AG2005/5711, Transcript of Proceedings [2005] AIRCTrans 2513 (12 December 2005)

TRANSCRIPT OF PROCEEDINGS

---

Workplace Relations Act 1996 13568-1

COMMISSIONER HOFFMAN

AG2005/5711

APPLICATION BY CALTEX REFINERIES (QLD) LTD & THE AUSTRALIAN WORKERS’ UNION
s.170NA(1) - Conciliation in respect of Agreements
(AG2005/5711)

BRISBANE

8.37AM, MONDAY, 28 NOVEMBER 2005

Continued from 1/9/2005

Hearing continuing

PN1

MR S WOOD: If the Commission pleases it's the intention of the union today to handle firstly some primary matters in relation to this arbitration. The union wants to advise the Commission that last Thursday a mass meeting was held for the employees to consider the agreement, minus the areas of arbitration and the two outstanding matters. The company, together with their legal counsel, met with the union on the Monday prior to the mass meeting to put together a document that they would consider. As I say, minus the two substantial matters that had to be arbitrated. The meeting was held at 7.30 on Thursday morning and the result was that 97 employees supported the agreement and 17 opposed the agreement.

PN2

It was the intention of the union to do it this way although it may not strictly confirm with the outline of the Act. We believe it was the appropriate course to take in terms of their earlier commitment to allow the Commission to arbitrate the two outstanding matters and the union wanted to have some confidence that in giving that commitment it wouldn't come back to the Commission and say that the agreement hadn't got up and we couldn't say with any real confidence the reason why it didn't get up was there could have been a re-think at least by some people about the commitment to private arbitration.

PN3

So when the arbitration is heard today, the Commission can be assured of the fact that whatever is arbitrated is incorporated in the agreement and the agreement is certified. There's no need for a second vote to be taken. So both from the company's point of view what I've been told and the union are quite happy with the result, we only have the outstanding matters now to be arbitrated. Before we call our witness and we've got one witness and we want to put to the Commission in relation to our submission one other issue.

PN4

We say that fundamental to this agreement now is the two outstanding issues. It's our submission that we have conceded every possible change there, but the two issues that stay in dispute are fundamental to the workings of this agreement. It's our submission that unless these two outstanding issues are not incorporated in the agreement, it's our view the agreement wouldn't work. The two issues are fundamentally that what we are calling is the BP clause that makes the company externally accountable to the Commission and sets down a number of issues to give the company the opportunity to rectify a problem if the problem arises and if a problem does arise, they've got ample opportunity to fix it, but as a last resort, if it can't be fixed, if the company cannot fix it or chooses not to fix it, we then can come to the Commission.

PN5

The second issue is in relation to the payment. It's incorporated in our submission that the concept of this payment was suggested by SDP Polites in the BP matter and it's not exactly what the union had argued then, but it certainly has been incorporated as our position in this. It gives some fairness both to the union and to the company, whereas it's our submission that the company's offer is that the fairness only goes one way and on that count we believe that the Commission should accept our two outstanding matters incorporated in our submissions.

PN6

The final thing before I call Mr Mark Field as a witness is that the union has had a small difficulty with this particular case because, as we all know, SDP Polites has since passed away, and the architect of the BP clause, Mr William Anderson has since retired. Coupled with trying to make this case as simple as possible, I'm the only one left who had direct knowledge of those details. Now, I provided an outline of our submissions to Freehills and the Commission on 17 November and in the last paragraph of those submissions we advised Freehills we were always acting on behalf of Caltex that I was prepared to make myself available for cross-examine on the main issues, being SDP Polites suggestion of payments and BP accountability clause, attachment J, and the disputes procedure, attachment K.

PN7

It's our intention to request that the Commission allow those submissions to make up what fundamentally is my witness statements on the basis that we've informed Freehills of our intention to do that and their ability to cross-examine me on any of that, if the Commission pleases.

PN8

THE COMMISSIONER: Yes, thanks, Mr Wood. Yes, Mr Downes?

PN9

MR H DOWNES: Thank you, Commissioner. In terms of the matters, I am assuming that they have been dispensed with in terms of leave for these proceedings.

PN10

THE COMMISSIONER: Yes, on the basis that they're a continuation for proceedings, nothing has changed.

PN11

MR DOWNES: Thank you. If the Commission pleases. Commissioner, as we see the proceedings, Caltex was very pleased to be informed of the outcome of the mass meeting and I must congratulate the delegate and Mr Wood on their efforts in securing that vote. That has enabled this arbitration to proceed to date. Our understanding of the proceedings would be that Mr Wood would present the AWUs case. Caltex would then present its case. Witness statements have been filed. Once Mr Wood and the AWU have completed the AWUs case, I have some opening submissions at that point in time and I will call each of the three witnesses to swear and affirm the witness statements. I don't propose to say anything more at this initial stage, Commissioner. That's how I understand the proceedings will run and on that basis the concern which the AWU had some time ago that this matter may run for a couple of days, I suspect that the matter may be finished, beyond the length of cross-examination today.

PN12

THE COMMISSIONER: Yes, thank you.

PN13

MR DOWNES: Commissioner, may I just confirm that the Commission has copies of all the witness statement and has a copy of the proposed agreement in the Commission file? Does the Commission have all of those?

PN14

THE COMMISSIONER: Yes. I take it it's the last document, despite there having been many. I trust it's the last version.

PN15

MR DOWNES: Yes. If the agreement which has as a header the words "Enterprise agreement proposed to be voted on by affected Caltex employees (other than disputed provisions in respect of which they agree to comply with it by recommendation by Commissioner Hoffman under section 111AA it's that document. That's the one which the parties will be working off today.

PN16

THE COMMISSIONER: If you've got a spare one it would be helpful because I can't see one with that heading attached to it. The last one I've got doesn't have that.

PN17

MR DOWNES: Commissioner, I will arrange for one to be made available as soon as possible.

PN18

THE COMMISSIONER: Yes, that's fine.

PN19

MR DOWNES: I think it would be handy for the Commission to have that before it.

PN20

THE COMMISSIONER: That's fine, thank you.

PN21

MR DOWNES: Thank you.

PN22

THE COMMISSIONER: Yes, Mr Wood?

PN23

MR WOOD: Is it possible to get a ruling from the Commission before I call Mr Field on the submission I made in relation to my submissions becoming part of our evidence by myself?

PN24

THE COMMISSIONER: Yes. Mr Downes, what's your position on that?

PN25

MR DOWNES: Commissioner, I have no intention of cross-examining Mr Wood. I accept that he's going to make submissions as outlined in his outline and to that extent they will be the submissions of the AWU. So I can take it no further than that if Mr Wood wishes to do it from the witness box or the bar table it's really his call. But in either event, if he does it from the witness box I do not intend cross-examining him.

PN26

MR WOOD: Well, the only issue that I raise and I know these aren't strictly legal proceedings, and that I'm thankful for, is that because there are two outstanding issues that have been incorporated from BP and SDP Polites. There was no other way of having that evidence admitted in to these proceedings unless I did it in that way. So if there's no objection to that, I understand that there's no cross-examination. All I respectfully ask the Commission to do is to, at least for those two components, have that entered in to as evidence by myself.

PN27

THE COMMISSIONER: Yes, well, on the basis that there's no objection or no intention to cross-examine if Mr Wood were to be in the box, then I will accept the submission he's made as being true and correct on his part. I don't have any reason to doubt what you say, Mr Wood. If you like I'll mark these submissions exhibit AWU1.

EXHIBIT #AWU1 SUBMISSIONS

PN28

MR WOOD: Thanks for that, Commissioner. Can I call then Mr Mark Field to the witness box.

<MARK ALLAN FIELD, SWORN [8.51AM]
<EXAMINATION-IN-CHIEF BY MR WOOD

PN29

MR DOWNES: Commissioner, may I just have a brief word with Mr Wood. Given the nature of the proceedings we have agreed that it's not necessary that the witnesses who are still to give evidence leave the Commission or vacate the Commission during the evidence that Mr Field is going to give and I thought I'd just make that agreement between us known to the Commission.

PN30

THE COMMISSIONER: Yes, in the circumstances I will allow that to occur in this particular matter. It is a matter of agreement largely between the parties in terms of the substantive matter and the details should be clearly understood by all and therefore if there is any divergence of view, I don't have any difficulty with the witnesses hearing that and swearing their own evidence. Yes, Mr Wood.

PN31

MR WOOD: Mr Field, could you state your name again for the record?---Mark Allan Field.

PN32

Your address?---(Address supplied.)

PN33

You're an employee at Caltex?---Yes.

PN34

Lytton Refinery?---Lytton Refinery, yes.

PN35

You've provided to the Commission and Caltex a witness statement?---Yes, that's correct.

PN36

And is it true that that statement was filed and comprises of two pages?---Yes.

PN37

And it was filed on the 17th of the 11th 2005?---Yes, it was.

PN38

Just two questions on that statement. You put down that there were some discussions over the change, that the AWU agreed to the changes. Can you just explain to the Commission why you believe the AWU agreed to the changes?
---Well, the company are ultimately the ones who have to make sure that this works, if this is agreed by the Commission. So we allowed them to change it from three groups of head operators and AHOs and include the people who do the panel, the console operators and the SAOs into that group because of the difficulties that we've got at the moment with the amount of people that do those jobs. We saw it easy as having the three groups separately defined, but after talking with the company agreed to change them to the two groups.

**** MARK ALLAN FIELD XN MR WOOD
PN39

In relation to that two, it has been pointed out to me that there was an error in my submissions. In our submissions we say it went from three groups to two groups and I said (1) that the head operator dropped down 10 hours, but within what we had as the second group, that second group then became the first group?---Yes, and that their hours went up by 20 hours.

PN40

And what is now group 2, rather than group 1, stayed the same?---Yes.

PN41

That's right, okay. It's not in your witness statement but it's been covered in Mr Callaghan's statement and Caltex submissions, the defined hours that we were seeking, it's been pointed out that those defined hours apply even if de-manning didn't occur?---That's right.

PN42

Can you explain to the Commission why that is?---During the negotiations we have included quite a few things in to what we currently do. The north pipeline was not something that we had normally done within our banked hours. We did it with shares or on shift or the day work people that were on shift at the time. So we're allowing the company to put anything they like into our banked hours as long as they try to keep the hours down by some other means, which is the defined hours.

PN43

So it's your expectation during the life of this agreement that extra work could be added?---Yes.

PN44

And the reason why extra work could be added is because of the defined
hours?---Yes.

PN45

I've got no further questions.

<CROSS-EXAMINATION BY MR DOWNES [8.57AM]

PN46

MR DOWNES: Mr Field, there are a number of attachments to the proposed agreement. Are you familiar with those attachments?---Yes.

PN47

They outline the various claims of the AWU and Caltex, irrespective of the issues which are before the Commission today?---Yes.

PN48

A number of those attachments relate to what everybody has generally referred to during these negotiations as consequential changes?---Yes.

**** MARK ALLAN FIELD XXN MR DOWNES
PN49

In respect of a number of those consequential changes, your position is that if the AWU succeeds with its claim for reducing the overtime threshold, then the company is going to need the particular provision in order to better manage overtime and the equitable sharing of overtime?---That's right.

PN50

As I have it, there are six of those and they relate to variations between employees, variations between each employee, access to annual leave by employees, those sorts of provisions. Are you familiar with those?---Yes.

PN51

Could I just ask you to confirm to the Commission that your concession that those provisions should be incorporated in the agreement if you get your threshold claim inserted in to the agreement is to enable Caltex to better and more efficiently manage the use of overtime?---Yes.

PN52

Because that will be necessary if the overtime threshold is reduced?---Can you just repeat that, please?

PN53

Certainly. Your agreement that those clauses which would enable Caltex to better manage overtime will be necessary, you say, because if the overtime threshold is reduced from their current levels to the levels that you claim, those provisions will be necessary to enable Caltex to better manage the use of overtime, the equitable sharing of overtime and the allocation of the operators generally?---Yes, and to have the ability to - - -

PN54

To achieve those thresholds?---Yes.

PN55

Thank you, Commissioner, I have no further questions.

<THE WITNESS WITHDREW [9.01AM]
EXHIBIT #AWU2 STATEMENT OF MARK ALLAN FIELD

PN56

MR WOOD: Basically, Commissioner, the substantive part of our case is going to be encapsulated after the witness evidence. It's our intention to take the Commission to each of the clauses that we say are either threshold issues or as a consequence of if our threshold issues were accepted by the Commission, that it makes sense that there are some better management of overtime at the refinery. So in terms of bringing witness evidence to the Commission, if there's no cross-examination of our submissions which makes up my witness statements, that basically is our witness evidence. If the Commission pleases.

PN57

THE COMMISSIONER: Yes, thank you. Yes, Mr Downes?

PN58

MR DOWNES: Thank you, Commissioner. As the Commission will be aware the parties have been negotiating the terms of a proposed agreement pursuant to Division 2 of the Act to replace the agreement which expired at the end of June and again the Commission is fully aware that the parties have reached agreement on all but two issues. One of those having some consequential flow-on effects, and, Commissioner, I think that Mr Lyndon has handed up a copy of the proposed agreement to the Commission. Does the Commission now have that handy?

PN59

THE COMMISSIONER: Yes.

PN60

MR DOWNES: Commissioner, the claims in essence are outlined, or the two substantive issues in dispute are found in attachments A and J and attachment L really goes with attachment J. A is the wages claim which the AWU makes and J and L, Commissioner, are the claims for a reduction of the thresholds in respect of banked hours and the claim that a dispute about the banked hours be referred to the Commission for arbitration. There are then, in respect of the remainder of the claims, Commissioner, they can probably be divided into two categories. There are attachments B, K and I which are claims by the AWU for the retention of references to trigger number references and attachments C, D, E, F, G and H which relate to provisions which in essence, Commissioner, Caltex seeks to have incorporated into the agreement to enable it to better manage the use of overtime and Caltex seeks to have those inserted irrespective of the outcome under threshold claim.

PN61

Commissioner, in terms of the process, the intentions of the parties and again, as is known to the Commission, it is hoped that a decision will be made by the Commission fairly promptly in order to enable the parties to bring an application to the Commission for the certification of this agreement within 21 days of last Thursday's vote. The outcome of the Commission's recommendation will merely be incorporated into the proposed agreement and that is what will be put up for certification.

