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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 VT10298
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION
DEPUTY PRESIDENT IVES
C2003/1068
C2003/1069
C2003/1070
AERIAL AGRICULTURAL AVIATION PILOTS
AWARD 1999
HELICOPTER PILOTS (GENERAL AVIATION)
AWARD 1999
PILOTS (GENERAL AVIATION) AWARD 1998
Applications under section 113 of the Act
by Australian Federation of Air Pilots to
vary re loss of licence insurance and the
Safety Net Review - Wages May 2002 decision
MELBOURNE
10.03 AM, MONDAY, 31 MARCH 2003
PN1
MR S. LUTTON: I appear for the Australian Federation of Air Pilots.
PN2
MR J. HOY: I appear for the Australian Industry Group.
PN3
MR P. MACKAY: I appear for the Aerial Agricultural Association.
PN4
MR P. HURST: I appear for the Aerial Agricultural Association also.
PN5
THE DEPUTY PRESIDENT: Mr Lutton, is it your desire that we hear these applications or did you want to do this separately or how did you want to go forward?
PN6
MR LUTTON: I think it might be a little bit simpler if we do it together. There would be a fair amount of repetition otherwise.
PN7
THE DEPUTY PRESIDENT: Well, we can do without that. So that is fine by me. Thanks, Mr Lutton.
PN8
MR LUTTON: If the Commission pleases, I propose to deal with the three matters before you today by, firstly, outlining the nature of the applications and orders for substituted service, dealing with the issues of service, thirdly, covering the employer responses to the applications, fourthly, making a very brief submission in relation to the $18 per week safety net adjustment and, finally, providing some detail as to the basis of for the increase in the loss of licence reimbursement amount.
PN9
The application was made by the federation on 25 February 2003 to vary three simplified safety net awards in similar terms: C2003/1068, the Aerial Agricultural Pilots Award 1999, C2003/1069, Helicopter Pilots (General Aviation) Award 1999, C2003/1070, Pilots (General Aviation) Award 1998. The applications and the awards to which they refer cover, obviously, aerial agricultural pilots, helicopter pilots and general aviation pilots. The applications for each award are primarily in two parts, firstly, implementing the May 2002 safety net adjustment of $18 per week and, secondly, increasing the loss of licence reimbursement allowance from $700 to $1000.
PN10
The federation also applied for orders of substituted service and requested sufficient time as to effect such service for each of the respective awards. The substituted service orders received on 3 March 2003 specified service upon the significant employer associations covering this part of the aviation industry, the Australian Industry Group and the Northern Territory Chamber of Commerce and Industry, being common to each of the variations, the larger or better known employers for each respective award and, thirdly, the placement of a notice in the aviation section of the Friday edition of The Australian newspaper in order to notify other respondents and the industry generally.
PN11
In relation to service, on 7 March 2003, the federation faxed each of the parties named in the respective orders for substituted service, firstly, a cover letter, a copy of the order for substituted service, a notice of hearing and a notice of listing and a full copy of the relevant application or applications, if they were receiving more than one. On 14 March 2003, a notice appeared in the aviation section of The Australian newspaper in accordance with the notice for substituted service and in line with custom and practice for previous safety net adjustments.
PN12
If the Commission pleases, I am able to tender facsimile receipts dated 7 March 2003 with each of the named parties highlighted, a full copy of the documentation faxed to each party and a copy of the notice that appeared in The Australian on 14 March 2003 referring to each of the awards. I have written the respective C number and award, Aerial Agricultural, Helicopter, and General Aviation, on the front of each set of documents evidencing correct service.
PN13
THE DEPUTY PRESIDENT: I might mark this just as a bundle of documents if you have no objection to that, Mr Lutton, and I will mark it A1.
PN14
PN15
MR LUTTON: The federation received the following written responses following service of the documents from - and this is in chronological order - on 14 March 2003, the federation received a faxed inquiry from Ms Barbara Roberts, IR Adviser at the Northern Territory Chamber of Commerce and Industry regarding C2003/1069 and C2003/1070, inquiring as to the basis for the increase in loss of licence allowance and seeking clarification that the variation did not delete clause 30.4.3 of the Pilots (General Aviation) Award 1998.
PN16
In addition to a telephone discussion, I responded in writing to Ms Roberts on 17 March 2003 confirming the basis for the loss of licence reimbursement increase and that it was our intention that clause 30.4.3 not be affected by this variation. On 25 March 2003, the federation - - -
PN17
THE DEPUTY PRESIDENT: Just for my information, Mr Lutton, what is 30.4.3?
