AG2001/647, Transcript of Proceedings [2002] AIRCTrans 1230 (11 April 2002)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

SENIOR DEPUTY PRESENT WATSON

AG2001/647-652

APPLICATION FOR CERTIFICATION
OF AGREEMENT

Application under Section l70LK of the Act for
certification of the Lone Star Steakhouse and
Saloon Frankston certified Agreement 2001-2003
and the Lone Star Steakhouse and Saloon Ringwood,
Dandenong, Chadstone, Preston, Moorabbin Certified
Agreement 2001-2003 report back

SYDNEY

9.08 AM, WEDNESDAY, 27 MARCH 2002

Continued from 26.4.01

Adjourned sine die

PN1

THE SENIOR DEPUTY PRESIDENT: Could I have appearances, please?

PN2

MR C. AGNEW: I am of Lone Star Asia Pacific, the employer and I was about to seek leave to appear, but I am of the company.

PN3

THE SENIOR DEPUTY PRESIDENT: I've received correspondence from you, Mr Agnew, requesting a couple of things that material be kept confidential and the hearing be conducted in private. I don't think there's anyone else here, but we might shut the door and certainly in respect to the materials filed they will be kept on the file in a sealed envelope to be opened only by myself or the registrar or on the authority of the registrar. Yes, what's the position, Mr Agnew?

PN4

MR AGNEW: Probably pre-empting, I should just point out to your Honour there is a representative of the employees in Victoria and I think if she could just put her appearance on the record on behalf of the employers.

PN5

MS B. HEWAPASSAPERUMAGE: I am representing all the staff at Ringwood Lone Star and representing the staff of Victoria.

PN6

THE SENIOR DEPUTY PRESIDENT: Yes, and how did you come to represent them?

PN7

MS HEWAPASSAPERUMAGE: Sort of volunteered and wrote to represent.

PN8

THE SENIOR DEPUTY PRESIDENT: Was there some meeting of staff?

PN9

MS HEWAPASSAPERUMAGE: Yes, there was.

PN10

THE SENIOR DEPUTY PRESIDENT: And you were authorised to represent them?

PN11

MS HEWAPASSAPERUMAGE: Yes.

PN12

THE SENIOR DEPUTY PRESIDENT: Yes, thank you.

PN13

MR AGNEW: I should add, your Honour, there were actually meetings between Brooke and all the representatives of the other restaurants which Mr Rebelo who is on the left of me attended, just to explain what the process was and what was happening here today, in addition to the election of the representatives.

PN14

Your Honour, I'm just trying to understand the nature of the proceedings here today in terms of the fact that it is a report back. I would therefore just continue to rely upon the material that was filed at the original hearing of this application and that was both two affidavits of Mr Tim Smith and one of Mr Geoff Foster. In terms of further updated material there is that material which I've sent to you in the letter of Mr Smith which basically gives you a further picture of the financial position of the restaurants.

PN15

Again I would be requesting or the company would be requesting, your Honour, the indulgence of this Commission in terms of a further period where they could continue to operate under the current arrangement which is - and I'll just refer to it as the 2001 certified agreement. The basis of that obviously is reliance upon the relevant sections in 170LT which is LT 3 and 4. I would just point out to you what I consider the relevant - - -

PN16

THE SENIOR DEPUTY PRESIDENT: Just let's go back a step. As I understand it the agreement was certified by Boland J notwithstanding the disadvantage having regard to the public interest on the basis of undertakings made by the employer and they were firstly that all employees employed on or before 26 April 2001 continue to have their terms and conditions governed by the 1998 agreement?

PN17

MR AGNEW: That's correct.

PN18

THE SENIOR DEPUTY PRESIDENT: From 1 April 2001 until 1 April 2002 or such later date as is directed. New employees in effect are subject to the 2001/2004 agreement.

PN19

MR AGNEW: That's correct, your Honour. That was the transitional process as you can obviously see.

PN20

THE SENIOR DEPUTY PRESIDENT: For the same period of time and there is a report back which required which is now occurring. Now, what has occurred in relation to those undertakings, all employees engaged prior to 26 April, they have been - - -

PN21

MR AGNEW: They continue and were seeking to continue that arrangement that if there are current employees who came under that undertaking in terms of employees pre that particular date, 26 April I should say, they would continue to operate under the 1998 certified agreement and we're seeking to continue that arrangement and employees employed after that date what we're seeking is the 2001 certified agreement continue until its normal expiry date of the agreement which is 1 March 2003, 1.3.1, your Honour.