PN62

Commissioner, in respect of the substantive claims, the AWUs claim is for an unconditional salary increase of 16 per cent paid on various trigger dates during the life of the agreement. The claim is accompanied by an offer to Caltex that in respect of three two per cent increments Caltex be entitled to apply to the Commission for an order that the increment not be paid. If the Commission finds firstly that the AWU or its members are preventing the implementation of the agreement in respect of the intention to achieve the reduction of three shift positions, and secondly, if the matters in question were within the control of the AWU or its members.

PN63

Caltex's position is that three increments totalling 10 per cent should be paid unconditionally on the trigger dates set out in the proposed table, and that three increments of two per cent each should only be paid upon the implementation of the intended reduction of the three operating positions linked to each of those increments. Caltex's claim is an offer that the increase be paid if the refinery manager determines, or it is found by the Commission by way of a determination that as at the trigger date, the reductions have not occurred because of a lack of commitment to achieving that reduction by Caltex.

PN64

In respect to the banked overtime hours claim, Commissioner, and those are the claims in attachments J and L, the claim by the AWU is for the establishment of thresholds of banked overtime hours within the range of existing banked overtime hours to be based on an average or which, on its claim, are based on an average number of overtime hours worked in the past 12 months. The AWU asserts that these thresholds are necessary, given its concern that the intended reduction of shift reductions may result in increased banked overtime being required.

PN65

Commissioner, it's now probably correct to say that that has changed. That was certainly the assertion during the negotiations, but it became clear to the company on Monday the 7th that that position changed and the AWUs position is that the reduced thresholds should apply from commencement of the agreement. The AWU further claims the establishment of a process to enable operators to raise concerns in the event of the reduced thresholds being exceeded over a reasonable period and they say three months is a reasonable period, as a result of the reduction in the shift positions.

PN66

Then in attachment L, Commissioner, the AWU says that should a dispute arise over the application or implementation of this clause that the AWU be entitled to refer the matter to the Commission and that the Commission may then arbitrate the outcome of that dispute. Commissioner, I'll come back and deal with the merits of that claim. Caltex rejects the claim and says that the existing clauses in the agreement contain safeguards and that the manner and outcome of the changed process which will precede any reduction in shift positions are more than sufficient to prevent excessive increases in banked overtime hours due to those reductions.

PN67

Then in relation to the consequential amendments, Commissioner, there are nine of them, and as I've indicated, three of them relate to a reference or a claim to retain references to trigger numbers. In short, Commissioner, we say that that is simply unnecessary. The table of trigger numbers has, by agreement, been removed from the proposed agreement. It no longer exists and there are references therefore just make no sense, they would have no work to do in the agreement at all. The remaining attachments, C to H, we say and as Mr Field has not confirmed under cross-examination, they are necessary for the better management of operators to achieve a reduction of overtime hours.

PN68

Caltex's position is that there is simply that, whether it enables the company to better manager overtime below the existing threshold, or a new threshold, seems to have no logic to suggest that they would only assist below the reduced threshold. If they are going to assist they are going to assist below the reduced threshold or at the existing threshold. Those provisions should be, if they are good enough to assist management below the thresholds that are now being claimed, they should be good enough to assist management in producing overtime below the current threshold.

PN69

Commissioner, in relation to the approach which the Commission should adopt in relation to these proceedings, we suggest that an appropriate way to do so is to follow the guidelines of an arbitration under section 170MX. We believe that that would be a useful guideline for the Commission to follow in order to arrive at an outcome. The approach which the Commission has adopted in 170MX arbitrations was outlined in the Full Bench decision of the Australian Workers' Union and P&O Catering Services and, Commissioner, that approach is outlined in my submissions. I will go through them very quickly, and Commissioner, may I just correct my submissions.

PN70

In my submissions I've made a reference to that authority as being at Print Q4464. That is incorrect. The reference is R2643 at paragraph 63.

PN71

THE COMMISSIONER: Are you sure about that?

PN72

MR DOWNES: Commissioner, I have it at paragraph 63 on page 15 of 21.

PN73

THE COMMISSIONER: Again, we're looking at - - -

PN74

MR DOWNES: I'm looking at the decision, Commissioner, and - - -

PN75

MR KUCERA: No. Sorry, the reference in your outline of submission, where is reference in there?

PN76

MR DOWNES: I beg your pardon, Commissioner, that's at paragraph 8 on page 4 and the reference to Q4464 is incorrect. That reference should be R2643.

PN77

THE COMMISSIONER: Yes, thank you.

PN78

MR DOWNES: At 63, and Commissioner, perhaps I should do that now. I have a bundle of the authorities that I thought I would hand up. It contains all the authorities in the agreements that we will refer to. So at tab 1, Commissioner, is the P&O decision and the approach is to be found at paragraph 63 on page 15 of that decision.

PN79

THE COMMISSIONER: Yes, thank you.

PN80

MR DOWNES: Commissioner, the Full Bench said the following:

PN81

Our approach to this arbitration is consistent with the that of the Full Bench's in HSUA v Kurra. In summary our approach has been ...(reads)... together with any other matters the Full Bench considers relevant.

PN82

Commissioner, this approach was followed recently by the Full Bench in Metropolitan Ambulance Service v Liquor Hospitality and Miscellaneous Union in a joint decision with Rural Ambulance Victoria v Liquor Hospitality and Miscellaneous Union at PR960731 which, Commissioner, is at tab 2 of the bundle of documents, and particularly the paragraph at 13.

PN83

Commissioner, that's a recent decision dated 28 July 2005 with which the Commission as presently constituted will be very familiar. The approach to be adopted was further summarised as follows:

PN84

The approach under section 170MX arbitration is that the Commission looks at all relevant factors in the particular circumstances of the case to achieve a fair result taking into account the matters set out in section 170MX(5) of the Act ...(reads)... the objects of the Part and the objects of the Act.

PN85

Commissioner, in relation to the wage claim there is no dispute that the increments in rows 1, 2 and 4 to be inserted in the table, and Commissioner, if I may take you to attachment A to the agreement.

PN86

THE COMMISSIONER: Yes, thank you.

PN87

MR DOWNES: It is the increments in rows 1, 2 and 4 of that table which is to be inserted in clause 10(1). Those increments are not in dispute and those are the increments which would occur unconditionally and in fact I can inform the Commission that in accordance with the description under the common trigger date in row 1, that first increment, given the outcome of the vote last Thursday, that increment is now being processed and will be implemented in due and proper course. It is the increments in rows 3, 5 and 6 that the wage dispute relates to. In short, Commissioner, the AWU says that they should be paid whether there is a reduction or not and Caltex says that they should only be paid if there is a reduction of a shift position in respect of each of those amounts of two per cent, each of those increments.

PN88

Commissioner, the guidelines applicable to the determination of an appropriate salary increase were recently outlined by the Full Bench of the Commission in the section 170MX arbitration in the Australian Industrial Relations Commission and Her Majesty the Queen v Wright in South Australia and the CEPU. A copy of the decision is at tab 3 of the bundle, Commissioner. The report is at PR957094 and it's a decision dated 8 April. Commissioner, what we have sought to do is take the guidelines that were set out in that decision and address each of those in turn. Those guidelines, Commissioner, are as follows. They are set out at paragraph 91 of the decision:

PN89

In determining the provision of a section 170MX award we draw the following guidelines from the authorities. First, reliance solely on the outcome of enterprise bargaining between other employers and employees and other industrial instruments ...(reads)... assessed against the proper application of the Work Value Changes Principle.

PN90

Commissioner, in relation to the first guideline, and I'm now at paragraph 13 of the outline of my submissions, I've set out each guideline just for the Commission's convenience. The first guideline is reliant solely on the outcome of enterprise bargaining between other employers and employees and other industrial instruments is of limited relevance. In relation to the first of these guidelines, Commissioner, and given its limited relevance and the fact that there has not as yet been any evidence of the outcome of enterprise bargaining between other employers and employees, this guideline should be ignored.

PN91

Commissioner, there is a reference by Mr Wood in his submissions to what has happened at BP Bulwar and I propose to touch on that during Mr Callaghan's evidence, but it really is a very superficial and will be a very superficial reference. The second guideline, Commissioner, is that the level of remuneration and conditions of employment of the same class of workers in the same industry is one factor which it is appropriate to take into account.

PN92

Now, Commissioner, what we have done is we've had a look at the other six refineries, operating refineries in Australia and then outlined the salary increments which are ascertainable from the certified agreement of each one of those and we've provided for the Commission, or we will make submissions in relation to the increments during the 2005 calendar year in relation to each of those refinements. Commissioner, in the bundle of documents which I've handed up are copies of each of the certified agreements from which that information is obtained.

PN93

At Shell Geelong the increase which took effect from 14 June 2005 was CPI plus one per cent. A search on the website on the Australian Bureau of Statistics indicated that at June 2005 our CPI was 2.5 per cent and we conclude from that that Shell Geelong provided for an increase of 3.5 per cent in mid 2005. Shell Clyde, its agreement provides for a four per cent increase with effect from 1 September 2005. BP Bulwar, as the Commission again presently consistently was certainly aware was certified last Monday, 21 November, and that agreement provides for a seven per cent increase with effect from the first pay period on or after 1 November and, Commissioner, there will be some short evidence about that seven per cent from Mr Callaghan.

PN94

BP Kwinana, again appears from its certified agreement, provided for CPI which our search indicated was 3.4 per cent with effect from 1 April 2005. Salary movements for 2005 for Caltex Kernell, I think is the subject of negotiation at the moment, and Mobil Altona, we were unable to establish there is some reference to a attachment or a schedule. We were just unable to get hold of. Commissioner, paragraph 18 of my submissions, the need to exercise caution before adopting enterprise agreement rates into a section 170MS award and therefore in circumstances such as these were highlighted by the Full Bench in the South Australian government decision at paragraph 139 and, Commissioner, that's at tab 3, and the Full Bench side the following:

PN95

The authorities demonstrate the care must be taken before adopting enterprise agreement bargaining rates into a section 170 -

PN96

And, Commissioner, there's a typographical error there, it's not section 1790, it's just 170MX award.

PN97

In particular the absence of material relating to the wage history which resulted in the rates being struck for particular contractors, it would be inappropriate to simply adopt those rates for the ...(reads)... but may be a product of a range of other considerations such as market rates.

PN98

Commissioner, we say that an increase of six per cent, four per cent being backdated to 1 July 2005, and a further two per cent taking effect on certification, together with another four per cent payable on 1 July 2006, is comparable with salary movement at other refineries across Australia.

PN99

An objective and detailed comparison is provided by the 2004 Solomon Report in respect of which evidence will be led. The evidence will indicate that it's an internationally recognised and influential comparison of refineries around the world and that report, Commissioner, ranks eighth out of the eight participating refineries in respect of the personnel index work hours per 100 EDC and the personnel cost index, US dollar, per EDC factors. This indicates that Lytton rated the worst of all participating refineries in Australia or in the Australia which at the time the evidence would indicate include one refinery in New Zealand in terms of work hours and personnel cost. Meaning that Lytton requires the most worked hours and pays the most in terms of personnel cost of any refinery in Australia.

PN100

Commissioner, the third guideline is that:

PN101

Consideration must be given in a section 170MX context to the particular set of circumstances. This may be include factors which have historically been taken into account in determining wage rates and conditions of employment.

PN102

Commissioner, no evidence has been tendered by the AWU and none is intended to be tendered by Caltex that suggest that there are any relevant criteria that the parties require or that will enable the Commission to take into account in respect of this third guideline.

PN103

Now, the fourth guideline, Commissioner, is the level of wages or rates of increases in comparable instruments is one factor to be taken into account or may be given a sideways glance. Commissioner, there is some evidence in my submissions which were filed simultaneously with the submissions of Mr Wood. Obviously could not take into account what was contained in his submissions at the time. There is now at the very least a submission from Mr Wood that seeks to compare the wage rates of Caltex Lytton with those of BP Bulwar, but he makes reference to a $411 difference. It's not clear whether that's in one or more or all of the classifications, and there's no evidence to indicate or to compare the other terms and conditions contained in the certified agreement.

PN104

However, at best, Commissioner, the guidelines suggest that what the Commission should do is take a sideways glance at that. Certainly it's not something which the guidelines suggest should be decisive or of any significant import. The fifth guideline is as follows:

PN105

Comparative wage justice on the basis of maintaining a level playing field is not a fair basis on which to fix wage rates in a section 170MX award, nor is conditions parity a sufficient ground to alter conditions of employment.

PN106

Commissioner, we say that the claim by the AWU for an unconditional 16 per cent salary increase over two years relies very heavily on comparative wage justice. That is now the claim has been sought to be justified by the AWU. We say it's clear from the fifth guideline that claims based on comparative wage justice or attempts to achieve a level playing field is not a fair basis on which to fix wage rates. There are fundamental obstacles to the Commission given credence to a contemporary use of the stark wage justice exercises, as evidence from the AWUs reliance on the diverse sources of operator rates at different refineries around Australia.

PN107

These obstacles, Commissioner, include the objects of the Act, and more particularly the objects in section 3A and 3B. Claims for salary increments are based on comparative wage justice offend the wage fixing principles and in that regard, Commissioner, we rely on the Full Bench decision in the Oil Drilling Rig Workers (Offshore Mobile Drilling Rigs) Award, a decision dated 27 April of 1988. Commissioner, a copy of that decision is at tab 4 of the bundle of documents. Commissioner, I think on page 2 of that decision the Full Bench makes the following remark:

PN108

Under the anomalies principle it is necessary that the Commission be satisfied that the claim will not be a vehicle for general improvement in pay and conditions ...(reads)... are not available for the purposes of establishing an anomaly.

PN109

Commissioner, the sixth guideline is that it is appropriate to take into consideration market rates in determining a 170MX award. This guideline requires that market rates should be taken into account. Neither party, Commissioner, has conducted a market rate survey and the AWU certainly hasn't provided any evidence and neither does Caltex propose to do so. So no evidence will be before the Commission in this regard.

PN110

The only data which may assist the Commission is the recently released September quarter 2005 trends in Federal enterprise bargaining statistics published by the Department of Employment and Workplace Relations and they indicate that the average annualised wage increases increased by 3.9 per cent for the private sector for that quarter. Commissioner, I did seek to obtain a copy bearing the seal of the Department, but met with some reluctance from the Department to do so. If - - -

PN111

THE COMMISSIONER: Was that 4.1 per cent movement overall when that private and public sector were taken into account?

PN112

MR DOWNES: Commissioner, I have statistics which should be at tab 9 and the full document is downloaded. The September quarter statistics only became available during the course of, I think it was last week.

PN113

THE COMMISSIONER: That's what I thought I was relying on.