PN18
MR LUTTON: It is an additional clause for the loss of licence. It was an oversight on our behalf when we were changing the variation. It is an additional one that covers flight instructors and it allows for the partial reimbursement to the employer should a pilot leave within one year of them actually paying the allowance and it is our intention that that remain in place. And I have put the draft orders to that effect so that it cleared that issue up.
PN19
THE DEPUTY PRESIDENT: Thank you.
PN20
MR LUTTON: On 25 March 2003, the federation received a letter from Mr Phil Hurst, Executive Officer at the Aerial Agricultural Association of Australia Limited. Mr Hurst suggests that the Aerial Agricultural Association of Australia does not object to the safety net adjustment but puts a compelling submission regarding the timing of the loss of licence increase in light of the drought currently affecting the industry. In essence, the AAAA raised a strong capacity to pay argument regarding the aerial agricultural industry at present.
PN21
The federation has held discussions with Mr Hurst and Mr Mackay from the AAAA and support that the matter of increasing the loss of licence allowance under C2003/1068 be deferred to a later date based on further discussions between the parties and relief from the drought. I have adjusted the draft orders in regard to C2003/1068 to reflect this agreement between the parties. Thirdly, on 27 March 2003, the federation received a letter from Chris Ridings, Consultant at EMA Consulting, on behalf of CHC Helicopters, regarding C2003/1069, variation to the Helicopters Award. Mr Ridings confirmed CHC supports the application.
PN22
THE DEPUTY PRESIDENT: Yes. I might just add that I also have on file a letter to the Commission from Mr Ridings of EMA Consulting to similar effect. It states that Mr Ridings acts as an agent on behalf of the Lloyd Helicopter Group trading as CHC Helicopters and advises that they support the union's application, although will not be appearing in the Commission. Thank you.
PN23
MR LUTTON: If the Commission pleases, I am able to tender copies of each of the correspondence that I have previously referred to.
PN24
THE DEPUTY PRESIDENT: Yes. Again, I might mark this as a bundle of correspondence, Mr Lutton, and I will mark it as A2.
PN25
PN26
MR LUTTON: I should also note that I also had discussions with Ms Suzanne Phillips from the Australian Industry Group in Sydney. In particular, Ms Phillips sought clarification as to the basis for the increase in the loss of licence insurance from $700 to $1000. I advised her that it is in relation to real increases in the cost of insurance in line with the reimbursement allowance under clause 5(a) of the statement of principles. I undertook to provide Ms Phillips with additional detail as to the basis for the increase but was unable to collate the information before now, as I was unexpectedly required to travel to Adelaide last week.
PN27
If the Commission pleases, I will just deal with the issue of the safety net adjustments for the three variations.
PN28
THE DEPUTY PRESIDENT: Yes.
PN29
MR LUTTON: In regard to the $18 per week Safety Net decision 2002 aspect of each variation, the federation makes the following submission:
PN30
(1) the application for wage increases is in accordance with the 2002 Safety Net decision for an $18 per week increase and the statement of principles;
PN31
(2) we seek operation for each of the awards from today's date;
PN32
(3) each of the awards was last varied for the 2001 safety net adjustment before Commissioner Eames on 27 March 2002 in Melbourne and the federation gives and has included in each of the applications a specific commitment regarding absorption of the increase as specified in the statement of principles for each of the awards.
PN33
THE DEPUTY PRESIDENT: Do you have drafts, Mr - - -
PN34
MR LUTTON: Yes, we do. I have got a disk and copies of the draft orders.
PN35
THE DEPUTY PRESIDENT: Did you intend to hand those up at the moment?
PN36
MR LUTTON: I am happy to tender those now.
PN37
PN38
MR LUTTON: In relation to the second part of each of the applications, the increase in the loss of licence reimbursement allowance, the federation makes the following submission. Firstly, in regard to C2003/1068 the federation accepts the Aerial Agricultural Association's written submission regarding the effect of the drought and the industry's current capacity to pay and possible effects on employment. On this basis I have prepared draft orders that only include the safety net adjustment 2002 for C2003/1068, the Aerial Agricultural Award.
PN39
Secondly, in regard to C2003/1069 and C2003/1070, the Helicopter and GA Awards, the federation submits the application is in line with the Safety Net Review - Wages May 2002 decision [PR002002] statement of principles 5(a), which states:
PN40
Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time, where appropriate, to reflect relevant changes in the level of such expenses.