PN22

THE SENIOR DEPUTY PRESIDENT: There's a typographical error in the undertaking, it's the certified agreement 2001 to 2003, rather than 2001 to 2004.

PN23

MR AGNEW: That's correct.

PN24

THE SENIOR DEPUTY PRESIDENT: Yes, nominal expiry of 1 March 2003 and in effect you are seeking that pursuant to the undertakings given that the Commissioner direct that a later date apply, is that correct?

PN25

MR AGNEW: Either a further report back or some form of guillotine order, your Honour, be set in place from 1 March 2003 with respect to the 2001 agreement.

PN26

THE SENIOR DEPUTY PRESIDENT: What do you mean by "guillotine"?

PN27

MR AGNEW: Well, the agreement is either terminated or we come back here again to terminate the agreement pursuant to the provisions of the act.

PN28

THE SENIOR DEPUTY PRESIDENT: So what does that mean in effect, that the Lone Star would provide an undertaking that it would institute proceedings directed to terminating the agreement upon its nominal expiry date?

PN29

MR AGNEW: That or a report back, yes, your Honour.

PN30

THE SENIOR DEPUTY PRESIDENT: But in effect you are seeking a direction by the Commissioner arising out of the undertakings of a later date?

PN31

MR AGNEW: That's correct.

PN32

THE SENIOR DEPUTY PRESIDENT: Yes, very well, continue on.

PN33

MR AGNEW: Your Honour, I think the only real difficulty and I need to point that out to you is that you need to be satisfied under LT4 that to continue operation of the agreement is still part of a reasonable strategy to deal with the short term crisis in the business. I think probably the hurdle for us is - I need to point out to you is the question of whether it is a short term crisis or whether it isn't and I think the material goes to that to addressing it. I did tender a number of decisions of the Commission, in particular Senior Deputy President Harrison's decision of Cadmal Security Services which is print number S0953.

PN34

THE SENIOR DEPUTY PRESIDENT: Do you have a further copy of that?

PN35

MR AGNEW: I can give you a copy, your Honour. The case is more relevant to deciding the question of the interpretation of the section rather than the facts of this particular case. That case concerned a security firm had the simple motive that it wanted to exercise or get the Commission to exercise its power under that section because they'd been at that stage paying under the New South Wales Security Industry Award and it really wasn't part of a strategy to turn a business around. It was simply asking the Commission to rubber stamp an underpayment of wages via an indirect means. That's not the case here, but I think the relevant parts of that decision refer to the question of what is a short term crisis.

PN36

This is the question I put to his Honour, Boulton J, we were originally seeking a two year period because we believe that that was the time which we'd be able to turn the operation of these restaurants around, his Honour was quite concerned in light of th words of Senior Deputy President Harrison that may not fall within the ambit of a short term crisis and therefore exceeded to an undertaking to report back in 12 months. Really what I'm saying to you is that that crisis is still continuing and re-iterating that it is, we believe, a crisis that we can turn around within a two year mark and therefore we're asking for an extension to the nominal expiry date.

PN37

THE SENIOR DEPUTY PRESIDENT: Within two years from when, from a year ago?

PN38

MR AGNEW: From the approval of the agreement which is just under two years. It is one year eleven months.

PN39

THE SENIOR DEPUTY PRESIDENT: Yes.

PN40

MR AGNEW: I should also point out that Mr Smith is not regrettably here today so I am really disadvantaged to at least tender this material in as evidence without him recognising the material. I do have Mr Rebel here who is the District Manager, or State Manager, of Victoria and he is able, if your Honour wishes, to examine him or ask questions of him about the material or statements contained in this affidavit because he can support some of the factual matters regarding the operations of the restaurant.

PN41

In terms of the affidavit itself, I would refer you to paragraph 5 which talks about the current operating situation of all six restaurants and it also refers to an attachment to the material for annexure which is TS1 which is the first page of TS1 is headed "Lonestar Steakhouse and Saloon Vic, Store Analysis". Basically that gives a summary from the opening of the store to the current date - current date I should say - complete operating period which is 19 February 2002 and as you can see it gives you net operating profit or loss, loss obviously being those figures that appear in brackets for the six restaurants. And then underneath that you will have a look at the other ten restaurants that have been closed in Victoria and Tasmania which made up part of the district of Victoria at that time.

