C2001/4617, Transcript of Proceedings [2002] AIRCTrans 2242 (17 June 2002)

AUSCRIPT PTY LTD
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TRANSCRIPT OF PROCEEDINGS


O/N VT04307

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER LEWIN

C2001/4617

TIMBER AND ALLIED INDUSTRIES
AWARD 1999

Application under section 113 of the Act
by Construction, Forestry, Mining and
Energy Union - The Forestry and Forest,
Building Products Manufacturing Division
to vary the above award re wages and
allowances

MELBOURNE

11.37 AM, TUESDAY, 4 JUNE 2002

THESE PROCEEDINGS WERE CONDUCTED
VIA VIDEO LINK IN MELBOURNE

PN1

THE COMMISSIONER: Good morning. Just before I take the appearances, I might just make some adjustments at Melbourne. Thank you. I was having a little bit of trouble with reflection on the monitor in Melbourne from the windows of the hearing room. So I just wanted to get them closed so that I could see you all. So now I will take the appearances, please. Can you hear me in Adelaide?

PN2

MR T. SMITH: I appear for the CFMEU, Forestry and Furnishing Products Division, appearing with MS. M. ADLAM.

PN3

MR M. SHEEHAN: I appear on behalf of the SA Employers Chambers of Commerce and Industry trading as Business SA.

PN4

THE COMMISSIONER: Thank you, and in Sydney, please.

PN5

MS J. WILLIAMS: I appear for the Timber Trade Industrial Association and with me is MR B. BEECROFT from the association.

PN6

THE COMMISSIONER: Thank you. And in Melbourne. I beg your pardon, you are off the screen there. We will just adjust that.

PN7

MS L. BROOKS: Sorry, Commissioner.

PN8

THE COMMISSIONER: All right, yes. Would you be able to move a little closer together. Just closer together. Don't move along, because you will just - you understand what I mean, you could - - -

PN9

MS BROOKS: Yes.

PN10

THE COMMISSIONER: So if you just - if it is possible for you, Ms Brooks, is that right?

PN11

MS BROOKS: Yes, that is right, Commissioner.

PN12

THE COMMISSIONER: To move a little bit closer to Mr Beecroft.

PN13

MS BROOKS: Is that better?

PN14

THE COMMISSIONER: Yes, it is. You are just in shot now. Thank you.

PN15

MS BROOKS: Thank you, Commissioner, I appear for Australian Business Industrial.

PN16

THE COMMISSIONER: Yes, very well, thank you.

PN17

MR P. EBERHARD: I appear for the Victorian Employers Chamber of Commerce and Industry.

PN18

THE COMMISSIONER: Good, thank you. Can the other parties see Mr Eberhard when we pan to him, is that right? All right, good. So I take it that sound and vision in Sydney and Melbourne is fine.

PN19

MS WILLIAMS: Yes.

PN20

THE COMMISSIONER: Good, thank you. All right, now, the purpose of today's hearing is for the settlement of the minutes of an order varying the Timber and Allied Industries Award 1999 and in particular in relation to an appendix to that award, which I understand we should properly describe as appendix A, part 2, is that correct?

PN21

MS WILLIAMS: Yes.

PN22

THE COMMISSIONER: And that, on my understanding of the issue, that seems to have arisen in relation to the application of the safety net adjustment for 2002 to the award is the only issue. That is to say, how should appendix A, part 2 be varied? Is that correct?

PN23

MS WILLIAMS: It is in reference to the allowances, how they are to be varied.

PN24

THE COMMISSIONER: Yes, I understand that, but I am just at this stage, just identifying a part of the award in which the issue arises. Is that correct?

PN25

MR SMITH: That is correct, Mr Commissioner. Mr Commissioner, just before you proceed, could I just ask of you, procedurally, is it appropriate that we stand when we address the Commission or given the video conferencing circumstances, do we remain seated. It has been some years since I have appeared before you?

PN26

THE COMMISSIONER: Yes, thank you, Mr Smith. No, I normally follow the practice that in a video conference the parties remain seated. It just makes the situation somewhat awkward if we adopt the other procedure.

PN27

MR SMITH: Thank you.

PN28

THE COMMISSIONER: Thank you. All right, so we only need to concern ourselves with that part of the award known as appendix A, part 2. We need to be clear about that. Now, I should just inform - - -

PN29

MS WILLIAMS: Commissioner?

PN30

THE COMMISSIONER: Sorry?

PN31

MS WILLIAMS: Sorry, Commissioner, the equation - difference of opinion to the equation also relates to appendix A, part 3 as well, because there is a different calculation there.

PN32

THE COMMISSIONER: Very well, well, that is what I was trying to ensure, that we make sure that we are clear on those parts of the awards that are involved in today's hearing. So we have appendix A, part 2 and appendix A, part 3, is that correct?

PN33

MS WILLIAMS: Yes.

PN34

THE COMMISSIONER: And the context is that the Timber Workers Union, I am sorry, the division of the CFMEU filed a draft order varying all of the terms of the award for the purpose of giving effect to the safety net adjustment and concerns have arisen, principally voiced by the Timber Trade Industrial Association in relation to those parts of that draft order which affect the identified appendices. I am sorry, the identified appendix and the two parts, 2 and 3. The parties will appreciate I want to get all of this on the record, because there are some technical issues and it may be necessary for a decision to be made and I think that just following the papers on the file, would be a very confusing exercise for the purpose of understanding the nature of the issues that have arisen and the considerations that are before the Commission, potentially for decision.