PN114

MR DOWNES: Yes, Commissioner. At tab 9, on the top page of the table the all sectors increase is 4.1 per cent. The private sector is 3.9 per cent and what I've made reference to in my submissions is the private sector increment. There is a useful table on page 2 of that attachment, Commissioner, which gives the most recent figures per quarter and that indicates that in the private sector the September was 3.9 per cent, June was 3.9 per cent, March 4.1 and December 3.7. Commissioner, if there is any concern or if my friend, Mr Wood, would like a copy bearing the seal to be provided, I'm happy to do so.

PN115

Commissioner, the seventh guideline is that:

PN116

Any claim based on work value grounds should be assessed against the proper application of the work value of change principles.

PN117

The AWU claims that a 16 per cent salary increase should be paid on the basis that the refinery pays its operators less than operators are paid at other refineries and that a 16 per cent salary increase is required in order to bring the operators' salaries into line with those being paid at other refineries. Commissioner, what is significant is that 10 per cent is agreed. It is the remaining six per cent and whether or not that is to be paid only upon the implementation of productivity improvements, the Commission is effectively deciding in relation to the wage claim.

PN118

Commissioner, we say that it is significant that in relation to that six per cent, the AWU invited Caltex to put forward productivity or efficiency improvements that it thought could be achieved in order to justify the additional six per cent, and on that basis we say that there is an acceptance that there needs to be some efficiency improvements, some productivity gains to offset that six per cent. The AWUs claim is not that there should be no efficiency improvements. The AWUs claim is simply that the six per cent should not be made dependent on those efficiency improvements.

PN119

Commissioner, the AWU does not claim the 16 per cent salary increase on the basis of the Commission's work value principles and neither can it do so. There are numerous commitments in the 2003 agreement in terms of which the parties undertake to pursue efficiencies and those commitments are at odds with the AWU and its members in the PIW forum, and Commissioner, I'd refer to, by way of example, clauses 5 and 10 of the 2003 agreement and that's dealt with in paragraphs 57 to 132 of the witness statement of Mr Callaghan.

PN120

The efficiency improvements obtained via the proposed agreement, other than for the reduction of the three shift positions, Commissioner, amount we say to no more than an agreement by the AWU to the implementation of productivity improvements which the AWU acknowledges in clause 10.3 of the proposed agreement, was stalled in the PIW process. Commissioner, if you could turn to clause 10.3 of the proposed agreement, you will see that the opening paragraph in fact says exactly that. It says:

PN121

The wage increases in this agreement are agreed by the parties on the understanding that existing issues stalled in the PIW forum will be implemented.

PN122

Commissioner, Caltex position is putting that a salary increase of six per cent during 2005 together with another four per cent payable on 1 July 2006 is comparable with salary movements at other refineries across Australia and we say that good reason exists for the Commission not to make a recommendation that if three two per cent increases are claimed by the AWU be paid without the productivity improvement first being achieved.

PN123

Commissioner, I will conclude my submissions once the evidence has been adduced, but that outlines, Commissioner, we say the guidelines which would assist the Commission in analysing the evidence and in reaching a decision in relation to these issues in dispute. Commissioner, those are my opening submissions. Unless there's anything else I wish to then call Andrew Brewer to the stand. Mr Brewer will take the oath.

PN124

THE COMMISSIONER: Yes.

<ANDREW TERENCE BREWER, SWORN [9.42AM]
<EXAMINATION-IN-CHIEF BY MR DOWNES

PN125

MR DOWNES: Mr Brewer, your full name for the record, please?---Andrew Terence Brewer.

PN126

And your residential address?---(Address supplied.)

PN127

Mr Brewer, I'm going to hand to you a statement. I'll ask you to have a look at that, please. Do you recognise that statement?---Yes, I do.

PN128

Mr Brewer, would you turn to paragraph 6 of that statement and the words in brackets starting with ie, is there an error there?---There's a grammatical correction that needs to be made. "(1) Reporting directly", insert the word,
"to" "a refinery manager."

PN129

Commissioner, I'd ask that those words be inserted?

PN130

THE COMMISSIONER: Yes, thank you.

PN131

MR DOWNES: Mr Brewer, what is Mr Turnbull's title?---Formerly Ian Turnbull's title was Dr Ian Turnbull.

PN132

Commissioner, the reference to Ian Turnbull to Mr Ian Turnbull appears to twice in paragraph 7, twice in paragraph 13, once in paragraph 22 and once in paragraph 23 and I'd ask that Mr Brewer's witness statement be amended to correct those references from Mr Ian Turnbull to Dr Ian Turnbull.

PN133

THE COMMISSIONER: Yes, thank you.

PN134

MR DOWNES: Mr Brewer, would you then have a look at paragraph 27 of the witness statement and was there something you wished to correct in that statement in the third line?---Yes, there is. The statement says, "This is because Caltex needs", and it should read, "This is because the refinery needs".

PN135

Mr Brewer, with those changes to your witness statement do you believe that the content of that statement is true and correct?---Yes, I do.

PN136

Commissioner, I with to tender Mr Brewer's statement as his evidence-in-chief.

EXHIBIT #CALTEX1 STATEMENT OF ANDREW TERENCE BREWER
<CROSS-EXAMINATION BY MR WOOD [9.46AM]

PN137

MR WOOD: Mr Brewer, at paragraph 7 you refer to the fact that you report to Mr Turnbull?---Yes, I do. His title is Dr Ian Turnbull.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN138

Are you aware of a meeting that I had with Mr Field and Mr Turnbull in around October?---I was not at such a meeting, but I was aware there was a meeting held, yes.

PN139

Did you get any information fed back to you from Mr Turnbull about that meeting?---Commissioner, I did get some general comments from Dr Turnbull about the meeting.

PN140

Were any of the comments that you got in relation from Mr Turnbull about an understanding that the union didn't want to tie its wages increases to the company's ability to manage?---The comments I got from Mr Turnbull indicated his full support for the direction that the business was putting forward.

PN141

If you can just stick to my question. Did you get any information back from Mr Turnbull that he didn't see it was unreasonable that the union didn't want to tie his wages to the company's ability to manage? Did he say anything about that or not?---Commissioner, I don't recall any comments to that effect, no.

PN142

Well, do you think it's unrealistic that the union wouldn't want to tie its wage increases to Caltex ability to manage?---Commissioner, I don't feel I should pass judgment on what the union believes is reasonable or not. I certainly understand the Caltex view and my personal view on that.

PN143

Well, that's what I'm asking you for. Do you think your view, do you think it's unreasonable that the union has reservations about tying its wage increases to the company's ability to manage, do you think it's unreasonable or not?---Again, it's not for me to pass judgment on the union view. I certainly view that the wage increases should be tied to the achievement of the productivity improvement.

PN144

In paragraph 13 you say that you've been responsible for this strategic direction taken by Caltex?---Yes, I do.

PN145

Now, a part of that strategic direction was that Caltex agreed to pay eight per cent provided there was implementation of productivity improvements?---I'm not sure of your reference there to eight per cent.

PN146

Well, paragraph 15 you say eight per cent per year can only be paid by Caltex to operators is if there's implementation of productivity improvements. Do you agree with that?---Yes, I do.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN147

Now, you were advised apparently that there were four items identified by the Caltex team for productivity improvements?---Yes, I was.

PN148

Do you know what the four were?---No, I don't recall the detail of all four, Commissioner, but I certainly know where it landed which was that there would be reduction of three shift positions with each shift position reduction attracting a two per cent salary increase.

PN149

Do you recall that one of the proposals was that the union forego some allowances in order to get a higher wage increase?---Commissioner, as I said, I don't recall the detail of all four, but - so I can't answer that.

PN150

You put in the witness statement that there were Caltex, four proposed, were identified, this is your witness statement, isn't it?---It is for sure.

PN151

Do you recall that one of the other issues was that Caltex wanted to make head operators staff people?---Yes, I do recall that as one of the four proposals.

PN152

It was the decision of the Caltex team and presumably yourself that you weren't going to press those issues?---Commissioner, I wouldn't indicate that, no.

PN153

You are pressing it?---Not at the moment, I'm not. But certainly the opportunity for that to be one of the three shift position reductions, to my mind is not off the table.

PN154

Paragraph 20 you say that you're fully committed to achieving the reductions of the shift position to the refinery?---Yes, Commissioner, I am.

PN155

Do you think that - would you fully commit to it, that you're going to achieve that?---Yes, I'm very confident that we will, Commissioner.

PN156

What gives you this confidence that it's going to work for the - - -?---I have great confidence in the ability of our business, the Caltex Lytton Refinery, if we put our mind to it, to make achievements. We have demonstrated that we are able to do that and I believe in this situation we will be able to do it again.

PN157

In that event the AWU would get six per cent on top of its 10 per cent because you're very confident it'll happen?---Yes, that would be the outcome of the agreement but on achievement of those shift position reductions, it would be a two per cent increase that would occur, totalling six per cent for the three positions.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN158

In your statement you've actually put some steps in place to achieve the reductions, that's correct?---Yes, I have, Commissioner. I've taken a number of steps to start the process for the work needed for the reductions to occur.

PN159

Now, in paragraph 23 you also say that the achievements of the productivity improvements will be an element of your personal performance agreement once finalised and will influence your performance assessment, is that correct?---Yes, it is.

PN160

Now, I want to ask you a few questions on this. Caltex proposition is that the operators don't get their money unless they de-man, is that correct?---The whole agreement pays 10 per cent over two years to all employees and then a further six per cent based on further productivity improvements from the reduction of the three shift positions.

PN161

So that the Commission understands, and I believe what the agreement provides, so my question is this Caltex isn't prepared to pay money until they de-man, is that correct?---For the shift, Commissioner, for the shift position reductions, that is the point that I put forward, that the achievement of the productivity increase improvement should be linked to the payment of the two per cent increase.

PN162

Let me make this suggestion to you, why don't you just manage the process, why don't you take on the responsibility rather than giving it to them and then taking he money afterwards once they do it?---Commissioner, I certainly do take on the accountability for us achieving outcomes, but the process for us to achieve those outcomes requires the involvement of everyone. The operators have significant knowledge and valuable input to make to that process and I see that in me achieving my accountability, which I fully accept, there is a need for an involvement of the whole work force.

PN163

With respect, we're not accepting our responsibilities, because you're saying to them, you de-man and you'll get the money and so will I, and I'm suggesting to you what you really mean to do is manage the refinery. They've given you the vehicle to de-man. They've said that they've agreed to it and they want the money for it, and you say in your own evidence that you're very confident that it's going to happen. So my question to you is why don't you just manage it, because you're not managing it, you're putting the responsibility on them to deliver your outcomes so you'll get more money, and what my question to you is, why don't you just manage it? They've agreed to it, so why you just manage it?---I'm not sure if that question differs from the previous one but I think my answer's the same. I fully accept my accountability and my accountability in that is to manage the process, but the process requires the involvement of the whole work force to be successful and that involves more of me contributing and participating.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN164

Well, you say that they're involved in process. The AWUs claim is that they're not involved in the process, they're going to cooperate. As a matter of fact, our claim also is that if we don't cooperate you can come to the Commission. You see, your claim is different. Your claim is they deliver the productivity improvements or they go get the money, and once they do, you get money, and I'm saying the correct way of doing it is you manage it. Do you agree with that or not?---Again I'm not sure if the question's different. The process involves all parties, so it's not solely the work force delivering it. It's not solely management. It's an involving process and I certainly accept my accountability in seeing the business achieve these - or make these productivity improvements.

PN165

Well, again, we'll labour on this point then, you're not managing. Do you think - well, I'll ask this question. When Telstra announced that they were going to reduce its work force by 12,000 people, do you think they got an agreement from the union or do you think they just went out and managed it?---I'm not able to pass comment on the Telstra situation.

PN166

Well, let's get back to this then. Do you think you have an obligation to the company to manage a process of de-manning?---Certainly I have an accountability. The achievement of the productivity improvements will be an item in the business plan for the refinery and it will be one of the key accountabilities that I report to my supervisor on during the year of 2006.

PN167

And that responsibility is there whether you get support from the operators or not, is that right?---Yes, the accountability will exist.

PN168

So it doesn't matter whether the operators support or otherwise, your responsibility is to de-man, or one of them, one of your responsibilities would be to have less workers at the refinery?---Commissioner, the ability to achieve the productivity improvements stems very much on good input from employees, both in terms of the outcomes that are achieved, both in quality and also the final aspect of the role. So I certainly have an accountability to manage, but I believe the input of employees is a very significant part of the refinery gaining success from the productivity improvement.

PN169

Whether they support it or not, your responsibilities don't change?
---Commissioner, as I said before, yes, that will be one of my accountabilities. I certainly hope that the employees, if they're making a commitment to this agreement, will be fully supporting the productivity improvements because the agreement indicates that that's what should happen.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN170

I asked this question before and I've moved on and I'll come back to it. Your own evidence, or the evidence of Caltex is that this is the worst performing refinery, is that correct?---No, it's not, Commissioner. We highlighted a couple of particular areas in performance, but the refinery rated worst amongst the Australian refineries, but that's certainly an untrue comment if you look at it across the whole spectrum with the refinery performance and compare it to the other Australian refineries.

PN171

Well, if you're not the worst, who is?---The ratings that I think Mr Wood is referring to under the Solomon aspect do not provide an overall summary rating of one point for the refinery. There are, I think, 18 or more than 18 different components of that rating, and the refineries rate on all of those components. It would be impossible for any one refinery to be number one on all 18 because some of them actually pull in opposite directions and there's no summation by Solomon's to give an overall table.

PN172

So you could be the worst?---That's an academic question. There is no way of determining that and I certainly do not believe that and will strongly defend the refinery is not the worst refinery in Australia.

PN173

So have you got good management there, good management there?---I believe the refinery is well managed, Commissioner, and I object a bit to an assertion that the refinery is the worst performing refinery in Australia.

PN174

I'm just saying that was your evidence, not mine?---It certainly was not my evidence, Commissioner.

PN175

Where do the management, in the Solomon report, where did they rank?
---Commissioner, the Solomon report does not rank management performance per se. Management is accountable for outputs at the refinery and Solomon looks at outputs of the refinery.

PN176

So what, it ranked operators but not management?---Commissioner, it doesn't rank operators per se either.

PN177

Are you familiar with the way in which you're going to reduce numbers
there?---Commissioner, I'm not sure what Mr Wood means by familiar. I certainly know our intent to do it and I've had some initial discussions with Mr Callaghan, the Production Manager, on the process and the resources but we have reached no conclusion on that.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN178

Well, do you know that the first five employees are going to be through natural attrition rather than redundancy?---Yes, that has been communicated to me.