PN42

So, the point of pointing you out to paragraph 5 is the fact that the restaurants are still operating at a loss and if you want to look behind those figures, each of the restaurants behind - - -

PN43

THE SENIOR DEPUTY PRESIDENT: Sorry, these are calendar year figures are they?

PN44

MR AGNEW: That is correct. It goes from 1 January say 2000 to 31 December 2000.

PN45

THE SENIOR DEPUTY PRESIDENT: Yes.

PN46

MR AGNEW: If you look behind the first page at TS1 into the third page you will see that it then refers to Chadstone restaurant operating income. So, if you are reading the annexure the summary of the figure is obviously contained in the first page but each of the restaurants, an analysis of each of the restaurant's operating income is detailed later, each of the six restaurants to support that global figure that you see on the first page. I would also refer you to paragraph 6 which points out one of the primary reasons for the position the restaurants are currently in. Basically it fundamentally is client sales. In other words revenue or guests coming into a restaurant and I have dealt with it in a short table there in percentage terms with client sales anywhere between 10 and 20 per cent in the last two years. And then I also talk about other areas in the paragraph under that table where:

PN47

we've had a significant increase in meat prices ...(reads)... in increasing the price of meat.

PN48

Increased freight costs, repair and replacement of the restaurants. The restaurants as you can see from TS1 are at least five to six years of age and have not undergone - the equipment there in terms of grills, cleaning equipment have not undergone replacement or repair in some considerable time so it, I am advised, is getting close to the time where most of that equipment needs to be replaced.

PN49

I would also point out to you some of the strategies that the company has put in place and this is something I said to his Honour on the last occasion. What we are asking of you today, your Honour, is not the only strategy that we have got in place to turn the operation of these restaurants around, in other words - - -

PN50

THE SENIOR DEPUTY PRESIDENT: Well, it is a strategy which does not seem to relate the labour cost element to the cause of the difficulty which is sales.

PN51

MR AGNEW: Well, the question we may ask if we've got to - I mean labour is a fixed cost and any increase in those fixed costs - - -

PN52

THE SENIOR DEPUTY PRESIDENT: Well, labour is not a fixed cost, surely?

PN53

MR AGNEW: It is an identifiable cost.

PN54

THE SENIOR DEPUTY PRESIDENT: It is an identifiable cost, yes.

PN55

MR AGNEW: And that is what we term as a fixed cost in terms of how we link it. Getting back to my point, the net effect will be if we have any increase in costs in a declining, you know, market that is declining which we will if we don't have this strategy in terms of labour in place, that is going to be one of our increases. Then, fundamentally, the restaurants will have to be closed but I will get to that point which is set out in Mr Smith's affidavit but what I am trying to say is it is not the only strategy. We are not asking the employees only to take a holiday or to sacrifice, or make a sacrifice, on their own. There are other strategies which are set out in paragraph 9 of Mr Smith's affidavit. For instance, management salaries have been frozen.

PN56

THE SENIOR DEPUTY PRESIDENT: Just before you go to that. The agreement, or the agreements, were approved April 2001, is that correct?

PN57

MR AGNEW: 27 April - - -

PN58

THE SENIOR DEPUTY PRESIDENT: The certificate was issued then?

PN59

MR AGNEW: Yes.

PN60

THE SENIOR DEPUTY PRESIDENT: What strategies have occurred since then, with the cafe style - - -

PN61

MR AGNEW: Paragraph 7.

PN62

THE SENIOR DEPUTY PRESIDENT: Yes, that occurred from September 2001?

PN63

MR AGNEW: To today, yes. From April 2001 to now. Those were the types of steps that have been taken.

PN64

THE SENIOR DEPUTY PRESIDENT: Well, the first is from September 2001.

PN65

MR AGNEW: That is correct.

PN66

THE SENIOR DEPUTY PRESIDENT: When was the lunch menu reintroduced?

PN67

MR AGNEW: It was introduced I think slowly over the period from April, I will have to take instructions before I tell you. It was from April to September the lunch menu was reintroduced.

PN68

HIS HONOUR: And the redundancies?