PN35

Now, could I just go to - first of all suggest a procedure by which we might deal with the matters today. As I said, a draft order was filed by the CFMEU and concerns were expressed by the Timber Trade Industrial Association in relation to the appendix parts 2 and 3. What I suggest is, perhaps if we can go to the CFMEU and ask that they speak to their proposed order varying the award and the methods which have been adopted by them in calculating the proposed adjustments to the various provisions of the two parts of appendix A that we are dealing with. So is it - will that be you, Mr Smith?

PN36

MR SMITH: Mr Commissioner, Ms Adlam will do the introductory comments.

PN37

THE COMMISSIONER: Very well. Ms Adlam.

PN38

MS ADLAM: If it please the Commission, the process by which the CFMEU has adjusted the rates and allowances within the draft orders in the appendices A, part 2 and A, part 3 are part of a process that I understand has been ongoing for some years and was actually proposed by the TTIA and Mr Smith will address the history of those things. But in terms of the calculation, the percentage increase for appendix A, part 2 was arrived at by taking the base rate of 2001, the current award, $413,75 and subtracting that from the 2002 proposed rate with the $18 included of 431.75. Adding to them the 25 per cent piece work loading, which in 2001 was 103.45.

PN39

THE COMMISSIONER: Sorry, just one moment. Yes, you will just have to go a little bit more slowly, Ms Adlam, for the purpose of the hearing.

PN40

MS ADLAM: Sorry.

PN41

THE COMMISSIONER: So - - -

PN42

MS ADLAM: The 2001 rate that we are talking about was - - -

PN43

THE COMMISSIONER: Yes, I understand. I am up to the 2002 rate. At that point you add 25 per cent.

PN44

MS ADLAM: That is correct.

PN45

THE COMMISSIONER: And that is - - -

PN46

MS ADLAM: 539.70.

PN47

THE COMMISSIONER: Right, now the purpose of the addition of the 25 per cent is?

PN48

MS ADLAM: That is a piece work loading.

PN49

THE COMMISSIONER: Right, good. You appreciate, Ms Adlam, one of the things that I have to do here, perhaps you are looking at it from your perspective and the parties no doubt quite rightly will look at the matter entirely from their own perspectives, but this is the first occasion on which the details of the application of the safety net adjustment have been formally dealt with on the record before the Commission. It is possible that I may have to make a decision and that decision is an appealable decision. If either were to wish to exercise a right of appeal, it is my responsibility to ensure that all of the issues that are before me are clearly before me in each and every detail of their factual and other manifestation.

PN50

So that if there was an appeal, it will be possible by reference to the transcript of the proceedings to understand exactly what the issues were before me at the point of decision. So whilst there has been some transaction by telephone through my office and some documents have been sent to me, as I said earlier, it will be impossible for anybody simply looking at those document, without a full explanation, to understand what exactly was the issue that had to be decided by the Commission. So I hope that the parties appreciate that that is a consideration that I have to keep in mind when I am conducting the proceedings.

PN51

So to some extent I may get you to go over ground that you have covered in your communications with my office and in the documentation. And might I say too, that there is another important reason for that and that is that there are parties present here today who have not been involved in that process. So thank you, I just wanted to clarify why we need to go through this with explanation at each stage of the process. So please continue, Ms Adlam. So add a 25 per cent piece work rate and the total is $539.25.

PN52

MS ADLAM: And 70, 70 cents.

PN53

THE COMMISSIONER: 70.

PN54

MS ADLAM: Yes, so the 2002 new rate is 539.70, from which you subtract the 2001 rate of 517.20, which gives you a difference of $22.50 and which you use in terms of the formula that is derived from the furnishing industries and glass decision.

PN55

THE COMMISSIONER: Right, so you need to actually go through that, I think.

PN56

MS ADLAM: Okay, that is $22.50 over $517.20. 517.20 is the figure that is used from the 2001 total prior to the 2002 safety net increase being added. So it is $22.50 over 517.20 times by 100 over 1, which provides a percentage of 4.35 per cent. Therefore, it is our contention that all rates and work related allowances in appendix A, part 2 should rise by 4.35 per cent.

PN57

THE COMMISSIONER: Right, just pause there, please. Now, what I want to do is check whether or not, given that this is said to be the correct application of the Commission's principles by the CFMEU, whether or not other parties submit that that is an incorrect application of the principle and if so, what detail of the formula, in particular, is incorrectly incorporated? So perhaps it might be convenient to go to the Timber Trade Industrial Association first.

PN58

MS WILLIAMS: Thank you, Commissioner. Commissioner, we believe that the rate of - taking the difference between 539.70 and 517.20 to come to a rate of $22.50 is not in line with the principles. We believe that the principles say that the monetary increase under the decision was $18 and that principle 5 in (d) says that the allowances should be increased by dividing the monetary safety net increase rate of pay for the key classification, which we maintain is $507.20, which is the - - -

PN59

THE COMMISSIONER: All right, can I just go to the first point that you have made and that is you say that it is inappropriate to subtract $517.20 from $539.70.

PN60

MS WILLIAMS: Yes.

PN61

THE COMMISSIONER: Is it that subtraction itself that is the issue from your perspective or is it something else?

PN62

MS WILLIAMS: Our perspective is that the - in accordance with principle 5, the way to adjust allowances throughout the entire award is to pick one key rate, which we all agreed to is $507.20 as per clause 27 and use that rate. And that the principles don't allow for a calculation which has subtracting an old rate from a new rate.