PN179

Do you foresee any problems with that approach?---I have heard people talk of problems, but personally I do not believe we'll have a problem, no.

PN180

So you don't see a problem with someone leaving at number 5 with nothing and someone leaving at number 6 with $200,000, you don't see that as a problem there?---No, Commissioner. If that's the process that's agreed upon, I don't see a problem with that, no.

PN181

Well, you say if that's agreed upon. It hasn't been agreed upon. We've told the company, there is a problem, and your work force have told us that there's a problem with the first five leaving without redundancies and the sixth person getting redundancy. Do you still say that there's no problem?---Commissioner, I don't see a problem with the process proposed, no, I don't.

PN182

Paragraph 20(a) you say that the refinery failed to give support and faced potential wind down commencing about five years' time?---Yes, I do, Commissioner.

PN183

What support are you talking about?---The refinery industry requires continual investment to maintain assets in a competitive state, Commissioner. So businesses such as Caltex are continually investing funds to give the asset the ability to produce to meet market requirements. Typically that investment frame will be over a five year plus period and a good example of that is the company, Caltex, has invested in excess of $300m over the last two yeas and into next year for this refinery and that will allow the refinery to produce fuels to Australian quality standards for the next five years, but hat level of investment will need to continue so that in five years, 10 years' time the refinery will maintain the ability to supply the Australian market and be competitive.

PN184

Paragraph 30 you say that in order to continually attract high quality employees, you believe that it is necessary to provide work that stimulates employees and maintains proper levels of interest and career advancement. Are you aware that on average BP Bulwar pays $411 a week more than you pay at your refinery?
---Commissioner, Mr Wood quoted that number, I accept that if he's quoting it that there's a difference there, but he has not talked of any other terms and conditions so I'm unable to validate whether that's an equal comparison by quoting that number and I also don't know whether it requires all classifications or simply one.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN185

As I said it was on average, you know. To go through every single classification and every single employer organisation in the oil industry was quite laborious and I can simply put to you that Caltex Lytton is the worst paid refinery in the country, yes or no?---Again if Mr Wood is putting that I can accept that that's what he's saying.

PN186

Now, getting back to the issue of paying increases once de-manning has occurred, are you aware that no other refinery in the country has done that?---Again, Commissioner, I don't feel I can comment there. I'm not aware of what other refineries have done. I do know - - -

PN187

No, I'm asking you if you were aware?---I do know what we need to do as a refinery. We need to remain competitive. We need to make productivity improvements and we need the involvement, the full involvement of our employees to make those successful.

PN188

Finished? Now, are you aware that no other refinery has tied reductions to pay increases?

PN189

MR DOWNES: Commissioner, sorry, there is no evidence that that is - the question is completely unfair in the absence of any evidence being put by the AWU. It's making the bald decision Mr Brewer has to assume or accept that that is in fact factually correct in order to be able to answer the question that has been put to him. It's now been pressed, but it requires some factual basis before the question can be put, Commissioner. I object to it.

PN190

MR WOOD: Well, I believe in our - - -

PN191

THE COMMISSIONER: Mr Wood, if the witness isn't aware as to what terms and conditions are payable at the other refineries, how would he be able to answer that question if he doesn't have that knowledge?

PN192

MR WOOD: Well, Commissioner, Caltex is putting a condition on wage increases that they'll pay some of it but not all of it. If the union does something else. My question is simple. Is he aware of anywhere else in the refinery
business where those circumstances apply. He's either aware or not aware?
---Commissioner, no, I'm not aware, no.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN193

MR WOOD: Are you aware of what the labour costs are to in its overall operation, that's what I'm talking about, in the exploration, the head office, the whole ….. are you aware of what percentage of labour costs are?---No, Commissioner, I don't have that information in my head. Caltex is a downstream operation so it does not have any exploration capabilities. It operates refineries and markets the products.

PN194

Now, in paragraphs 34 and 35 of the witness statement you again outline what your reasons for linking wage increases to the implementation of reductions. Do you see that?---Yes.

PN195

And the last sentence is that increases to reductions will encourage a higher level of support from operators in order to obtain the best possible result. So do you believe that unless you tie money to this, you won't get support from the operators?---Commissioner, I believe that we need the full support of operators to achieve this. I believe the tying the pay increase to it will increase that level of support, yes.

PN196

And you won't get that without tying it, that's your view of your employees, that unless you tie money to it you're not going to bet support, is that what you're saying?---Commissioner, again I believe that we need full support and this will be one step in ensuring that that support is achieved.

PN197

And if it's not tied to it, you don't think you will get it, you don't think your employees will support you unless it's tied to money?---Commissioner, it is one step and I believe an important step in achieving full support of the work force for the productivity improvements.

PN198

Well, that doesn't answer my question. Do you believe that you have to tie money to get the support of your work force, yes or no?---Commissioner, it's one part of it. People do see the importance of remuneration, it does drive behaviour and contributes to behaviour. It is certainly not the only part of gaining support but.

PN199

Well, I'll take that as a yes then?---I didn't say that, but - - -

**** ANDREW TERENCE BREWER XXN MR WOOD
PN200

I know what you're trying to say because there's people in the court employed by - you take the word of the operators and your employees that they say to you, you give us the money and you manage the process and we will do everything we can to deliver the reductions, everything they can, do you believe that?
---Commissioner, the refinery has excellent operators, high quality people delivering a high quality job. I believe all people need to have a stake in the game, something which they gain out of working towards an achievement, so the fact that the improvements, the productivity improvements are tied to the wage increase to me does not reflect in any way on the quality of people, either at management level or at - in the operator ranks. Simply a belief that people contribute and one of the aspects which helps them contribute is something to gain at the end of the achievement.

PN201

I'll ask the question again. Your work force had several mass meetings and our negotiators have assured me that they'll do everything they possibly can to assist the company in reducing it but they don't want their wages tied to de-manning. Do you believe them or not, that there are actually going to assist the company in de-manning?---Commissioner, I'm very heartened by the fact that the work force has indicated that they'll provide that level of support. What I do believe that the best outcome will be achieved by linking the achievement of the productivity improvement with the wage increase.

PN202

All right. Given the best endeavours of all your employees, they do everything possible to implement this change and for reasons outside of their control, whether it be management, whether it be a decision not to do it, whether there's some automation or they can 't do automated, you make the decision not to de-man, not to reduce the numbers there. Do you think it's fair that they don't get paid though, when you make the decision and they've done everything they possibly can?

PN203

MR DOWNES: Commissioner, sorry. Mr Wood needs to have a guide to the proposal which Caltex has put up. I'm happy to make this address but perhaps Mr Brewer should leave the court room because it may be unfair for him to hear my submission.

<THE WITNESS WITHDREW [10.17AM]

PN204

MR DOWNES: Thank you. Commissioner, two things. I've sought not to jump up too quickly, but the question which has been put to the witness now is quite different to the claim being made by the AWU in attachment A. Commissioner, if you have a look at attachment A, what the AWUs position is, and the second paragraph of its proposed paragraph 10.2 says that:

PN205

As part of the agreement it should be open to the Commission to make an order that payment or payments in relation ...(reads)... but would only do so if the matters in question were within the control of the AWU or its members.

PN206

What Mr Wood is putting to Mr Brewer is that the operators in fact do everything possible. Now, that's not the same as saying we will only not get the money if we are preventing the implementation of the reductions, and in respect of matters which are in our control. Those are two different concepts. Secondly, Commissioner, the most recent question doesn't take into account the proposal put by Caltex in the last paragraph of its proposed clause 10.2 and that says:

PN207

The parties are fully committed to achieving the proposed reductions and the wage increases which depend ...(reads)... Commission at the trigger date that the reductions had not occurred because of a lack of commitment by Caltex.

PN208

So the question which Mr Wood, the most recent question which Mr Wood has put to Mr Brewer is addressed by the proposal which Caltex makes. If there is a concern that it is simply a lack of commitment by Caltex or by management it is not making the reductions happen, then the AWU is entitled to bring the matter to the Commission and the Commission can determine that dispute. So the answer to Mr Wood's question is in Caltex's proposal. Thank you, Commissioner.

PN209

MR WOOD: Well, that's quite wrong, Commissioner, and we say that for this reason. It has been at many times, also in conferences before the Commission, that if the work force does everything it possibly can, you know, we did - fair enough, in terms of the exact words - they're not the exact words, but they know and Caltex knows and the Commission knows that - and I've given direction to say you vote for this agreement, you've got to do everything possible to assist in the de-manning. Now, it's not an unfair question. In terms of saying we can bring it to the Commission, that's right, we can bring it here, but only if Caltex lacks commitment, that's it.

PN210

Now, if it is found that they can't do it safely, if it is found that they can't automate as much as they want to because they can't get the capital from the stage to do that, it might be that they turn around and say they're not going to do it. They're just not going to do it. It's not that there wasn't any commitment there. There was plenty of commitment, but it was either unsafe or they've got insurance policies in place that they can't satisfy if they de-man. I don't know what it is. There might be a number of reasons that they decide that they're not going to de-man. But it's not an unfair question because I'm on record here today to tell the company that their work force is committed to implement this de-manning, they will assist in every way possible to do that. It's on record that that's what they're going to do. I'll say it, and I'll say it time and time again, that they will do it.

PN211

What they're saying is that yes, you can come here if we're not committed, but unless we can achieve it, you're not going to get the money. It's a fair question to ask is that fair if they do everything they possibly can and circumstances outside of their control decide that it can't be done, that they don't get the money. It's a very fair question.

PN212

THE COMMISSIONER: I think you need to put the question in that way, Mr Wood, and use the examples as you have on other occasions as well of the issues of safety, for example. So I think if you put it specifically that way, that would be allowable.

PN213

MR WOOD: Happy to do that, Commissioner.

PN214

THE COMMISSIONER: Yes.

<ANDREW TERENCE BREWER, ON FORMER OATH [10.23AM]
<CROSS-EXAMINATION BY MR WOOD, CONTINUING

PN215

MR WOOD: Now, I need to explain in more detail the question that I'm putting to you. At the moment our understanding of Caltex's position is that we can come to the Commission if Caltex lacks commitment, but you might be permitted to do something, but you just can't do it. Is that correct?---That's my understanding that I can, as refinery manager, authorise the increases even if they have not been achieved, or it can come to the Commission for determination.

PN216

My question is this. Now, I put on record and I'll put it to you as well. Despite what the words may say, I'm saying to the Commission, to the company, to a mass meeting, to the delegates here, the members are fully committed to reduce the numbers. They do everything they possibly can but Caltex comes to its own conclusion for its own reasons, and it might be it's not safe to do it. It may not comply with insurance obligations that you've entered in to. You may not be able to get the capital expenditure from the United States to automate some of the equipments that you can de-man. So there was all the commitment there, but you can't do it. The question is this, given all those considerations, if they do everything they possibly can to assist in this process, do you think it's fair that they then don't get the money, the six per cent, when it's the decision of the company, maybe for very valid reasons, why they don't de-man?---Commissioner, I will answer Mr Wood's question but just a couple of corrections. I'm sure no employee would want to do it if the view was that it was unsafe. And secondly, Caltex is not - Caltex Australia is an independently publicly listed company. It has a shareholder in the United States but certainly no one in the United States determines the funding or the direction of the business. There is an independent board that actually sets that direction. Now, the question, I believe there are adequate safeguards in the agreement in that it allows the refinery manager to authorise an increase if the refinery manager judges that that's valid even if the productivity improvement has not been achieved and it allows the employees through further matter to the Commission if there's a lack of commitment on Caltex's part. Now, a lack of commitment can cover a wide range of things and it would, I believe, would be allowed to include the arguments that Mr Wood put forward.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN217

Well, we'll just concentrate on one issue then to assist in this process. If you decide that it's not safe to de-man, there's no way that you can reduce the numbers safely, so you don't do it. You'll say there's adequate protection there, but there's not because they don't get the money. Given that they did everything possible, that they assisted in the process, they did everything they possibly could, but you came to your own conclusion that you can't de-man because it's not safe. I'm saying in our application, we're saying they still should get the money. You're saying they're not, they don't?---Commissioner, I believe there's adequate protection there because it allows employees to refer the matter to the Commission from a lack of commitment on Caltex's part, so by following Mr Wood's example of it being unsafe, I guess, I suppose that he's indicating that the business is not willing to spend the funds to make that reduction safe and then employees would be able to refer back to the Commission.

PN218

I think you're hearing what you want to hear. I'm simply putting to you this. It's not a matter of you're not committed. I can just imagine the arguments here. We were very committed, Caltex were very committed to get this done. It's just not safe and we'd probably agree with you, it's probably not safe then. If you are saying it's not safe, far be it for the union to say it is safe. So we'd probably agree with you and I'm saying then that they get paid and you're saying they don't. Is that right?---I'm saying in the agreement, Commissioner, there's an opportunity for the employees to bring that to the Commission for determination if they're not satisfied with the determination that the business has made.

PN219

But that's not - you see, we can only bring it to the Commission if Caltex demonstrates that it wasn't committed. So if you're committed to it, don't bring it to the Commission. That's what the agreement says. Are you saying that we can bring it to the Commission, even if you were committed, is that what you're saying?---Commissioner, I'm saying that the employees are entitled to bring the matter to the Commission if they believe that they have a case, that there's lack of commitment by Caltex. I assume it's up to the Commissioner then to determine whether he perceives it as a lack of commitment or not.

PN220

Well, I'm telling you now, we're not saying that Caltex wasn't committed. We're saying that now, I'll give you that now. We're not saying that Caltex isn't committed. So given that we're not saying that, we can't come to the Commission, can we?---I don't feel able to comment on which way Mr Wood may interpret that at a later time.

**** ANDREW TERENCE BREWER XXN MR WOOD
PN221

I've got no further questions.

PN222

THE COMMISSIONER: Yes, thank you. Yes, Mr Downes?

<RE-EXAMINATION BY MR DOWNES [10.29AM]

PN223

MR DOWNES: Mr Brewer, you've been asked a number of questions along the lines of if the company decides, for whatever reason, and even if it's a perfectly acceptable reason, safety, for example, not to implement any one or all of the redundancies or the reductions that the employees do not get their money. Do you understand that to mean that they get no money out of the agreement or just that they don't get some of it?---My understanding is the employees are guaranteed to get 10 per cent over the two years of the agreement and then there's a further six per cent tied to three productivity improvements. So in the nature of the question, it would only apply to two per cent linked to any one productivity improvement, one shift position reduction. I would also add that in that situation the business does not achieve its productivity improvement.