PN69

MR AGNEW: Redundancies - the chief operating officer's position was made redundant around November. The national QA manager's position was made redundant around November and the national training manager's position has only recently been made redundant in February 2002.

PN70

THE SENIOR DEPUTY PRESIDENT: Does that suggest much urgent activity to address the short term crisis?

PN71

MR AGNEW: Well A is a radical change in the way the business operated in the sense that it was a full service restaurant originally which meant that staff were serving guests at a table. The cafe style was where the guests actually had to come up and order their steaks. That is an enormously radical change. The intent of it was to try and reduce the number of bodies needed to operate a restaurant.

PN72

THE SENIOR DEPUTY PRESIDENT: Yes, and that has failed would it be correct to say?

PN73

MR AGNEW: It failed and I think it contributed somewhat to a decline in sales.

PN74

THE SENIOR DEPUTY PRESIDENT: Yes, so there has been a reversion back to the full service concept?

PN75

MR AGNEW: Only on the basis that they have had the backing of the American parent company in terms of, if you said look at the strategies going forward there is going to be a national advertising campaign and something in the order of a quarter of a million dollars is going to be expended throughout Australia a percentage of which Victoria will get which is something the company hasn't done at least in the last 12 to 18 months.

PN76

THE SENIOR DEPUTY PRESIDENT: Yes, well perhaps you can go to that. It's at point 9, is it?

PN77

MR AGNEW: That's correct, your Honour. A new menu is going to be rolled out this coming month and the menu is hoped to address issues of - there is a perception in the public with respect to the restaurant chain that the menu prices particularly the main steak items are not affordable and that is what it is going to address. So lower meal prices and also, in turn, not just having lower meal prices for the sake of getting guests in but also to increase our margins so we are looking at doing a complete analysis. If you go down further - benchmarking of supply costs, that is sort of entwined with the roll out of the new menu. In other words we are looking at ensuring that we are getting the cheapest product possible so we are not locking ourselves into one particular supply at a particular rate. We are going to continually benchmark our suppliers against other competitors.

PN78

There has been a directive by management that management salaries will be frozen. They have been for the last twelve months and they will continue to be. There's also a strategy we've put in place a couple of years which we are continuing. We've got a management enterprise agreement which has simplified the administration of things like annual leave and sick leave because we have a standard annual leave and sick leave provision across Australia for our managers. Also standardised our long service leave arrangements.

PN79

A number of our sites are under leaseholds and we are looking at renegotiating those leases particularly in Victoria with a view to either getting from the landlord a reduction or some form of a rent holiday over the next twelve months with respect to the particular sites that are leased.

PN80

THE SENIOR DEPUTY PRESIDENT: The rent holiday won't be of any assistance in addressing the longer term viability. It will remain a short term saving.

PN81

MR AGNEW: Which is the nature of what we are trying - we have, we believe, a short term crisis in our business and we are looking to revive it as quickly as possible. I agree with you but what we are trying to do is give us some time in terms of our costs, particularly our fixed costs, to put in place our marketing strategy to increase and address the primary reason for the downturn of the business which is sales.

PN82

You pointed out quite correctly the whole basis of the business is sales and at the end of the day if we can get substantial increases in revenue which is hoped, particularly with the investment now that the American parent company is prepared to make in terms of advertising and marketing, then we can continue to operate at least the last six restaurants in Victoria and not go down the same way that the previous six have gone which is closure.

PN83

THE SENIOR DEPUTY PRESIDENT: What sort of increase in sales would be required to make the restaurants survive?

PN84

MR AGNEW: It would have to be in the order of 15 to 25. My understanding is that restaurants, generally, the benchmark sales figure per store is around about I think $28,000 to make a store profitable.

PN85

THE SENIOR DEPUTY PRESIDENT: Sorry, $28,000?

PN86

MR AGNEW: Per week.

PN87

THE SENIOR DEPUTY PRESIDENT: Per week, oh, I see. But that would presumably vary on the store?

PN88

MR AGNEW: It is an average across Australia that we use. It would depend upon things like whether the store is leased or owned by the company, etcetera, etcetera.

PN89

THE SENIOR DEPUTY PRESIDENT: Yes, but if you look at Chadstone. It had achieved sales of that order last year.