PN63

THE COMMISSIONER: So what you are saying, in essence, I think, Ms Williams, is that this is not the application of the formula in the furnishing trades.

PN64

MS WILLIAMS: Yes. Yes, Commissioner. We are saying that the one -the principle is one calculation and we say it should maintain throughout the entire award. And that the increase should be 3.5 per cent and that the principles don't allow for various calculations and various methods of the calculation.

PN65

THE COMMISSIONER: All right. Now, I guess what we need to do is go to the formula itself. Do you accept that that is the formula that should be used?

PN66

MS WILLIAMS: Yes.

PN67

THE COMMISSIONER: There are two issues. One is, is it the correct formula; two, is the calculation in accordance with the formula? Is that right?

PN68

MS WILLIAMS: Yes.

PN69

THE COMMISSIONER: So is the formula the correct formula?

PN70

MS WILLIAMS: The formula, we would say, is $18 - - -

PN71

THE COMMISSIONER: No, no, I am sorry, I think you misunderstand that question. I have divided the question into two parts. Is the formula the correct formula. That is question one. The second question is, are the calculations the appropriate calculations according to the formula? So the question I am asking you at the moment is question one. Do you have any difficulty with the formula identified by the CFMEU as the formula to be followed for the purposes of the calculations?

PN72

MS WILLIAMS: I am sorry, Commissioner, I have no problem with a figure being multiplied by 100 and then being divided by the rate of pay.

PN73

THE COMMISSIONER: Right, so I think your answer to my question, I am going to understand it is, no, you don't have any difficulty with the formula, but you think that the values that have been used by the union in the formula are incorrect or inappropriate.

PN74

MS WILLIAMS: Yes. Yes, Commissioner. Yes.

PN75

THE COMMISSIONER: All right. And I have from you a document which, I think sets out your approach to this.

PN76

MS WILLIAMS: Yes, Commissioner.

PN77

THE COMMISSIONER: Was that served on the CFMEU?

PN78

MS WILLIAMS: I did forward it to the CFMEU this morning.

PN79

THE COMMISSIONER: Good. Could I just confirm that they have a copy of it?

PN80

MR SMITH: Yes, we do, Commissioner.

PN81

THE COMMISSIONER: All right. Have you seen this, Mr Eberhard? I will just arrange for Mr Eberhard to have a copy of this. If you just bear with us for a moment. So that in comparison to the union's formula, yours is set out I think in relation to the clause 27 allowances, as 18 over 507.20 by 100 over 1.

PN82

MS WILLIAMS: Yes, yes, Commissioner.

PN83

THE COMMISSIONER: So the difference is $22.50 over $517.20 times 100 over 1. That is the difference between the parties, is it not?

PN84

MS WILLIAMS: Yes.

PN85

THE COMMISSIONER: And the $507.20 is a particular classification that you have indicated is the appropriate classification to apply the $18 to, is that right?

PN86

MS WILLIAMS: Yes, yes, Commissioner. It is level 5, which is the trade level.

PN87

THE COMMISSIONER: Now, why is it that that classification has been chosen by you, because obviously the CFMEU, even though it proceeds in a different manner in relation to the formula, as well selected a different classification. That is classification 1, as I understand it?

PN88

MS WILLIAMS: Our - I think that is what our position is. We - both parties - - -

PN89

THE COMMISSIONER: Yes. No, I understand, but why is it that you choose five. I will ask the union why they choose one in a minute, but I am asking you at the moment why you choose five.

PN90

MS WILLIAMS: Because level 5 is the trade classification and we believe that it be the correct level or the T classification under the award. It is the second highest rate under that award, under the part A, part 1.

PN91

THE COMMISSIONER: Well, of course, it follows, does it not, as a matter of logic that the higher the number under 18 or the lower the number, there will be a consequential effect on the outcome of the sum.

PN92

MS WILLIAMS: Yes.

PN93

THE COMMISSIONER: So that it is rather important to have some basis upon which to choose between five and one, is it not?

PN94

MS WILLIAMS: Yes, but it is also the same level that was agreed to for clause 27. Both parties agreed at using the key level of $507.20 for clause 27 increase allowances.

PN95

THE COMMISSIONER: All right. So is that correct. Could I ask the CFMEU, is that correct?

PN96

MR SMITH: That is correct. That is in respect to annual leave.

PN97

THE COMMISSIONER: Well, which allowance - - -

PN98

MR SMITH: That is in respect to the main body of the award and I think this is what fundamentally goes to the hub of the issue. And if I may, I would like to indicate to you why the union believes its classification is appropriate.

PN99

THE COMMISSIONER: Yes, I just - no, I just want - I am going to let you do that in just one moment, but I just want to exhaust, if I can - - -

PN100

MS WILLIAMS: I am sorry, Commissioner, we had some - we had some drilling going on.

PN101

THE COMMISSIONER: Yes, I will ask my associate to ring the registry in Melbourne and get them to - I am sorry, ring the registry in Sydney and get them to attend to that. But what I want to do, Mr Smith, first of all, is make sure that whatever is put, is put completely on behalf of the TTIA in relation to the choice of that number.

PN102

MS WILLIAMS: Yes, Commissioner, the - - -

PN103

THE COMMISSIONER: Is that the only thing, the fact that the union agreed to use that in the main body of the award?

PN104

MS WILLIAMS: In the main body of the award and it is our belief that there is no reason why, once that percentage is arrived at, that you should depart from it for other parts of the award.

