C2003/2508, Transcript of Proceedings [2004] AIRCTrans 1808 (17 May 2004)

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TRANSCRIPT OF PROCEEDINGS


O/N 7088

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

JUSTICE GIUDICE, PRESIDENT
VICE PRESIDENT ROSS
VICE PRESIDENT LAWLER
SENIOR DEPUTY PRESIDENT MARSH
SENIOR DEPUTY PRESIDENT LACY
COMMISSIONER LARKIN
COMMISSIONER GRAINGER

C2003/2508, 2845, 2846
6230, 6231, 6232, 6233,
6318, 6320, 6321, 6348,
6455, 6456, 6457, 6458,
6527, 6563, 6570, 6741
and 6742

CLOTHING TRADES AWARD 1999

HORSE TRAINING INDUSTRY
AWARD 1998

TIMER AND ALLIED INDUSTRIES
AWARD 1999

GROCERY PRODUCTS MANUFACTURE
- MANUFACTURING GROCERS AWARD 2003

COMMERCIAL SALES (VICTORIA)
AWARD 1999

RUBBER, PLASTIC AND CABLE MAKING
INDUSTRY - GENERAL - AWARD 1998

STORAGE SERVICES - GENERAL -
AWARD 1999

VICTORIAN LOCAL AUTHORITIES
AWARD 2001

CLERICAL AND ADMINISTRATIVE
EMPLOYEES (VICTORIA) AWARD 1999

RETAIL AND WHOLESALE INDUSTRY -
SHOP EMPLOYEES - AUSTRALIAN
CAPITAL TERRITORY - AWARD 2000

TRANSPORT WORKERS AWARD 1998

THE HOSPITALITY INDUSTRY -
ACCOMMODATION, HOTELS,
RESORTS AND GAMING AWARD 1998

BUILDING SERVICES (VICTORIA)
AWARD 2003

CHILD CARE INDUSTRY (AUSTRALIAN
CAPITAL TERRITORY) AWARD 1998

LAUNDRY INDUSTRY (VICTORIA)
AWARD 1998

HEALTH SERVICES UNION OF
AUSTRALIA (ABORIGINAL AND
TORRES STRAIT ISLANDER HEALTH
SERVICES) AWARD 2002

VEHICLE INDUSTRY - REPAIR,
SERVICES AND RETAIL AWARD 2002

VEHICLE INDUSTRY AWARD 2000

METAL, ENGINEERING AND ASSOCIATED
INDUSTRIES AWARD 1998 - PART 1

GRAPHIC ARTS - GENERAL - AWARD
2000

Applications under section 113 of the Act
by Textile, Clothing and Footwear Union of
Australia and Others to vary the above
awards re increases to minimum wages
and work related allowances and Safety
Net Review 2004

MELBOURNE

10.00 AM, WEDNESDAY, 5 MAY 2000

Continued from 26.3.04

PN3400

JUSTICE GIUDICE: The Australian Council of Trade Unions has made a claim for a flat dollar adjustment of $26.60 in safety net award rates of pay, with commensurate adjustments in wage related allowances. The claim is underpinned by a number of union applications pursuant to section 113 of the Workplace Relations Act to vary certain awards. The applications were filed in November and December 2003.

PN3401

All employer parties and interveners opposed the claim. The Australian Chamber of Commerce and Industry's primary submission was that the Commission should award an increase of no more than $10 per week in award rates up to and including the level of the tradeperson's rate in the Metal Industries Award - $542.20 per week. The Australian Industry Group proposed an increase of $10 per week in all award rates. Most of the other employer parties supported increases of similar magnitude to those proposed by ACCI and AIG respectively.

PN3402

The Commonwealth Government supported ACCIs position. All of the State and Territory Governments supported an increase of $20 per week in all award rates. Since our last decision in relation to the Safety Net growth in non farm Gross Domestic Product has remained strong. Farm GDP in the year to December 2003 grew by 21.1 per cent, reflecting the recovery in many areas of the rural economy from the drought conditions which had contributed to major declines in farm production over recent years. GDP overall increased by 3.5 per cent in the year to December 2003.

PN3403

During the last 12 months private investment continued to grow strongly with the exception of dwelling investment which is declining from the very high levels recorded in previous years. Imports continued to grow strongly and exports declined slightly. Inflation, as measured by the Consumer Price Index, was 2.4 per cent in December 2003, down from 3 per cent in December 2002. Unemployment has crept steadily lower, standing at 5.6 per cent in December last year. Employment, particularly full time employment, showed encouraging growth.