PN90

MR AGNEW: It had an issue - and I should say it is an exception. It's leased. It did have a number of issues in terms of its labour costs. It had a number of operational issues. That is the figure that we aim for across Australia in terms of a benchmark sales figure but Mr Rebelo has just informed me it is 15 to 25 percent increase in current sales in those stores, and he would be better placed to give that information, to turn them around.

PN91

THE SENIOR DEPUTY PRESIDENT: Mr Agnew, I might just interrupt you there. I might take a very short adjournment, just a couple of minutes.

PN92

MR AGNEW: Certainly.

SHORT ADJOURNMENT [9.35am]

RESUMES [9.39am]

PN93

THE SENIOR DEPUTY PRESIDENT: Yes, Mr Agnew?

PN94

MR AGNEW: So, it turns at the strategy I think I've touched as much as I can on what the overall strategy of the company is, I just talk about the restaurant itself. The restaurants in total employ 294 management and hourly staff, that's set out in paragraph 12 and approximately 75 per cent of those employees are 21 years and under, so we are dealing with young staff.

PN95

The areas in which they are engaged are not areas in which from latest the ADS statistics which I think I did. There were statistics that I tendered last time with Mr Smith's material regarding unemployment statistics for youth between 15 and 24 and I'd seek to rely on those again. In summary I submit that the company is seeking, it's a genuine strategy to turn its business around, it's not asking that the employees burden the entire amount in terms of trying to turn this operation around, it's asking that this document be approved as part of an overall strategy to continue to allow the restaurants to operate to implement that strategy over the next 11 months.

PN96

THE SENIOR DEPUTY PRESIDENT: Mr Agnew, the effect of the undertakings in the absence of any direction as to a later date for the operation of the agreements would be that the agreement should in effect, cease to operate from 1 April 2002. In that eventuality is the relevant award or awards would then apply or alternatively, another agreement against the no disadvantage test, against those relevant awards would need to be put in place.

PN97

Are you able to tell me in broad terms what the extent of the disadvantage of employees is against the relevant award at April 2002?

PN98

MR AGNEW: As you are aware, your Honour, down there the situation is you have Federal awards and you have the industry sector order, the industry sector order applying just to flat rates of pay which for most of our staff would be for full-time, part-time 11.97 and 14.96. I only point the industry sector order out, we are actually or the company is actually a party to the Federal Victorian Restaurants, I've just called it the Victorian Restaurants Award.

PN99

THE SENIOR DEPUTY PRESIDENT: That applies penalty rates?

PN100

MR AGNEW: That's right, the usual penalty rates that you may find, for instance, in the Federal Hotels Award

PN101

THE SENIOR DEPUTY PRESIDENT: After certain hours on week days, after mid-night on week-days and then Saturdays and Sundays.

PN102

MR AGNEW: Saturday, Sunday and public holidays, yes.

PN103

THE SENIOR DEPUTY PRESIDENT: None of those penalties are applicable?

PN104

MR AGNEW: Not in this case but there is a leading in terms of the agreement, if I could just refer you to a particular clause because all the agreements are the same for the six applications, 3.2 sets out the rates of pay, there is an introductory rate which applies for the first six months of a person's employment. Then there is a Grade 1 rate which is between 7_ and 11 per cent higher than the award as it was at that time.

PN105

Now, that rate obviously would be decreased by the last national wage, the $13 or $15, so in my view it is around about 5 to 8 per cent above the current rates of the award.

PN106

THE SENIOR DEPUTY PRESIDENT: But absent penalties.

PN107

MR AGNEW: Absent of penalties and as you are award, your Honour - - -

PN108

THE SENIOR DEPUTY PRESIDENT: The company must've made some calculation as to the effect on the hours actually worked fo the award versus the agreement, is that a fair presumption?

PN109

MR AGNEW: That's right, your Honour.

PN110

THE SENIOR DEPUTY PRESIDENT: What does that disclose?

PN111

MR AGNEW: In my view it's around about 12 per cent, 12 to 14 per cent on the average employee.

PN112

THE SENIOR DEPUTY PRESIDENT: Deficiency against the award?

PN113

MR AGNEW: No, well, loading should be about 12 to 14 per cent, so the deficiency at the moment would be about 4 to 6.

PN114

THE SENIOR DEPUTY PRESIDENT: I see, yes, very well.