PN105

THE COMMISSIONER: Right, but in essence you rely on nothing else but that the union considers it appropriate for the main body of the award.

PN106

MS WILLIAMS: All the rates of pay also, Commissioner, if I may just add, relate to that level 5. So that - - -

PN107

THE COMMISSIONER: I am not quite sure I understand what you mean by that.

PN108

MS WILLIAMS: In the award itself - just bear with me. Sorry, Commissioner. For example, Commissioner, level 3 is based on 87.4 per cent of level 5 to derive the rate of pay.

PN109

THE COMMISSIONER: I am - the relevance of that escapes me to this question.

PN110

MS WILLIAMS: Well, as to why we have chosen that as the key - - -

PN111

THE COMMISSIONER: It is the key classification for the purpose of determining relativities.

PN112

MS WILLIAMS: That is right.

PN113

THE COMMISSIONER: Yes, I guess that is what I am saying. I mean, it may be the key classification for determining the wage relativities in the award. I will take that into account, but I am not quite sure what the relevance of that is.

PN114

MS WILLIAMS: Just that that is the reason that the level 5 is chosen when in consideration of clause 27 allowances, which is the main part of the award, why that is chosen as the key classification.

PN115

THE COMMISSIONER: All right. Well, I think I have heard all you have to say about why that classification should be the classification which provides the rate of pay for inclusion in the formula. Is that right?

PN116

MS WILLIAMS: Yes, Commissioner.

PN117

THE COMMISSIONER: Well, I just wanted to check whether or not Ms Brooks has anything to say about this.

PN118

MS BROOKS: Commissioner, only to add to the submissions made by my friend in that the key classification rate that has been used, the 507 rate, 507.20, relates or is in accordance with the requirements of the furnishing and glass industries allowances decision, print M9675, that requires the parties to an award to come up with a key classification rate for the determination of allowances within the award. And in most circumstances, that is the trade rate. In other circumstances where the parties come up with a different rate, it may very well be a rate other than the trade rate. In the circumstances of this award, the rate that has been agreed between the parties, it is my understanding, for the calculation of allowances in accordance with the furnishing and glass decision, is the trade rate of 507.20. So - - -

PN119

THE COMMISSIONER: Why do you say that?

PN120

MS BROOKS: Well, because the allowances that have been calculated throughout the other parts of the award for the purposes of this wage case have been at 3.5 per cent, 3.5 per cent, which is the calculation that is - - -

PN121

THE COMMISSIONER: Are not you just effectively reiterating what Ms Williams has just said, that because that has been used in the main body of the award, it should be used in the appendix?

PN122

MS BROOKS: Yes, but also to add the point that it was used in the main body of the award in accordance with a decision of this Commission.

PN123

THE COMMISSIONER: Well, it has been used according to Ms Williams and I think, with respect, yourself on the basis that that is the rate which in accordance with the decisions, the parties nominated or that part of the award.

PN124

MS BROOKS: Yes, for the calculation of allowances in the main part of the award. Yes, Commissioner.

PN125

THE COMMISSIONER: Yes, so that brings us back, I think, to the essential proposition that since the parties agreed on that amount for the main part of the award, it should apply in the appendix.

PN126

MS BROOKS: Yes, in accordance with principle 5 of the national wage case safety net review.

PN127

THE COMMISSIONER: I think what I am going to hear from the union is that - fairly predictably - that there should be some distinction drawn between the main body of the award and the appendix, otherwise they would be consenting to your proposition.

PN128

MS BROOKS: Yes.

PN129

THE COMMISSIONER: So it may be time now to just check with Mr Eberhard to see whether or not he wants to add anything to this. Now, you won't be able to see him, because the video operator is not here. This is sort of the Commission's answer to big brother. Yes, Mr Eberhard.

[12.07pm]

PN130

MR EBERHARD: Commissioner, I have nothing to add at this particular time.

PN131

THE COMMISSIONER: Very well, thank you. Right, Mr Smith.

PN132

MR SMITH: Yes, if it may please the Commission. Fortunately, Mr Commissioner, you have already pre-empted part of our response, which is really just logical common sense, pragmatic and a fairly clear understanding about how the award operates. In the first instance we would say that we have no disagreement, absolutely no disagreement that the rate of $507.20, which is the trades persons rate in skill level 5, is the appropriate rate to apply throughout the body of the award.

PN133

That is why there is no argument, no disagreement that in respect to the annual leave provision that was referred to before by Ms Williams under clause 27, clearly has that calculation taken into account, because those allowances are, in fact, embraced within the main body of the award. I will reiterate that for all allowances in the main body of the award, the classification of skill level 5, $507.20, as appropriately calculated, does apply. What we are discussing here today is not the main body of the award.

PN134

We are discussing the appendix to the award and the two sectors of the appendix A, in particular, that refers to pick crop cutters and bush workers in Tasmania. Mr Commissioner, there has been a long standing arrangement and agreement with the TTIA in relation to what constitutes the key classification in what is now appendix A, part 2, which was formally an appendix that refers specifically pick crop cutters. That specific key classification is the base rate that has been as set out and supplied to the parties and to the Commission, and calculated in accordance with the methodology that Ms Adlam has outlined to the Commission.

PN135

THE COMMISSIONER: Could I just interrupt you there, Mr Smith. That is classification 1, is that right?

PN136

MR SMITH: That is correct.

PN137

THE COMMISSIONER: And that classification is the classification 1 shown in the main body of the award, is that right?

