or the evidence that the union's witnesses have put forward, I think that the clear preference is to choose the evidence of Mr Miller, Andrea Dennis, Mr Murphy and Mr Wright about this, who are all players in this event.
PN916
They gave clear evidence on this. Their evidence on that point was not challenged by Mr Lunny in his cross-examination. Mr Pawsey's view of it only came out during initially evidence in chief led to Mr Lunny and through my cross-examination. Up until that point, the evidence of the union's witnesses was unchallenged on that point. We say, Commissioner, that that is the significant point in this matter and that people are entitled to rely on the meaning of the words that were in the agreement when it was negotiated, voted on and certified by this Commission. If the Commission pleases.
PN917
THE COMMISSIONER: Thanks, Mr Harvey. Mr Lunny, I won't call on you to start tonight. The next available time I have is in the afternoon of next Monday, if you are available.
PN918
MR LUNNY: The 22nd, that is fine for me, Commissioner.
PN919
THE COMMISSIONER: Are you free, Mr Harvey?
PN920
MR HARVEY: Yes, Commissioner. I realise the incredible advantage Mr Lunny now has of honing his words over the five days.
PN921
THE COMMISSIONER: Well, I will also provide you the opportunity, Mr Harvey, if there is anything that suddenly hits you like a bolt out of the blue that you want to quickly raise.
PN922
MR HARVEY: Thank you, Commissioner.
PN923
THE COMMISSIONER: But if you could give Mr Lunny warning of it, so that he can prepare.
PN924
MR HARVEY: Thank you, Commissioner. I appreciate that.
PN925
MR LUNNY: Do we have a time for that, Commissioner?
PN926
THE COMMISSIONER: 2.15. Now, I will say it now. I am also going to say it at the end, so that you can be aware of it. I am going to reflect on the transcript, so there will be some time between when I have heard Mr Lunny and the decision in the matter, because I will get the transcript and I will reflect on what has been said and there are a couple of questions I will ask the parties in any event towards the end, but simply because I am hearing it, that doesn't lock the parties out of reaching agreement, if suddenly they think that agreement might be possible. Although I have made a finding that I thought you had tried hard and failed, we have now heard all the evidence in the case and we are up to final submissions, so that if anybody wishes to pursue agreement, they do so with my encouragement. The matter is adjourned until 2.15 on Monday.
ADJOURNED UNTIL MONDAY, 22 OCTOBER 2001 [4.39pm]
INDEX
LIST OF WITNESSES, EXHIBITS AND MFIs |
EXHIBIT #H1 ASU OUTLINE OF SUBMISSIONS PN26
BARRY DESMOND MILLER, AFFIRMED PN35
EXAMINATION-IN-CHIEF BY MR HARVEY PN35
EXHIBIT #H2 STATEMENT OF B.D. MILLER PN47
CROSS-EXAMINATION BY MR LUNNY PN95
RE-EXAMINATION BY MR HARVEY PN220
WITNESS WITHDREW PN226
ANDREA JOAN DENNIS, AFFIRMED PN227
EXAMINATION-IN-CHIEF BY MR HARVEY PN227
EXHIBIT #H3 WITNESS STATEMENT OF ANDREA JOAN DENNIS PN241
CROSS-EXAMINATION BY MR LUNNY PN258
WITNESS WITHDREW PN291
PAUL MURPHY, SWORN PN294
EXAMINATION-IN-CHIEF BY MR HARVEY PN294
EXHIBIT #H4 STATEMENT BY PAUL MURPHY PN300
CROSS-EXAMINATION BY MR LUNNY PN305
WITNESS WITHDREW PN340
MATTHEW JAMES WRIGHT, SWORN PN341
EXHIBIT #H5 STATEMENT BY MATTHEW JAMES WRIGHT PN359
WITNESS WITHDREW PN412
EXHIBIT #JOINT1 TERMS OF REFERENCE PN426
EXHIBIT #H6 CPI DOCUMENT PN434
EXHIBIT #H7 CHAPTER 3 LIVING STANDARDS PN434
EXHIBIT #H8 BENEFITS OF THE IMPACT OF THE GOVERNMENT REFORMS PN434
EXHIBIT #H9 DOCUMENT FROM THE RESERVE BANK OF AUSTRALIA, BULLETIN, AUGUST 2001, STATEMENT ON MONETARY POLICY PN437
EXHIBIT #L5 OUTLINE OF SUBMISSIONS PN448
JEFFREY PAWSEY, SWORN PN448
EXAMINATION-IN-CHIEF BY MR LUNNY PN448
EXHIBIT #L6 STATEMENT OF JEFFREY PAWSEY PN456
CROSS-EXAMINATION BY MR HARVEY PN478
RE-EXAMINATION BY MR LUNNY PN682
WITNESS WITHDREW PN709
JOHN NEVINS, SWORN PN710
EXAMINATION-IN-CHIEF BY MR LUNNY PN710
EXHIBIT #L7 OUTLINE OF EVIDENCE OF JOHN NEVINS PN717
CROSS-EXAMINATION BY MR HARVEY PN731
RE-EXAMINATION BY MR LUNNY PN763
WITNESS WITHDREW PN769
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