PN224

What is your view in respect of that 10 per cent if for reasons which everybody accepts are reasonable, none of the reductions occur?---My view of the 10 per cent is that it's a very generous increase in the current environment if there's no significant productivity link to shift position reduction. The evidence that Mr Downes put forward earlier about other refineries and my general knowledge of what's happening tells me that that is a significant increase over a two year period in the current climate.

PN225

Thank you, Commissioner, I have no further questions.

<THE WITNESS WITHDREW [10.31AM]
<SHORT ADJOURNMENT [10.32AM]
<RESUMED [10.57AM]

PN226

THE COMMISSIONER: Yes, Mr Downes?

PN227

MR DOWNES: Thank you, Commissioner. I call Ms Paris.

<BELINDA PARIS, AFFIRMED [10.58AM]
<EXAMINATION-IN-CHIEF BY MR DOWNES

PN228

MR DOWNES: Ms Paris, would you give your full name and address for the record?---Belinda Paris, (address supplied).

PN229

Ms Paris, would you have a look at the witness statement which is now being shown to you with a number of attachments. Would you please have a look at that and please tell the Commission whether or not you recognise that?---Yes, I do.

PN230

Ms Paris, would you have a look at paragraph 23 and is there a correction you wish to make in that paragraph? Should "decision" in the second line be singular or plural?---Sorry, yes, should be plural.

PN231

So you want to add the letter s after decision in the second line?---Yes, thank you.

PN232

Would you turn to paragraph 31. Is it correct that there should be a comma between the words process and unit towards the end of the third line?---No, please remove the comma.

PN233

Just further down in paragraph 33, should the second word be measure or measures?---Measure.

PN234

You wish to delete the s?---Yes, thank you.

PN235

Paragraph 38, there were two changes you wish to make to that paragraph?---Yes, please remove "and" from the start of the second line and also there's an extra full stop after work hours at the bottom of the paragraph.

PN236

Thank you, Commissioner. With reference to the attachment, it's just a typographical error.

**** BELINDA PARIS XN MR DOWNES
PN237

Now, Ms Paris, in relation to paragraph 35 you say there that personnel cost index US dollar per EDC compares the total overall labour cost as a factor of EDC in United States dollars, "As with the measures above, the refinery ranked eighth out of the eight Australian refineries." Could you please give the Commission an indication of the extent to which operators constitute a component of the refineries personnel cost index factor?---This is information from the 2004 Solomon survey and the data input into that survey to Solomons at the time, operators comprised approximately 37 per cent of all personnel employed by the refinery for the purposes of the calculation of the personnel cost index. So operators - it would account for approximately 37 per cent of that index.

PN238

Thank you, Commissioner, I have no further questions. I would seek to tender Ms Paris' statement together with the attachments as her evidence-in-chief.

EXHIBIT #CALTEX 2 STATEMENT OF BELINDA PARIS
<CROSS-EXAMINATION BY MR WOOD [11.03AM]

PN239

MR WOOD: Yes, just a couple of questions in general. First of all your witness statement that you've provided to the Commission essentially deals with your understanding of the Solomon report?---Yes, and the information contained in that report.

PN240

You haven't been involved in any of the discussions during the enterprise bargaining negotiations of the company and the union?---No.

PN241

Now, in relation to the Solomon report, I think it's somewhere in your evidence you say that Caltex Lytton Refineries finished eighth out of the eight refineries in relation to hours of work?---I just want to be correct in finding the?---Yes, in terms of personnel index, number of work hours per 100 EDC for the refineries we finish eight out of eight refineries in the region titled Australia.

PN242

So correct me if I'm wrong, that is the amount of man hours that need to be put in to get the amount out of the refinery, correct?---No. It's in terms of 100 EDC and that's a benchmarking term put together by Solomons which basically compares - well, it takes into account the size and complexity of a refinery. So by comparing them by EDCs you're sort of able to compare them on a like for like basis.

PN243

Being an analysis, do you think that Caltex Lytton's position can improve then, based on the formulas that are used?---It can improve, yes.

**** BELINDA PARIS XXN MR WOOD
PN244

Could it become number one?---Yes, that's feasible.

PN245

In that area, it's feasible. So what was the difference between, say, the number one refinery and Caltex Lytton?---I don't have the results for the number one refinery but I can give an average of the top two refineries from the report.

PN246

Do you know who the top two refineries were?---No, that information isn't provided.

PN247

There's eight refineries in this assessment, in Solomon's report?---In the group titled Australia, yes.

PN248

And in this respect Caltex Lytton was last?---Yes.

PN249

Can I put to you that the best refinery in the last Solomon report was Shell Geelong?---I don't know that information, sorry.

PN250

And the year before that it was BP Kwinana?---Again, I'm not aware.

PN251

But it is possible for Caltex refinery in Lytton to become number one?---Yes.

PN252

In your view what would be required to make that happen?---I haven't done any further analysis on the data and it would be difficult to ascertain if other refineries were changing personnel numbers as well because the only data we actually receive is averages on the entire Australia group. So you could make some estimates as long as certain variables didn't change such as the number of personnel already in other refineries. If that all remained the same, then we could provide an estimate of the number of personnel we would have to have on site to be number one in that category.

PN253

That's assuming that all the other refineries do nothing and Caltex does something?---Yes, that's true.

PN254

What's the likelihood of all the other refineries doing nothing and Caltex doing something?---That's very unlikely.

PN255

So it is possible to become number one, but in order to become number one, everyone else would have to stop and that's unlikely, is that your evidence?---I'm sorry, I don't understand what you mean by stopping everything.

**** BELINDA PARIS XXN MR WOOD
PN256

Well, your evidence was that Caltex could become number one and then you further agreed that it could become number one but basically all the other refineries would have to stand still?---They wouldn't have to stand still but in order for us to estimate how many employees we would need to become number one, we could make a very good estimate with the information provided and that information was current as at the end of 2004. So if we made estimates on the number of personnel that we required to be number one for that still to hold true, there would have to be no other changes in the data.

PN257

When you assess this element of your performance, do you take into consideration or account the requirements of the plant?---That's all taken into account with the term EDC, which covers size and complexity of refineries.

PN258

Do you take into account the safety then of employees if you decide that you were going to do it with less people?---I'm not sure whether that's taken into account in EDC.

PN259

So you wouldn't know to become number one whether it's just a mathematical equation but might have a serious consequence to that? You wouldn't know that?
---Sorry, can you rephrase that?

PN260

Well, your evidence was you don't know if safety is taken into account in the numbers, that was your evidence, is that right?---I don't know if safety is taken into account in terms of putting together the EDC.

PN261

That's right. So to get to number one, you may be able to get there mathematically but you wouldn't know whether it was safe or not, would you?---I wouldn't, no.

PN262

Are you familiar with any of the claims that the union have made in respect of these proceedings with the protection of defined hours and so forth or - - -?---No, I'm not.

PN263

All the refineries use the Solomon report?---The refineries in Australia, to my knowledge, that subscribe - all the refineries in Australia, yes.

PN264

In terms of output versus the amount of man hours, if the union was to point to say - you say you're number eight, say we pointed to number one, would it surprise you that the arguments that we're advancing here are from the number one refinery and you're number eight and it's Caltex's position that that doesn't work?---I'm sorry, I don't understand. Can you rephrase that for me, please?

**** BELINDA PARIS XXN MR WOOD
PN265

Well, does it surprise you that - well, first of all your evidence is, you're number eight. There's eight refineries including the one in New Zealand. Does it surprise you that the very best refineries in this category, that the issues that we bring before the Commission are the very issues that you say that Caltex have occasion to oppose - - -

PN266

MR DOWNES: Sorry, Commissioner, it surprises me because there is no evidence in support of this. This is the same objection I raised earlier. There needs to be come evidentiary basis for the proposition which has been put to Ms Paris and there simply isn't one at all. Ms Paris has been asked to (a) assume that what Mr Wood tells her is factually correct and then to speculate. She's already said she doesn't know what the merit arguments are. The second speculation she's been expected to make is that the arguments that are being advanced in respect of which she has said she has no knowledge, apply at the refinery which ranks number one. So the third bit of speculation she has been asked to make is that they do in fact apply at the refinery that is ranked number one. The question is just completely unfair.

PN267

THE COMMISSIONER: She doesn't know who the number one refinery is anyhow, other than what - - -

PN268

MR WOOD: I agree, Commissioner, it's an unfair question to ask. The only point I make out of all of that is all of their evidence is that in this category, the evidence they bring to the Commission is that they're the worst in that category and my only question was, do you know who the best is, and they don't know the answer to that so I have no further questions.

PN269

THE COMMISSIONER: Yes, Mr Downes?

PN270

MR DOWNES: I have no re-examination, thank you, Commissioner.

<THE WITNESS WITHDREW [11.14AM]
<PETER JOSEPH CALLAGHAN, SWORN [11.15AM]
<EXAMINATION-IN-CHIEF BY MR DOWNES

PN271

MR DOWNES: Mr Callaghan, would you just provide your full name and address for the record?---Peter Joseph Callaghan, (address supplied).

PN272

Mr Callaghan, you're going to be shown a witness statement, two statements, and there are some attachments to the first. Would you please have a look at those and then tell the Commission whether or not you recognise them?---Yes, they're statements - my statements.

PN273

Mr Callaghan, would you have a look at the first statement and go to paragraph 82?---Yes.

PN274

Is there a correction there that you wish to make?---Yes, Commissioner. The bolded comment there shouldn't be part of the statement. So it's typographical, I guess.

PN275

Would you then turn to paragraph 165 and the date, Monday, 8 November 2005, should that read Monday, 7 November?---Yes, it should.

PN276

Finally, paragraph 174?---Yes.

PN277

Should the third word in the third line read "ensuring"?---Yes, it should.

PN278

Thank you, Mr Callaghan. Would you please turn to paragraph 33 of your first statement. Now, it's not in dispute that it was certified, it's 2005 agreement, very recently. Would you please inform the Commission whether or not you have any knowledge of the outcome of that agreement in terms of its wage increment for 2005 and how that knowledge came to your attention?---I had a conversation with Brett Dixon, who's the HR Manager at BP, and discussion was about wage movements and that sort of issue. He basically conveyed, although it wasn't said, that essentially their agreement was five per cent per annum for three years and they added an extra two per cent to make it seven per cent for this current year. Because the operators were accepting clean fuels units that BP are putting in with no additional manning.

PN279

Thank you, and finally, Mr Callaghan, would you have a look at paragraph 36 of your first statement?---Right.

**** PETER JOSEPH CALLAGHAN XN MR DOWNES
PN280

You make reference in that paragraph in the second last line, in the final sentence, to natural attrition?---Right.

PN281

And you make reference again to natural attrition in paragraph 15 of your statement in reply?---Right.

PN282

So that it is absolutely clear, would you please inform the Commission whether or not the first intended reduction is dependent upon natural attrition or whether it is not?---The first reduction is a reduction of one shift position. We don't see the reduction of one shift position being dependent on natural attrition. So that, in other words, that's the minimum manning for that shift, so we don't see that as being dependent on natural attrition and therefore the pay increase is not dependent upon natural attrition. However the saving to the company would be dependent on natural attrition for that position. So in other words, what that means is that we wouldn't be hiring people, basically.

PN283

So how will that first reduction physically be achieved in terms of shift operator numbers?---We need to go through a process that involves the PIW group and potentially other operators as well as the management side and then to determine how we're going to remove that shift position which may involve some training or something else. Then at an agreed time we would remove that shift position and the operators may be reallocated tasks or they may be used in training or other jobs. I expect at some point we'll have a fair bit of training to reduce numbers.

PN284

So is it correct or is it not correct to say that that first reduction is dependent upon natural attrition?---It's - in terms of reducing shift numbers it will take time to reduce the total overall shift numbers. However, in terms of reducing the minimum number on shift, it's not dependent on natural attrition and that's what we're basing our pay increases on.

PN285

Thank you, Commissioner. I'd ask that the first and second statements of Mr Callaghan be tendered, or I tender them as his evidence-in-chief.

EXHIBIT #CALTEX3 PRIMARY STATEMENT OF PETER JOSEPH CALLAGHAN
EXHIBIT #CALTEX4 STATEMENT IN REPLY OF PETER JOSEPH CALLAGHAN

PN286

MR DOWNES: Thank you, Commissioner, I have no further questions.

<CROSS-EXAMINATION BY MR WOOD [11.24AM]

PN287

MR WOOD: I just want to pick up on that last line of questioning because I'm not sure on fully understanding the position given your statement. It talks about natural attrition for operators. I suppose the easiest question to ask, is it the intention of Caltex to make any of its employees redundant to reduce the first level of operators from three to 22?---No.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN288

If operators want to stay in their current positions doing their current work under their current classifications, you see that that's going to happen?---Given there may be a need for some changes due to reduction in shift manning, but apart from that, yes, that would happen.

PN289

What are those changes, for instance?---I can't tell you that because we haven't been through that process yet.

PN290

Let's get specific then. Mark Field, who is an O4, works in a particular area, he wants to stay in that area as an O4. Do you see that the reduction from 23 to 22 could affect him, that he could be taken out of that position?---No, I don't believe it would. He may have to learn some more duties or he may have to perform some more duties.

PN291

Essentially, and stay where he is as an O4?---Yes, yes.

PN292

The agreement takes into account, apart from this argument of natural attrition, putting that aside, the agreement does take into account working in different areas, is that right?---Well, the agreement takes into account that the number of reduction will occur, and so therefore the flow-on changes from that, I believe, would be taken into account.

PN293

Because in your witness statement at 32 you said that over time through natural attrition operators' numbers will fall so that there was not a surplus of operators to requirements. You stand by that, don't you, or is that wrong?---I believe over time the operator numbers will fall to balance whatever need we have.

PN294

Paragraph 36, last sentence in your witness evidence, you say that over time through natural attrition operator numbers will fall so that there are not surplus operators to requirements. You stand by that position?---Yes.

PN295

Right, okay. So it will be through natural attrition for operators, because that's what that says?---For the overall numbers, yes.

PN296

Paragraph 33 you talk about the wage increases to operators since 1999 as being consistent with general wage trend movements. You say that overall when you take into account from the highest paid to the lowest paid and the average that's worked out, is that your evidence?---All the wage increases have been general to my knowledge.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN297

They haven't been linked to, say, refineries, been linked to what's generally happened in the community at large?---Sorry, I'm not clear on the question, sir.

PN298

Well, your evidence in number 33 says that you believe the wage increments paid to operators since '99 have been consistent with the general wage movement trends. You're not talking about general wage movement trends in the oil industry. You're talking about general wage trends across Australia in all industries?---Yes. We're talking about general community trends.