PN138

MR SMITH: I will just have to have a look at that, because classification 1 does not, in fact, apply in South Australia. It has limitations in respect to its application.

PN139

THE COMMISSIONER: Well, of course, I am thinking about the federal scope of the award.

PN140

MR SMITH: Yes.

PN141

THE COMMISSIONER: I am just trying to - - -

PN142

MR SMITH: Yes, it is.

PN143

MS WILLIAMS: I was just - - -

PN144

THE COMMISSIONER: I am sorry, I could not hear you. You were speaking simultaneously. I am sorry, somebody - please, please just be silent for a moment if you would, please. Mr Smith, is classification as drawn from the classification provisions of the main body of the award, is that right?

PN145

MR SMITH: There is a very slight variance of cents, but in essence, that is the - the classification, yes. I think that there is about 35 cents difference.

PN146

THE COMMISSIONER: 75 cents difference between what. I don't - - -

PN147

MR SMITH: 35.

PN148

THE COMMISSIONER: 35.

PN149

MR SMITH: 35 cents difference between level 1 in the main body of the award.

PN150

THE COMMISSIONER: And?

PN151

MR SMITH: As compared to the base rate in appendix A, part 2.

PN152

THE COMMISSIONER: So, in fact, you have adopted the base rate in appendix A, part 2.

PN153

MR SMITH: That is correct.

PN154

THE COMMISSIONER: Right. That is what we need to be really clear about. Appendix A, part 2 the base rate is the rate that you have selected rather than the $507.20, that is the difference, is it not? You say the base rate in appendix A(2) is the correct key classification.

PN155

MR SMITH: That is correct, and because the appendix does, in fact, stand alone, the principles as expressed in the furnishing and glass industries allowances decision does not preclude us from anointing that as the key classification in respect to that appendix. That is the understanding that has existed between the parties for a considerable period of time.

PN156

THE COMMISSIONER: Yes, very well, let us assume that you are correct about that for the sake of the discussion. Is it your submission that that agreement has been given effect to in the application of previous safety net adjustments?

PN157

MR SMITH: It certainly has, Mr Commissioner.

PN158

THE COMMISSIONER: All right, could I just pause there. Could I ask the Timber Trade Industrial Association whether or not that assertion is contested, that historically the base rate in appendix A(2) has been used as the key classification for the adjustment - I am sorry, for the purposes of the formula for the adjustment of allowances in the appendix.

PN159

MS WILLIAMS: It would appear so.

PN160

THE COMMISSIONER: So that historically different base rates have been used as between the main body of the award and the appendix.

PN161

MS WILLIAMS: Yes, Commissioner.

PN162

THE COMMISSIONER: But you propose on this occasion that that practice not be followed and the practice which you propose should be used for the purpose of the formula.

PN163

MS WILLIAMS: Commissioner, I have been able to - not able to come up with any reason as to why the principles may have been departed from. My predecessor, who was here at the last - the last time this award was increased, I have been unable to get in touch with him. The rates, as I have gone through the award and differences between what allowances have in the appendix that has been raised, not raised and raised are different. There doesn't seem to be any logical reason as to why, even if they keep that as a key rate, why a different rate of pay, national increase, was selected.

PN164

THE COMMISSIONER: No, there may not have been and I am not at this stage going into the rationale of it. At this particular instant, all I am concerned with is to establish with clarity what the historical position has been. I put it in a general sense and that is the main body of the award has been dealt with by virtue of a formula which uses a different classification than that which had applied in the appendix and I think the situation is that as far as we are able to establish it in these proceedings, that is true, as a matter of fact.

PN165

MS WILLIAMS: Yes, Commissioner.

PN166

THE COMMISSIONER: So the real question to me is whether or not that practice should be followed or departed from, having regard to the Commission's principles.

PN167

MS WILLIAMS: Yes, Commissioner.

PN168

THE COMMISSIONER: All right. Now, can we just now proceed, Mr Smith - I am sorry, I think you have made the point there that it has been conceded that the agreement has existed or at least whether or not there was an agreement the practice has been followed, whereby the base rate in appendix A(2) has been used for the purposes of the formula. What I wanted - - -

PN169

MR SMITH: That is correct.

PN170

THE COMMISSIONER: I think so far, Ms Williams, and the other employer representatives have made out in outline what the alternative option is from their perspective. What I would like to do now is turn to the way in which you apply the selection of that classification to the formula itself. So if you adopt the base rate in appendix A, part 2 - - -

PN171

MR SMITH: Mr Commissioner, more - - -

PN172

THE COMMISSIONER: Sorry. You do not do it in the same way that, as I understand it, but I need to clarify this with TTIA, they would do so if it was the correct base rate. Is that right, Ms Williams?

PN173

MS WILLIAMS: Yes.

PN174

THE COMMISSIONER: Right. Now, for the benefit of the CFMEU, perhaps you could explain without prejudice to your substantive position, if the base rate in appendix A(2) was applied on this occasion, how would the formula be comprised?

PN175

MS WILLIAMS: Commissioner, I would have had $18, increased it by 18.

PN176

THE COMMISSIONER: Over 413.70, is that right. Over - sorry, I just - - -

PN177

MS WILLIAMS: Yes, over 413.75.

PN178

THE COMMISSIONER: Over 413.75.

PN179

MS WILLIAMS: Yes.

PN180

THE COMMISSIONER: Times 100 over one.

PN181

MS WILLIAMS: Yes.