PN115

MR AGNEW: That's for somebody who does work week-ends, I mean, we do have some staff who work just Monday to Friday and on the basis someone worked two week-ends, that calculation was on two week-ends each 4-week period. That's probably the major change within the document. There isn't a pay increase set within the document, there wasn't one for last year and there's not one anticipated for this year.

PN116

THE SENIOR DEPUTY PRESIDENT: The description of the problem as a short term crisis, just going to the figures in the first attachment TS1, for a store like Ringwood could the problems confronting that store be reasonably described as a short term crisis? It seems to have been operating at a loss for 1998, a more substantial one from 2000.

PN117

MR AGNEW: I think a lot of the issues with respect to that store are not only labour but with respect, I think it may be and I'll have to ask Mr Rebelo, I think from 1999 they'd sold the property, they had originally owned the property and it was a lease-back arrangement and that's what has caused, I would regard as a jump.

PN118

THE SENIOR DEPUTY PRESIDENT: That's an accounting exercise, there must be some opportunity cost of holding the property as against a lease, the difference wouldn't be that significant when the opportunity - - -

PN119

MR AGNEW: I'm just saying it's one of the factors which distinguishes it from the others. All I can say to your Honour is we believe there is an opportunity to turn that store around and that we do have a strategy to do that and the company is quite willing to give it one last try in terms of 12 months.

PN120

THE SENIOR DEPUTY PRESIDENT: Was that the more accurate description than tending to a short term crisis and the sales figures in each store seem to show a decline over a considerable period of time.

PN121

MR AGNEW: As I've said in the material, it's the last two years 2000 and 2001 that we've seen this dramatic decline in sales, mainly due to the fact I'm instructed, mainly due to the fact that we went out of the market in terms of making our name or our brand aware in terms of advertising in the market and that's when it really hit. So, it's really only been in the last two years that those issues have resolved.

PN122

THE SENIOR DEPUTY PRESIDENT: Very well. Is there anything further?

PN123

MR AGNEW: I'd just point out to you there is another paragraph in that affidavit, the CEO of the parent company in America came out in January this year and actually visited the stores and did an operational review himself with other senior executives, that's paragraph 8 and he has quite clearly indicated to Mr Smith - or at least Mr Smith says in his affidavit - that they don't adhere to budgets. I should point out that the budgets were actually set this year but in America. That they will be closed. What has happened is that budgets were set in November/December and I am instructed by Mr Rebelo that they were based on those increases in wage costs.

PN124

THE SENIOR DEPUTY PRESIDENT: That was rather presumptuous in light of the undertakings which attended the certification of the agreements, was it not?

PN125

MR AGNEW: Presumptuous, yes, but obviously facing reality in terms of the parameters which the parent company has set for them to turn the operations around. At the end of the day the important point is that if we don't adhere to those parameters then they will close them and people will lose their jobs. All we are asking here today, your Honour, is a further 12 months and if things do not turn around within those 12 months it won't be necessary to come back to you because there won't be stores.

PN126

THE SENIOR DEPUTY PRESIDENT: Yes, very well, anything further?

PN127

MR AGNEW: No, your Honour. Ms Hewapassaperumage, can I ask you whether there is anything you wish to put on behalf of employees in relation to this matter?

PN128

MS HEWAPASSAPERUMAGE: No, your Honour.

PN129

THE SENIOR DEPUTY PRESIDENT: No? Well have the employees met and discussed the proposition that the agreement be extended, in effect, for a year.

PN130

MS HEWAPASSAPERUMAGE: No.

PN131

THE SENIOR DEPUTY PRESIDENT: They haven't?

PN132

MS HEWAPASSAPERUMAGE: Your Honour, I was told what was happening today.

PN133

THE SENIOR DEPUTY PRESIDENT: Yes, you were told what was happening today. Really what I am trying to ascertain is whether the employees have had an opportunity to discuss what was being proposed today. That was to extend the operation of the agreement beyond April 2002.

PN134

MR AGNEW: Maybe to assist. There is TS2, a notification I forgot about, which we replaced in all the stores.

PN135

THE SENIOR DEPUTY PRESIDENT: Yes, very well. Yes, thank you. I am just considering what further undertaking might be required to ensure that upon the nominal expiry date passing action is taken to terminate the agreement of the operation. That would require obviously either the operation there after the award or arrangements to be put in place for negotiation of a new agreement. I think that would be necessary and desirable rather than seeking to continue the current agreement on the basis upon which it has been made and approved. That could presumably be made under section 170MH.