PN299

But you compare yourself in terms of output, productivity, your Solomon report, everything else on the oil industry, but not wages, is that right?---We certainly do compare ourselves in the oil industry on Solomon's and we do look at the wages of general industry as well.

PN300

Yes, general industry?---Yes.

PN301

So you compare yourself, for everything else with the oil industry, bar wages, that's the question, is that right?---I don't know if it's everything else, but, yes.

PN302

You spend a lot of time looking at all the other refineries, you go to the other refineries, you look at what their productivity is, what their output is, what their kit design is, what they purchase their crude oil for, where they get their crude oil, all of that, you look at?---Yes.

PN303

But when it comes to wages you look at the general wage movements, not what's happening in the refinery industry by itself, is that right?---We do look at the refinery industry, but we do look at general industry.

PN304

A sideward glance, you might say?---You might say that.

PN305

That side of things, okay. Now, in paragraph 34 you talk about the four items that were put to the AWU?---Right.

PN306

You recall that one of those was allowances that you wanted the union to forego to get high wage increases?---I do.

PN307

And you recall that the AWUs position was it wasn't going to rob Peter to pay Paul, it wasn't going to give away money to get money back?---I do.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN308

The issue with the head operators, we identified a number of problems with that concept?---Yes.

PN309

And it was Caltex that actually dropped that issue, we didn't ask that you drop it, it was just dropped for your own reasons?---I wouldn't have put it that way, sir.

PN310

How would you put it?---I would have said it came up during the discussions, it seemed like a fruitful avenue to go down, then at one meeting, and I think it was the one after one of your mass meetings, there was quite a bit of discussion saying that anyone who did any - the current head operator duties who was employed by the AWU would have to be paid at the operator level and there just became too many impositions on what we wanted to do. So we never thought we'd be able to reach agreement on that point.

PN311

Paragraph 38, you've put there that this is in relation to the reductions?---Yes.

PN312

The first reduction is that with the full support of the operators, you think this can be achieved by the end of 2006?---Yes.

PN313

And the union has said to you that it gives full support for that?---The unions?

PN314

The reductions, the work force and the reductions, there's full support for that?
---You've said that.

PN315

People have voted on the agreement and - - -?---Yes.

PN316

And they're saying they support and understand that there's going to be reductions occurring?---People have voted on the agreement, yes.

PN317

And that people have voted on the ground support of the agreement?---That's - presumably they do, Sam. Some voted against as well.

PN318

Were you advised of the outcome of the meeting?---I was.

PN319

97 voted for the agreement?---Mm.

PN320

And 17 voted against it?---Mm.

PN321

The vast majority of people support the agreement?---Well, there was also at least 50 operators who didn't turn up, so.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN322

Well, even if all of those 50, that's 67 to 97, the majority of people support the agreement?---Yes.

PN323

Good. Now, paragraph 42, you say that you believe that unless the increase is dependent upon implementation, operators will, "not support the process or find a way to obstruct that in some way", do you still believe that?---Yes.

PN324

So despite the fact that the operators have voted and despite the assurances that the union give, you still believe that the operators won't support the de-manning?
---Based on that and discussions I've had I believe some operators will definitely not support de-manning.

PN325

Do you agree that whilst some people mightn't like it, the fact is that whether they like it or not, the work force has agreed to it, the union's agreed to it?---Yes, they have agreed to it.

PN326

So you'd say that there are some operators that you believe are going to have difficulty with the reduction?---There definitely are some who will have difficulty with the reduction.

PN327

What do you plan to do about that, those that are going to cause some difficulty?
---I guess there's two sides to it, Sam. One is our view linking the reduction to pay and the other side is trying to get them involved in whatever process we come up with.

PN328

If one operator or 17 operators don't follow the reduction, but all the others do, are you going to stop everyone's, or just the 17?---It's a collective agreement.

PN329

That's right, it is a collective agreement. So collectively the unions agree and the work force agree to implement the de-manning by the company, is that right?
---Yes.

PN330

So it doesn't matter about what individuals might think. They'll just have to comply with the majority, is that right?---That would be nice.

PN331

Let me put this to you. That's the expectation on all issues with the union, whether we're on strike or, you know, the majority rules. Do you agree with that?---I understand that's your position, yes.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN332

In paragraph 50 you outline in the last sentence that there are some improvements or efficiencies that can be identified by the operators where the management can't?---Yes.

PN333

You'd expect that we, the operators and the negotiating team identify those efficiencies?---Yes.

PN334

And you'd expect that given we supported the agreement, would implement them?---In order to get that pay increase, yes.

PN335

That's a matter before the Commission, isn't it, whether it was going to be tied to that?---That's right.

PN336

We're saying that we're going to do it?---Yes.

PN337

And that would be, you understand that our issue is then that given that we're going to do it and we're going to assist you in that, it follows therefore that we get the money, do you understand that?---I understand your argument.

PN338

In paragraph 52 you also say that you need to hear all the possible safety concerns before implementation of the changes?---Yes, that's right.

PN339

Rather than after?---That's right.

PN340

So it may very well be that given all of the input, given the fact that they've attended meetings, that they've done everything in their power, it might be that there are some safety concerns that prevent the implementation of change?
---There might be.

PN341

And it's your position then, if they've involved in that process and they've done everything and there was a safety concern, that they wouldn't get the money?
---That's right.

PN342

Do you think that's fair?---Yes, I do.

PN343

I was made aware when I was reading some questions and answers that you actually got an agreement in 1999 to de-man and you didn't do it?---That's right.

PN344

And it was written in to your EBA that you could do it?---It was.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN345

You understand that the union is a little bit hesitant given you had agreement before and you didn't implement it, you might get agreement again and not implement it and our wages are tied to it?---I understand the union's argument, yes.

PN346

Now, in paragraph 63 you outline a number of disputes that have occurred since the last EBA?---Right.

PN347

And a number of those are now incorporated in the agreement?---They are.

PN348

The refinery that you work on, the refinery that you're a manager on, is on an annual wage, isn't it?---It is.

PN349

So theoretically at no extra cost to the company you can keep putting more and more work there at no cost to the company because they're on an annualised wage?---There's a bank of hours above which we would pay.

PN350

Yes, well, in the first year of annualised salary, what was the percentage of work of an employee doing the bank of hours?---I don't have that, sorry. You probably have.

PN351

Yes, we have made a note of it. For the first three years, 100 per cent of the overtime bank was done by 100 per cent of the operators, and no other refinery in the country did that. Does that surprise you?---Given what I've seen, no.

PN352

Isn't it the case that the union has basically said that if you put defined hours in there, what areas are going to do, you can put as much work in there as you like now, the union said that?---Yes, the union have said that.

PN353

So things like the row torque valve, the barge tie ups, they can all be included now because from the union's perspective anyhow, there's some protection of the hours that will be worked?---I don't think it was those two in particular, but the north products pipeline, the issue certainly came up as it gave some protection if that matter was agreed by the Commission.

PN354

Now, at paragraph 94 this goes to the bunker barge tie ups and the history about that involving PIW. Now in the last sentence it says:

PN355

No additional or new safety concerns have been raised on condition to performing this task under the new agreement.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN356

What we have said in picking up that that we wanted defined hours there, didn't we, because that actually gives us protection?---I don't specifically remember bunker barges being referred to during discussion within the defined hours.

PN357

Do you - - -?---I'm not saying you haven't said it.

PN358

But bunker barge tie ups are in the agreement?---They are, that's right.

PN359

And your evidence was that during these negotiations no new safety concerns were raised for performing the task, that's correct?---That's right.

PN360

I don't have it, but it follows that all of the extra job levels that were put in there were done so because there was an expectation of the union that we'd have some protection in defined hours?---We reached an agreement. I guess I'm not exactly sure what the union's particular concerns were on each issue and to why they agreed.

PN361

Well, I'll put it to you this way. If for instance you decided to get rid of all of your maintenance and say, all right, we want to train our operators to do that at work, unless we have some sort of defined hours of what we're expected to work, I might have put it in this context to you that we don't want to be working 60, 70 hours a week. We want some protection there. We want to know that what we agree to - we'll agree to anything as long as there's not additional hours that we would be expected to work. That's how the defined hours came up, and that's why there was an agreement to include a number of parts there that you wanted, because we had that protection there, is that right?---Sam, I've certainly heard your discussion about why you want the defined hours and I've heard the discussion about 60 or 70 hours a week and maintenance or other tasks, but I must admit I don't recall a direct linking like that.

PN362

You recall that there's a number of extra jobs that have gone into the agreement?
---Yes, yes.

PN363

And I'll put it to you that the reason that that's happened is because the union has now got some comfort in the fact that you can keep putting work and work and more work in there because we've got defined hours, but if you take the defined hours out, all you've got is the work coming in with no protection. Is that right? I'm not asking you to agree that that's right, that what I'm saying, but that is a consequence. If there's no defined hours there, your application, other than your word coming from the worst refinery in the country, is that it won't happen. We're saying, all right, it mightn't happen, but we want a defined hours there?---Yes, I understand your argument, Sam.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN364

All right, and we're saying that you can put as much work in there as you want. Now, whether it's the pipeline or the barge tie ups or the row torque valve or whatever, the clean fuels, put it all in there, give it all to us, but only on the basis that we get some defined hours, that we know that we're not going to be working more hours than what we've traditionally worked?---Yes, understand that.

PN365

Now, paragraph 136, it's your evidence that there are existing safeguards in the proposed agreements together with the way that the manning productions will be implemented will not result in excessive overtime being worked. That's your statement. What safeguards are in there that you say are in the agreement that protects us from excessive hours of overtime?---There was a - fairly early on in the - I can't remember the clause number - but fairly early on in the discussions with the AWU we sat down and tried to work out some words around overtime because I believe both parties, it was in their interest to try and reduce overtime. So there's some wording there. There's also the bank hours that are there, so if people, individuals do go above the overtime bank, then they will be paid in addition and I guess that would probably be the same now.

PN366

I believe that you're talking about is the principles of the agreement, you know, there is an intent that overtime occurs and so forth, but that doesn't really give an absolute right that it's going to happen. It's the intentions of all parties to go into that, but there's no absolute right there to say, for instance, come to the Commission if the overtime does start to blow out?---There's still the right for people to go to the Commission. It's just the Commissioner can make a recognition which either party could ignore.

PN367

Yes, but I think you've made it fairly clear that you don't necessarily have to accept that?---No, we don't, but I think we'd think pretty hard about not accepting the Commission recommendation.

PN368

In your proposal there were actually, from a Commissioner's point of view, there's nothing in there to say that the Commission hasn't got a right to make a recommendation?

PN369

MR DOWNES: Sorry, Commissioner, that's agreed. Yes, it's in the agreement that as the final step of the dispute procedure, other than for the discrete clauses which are in dispute, it's agreed that a matter can be referred to the Commission but not for determination. So it's not correct to say that it's one of Caltex's claim. The disputes procedure is agreed other than for the claim in attachment L.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN370

MR WOOD: Well, that's right and attachment L gives the powers to the Commission to arbitrate and you have to accept it in relation to the hours of work.

PN371

MR DOWNES: Yes, okay.

PN372

MR WOOD: In terms of the bank, that doesn't necessarily address the union's concern because that only starts to kick in after 273 hours?---That's right.

PN373

So the union's concern was not the 273 hours. It was if they went into an agreement that caused them to work more hours than what they were expected to work, so that's in between, say, 90 hours and 273 hours, there's really nothing there that the union can do until after the bank and all it can do then is it just gets more pay?---I think at some point the delegates would be coming to talk to us if everyone was working those sort of hours, in fact, I'm sure they would.

PN374

Then during clause 136.3 you talk about paid hours, operators are paid to work 5.25 overtime hours?---Yes.

PN375

Now, once again you make reference to the community standards. Are you aware of the hours operators work at BP Kwinana Refinery over a year?---You're referring to additional shifts above the 35 hour week?

PN376

Yes. I'm talking about overtime hours that BP Kwinana work over a year per operator?---Yes.

PN377

Do you know what the average would be there?---You've told me in the past, Sam, it's 12 additional ordinary hours.

PN378

Shell Geelong is 12 hours per operator per year and BP Kwinana is four hours per year per operator?---I talked to John Bardon. He told me for his movements operators, they did an extra one shift a year on average and for the process operators, they probably did a few more, so it doesn't quite gel, but it's certainly less than what we do.

PN379

In the last 10 years at BP Kwinana they had on average 40 hours built up per operator and that works out to about four hours a year. They might have recently worked 12. Are you saying that John Bardon told you they're working about 12 now?---He's saying for his movements operators, they're working an extra shift.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN380

So their 12 to your 273?---I believe it's 12 and then double time, so it would be 24 to our 273.

PN381

Twenty-four to 273?---Yes.

PN382

Okay, paragraph 141, I just wanted to ask you some questions on that. Prior to our final position, the AWU had three groups?---Yes.

PN383

And the company proposed that it would be better and more manageable to have two groups?---Yes.

PN384

And the company requested that assistant head operators, console operators and senior area operators go up into group 1?---Yes.

PN385

And the AWUs initial position, group 2 went up into group 1?---Yes.

PN386

Group 3 became group 2?---Yes.

PN387

And that covered area operators 1 to 4 and the trainee operator?---That's right.

PN388

And when you'd gone through those issues, the company suggested that the head operator would drop 10 hours and the other operators that were under the AWUs original proposal be increased by 20 hours. They'd go up to 140 as well?---I believe so.

PN389

Now, it is the intention of Caltex to reduce the amount of hours that have been worked?---Yes. It's our intention to try and minimise people working overtime.

PN390

And given that there's no evidence of this, you would like to in terms of that particular calculation be the number one refinery in the country?---There's probably a few other ones I'd rather be number one in, Sam, first.

PN391

Would pay be one of those?---Do you really want me to answer that?

PN392

No, I don't think so. I know the answer to that question. That's why I asked it. Now, clause 153, you say that the Caltex position is that properly structured manning reductions, together with the protections which existed in the proposed agreements will prevent excess overtime hours being worked by operators?
---Right.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN393

Now, if that was right, you're saying that that would happen and if that's right, the AWUs claim particularly for defined hours and coming here to the Commission, it's not going to eventuate, is it, if you're right?---Yes, the concern I guess, Sam, is we've never rated under the sort of process before and we really don't know where we'll end up in terms of greater overtime and we'll all end up in terms of equitable sharing.

PN394

But given the best intentions of everyone, you would have to accept that the AWUs issues only get brought before the Commission in respect to the defined hours and the arbitration if yours doesn't work. If yours works, well, we don't get here?---Well, even if we don't de-man, my understanding is we could still end up here.