PN182

THE COMMISSIONER: Now that, of course, is different to the way in which the union has proceeded.

PN183

MS WILLIAMS: Yes.

PN184

THE COMMISSIONER: Would you like to say why it is that you would proceed in that manner rather than the way in which the union has done?

PN185

MS WILLIAMS: Well, first of all, I don't believe that that is the way that it should be done - - -

PN186

THE COMMISSIONER: I appreciate that. I am just exploring the two things. First of all you say, look, this is the wrong base rate and, secondly, you say, not only that, the way in which the union uses the formula is wrong. Is that right?

PN187

MS WILLIAMS: Yes. I don't understand the taking from last year's rate to adding increases on and then taking it away from last year to get a different figure increase, so that you get 22.50 as opposed to $18, when $18 was the increase as per the - - -

PN188

THE COMMISSIONER: No, I understand that, but I think there is a step before that in respect of which you are in conflict with the union and that step is that your formula would apply $18 to the base rate and it would not be applied to the loaded rate.

PN189

MS WILLIAMS: That is right.

PN190

THE COMMISSIONER: So that you wouldn't apply the $18 to $413.75 plus 25 per cent, is that right?

PN191

MS WILLIAMS: I would apply the $18 to 413.75.

PN192

THE COMMISSIONER: Right.

PN193

MS WILLIAMS: I would apply it to that. I would do exactly - - -

PN194

THE COMMISSIONER: Does anybody have a calculator with them?

PN195

MS WILLIAMS: Yes, I do.

PN196

MR SMITH: Yes, Mr Commissioner.

PN197

THE COMMISSIONER: Can you tell me what that formula would yield. 18 over 413.75 times 100 over 1, please.

PN198

MR SMITH: Yes, Mr Commissioner, the same percentage that we have arrived at in respect to our formula of 4.35 per cent.

PN199

THE COMMISSIONER: I must say, Mr Smith, there is something about that formula that, with very cursory consideration, appeals to me, because if you say that this is an appendix that applies to piece workers for whom the ordinary time rate should be loaded by an amount of 25 per cent, there is a suggestion that perhaps the correct approach is to apply - if the classification, number one, or the base rate, rather, is the key classification that has been used historically, to apply $18 to that amount, that is the base wage rate and the safety net adjustment is essentially an adjustment to wages. And then to calculate what the percentage adjustment is for the purposes of the adjustment of other allowances.

PN200

Now, I mean, I may be wrong, but it looks to me like there is a certain logic about that. Whereas the more, shall we say, elaborate or attenuated calculations seem to involve a number of steps that may have been agreed by the parties, but from the point of view of the Commission, I am not quite sure that I understand the logic of that agreement. So that - could I just put this to you, Mr Smith, whether we adopted the formula just discussed or the formula adopted, you say, by agreed over a long history, at least in relation to this adjustment the outcome would be the same, would it not?

PN201

MR SMITH: It would be the same in both instances, Mr Commissioner.

PN202

THE COMMISSIONER: And then I would be left with the very simple question of whether or not I should adopt the base rate from the appendix or the classification 5 rate from the main body of the award. And if I decided that issue for or against either party, then the result would be determinant. Can we do - just check that, then against Ms Williams' proposals by substituting the $507.20 in the equation that we have just discussed. So 18 over - that would give the 3.5 per cent, wouldn't it?

PN203

MS WILLIAMS: 18 over 507.20 gives 3.5 per cent.

PN204

THE COMMISSIONER: Right, so the real question - the real question is very simple, is it not? If I decide that classification 5 should be used or the base rate in the appendix should be used, that will dispose of the issue between the parties.

PN205

MS WILLIAMS: Yes.

PN206

THE COMMISSIONER: In appendix A(2).

PN207

MS WILLIAMS: In A(2), yes.

PN208

THE COMMISSIONER: All right. So I just needed to be absolutely clear what the question to be determined is and, that is, should it be; one, classification 5 or; two, the base rate in A(2). Now, can we go onto appendix A(3), please, because I think there is a - it seems to me, at least, that there may be some differences there. Now, I understand that - and please correct me if I am wrong, that there is a different quantum of adjustment in appendix A, part 3 proposed by the unions, but that - is that contested?

PN209

MS WILLIAMS: That there is the different equation?

PN210

THE COMMISSIONER: Well, first of all, there is a different percentage adjustment proposed.

PN211

MS WILLIAMS: Yes, there is a different percentage.

PN212

THE COMMISSIONER: It is 3.75 versus 3.5, is that right?

PN213

MS WILLIAMS: Yes, Commissioner.

PN214

THE COMMISSIONER: All right. Now, could I just check with TTIA. The reason that you come to 3.5 is for exactly the same reasons that we have already discussed.

PN215

MS WILLIAMS: Yes, Commissioner.

PN216

THE COMMISSIONER: So that it is a uniform 3.5 per cent of adjustment to all allowances in the main body of the award and the appendix from TTIAs perspective, using the same formula in each case.

PN217

MS WILLIAMS: Yes.

PN218

THE COMMISSIONER: Right. Now, Mr Smith, can you explain to me why it is that in appendix A(3), the union proposes 3.7 per cent?

PN219

MR SMITH: It is actually 3.77 per cent.

PN220

THE COMMISSIONER: I beg your pardon, 3.77.

PN221

MR SMITH: That is correct. That is predicated on the calculation that, in fact, you have just asserted as far as appendix A, part 2 is concerned. That is the $18 on top of the base rate of 477.70 multiplied by 100 over 1.