PN41
The federation notes that there has been no objection to the increase from employers with EMA on behalf of CHC Helicopters supporting the application. There has, however, been a request to detail how the movement from $700 to $1000 has been arrived at, which I will deal with now. In terms of background, the Helicopter Pilots (General Aviation) Award 1999 and the Pilots (General Aviation) Award 1998 provide for the loss of licence insurance reimbursement allowance at clause 16.2 and clause 30.4 respectively.
PN42
The awards provide for, in the case of the Helicopter Award, either the provision of loss of licence insurance by the employee, in which case the employer reimburses the employee up to a maximum of currently $700 upon production of a receipt and the employer provides equivalent coverage to their pilots through a group insurance scheme if that is the process that is elected by the pilot. If the employee elects to provide their own insurance coverage, it should be noted that the employer only reimburses up to the maximum of $700. Fourthly, the awards were last varied to the current rate of $700 before Deputy President Acton effective 25 February 1997, in essence, over six years ago.
PN43
If the Commission pleases, I am able to tender copies of the variations for the last loss of licence allowance increases to $700 effective 25 February 1997.
PN44
THE DEPUTY PRESIDENT: Yes, I won't mark this, Mr Lutton. It is a document of the Commission.
PN45
MR LUTTON: It should also be noted that all current federation certified agreements provide for loss of licence insurance reimbursement or the provision of an equivalent company provided scheme and have the reimbursement maximum set at over $1000 with some well in excess of this amount, such as the recent Virgin Blue EBA set at $2300 and the Eastern Australia Airlines, Southern Australia Airlines and Sunstate Airlines reimbursement set at a maximum of $1400 plus GST.
PN46
In regard to the basis for the current application, the federation is aware of two schemes under which a pilot can obtain private loss of licence insurance. These are, firstly, the Australian Air Pilots Mutual Benefit Fund or MBF scheme and, two, the Professional Aviators Association Incorporated Loss of Licence Scheme or Professional Aviators Scheme. In relation to the MBF scheme, while there has been a number of changes, such as the reduction of five joining age categories to four categories and the minimum insurance amount to $100,000, it is still possible to compare the 1996/97 MBF rates to the 2003 MBF rates.
PN47
If the Commission pleases, I am able to tender copies of the MBF 1996/97 contribution scale and the MBF 2003 contribution scale, last year's and this year's rates from the Professional Aviators Scheme and a memo from Regional Express Airlines management that I intend to refer to in relation to dramatic increases in the insurance rate where the employer provides pilots with coverage.
PN48
THE DEPUTY PRESIDENT: Again, are you satisfied that this be marked as a bundle of documents?
PN49
PN50
MR LUTTON: Probably the most striking thing about the changes in the MBF scheme is that in 1997 the maximum that a pilot could be insured for ranged from a premium cost of $594 to $919.80 for a pilot who joined the scheme before 38 years of age - I am reading essentially down the columns, the first one joining age under 38.
PN51
THE DEPUTY PRESIDENT: Yes. I am assuming - yes, they have copies at the bar table. Thank you.
PN52
MR LUTTON: $554.80 to $780.40 for a pilot who joined the scheme aged 38 to 39, $660 to $729 for a pilot who joined the scheme aged 40 to 44 and, obviously, it goes along for the five different joining age categories. Clearly, the amount a pilot could pay for maximum insurance was between $500 and $1050. At this time the maximum reimbursable was $700. Now under the MBF scheme, the premium cost for maximum insurance ranges from $847 to $1980, which is, in essence, the contribution scale on the next page.
PN53
To be fair, the maximum amounts payable in the case of loss of licence have increased significantly but when compared overall and offset against the MBFs 1997 policy of providing the first 20 per cent of the maximum insurable at just $1 per $1000, we believe that the increase from $700 to $1000 maximum reimbursement is warranted and justified. In the case of the Professional Aviators Scheme, the comparison is a lot clearer and over one year. In the 2001/2002 year, we are advised that a unit of loss of licence insurance cost $228.64. In 2002/2003, a unit of insurance costs $364.98. In essence, this is a 59 per cent increase in just one year.
PN54
Finally, in regard to the second option under the award, where the employer provides insurance to a group of pilots, the memo from Regional Express sheds some light on the issue. It shows that in light of dramatic premium increases, Regional Express had to change insurers and even after locating the most competitive insurer, the per pilot cost is $1750 and that, depending on movements in or out of this policy, the rate may change. That issue is detailed on the first page of the Regional Express memo at about paragraph number 5, bottom line.