PN395

Well, that's correct, but that's as a consequence of continuing loading work onto people and we said, all right, well, we can continue to have work, we can have the clean fuels, we can have the row torque valve, we can have the area north pipeline, just keep giving us work, but we just want that protection that it's not going to affect our overall obligations to the company?---I understand your arguments.

PN396

That's a fair proposition to put, don't you think?---Well, the other side of the coin is we've already paid for a bank. Why put extra impositions on the agreement?

PN397

But the best refineries in this country don't use the bank, or they don't use all the bank. They only use 12 hours of the bank?---The best refineries in the country probably have a better attendance record than we do as well.

PN398

Well, I would suggest that it's a cultural change with everyone, not just with the workforce, but with the management and the workforce?---I'd suggest you're probably right.

PN399

You wouldn't disagree in terms of paragraph 153 that if you're right there, at least for the issue about coming to the Commission, it would never eventuate, would it, because you've got a properly structured manning reductions together with the protections in existing proposed agreements that will prevent excess overtime being worked by operators, so if all that happens, you'd have to agree that what the AWU is claiming here won't eventuate, because that will all be in place?
---Yes, if we reduce manning and we don't believe that by itself would - - -

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN400

Increase overtime?---Would increase overtime.

PN401

It follows that the AWU wouldn't then come to the Commission because there'd be nothing to complain about, is that right?---Well, I'm sure the AWU might find something to complain about, Sam.

PN402

Well, would it make any difference if I said to you right now we will not bring a claim here to the Commission if that's right?---That's good.

PN403

Do you accept that? What are we going to complain about? If everyone is working to the agreement and the agreement is working, why would we bring an issue to the Commission?---We're talking about the future, Sam. The manning structure, if it's properly de-manned and we reduce the right number of people and we keep the numbers up, then I don't expect there's a reason. However, unforeseen things can happen.

PN404

All right. Now, let's concentrate on the unforeseen things. In the event unforeseen things happen, what's your solution to that problem?---It depends what the unforeseen thing is.

PN405

Well, our solution is that after giving you all the possible ways of fixing the problem and you can't do it, we'd then come to the Commission with a case to say that, look, this area, these operators in this group are working way above what they should do, the company is not doing anything about it, we've given them ample opportunity to do something about it, they haven't done anything about it so we came here. Now, that's what we would do. Now, you're saying that you don't think it will happen and I hope that it doesn’t happen, but my question is this. If it does happen, if the wheels fall off and in your own words, you said, you know, this is what we propose to happen, but something might go wrong, what is the company's position if something does go wrong? What are you going to do about it?---What's the question, Sam?

PN406

The question is what are you going to do if that doesn't happen?---If 153 doesn't happen?

PN407

If 153 doesn't happen, for some unknown reason you are working excessive overtime, what's your answer to fixing it? What are you going to do?---We obviously try and work out what the cause is and address whatever the cause is, whatever that might be.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN408

And if that doesn't work, you just say, you know, it just happened, people are working excess hours, we're saying we want to bring it to the Commission. You're saying - I don't want to put words in your mouth - but just trust me. That's your solution, trust me?---Is there a question there, Sam?

PN409

Yes, the question is what are you going to do if there is excessive overtime hours being worked once you de-man? What are you going to do if that's wrong and we can't come to the Commission?---We'll have to work through what the issues are and try and sort it out.

PN410

And if that doesn't work, what happens then?---Presumably it will work.

PN411

Well, let's presume for a second that it doesn’t work?---Commissioner, I - - -

PN412

Would you put more people on?---Maybe you can clarify what he actually wants. I'm struggling to understand what you're asking me, Sam.

PN413

THE COMMISSIONER: Perhaps you might try rephrasing it. Put just a question, rather than a statement.

PN414

MR WOOD: Well, the question is if operators as a result of de-manning are working excessive hours of overtime, much more than what was expected to be worked, what are you going to do about it?---Would we employ more people?

PN415

No, I'm asking what you'd do about it. If your answer is you'd employ more people, that's the answer?---If we believed it was a long-term issue, we would most likely end up employing more people, if we couldn't fix the issue some other way.

PN416

Okay?---But it may not be a long-term issue.

PN417

But if it is a long-term issue, you'd employ more people?---If we needed to.

PN418

Well, when you say if we needed to, if people are working excessive overtime, more than what you expect, do you think you need to then?---If it's a long-term issue, yes, we probably would.

PN419

Good, that wasn't too hard?---Do I reply to that, Sam?

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN420

You touch on the refinery de-manning again on paragraph 155 and I think further on in your statement, too, you talk about the Solomon report. Given that in this area the refinery is eight out of eight, do you think that the three positions that are de-manned as a result of this agreement would make the refinery number one?
---No.

PN421

What do you think it would lift it from, if it's eight now and you de-man three positions?---I actually don't have that information.

PN422

Okay, in terms of 157.1 to 157.4, they're basically all the things that the union and the company has done to incorporate into the agreement to make the agreement and more importantly the equitable sharing of overtime occur, is that correct?
---Yes.

PN423

Right, and in 158, in the second line towards the end, you say:

PN424

Operators work virtually no overtime.

PN425

We're obviously talking about some operators?---Yes.

PN426

Again, that's a management thing. You've allowed that to occur, is that correct?
---Interesting question. My understanding and I wasn't there when annualised wages were brought in, my understanding was at the time people wanted to write down a lot more rules and were told by the AWU delegates, no, leave it alone, it's our system, we'll work it and we'll make sure it happens equitably and certainly a few years before I was production manager, it didn't look equitable at all.

PN427

So you're paid as a manager, the operators say leave it alone, go away, we're going to manage it, you do that, that's your evidence?---I'm just telling you what happened, Sam.

PN428

And if that's what - and you went away and you weren't responsible for managers and you let them do it, that's all I'm asking. If that's what you did, that's what you did?---That's what happened and I don't believe it worked very well.

PN429

But we're going into a brave new world now where management is going to manage and the workforce is going to - with this agreement?---Yes.

PN430

Because in 159, right through paragraphs (a) to (k), talk about how all of that is going to be managed, correct?---Some of that happens already.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN431

Now, it becomes a bit more confusing in terms of your witness evidence in paragraph 161 and it's headed hours not excessive. When you say they're not excessive, they're not excessive compared to what?---General community.

PN432

Compared to what?---General community.

PN433

Right, so we're back to general community, but they are excessive compared to Shell Geelong and BP, in general community they're not?---They're more than Shell Geelong and BP. I think it's debatable what excessive is.

PN434

In 162 to 163 you talk about the AWUs position of having defined hours is in effect a de facto wage claim. Given that it's your expectation and my expectation that no additional hours are going to occur, we're only going to work to all this, how can you make a statement that this in effect a de facto wage claim? You might be able to make an argument if you're wrong, but you're saying you're right. If everyone's saying you're right, that there's not going to be any increased overtime, so how can it be a de facto wage claim if you're right?---We're talking about the future, so things can happen that you don't expect and I guess the calculations were based really on the last year and people's behaviour and sick leave and equitable sharing for the last year and other years have been worse. Some years have been much worse, I guess, so really what we're saying is we've paid for the 273 hours once. It's all been put on someone's superannuation, all the rest of it and now we're saying we're never going to work it, whether we need to or not for a short period of time.

PN435

No, well, we're not saying that we're never going to work it. As a matter of fact, the defined hours say 40 hours and 90 hours are going to be worked or given the 10 per cent loading on top, 154 and 99, so it's not as if the union has just said we want you to get to where the best refineries in the country are, we're doing it over a much longer process, so there are going to be some hours worked, but even on your own evidence, we don't know. It's uncharted waters that we're going into. It's not unreasonable that the union would want some protection there. We are going into uncharted waters. Do you think it's unreasonable that we want some protection there?---Well, the hours are paid for, Sam, so whether they're worked or not, they're getting paid for them and if you work any more hours than 5.25, then you get paid for those as well, so I would have thought that was adequate protection.

PN436

Are you aware of what commitments were made by Caltex when they requested that the Caltex refinery employees went from a general wage to an annual wage as to what their expectation of overtime levels would be? Do you know what that was?---I'm not aware specifically of commitments, but I know that people were told that their hours would drop off based on experience at other refineries.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN437

And the statement made by management at the time was three per cent. That's what they'd expect to work of their banked hours, yet in the first three years they worked 100 per cent over, so you only got that wrong by 97 per cent a year for three years and you want us to trust you?---I can't argue with your numbers, Sam, because I don't have them, but I suspect the three per cent was comparing three per cent to seven and a half per cent not - which is about 150 per cent, not whatever it was. Certainly the annualised wages didn't work as expected.

PN438

No, they haven't worked, the annualised salary hasn't worked like it's worked in other refineries. Would that be fair to say?---Yes, I agree with that.

PN439

Is there something in the AWUs claim that leads you to believe that if that's incorporated, it won't work?---Could you just rephrase that, sorry?

PN440

Well, the AWU makes a claim that it wants to have some defined hours, wants to bring the matter to the Commission if the company doesn't bring the defined hours into control and it wants the pay increases not linked to the management's ability to manage. It just wants them paid. It's prepared to give the company the right to come to the Commission and argue that we don't get the wage increases for the de-manning because we're doing something to prevent that from happening. Those are the issues that - are any of those issues an impediment on the company for getting to the level it wants to in refining?---Certainly I think the wage claim is an issue, Sam, because I believe unless it is linked, people will find a reason why it can't happen.

PN441

Yes, but the AWUs position is if people do find a reasons that it doesn’t happen, you can bring it to the Commission and if you're right, we don't get paid. That's the proposition we're putting?---That's right.

PN442

You're not saying this is just a one way street?---It's very difficult to argue that in the Commission, I would think.

PN443

What I'm saying is very easy. If, for instance, we weren't participating in meetings or we had a ban on or during the meetings, even if we did attend them, that we sat there and said nothing, all of that would be evidence that you could come to the Commission and say, listen, you know, they're not giving us our information, they're not doing that so they're trying to stop the de-manning so therefore they don't get paid. That's the proposition we're putting to you?---I guess my - if I go back to the 2003 agreement, there were words in there that talked about all overtime will be worked, no unreasonable requests, we'll commit to continuous improvement, all sorts of words like that and when we talked about implementing one particular improvement, we got an answer back saying, well, you can do it as long as you pay every operator $1000, so the words might be there and I accept that at this point in time, the intention might even be there, but over time that changes.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN444

Well, I would say to you that we've all got a responsibility that once we reach an agreement, the agreement is the agreement and we implement it, so I understand you might have had difficulties before, but if this is going to work, the best chance of it working is with the expectation of the workforce that there are some protections there. Now, that's the whole reason why we support it. I'll take you to paragraph 165. It's evidence that you give in relation to the meeting on Monday, 8 November and it goes to the issue of the defined hours occurring irrespective of whether manning reductions are happening. I point out that I think that the sequence of events is wrong. I did say that I understood the same as Caltex, but that was when you came back into the room, so nothing really turns on that point, but it was explained to you at that meeting the reason why the defined hours were there, irrespective of de-manning occurring was because of all the additional work that we took on, is that right?---I can't remember if it was exactly then, but I have heard that discussion previously.

PN445

Yes, because my understanding was that when the company returned to the room, it was pointed out to them that because of the barge tie-ups, the row torque valve, the area north pipeline, the clean fuels, the continuous improvement, significant change, all of those issues, we just said you can keep coming on there, keep giving us more and more work and there'll be some work that was agreed by the AMWU that we could do and we said go ahead, talk to them. If you can get more agreement, give us whatever they agree to, give us some more work. It was those reasons that we said that we needed some control of the defined hours, irrespective of whether de-manning occurred. Do you recall that?---Like I said, Sam, I've certainly heard that argument from you.

PN446

Well, do you accept that?---I can't remember if it was at that meeting in particular.

PN447

Well, okay, you can't remember, but do you accept that?---I understand your argument.

PN448

Do you agree with my argument?---No, I don't. We wouldn't be here if - - -

PN449

Well, no, we'd probably still be here, even if you agreed with that, but do you agree with the fact that the union, given these people are on an annualised salary, has to do something to identify that the more and more work that you give us isn't going to blow out to us working excessive levels of overtime?---I believe you'll be monitoring people's overtime, what we do at the moment.

**** PETER JOSEPH CALLAGHAN XXN MR WOOD
PN450

And if that's not working, the union's application is it was to come to the Commission?---I understand that.

PN451

Your position is we'll do our best. We don't want to come to the Commission?
---Yes. Well, we're happy to come here, but - - -

PN452

As long as they don't do anything?---Arbitral powers.

PN453

I've got no further questions.

PN454

THE COMMISSIONER: Yes, thank you. Yes, Mr Downes.

<RE-EXAMINATION BY MR DOWNES [12.32PM]

PN455

MR DOWNES: Thank you, Commissioner.

PN456

Mr Callaghan, it's been put to you on a number of occasions that at or about the commencement of the system of annualised wages, employees worked 100 per cent of their overtime bank. To the best of your knowledge, do you accept the proposition that was put to you that as I understand it 100 per cent of operators worked 100 per cent of the overtime bank for the first - I think the reference was to three years after the implementation of annualised wages?---No, no. I certainly believe some operators would have worked 100 per cent of their bank. The information we put on the second statement was all the operator overtime, but excluded the wharf, so at that point the wharf may have made up some of that balance. Certainly not all operators would have worked the whole bank.

PN457

So some operators would bust the bank, as it were, and other operators will not have exceeded the bank?---Yes. What typically used to happen was - call it the dash for cash, so as people approached the bank, they'd take more overtime because once they broke the bank, they got paid for it. Those who hadn't broken the bank would not work any overtime, whatever means they managed it and so those who were working overtime were being paid, a number of people were being paid an extra 15 per cent and not working very much overtime.

PN458

Commissioner, might I ask that Mr Callaghan be given a copy of the proposed agreement? I just wish to take him to some of the clauses of the proposed agreement. Mr Callaghan, you've been asked about safeguards in the agreement. Do you recall that?---Yes.

PN459

And by way of example, you referred to some wording that was inserted early on in the agreement?---Yes.

**** PETER JOSEPH CALLAGHAN RXN MR DOWNES
PN460

You now have a copy of the agreement in front of you. Would you have a look at clause 3.5 and just tell the Commission whether that is the clause you were referring to?---3.5?

PN461

Yes?---No.

PN462

How did that clause arise? Can you recall it?---3.5?