PN222

THE COMMISSIONER: Well, why do you - well, that is a different equation. $477 is a different amount of money than the equation we just undertook.

PN223

MR SMITH: It is, yes. Mr Commissioner needs to understand that these appendices do stand alone. In respect to appendix A, part 2 we are talking about the substantive classification being a piece worker that attracts a piece work rate of 25 per cent and that fundamentally sets the wage standard for that worker. They are not all piece workers in appendix A, part 2, but the substantive nature of work is, in fact, piece work. In respect to appendix A, part 3, again whilst they are bush workers, it sets out specifically rates with supplementary payments and not those incorporating a piece work rate.

PN224

Until one does, the actual substantive calculations in the latter part of appendix A, part 3 which sets out all the piece work provisions for the variable type of bush that these workers are in. So therefore, the calculation in respect to appendix A, part 3, is different because it is not the actual piece work rate that is used. It is not incorporated within the classifications of 1 to 5 within appendix A, part 3. The actual piece work loading is - - -

PN225

THE COMMISSIONER: Well, what is - - -

PN226

MR SMITH: - - - done independently by means of a substantive number of our rates, subject to the nature of the bush and the timber that is extracted.

PN227

THE COMMISSIONER: I hear what you say. What would help me is if we could actually now do the formula that gives the 3.77 per cent, please.

PN228

MR SMITH: I am sorry, the - - -

PN229

THE COMMISSIONER: If you take me through the formula, please.

PN230

MR SMITH: It is based on the class 1 base rate in 2001, which was $477.70.

PN231

THE COMMISSIONER: So the class 1 base rate from the - from where?

PN232

MR SMITH: From the 2001 - - -

PN233

THE COMMISSIONER: Class 1 from which part of the award?

PN234

MR SMITH: Appendix A, part 3.

PN235

THE COMMISSIONER: A, part 3 in 2001 was 400 and - say again?

PN236

MR SMITH: 77. $477.70.

PN237

THE COMMISSIONER: Right. Now - so it is $18 over 477.70, is that right?

PN238

MR SMITH: That is correct, which derives 3.77 per cent.

PN239

THE COMMISSIONER: So in other words, what is at stake here is whether or not that is the key classification in appendix A, part 3. That would seem to be the issue.

PN240

MR SMITH: That is correct, Mr Commissioner, and - - -

PN241

THE COMMISSIONER: Yes, would you accept that, Ms Williams, that that is the issue?

PN242

MS WILLIAMS: Yes.

PN243

THE COMMISSIONER: Right. So that, Mr Smith, is it asserted likewise to the situation in relation to the key classification in appendix A, part 2 that historically classification 1 is the classification which has been used for the purpose of safety net adjustments? Did you hear me, Mr Smith?

PN244

MR SMITH: I am sorry, Commissioner.

PN245

THE COMMISSIONER: Did you hear me?

PN246

MR SMITH: No, I didn't.

PN247

THE COMMISSIONER: I beg your pardon. I will repeat myself. I may have just moved back from the microphone. Is it asserted in the same way that it was in relation to appendix A, part 2 that historically the key classification in appendix A, part 3 has been classification 1 and that that has been used for the purposes of the formula in the furnishing trades award in applying safety net adjustments in the past?

PN248

MR SMITH: Yes, Mr Commissioner, that is correct, but not as a substantive history as the appendix A, part 2. Of course appendix A, part 3 is in the context of the overall award and appendices, is a fairly recent appendix to the award. I am talking in the context of perhaps under 20 years. But, again, the employer parties have always identified that to be the key classification, which - - -

PN249

THE COMMISSIONER: Well, when you - don't worry about what happened more than 20 years ago. Could I ask you this, has it been the key classification used for the purpose of the application of safety net adjustments since 1 January, 1997?

PN250

MR SMITH: Yes, it has, sir, Mr Commissioner. I would like the opportunity to qualify something at some stage. In relation to - there seems to be a strong inference that, of course, that this is the union's position in relation to - these are the key classifications because of some instigation on our part, deeming them to be the key classification. That is not the case, of course. These are key classifications, because that is what has ultimately been determined between the parties, but not necessarily at the request or behest of the union.

PN251

It is just an accepted practice and clearly we may at some stage in the future, want to argue why these aren't the appropriate key classifications, but for the sake of this exercise, this recent history, for the application of the principles, it has been driven by the agreement by the parties. And, in particular, the historical position of the TTIA, who have insisted, who have insisted that in respect to appendix A, part 2 that that is the formula and that is the key classification.

PN252

Because the TTIA have now recent acquisitions in respect of those who are responsible for the interest of those employer members of the TTIA, because they are a recent acquisition, they failed to understand what has been those historical agreements and, in particular, because the recent - the most recent parties of TTIA or the responsible officers of the TTIA, have done an industrial coup on their predecessors, they left behind all the documentation, all the history of the understandings and the agreements.

PN253

And obviously we can't be held accountable for the industrial coups that occur within the employer parties, but I do take some umbrage that when it then suits them, that they can have a recent engagement of employees who then want to change the course of history by changing the actual agreed understandings that constitute key classifications and we would argue most strenuously that, in fact, we haven't departed from the principles. The principles are not set out that one size does fit all. It doesn't mean to say that a tradesperson's rate, in all circumstances, is the appropriate rate. As I said before, that is the case in relation to the main body of the award - - -

PN254

THE COMMISSIONER: Well, I have noted those submissions.