PN3404

Productivity increased at satisfactory levels. GDP per hour worked in the market sector grew by 3.2 per cent during 2003. Profits remain at high levels. Despite differences between the parties concerning the proper method of measuring the profit share, no one suggested that the share of total factor income is attributable to profits is a serious obstacle to a safety net adjustment. We have discussed movements in various earnings measures in our reasons for decision. During the past year all of these measures recorded significant movement.

PN3405

Average annual wage increases per employee under certified agreements were around 4 per cent, on the most recent figures available at the time of the hearing. The most direct measure of changes in wage costs for a particular position, the Wage Cost Index, increased by 3.6 per cent over the year. In relation to the economic outlook, the Australian economy is expected to continue to perform well throughout the 2003-04 financial year with GDP forecast to increase by 3 and three-quarter per cent compared with the budget estimate of 3 and one-quarter per cent. It is expected that employment will continue to grow and unemployment will reduce further.

PN3406

There are some areas of risk, including the potential inflationary effects of the rise in the Australian dollar, the pace at which parts of the rural economy recover from drought, and the exposure of the manufacturing sector to exchange and interest rate movements and global capacity. Overall there are grounds for optimism that the economy will perform strongly in the immediate future. While activity in the domestic housing sector has reduced and is likely to reduce further, in light of the views expressed by the Reserve Bank of Australia on the dangers of overheating in that sector, we regard the overall effect of the slow down as neutral.

PN3407

As the Commission has done in safety net review decisions in recent years, we have had regard to the fact that substantial safety net adjustments may have some negative effects on employment in those sectors of the economy in which a high proportion of the workers are award reliant. The Commission is obliged to take into account the desirability of attaining a high level of employment. While this is an important issue we think that economic conditions generally, including the level of domestic demand, indicate that a significant increase is sustainable on this occasion.

PN3408

The limited arguments and materials advanced in this case for the proposition that past safety net adjustments have had a significant negative effect on employment were unconvincing. We also consider that any potential negative effects must be weighed against the real benefits of safety net adjustments for the employees who depend upon them for increases in wages, particularly low paid employees. We affirm the view stated in the Safety Net Review Wages May 2002 decision and repeated in last year's decision that in the normal course of reviewing the safety net the Commission should seek to maintain a safety net of fair minimum wages for all employees.

PN3409

We are not persuaded that a departure from that course is warranted on this occasion on economic, equity or other grounds. We have decided not to cap the adjustment. Since no party sought a percentage adjustment we have determined to award a dollar amount at all classification levels. Last year a number of factors, including the persistent drought and the need to consider the needs of the low paid, led the Commission to award a two-tier increase of $17 and $15. On this occasion we see no need for a reduction in the dollar increase at any level.

PN3410

Several parties, in particular the Commonwealth, submitted that the ACTU claim ignores the requirement for the Commission to establish a genuine award safety net and encourage work place bargaining. As the Commonwealth point out, in a previous decision the Commission has recognised that increases in award wages have the potential to influence the speed at which agreement making is taken up. This is a factor to be taken into account in assessing the parties proposals. On the other hand, no one would suggest that all employees are capable of bargaining.

PN3411

Bargaining is not a practical possibility for employees who have no bargaining power. It is to be inferred from the statutory scheme that the award safety net should be adjusted with the interests of these employees in mind. Furthermore, safety net adjustments in recent years have been accompanied by a steady growth in the number of employees covered by agreements. Taking all of the material and submissions into account, including the material relating to costs, we have decided to award an increase of $19 per week in all award rates.

PN3412

The Commonwealth submitted we should give consideration to delaying our decision until after the Commonwealth Treasurer's release of the Budget for 2004-05 on 11 May 2004. The purpose of the delay was said to be to enable the Commission to be informed by up-to-date Treasury information on the national economic outlook. The Commonwealth estimated that any delay in implementation of the decision would not be significant. As is now apparent we did not consider that course desirable on this occasion. We are not as confident as the Commonwealth that any delay would be short and of limited effect.

PN3413

Experience suggests that once submissions are reopened, delays tend to be substantial because of the nature of the safety net reviews and the range of interests entitled to make submissions. We have dealt in our reasons for decision with an ACCI proposal that the Statement of Principles be altered to provide that the operative date of any variation arising from a safety net review should be 28 days from the date the order is made. We have decided not to adopt the proposal.

PN3414

Except where permitted by the Statement of Principles, the increase will be available from a date no earlier than 12 months after the increase is provided for in the May 2003 decision in the award in question. Other proposals to alter the Statement of Principles are also dealt with in our reasons for decision. Consistent with our decision the federal minimum wage will be increased by $19 to $467.40 per week. We now publish our reasons for decision.

ADJOURNED INDEFINITELY [10.12am]