PN55
This memo is consistent with recent discussions we have had with employers regarding the dramatic increase in insurance cost at Jayrow Helicopters, Air North Regional and just last week from a GA operator in Adelaide, who advised that QBE Insurance was quoting $1700 per annum to insure a pilot for $40,000 in the case of loss of licence. Overall, we believe that a change in the maximum reimbursement for loss of licence insurance from $700 to $1000 is in line with the statement of principles, clause 5(a), and we would ask the Commission approve the variation with effect from today's date. If the Commission pleases.
PN56
THE DEPUTY PRESIDENT: Thanks, Mr Lutton. Mr Hoy.
PN57
MR HOY: Thank you, your Honour. Australian Industry Group does not oppose the application by the Federation of Air Pilots in respect to the safety net adjustment and its date of effect from today's date. However, as was pointed out, we had requested details of the calculation in respect to the loss of licence, which we have now been given but I would ask that we be given seven days to look at that and respond to the association. We would be - subject to us satisfying ourselves that that is correct, your Honour, we would then notify the Commission that we do not oppose the increase.
PN58
THE DEPUTY PRESIDENT: Yes. Would you see under the circumstances that that increase would have effect from when, Mr Hoy?
PN59
MR HOY: From the date of the order, which has been made for today's - or the application has been made for today's date.
PN60
THE DEPUTY PRESIDENT: Yes. Thank you. Mr Mackay.
PN61
MR MACKAY: I will let Mr Hurst speak to that.
PN62
THE DEPUTY PRESIDENT: Yes. Mr Hurst.
PN63
MR HURST: Your Honour, thank you. Very simply, the Aerial Agricultural Association does not oppose the safety net adjustment at all. We support that. We do note, however, that the arrangements in the award for aerial agriculture are essentially split into two parts where there is a base rate of pay essentially referred to as the retainer, and that is the component that we are dealing with in the safety net adjustment, and then on top of that there is a further requirement in the award for an air ag pilot to be paid an additional percentage rate of the charge-out rate of the aircraft. That leads to other issues arising such as the, if you like, almost automatic indexation of that component of the salary.
PN64
The commission part of the salary actually means that the ag pilot is earning in a normal season, a season when there is work around, a wage well above what is contained in the base rate but, as I said, that is a footnote rather than an argument for or against. So we do support the safety net adjustment. We have asked AFAP to request a deferment of the loss of licence adjustment simply because of the conditions that our members and operators and pilots are experiencing at the moment with the drought, where there is simply no work.
PN65
In the case of rice season just finished, plantings were down 90 per cent and in most cotton valleys plantings have been down between 60 and 80 per cent, leading to a considerable lack of work for our industry; hence, the request for a deferment.
PN66
THE DEPUTY PRESIDENT: That is an agreed circumstance, as I understand, isn't it?
PN67
MR HURST: Yes, it is, your Honour.
PN68
MR LUTTON: It is, your Honour.
PN69
THE DEPUTY PRESIDENT: And that is also reflected in the draft orders.
PN70
MR LUTTON: Yes, it has been, your Honour.
PN71
MR HURST: Thank your Honour.
PN72
THE DEPUTY PRESIDENT: Thanks, Mr Hurst. Mr Mackay, did you have anything further to add?
PN73
MR MACKAY: No, I would only repeat.
PN74
THE DEPUTY PRESIDENT: Mr Lutton.
PN75
MR LUTTON: In relation to the request from the Australian Industry Group to be provided with seven days to essentially look at the costs of loss of licence insurance, we have no objection to that. We would ask that the Australian Industry Group, while doing that research, notify us if they come across a fund that is prepared to cover a group of pilots for less than the amount of reimbursement that we have required because in our investigations we weren't able to come up with one and we would welcome them being able to do so.
PN76
MR HOY: I am happy to accept that request, your Honour.
PN77
THE DEPUTY PRESIDENT: Thanks, Mr Hoy. I can indicate to the parties that the application in respect to the three awards will be granted and the awards will be varied in accordance with the drafts provided and marked as A3, A4 and A5 respectively, save and except for a period of seven days to be available to the Australian Industry Group to enable investigations to be made into the provision relating to loss of licence insurance to satisfy themselves that the variation as provided for in the draft is appropriate in all of the circumstances.
PN78
At the end of the seven day period or upon notification from the AI Group, whichever is the earlier, the orders will be made and the awards in each case will come into force from the first pay period to commence on or after 31 March 2003 and will remain in force for a period of six months. Anything further?
PN79
MR LUTTON: No, your Honour.
PN80
THE DEPUTY PRESIDENT: Thank you. The matter is adjourned.
ADJOURNED INDEFINITELY [10.30am]
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