PN255

MR SMITH: - - - but that is clearly different in respect to the appendices.

PN256

THE COMMISSIONER: Thank you, I have noted those submissions. My concern, of course, is to appropriately apply the principles which are set out in the current statement of principles of the Commission contained in the May 2002 safety net review of wages decision. And whilst I appreciate that there may be a background to the reasons for the way in which the provisions of appendix A have been dealt with for the purposes of applying safety net adjustments in the past, my principle concern is to establish that as a matter of history, this is what has been done rather than to delve into the details of the reasons for which it has been done.

PN257

The issue I think comes down to whether or not it is appropriate under the current statement of principles to adopt the key classifications, which have apparently been utilised in the past and certainly since the current form of the legislation was enacted and came into force for the purpose of this adjustment. It is not actually a very broad issue. Ms Williams, I do not think you need to respond to what Mr Smith has said about why it is that the TTIA adopts a particular position.

PN258

It is open to it to do so. It is open to the association to submit that the appropriate course of action, which should be taken by the Commission on this occasion, is the one that you are submitting and I think I have already indicated that my concern is not so much with the reasons why things were done from the point of view of the parties. From the Commission's perspective, it is more to do with what was actually done. So that my interest is really just to establish what the historical situation actually was and I guess what I would like to hear from you about in that respect is the submission made on behalf of the CFMEU, that in appendix A, part 3, classification 1 has been used for the purposes of the furnishing trades formula. Is that submission contested?

PN259

MS WILLIAMS: No, Commissioner.

PN260

THE COMMISSIONER: All right. So that in relation to appendix A, part 3, the question for me to determine is should it be classification 1 in that appendix or in that part of appendix A, or classification 5 in the main body of the award. I think that is the question, isn't it? I note the parties confirm that. Would the other employer organisations wish to say anything about those two - the way I have posed the two question that have to be determined by the Commission?

PN261

MS BROOKS: No, we have nothing to add, Commissioner.

PN262

THE COMMISSIONER: Very well. Mr Eberhard.

PN263

MR EBERHARD: No, Commissioner, I think you have summarised the situation as to what we need to determine to then proceed in regards to what then needs to be applied to the actual rates, to finalise the order itself. If the Commission pleases.

PN264

THE COMMISSIONER: Very well.

PN265

MR SHEEHAN: Commissioner, Michael Sheehan, Business SA. Appendix A, part 2 and 3 don't really apply in our particular case. We don't have any particular position on the matter, but the approach that you have taken, the position that you have taken, we would go along with, Commissioner, thank you.

PN266

THE COMMISSIONER: Now, I have communication from TTIA that in light of the desire on behalf of that organisation to present this position to the Commission for consideration in relation to the application of the safety net adjustment and the need to deal with it, and in light of the delay to the potential variation of the award by the need for such hearings and deliberations, that it has no objection to whatever the Commission decides should be the appropriate adjustment in the two parts of the appendix concerned operating from the same date as the date of operation of the order made by the Commission in relation to the main body of the award.

PN267

And that is recorded in a facsimile addressed to myself on 31 May, 2002. The parties will no doubt be aware that I have actually signed an order varying the main body of the award and varying all of the rates and allowances, with the exception of those under consideration here today and that order - that order came into force on and from 31 May, 2002. I should indicate that I decided to adopt the day in light of the fact that some delay occurred inevitably to the application of the safety net adjustment, although it was only a matter of days beyond the expiry of the 12 months from the day on which the award was last varied, rather than the full pay period in order to accommodate the hearing of this matter.

PN268

For the purposes of consideration of whether or not the order, which will arise from my decision of the issues in this matter, should operate from that day. That is to say, should there be a common day of operation. Could I hear from Ms Brooks. Do you have members affected by this, Ms Brooks?

PN269

MS BROOKS: We have very few members affected by this particular part of the award, Commissioner, but in terms of the circumstances that have arisen, we would consent to an operative date similar to that in the main body of the award, the 31st, for consistency and ease of application.

PN270

THE COMMISSIONER: Thank you, very much. Mr Sheehan, I gather that doesn't apply to you?

[12.43pm]

PN271

MR SHEEHAN: It doesn't apply to us, sir, but we would go along with those submissions of the operative date being from 31 May. Thank you, sir.

PN272

THE COMMISSIONER: Thank you, Mr Sheehan. Mr Eberhard.

PN273

MR EBERHARD: Commissioner, if the Commission satisfies itself that exceptional circumstances exist with respect to this particular application, we would not be opposing any operative date being made at an earlier date that today's hearing.

PN274

THE COMMISSIONER: Good, thank you. I should inform the parties, however, in light of that encouraging convergence of views, that there is one step that will have to be taken to enable that to occur. Under the Commission's statement of principles, principle 10 is applicable to such a step. I will have to refer the matter to the President and I think procedurally, given that the union seeks the retrospective operation of whatever order I decide upon as a result of today's date, Mr Smith, that I refer the matter to the President on your application.

PN275

MS SMITH: Yes, Mr Commissioner, thank you.

PN276

THE COMMISSIONER: Very well. Now, I think I have identified the issues for decision. Is there anything that anybody wishes to say in support of any particular outcomes that hasn't already been said? No. Very well, then, I will reserve my decision in relation to the adjustments to appendix A, parts 2 and 3. I will refer the matter to the President in relation to the proposal for a retrospective date of operation and I will advise the parties as soon as practicable of the outcome of my deliberations. Thank you.

ADJOURNED INDEFINITELY [12.44pm]