PN136

MR AGNEW: Your Honour, if I could assist, may be 170LB(2)? If we given an acceptable undertaking to your Honour you have the power by order to terminate the agreement, under 170LB(2).

PN137

THE SENIOR DEPUTY PRESIDENT: If it is not complied with. Yes. So, I take it the company would be prepared to make an undertaking in those terms that in the event that the operation of the agreement is continued, in effect by direction by the Commission, that the concluding period in undertakings (a) and (b) be extended to 1 March 2003 that the company wouldn't take steps upon the expiry of the agreement - on that nominal expiry date - to terminate the operation of the agreement?

PN138

MR AGNEW: That would be acceptable.

PN139

THE SENIOR DEPUTY PRESIDENT: Very well, are you able to provide that in writing in due course?

PN140

MR AGNEW: Yes, I would.

PN141

THE SENIOR DEPUTY PRESIDENT: So, in effect, the undertakings continue to apply subject to a direction to the Commission that the operation of the agreements in (a) and (b) extend to 1 March 2003 and an additional undertaking from Lone Star that upon the nominal expiry date of 1 March 2003 Lone Star will make application to terminate the agreements.

PN142

I would be prepared to make a direction of that kind - of the kind contemplated in the existing undertaking - to extend the operation to 1 March 2003 of the 1998 Agreement in respect to the employees it applies to in the 2001/2003 Agreements. In the respect that I am satisfied that there is a short-term crisis continuing in respect of which there is a reasonable strategy in place to deal with it and to assist with the revival of the single business.

PN143

It is my view however, that it would not be appropriate to have the agreement operating beyond the normal expiry date of 1 March 2003 given the disadvantage to employees within the agreement and given the 2 year period over which the agreement would now operate as a result of my direction. In the those circumstances I do require the undertaking that the company would terminate the agreement at that time and that will be forth coming and that will place employees in the position where the award applies or alternate an agreement is negotiated and sought to be certified in the commission and that would allow any issues that arise in relation to the certification being dealt with in a contemporary sense at the time having regard to what is occurring at that time.

PN144

So I will leave that on that basis. If the written undertaking is provided by the commission I will issue a document giving effect to what I have just said, I am not entirely sure what it is at the moment. I do not think it is the - it may well be in the form of a direction in respect to those dates and perhaps an order or certificate in effect extending operation of the agreement allowing it to remain in force until 1 March 2003. I have to think that through a bit quite frankly but that will provide the stores with an opportunity to put in place and reap some benefits from a strategy to revive sales essentially, and obviously to the event that that is not successfully then you never know Mr Agnew prospects for the stores and employees are fairly limited any case.

PN145

It could be helpful from my limited experienced that the Chadstone store suggests that substantial savings might be made from reducing the level salt on the food - that is another matter entirely. I will adjourn this matter, can I ask you Mr Agnew whilst you are hear, there are other matters involving I think Western Australia which due back for report in May and possibly - - -

PN146

MR AGNEW: Toowoomba and Rockhampton, I think are the other two.

PN147

THE SENIOR DEPUTY PRESIDENT: At a later date?

PN148

MR AGNEW: Yes.

PN149

THE SENIOR DEPUTY PRESIDENT: Are you able to indicate in fairly brief terms what is likely to be the situation in respect of those.

PN150

MR AGNEW: I do not have up to date figures and I would be reluctant to put something on record before you but my last discussions with Mr Smith were yes, but I would just place a condition on that without seeing the actual numbers but yes.

PN151

THE SENIOR DEPUTY PRESIDENT: Yes, very well. Can I do one other thing in respect to the agreements I have already dealt with. What I might do in respect of that is indicate now that I will program the matter for report back some time in late January or February, I will not provide a date at this stage or 2003, I think it would be prudent to deal with those matters in advance of the expiry date of the agreement.

PN152

MR AGNEW: Yes, I have not objection your Honour.

PN153

THE SENIOR DEPUTY PRESIDENT: I will do that as well, otherwise, I will adjourn and upon receiving a written undertaking I will issue a hopefully appropriate document giving effect to what I have said and decided.

PN154

MR AGNEW: Thank you.

ADJOURNED INDEFINITELY [10.04am]