PN463

Yes?---3.5 was - there was a discussion about the maintenance work and we had a list of issues or additional tasks and we were trying to make it a - there was some discussion about we should make it a list that encompasses what is done now and there was a bit of concern on the company's part that, well, there's some things that people do now we don't want them to stop, so 3.5 was really about from our point of view, was making sure the jobs that people are doing now didn't disappear just because it wasn't all written down in the agreement and then I think once 3.5 was in, the union also saw some benefit in it as well.

PN464

Would you have a look at clause 5 and would you tell the Commission whether you think that in any respect at all that constitutes a safeguard against the excessive use or working of overtime hours? Is there protection in there for the operators at all?---There is in terms of defining their ordinary hours of working, but not specifically around overtime.

PN465

Would you have a look at 6.1 - I beg your pardon, 6.2(a)?---Yes, as a statement, yes, that's about trying to improve the way the annualised wages system works.

PN466

6.3(b)?---That's about improving annualised wages. By reducing absenteeism, it will reduce the amount of overtime needing to be worked.

PN467

6.3(f)?---That's also to be linked to overtime because obviously if we can streamline some current work, then we won't need to call people in to do that work if possible.

PN468

Mr Callaghan, would you have a look, please, at clause 12.4(c)?---Yes.

**** PETER JOSEPH CALLAGHAN RXN MR DOWNES
PN469

Would you please tell the Commission whether or not you are aware of that clause being invoked or relied on by the operators at all in relation to overtime which has been worked?---No. To my knowledge, there hasn't been - haven't referred specifically to that. Overtime is generally talked about quite regularly.

PN470

Have the operators come to you and said, look, we're working excessive overtime hours, the agreement provides for a review?---No, they haven't done that to me.

PN471

And finally, Mr Callaghan, could you have a look at attachment - and I'm going to ask you to look at (c), (d), (e), (f), (g) and (h), those six attachments and I would like to ask you to please tell the Commission whether or not those clauses, if the Commission issues a recommendation in accordance with Caltex's preferred position, whether they will assist in the better management of overtime?---Sorry, (c), (d)?

PN472

Start with (c) and if you can go through each one of those, please?---Attachment (c) is essentially saying that if we leave that wording in there, then we won't be having individual discussions with employees about individual issues, so in other words, providing somebody turns up, we won't be having discussions with an individual. Obviously, if individuals aren't held to account, it makes it very difficult to have proper, equitable sharing.

PN473

So if your ability to review applies irrespective of where the threshold is, will that improve the management of the equitable sharing of overtime?---Yes, it will.

PN474

Thank you. (d)?---(d), so currently we have two operators on leave per shift per area which at times can create overtime, especially around peak periods, whereas if we have one operator on leave, we believe we can manage the overtime better.

PN475

(e)?---(e), so the difference here is around the words more than 24 hours. At the moment, people enter discussions on the requirement to equitably share overtime if a significant variation occurs, but we haven't defined what that significant variation is, so it's a bit like the word excessive. What does that mean? It means different things to different people, so, really, we're saying if we've got a definition there, then we've got a trigger point to start talking to people.

PN476

Thank you, and (f)?---(f), the current wording is the first wording where people are expected to catch up. I guess what we're saying, if people know they're going on leave and they know that there's overtime being created or there's overtime being worked at a particular rate, then they should be able to build up that bank prior to taking leave. The situation we have now is some people go on leave for six months, long service leave. Because they would do no overtime in that six month period, they don't build up any level at all before they go away and so it means that other people have to carry the load while they're away.

**** PETER JOSEPH CALLAGHAN RXN MR DOWNES
PN477

(g)?---(g) is around the issue of shift swaps. There's a current award provision around notice required if the company directs a shift swap. What tends to happen is if the employees organise a shift swap, they'll do it themselves and award provisions don't get invoked, whereas if we would direct people, then there'd be an issue about the award, so there tends to be less shift swaps to avoid overtime than could actually happen.

PN478

Thank you, and finally (h)?---(h), the current wording is - I believe the current wording is the bottom one. We do have a contact list at the moment and the intention is that the people are there to provide unscheduled overtime, but generally what tends to happen is those people won't respond, don't see it as - they'll just put their name down, may or may not respond. The wording at the top paragraph there is around trying to make sure that those people who have the lowest bank hours respond so that people don't get out of kilter and the overtime is shared more equitably.

PN479

So in respect of where the Commission determines the threshold to be whether it remains at 273 or whether it reduces to the AWUs proposal, what I understand is that the top wording will generally assist you in better managing the sharing of overtime?---Correct.

PN480

Thank you, Commissioner. Sorry, if I may just have a minute? Thank you, Commissioner, I have no further questions.

PN481

THE COMMISSIONER: Thank you. You are excused. You may step down. Thank you.

<THE WITNESS WITHDREW [12.47PM]

PN482

THE COMMISSIONER: The Commission will stand - sorry, yes.

PN483

MR WOOD: Commissioner, there's just one issue I want to raise before we break. It appears, particularly these consequential provisions, that there seems to be a misunderstanding from Caltex' point of view as to what our position is and just take, for instance, attachment (f). I've noticed that they've put down that if the AWU succeeds in the claim, this is in the agreement, with the overtime threshold, then the following claim should be incorporated into the agreement and it goes on:

PN484

Employees absent due to long service leave, annual leave, long term sickness are expected to catch up with the bank of hours with a reasonable overtime time frame. Where possible, the employee should build up a bank prior to the taking of annual leave.

PN485

In our submissions we've put down the AWU accepts the consequences of the AWU being awarded at attachment (j) that the company needs to be sure the employees stay as level as possible with overtime. This would include employees building up a bank of overtime where the employee was aware that he would be taking time off work, so our position is that if we got attachment (j), we agreed with the company.

PN486

We're saying that there is a need, because we've got defined hours and then to manage it, it follows therefore what they want, they should get, but if we don't get attachment (j), we're saying that the need of balancing overtime isn't as great therefore and therefore you don't need it, so it may be that in this adjournment that I sit down with Freehills just to go over and make absolutely sure that we're singing off the same song sheet in terms of the consequential provisions.

PN487

THE COMMISSIONER: Yes, thanks, Mr Wood. Do you have any difficulty with that, Mr Downes?

PN488

MR DOWNES: I don't, Commissioner. I can possibly answer it for the benefit of Mr Wood right now. Our position is simply that the measure aimed at more efficiently managing overtime should apply whether the AWUs claim is granted, whether it's successful or not, because it's aimed at more efficiently managing overtime either in toto or in terms of an equitable sharing of overtime.

PN489

We just say that it's in accordance with the commitments elsewhere in the agreement to better manage overtime, so it's those six, I think it's (c) to (h), we simply say irrespective of the outcome, those provisions should be inserted into the agreement because of the commitments elsewhere in the agreement and I think it's now safe to say it's common cause.

PN490

Mr Field has given evidence, Mr Callaghan has given evidence. I don't think it's in issue between the parties that those clauses will improve the efficiency of the management of overtime, whether it's overtime worked or the equitable sharing of overtime. Our position is simply this. It seems silly to us to have the most efficient clauses only apply if the threshold is at the lower levels that the AWU seeks.

PN491

We say if they are good for the reduced threshold level, they're equally as good for the existing threshold. There's no magic - they're not any less efficient or more efficient. They're either efficient or they're not. It's agreed that they are efficient. We should then have them in the agreement irrespective of the threshold allowance, so that's in short the position.

PN492

MR WOOD: Yes, I understand it a bit clearer now. I suppose our position is that if we were granted attachment (j) for instance, we see that as a consequence of getting that, those other things would flow, so that's the area of disagreement between the two.

PN493

THE COMMISSIONER: I understand, yes.

PN494

MR DOWNES: Commissioner, might I just get some direction from the Commission as to how we propose to close? That's Caltex's case. No doubt
Mr Wood and I will be giving some thought to our submissions. Would the Commission expect that I close and that Mr Wood follows or the other way around?

PN495

THE COMMISSIONER: I don't have any particular preference. Mr Wood, I thought you would have gone first.

PN496

MR WOOD: Yes.

PN497

MR DOWNES: Thank you, Commissioner.

PN498

THE COMMISSIONER: The Commission stands adjourned until 2.15.

<LUNCHEON ADJOURNMENT [12.52PM]
<RESUMED [2.20PM]

PN499

THE COMMISSIONER: Yes, Mr Wood.

PN500

MR WOOD: Commissioner, we've now come to the part of the proceedings where the AWU intends to give the following submissions to the Commission as to why we say that the application that we make and that the AWU support should be granted by the Commission, particularly the threshold issues, being the defined hours, the fact that protection should be afforded to the union, the role for the Industrial Relations Commission to ensure that those hours are protected if, in fact, the employer fails to provide those protections themselves and then secondly why the increase should be granted in the terms sought and our wage increases should be tied essentially what we've been saying is the management's ability to manage.

PN501

We recognise that right, they have the authority to do that. We can only make commitments that we're going to do it, we're going to comply with the agreement, that the union has made statements to the company that if they need us to go down and re-state that to its workforce, we will do that, so given that the union does everything in its power, as the negotiating team will do as well, there is no reason why our wage increases shouldn't be granted.

PN502

I suppose the most pressing point of all of that is that the formula that we've put forward to the Commission was of my making. Our initial position was that we just got paid the money. It was Senior Deputy President Polites in a matter with BP Kwinana where exactly the same issue came up. The company didn't want to pay until certain things happened in the agreement and it was Senior Deputy President Polites' suggestion that what should be incorporated in the agreement is the ability for the management to come under a section 99 and make application to the Commission because the agreement allows it, that if we in any way were preventing the implementation of any change, those components, the six per cent, even full or in part, wouldn't be paid and I think that's as fair as anyone can expect us to be.

PN503

On the alternative position, the company just doesn't agree with that and basically leaves us with very little comfort in what they say is that there are words there, there's been words in the past where 100 per cent of the bank has been worked or at least close to that, I think 93 one year and 97 another year and words have never sufficed in the past and I think there have even been matters before the Commission where the Commission has basically said that consistent with what the Federal Government has done, that unless it's written into the agreement that you have certain powers to deal with certain things, the Commission's hands are tied, too, so it's a bit of a nonsense from the company's point of view to say that there are protections there and we can raise issues and that.

PN504

The fact is that there's not. We know that there's not. They know that there's not and more importantly out of all of that we believe the Commission knows that there's not under the current arrangements. It's our intention to go through a number of the submissions made by Caltex and the evidence given. The first one that we raise is in the submissions by - the outline of submissions by Caltex, clause 6, paragraph 6, bank hours overtime, particularly 6.2.

PN505

We say in relation to that that if the company is right and it says that Caltex rejects this claim and says that existing safeguards contained in the proposed agreement in the manner and the outcome of the changed proposal that will be undertaken prior to manning reductions are sufficient to prevent excessive increases in bank overtime due to the reductions.

PN506

What we're saying is that that's right. Our protections are not needed. We will never get to the Commission, we will never make an application because 6.2 is right. They're saying that there are sufficient safeguards there, so therefore it's not needed. We say that it is needed because the employer does not provide any assurances to the union that if in the event of them failing to prevent excessive overtime increases occurring, we go and do this or that.

PN507

All they could say is trust us. As much protection as we've got, if they can outline it, well and good and if the protection is there, there's no problem, but if it's not there and as their own evidence suggests, no-one really can be sure about what's going to happen in the future. I hope that they're right, that there are sufficient safeguards, that there are protections in there, that people aren't going to work excessive overtime and therefore here is no need to bring a matter to the Commission, but the employer has got nothing to offer to the Commission or satisfy its workforce that in the event that it is wrong, we can go and do this.

PN508

Now, this is what the union is trying to establish, that in the event that the employer does not rectify the problems, we can bring the matter to the Commission. Further, it also said in relation to this was that right through the exercise of enterprise bargaining, the employers raise a number of issues. One was that they were concerned about the union bringing a matter to the Commission where an individual exceeded the banked hours and we said, no, it wasn't our intention to do that and it was through that process that we finally put forward to the company that it would be a grouping, so in some cases it would be four classifications in an area or it could be five classifications in an area and it would have to be 10 per cent above and it would have to be over three months, so it wasn't just a matter of Joe Blow receive - worked more than 10 per cent over his, so we bring the matter to the Commission, so the union has gone to extreme lengths to try to satisfy the concerns by the AWUs claim.

PN509

We want to touch on briefly the evidence provided to the Commission and decisions in relation to how these proceedings are to be taken and what the Commission should be using as guidelines. We disagree totally to the Commission adopting the approach of section 170MX(5) as a guideline that it uses. We say that for this reason.

PN510

If that was the case that the Commission should follow the guidelines laid down by a Full Bench in MX arbitration, we would have blown our opportunity to test our industrial might against the company. We decided not to do that because we believe there's a far better option in coming to the Commission under section 111AA consent arbitration with no appeal, purely we say based on the merits of the argument, where the Commission can feel free to regard or disregard evidence put forward by the unions or the employers and they're free, given that there is no appeal, to do that based on the substantial merits of the case.

PN511

Now, I was involved in the MX arbitration with the Caltex Kurnell refinery and I believe that process was very different to the process that we are undertaking now. In terms of an industrial sense, I reported to the membership that if the offer was not accepted for private arbitration, you may get away with it once or twice in terms of taking industrial action, but sooner or later, your bargaining period is going to be terminated, sooner or later there's going to be an MX arbitration and the consequences of that are that the Full Bench do apply a number of guidelines, are much more conservative in their assessment and this is what our people have been told as to why they should accept this offer of a private arbitration as opposed to MX arbitration, Full Bench, the whole shooting match.

PN512

Now, even Caltex in the Kurnell matter, when we made offers prior to that dispute going to Full Bench arbitration, we said, look, we'll agree to a private arbitration. Their answer was, no, we don't want that. I can remember the chief executive officer at the time, he said we want the whole shooting match, we want the whole shebang his words were. We want the President up there and we want the Full Bench and we want to go through the whole thing and Mr Watson came down from Freehills and ran his case and Geoff Shaw ran the case of the union, so we see that there's a big difference, certainly in the minds of the rank and file and in the minds of the union.

PN513

We believe that this process is much more user friendly, that the substantial merits of our case have got a better chance of being aired here without the legal niceties that may follow with an MX arbitration, so we say in respect to that that the Commission is free to balance the areas of the submissions made by the parties before it and is free to make its decision on the substantial merits of the case and if it decides that it wants to adopt some guidelines to guide it through to its conclusions, we concur with that, but we say that there's a substantial difference between an MX arbitration and this and as I say, if we were wrong on that point, we probably would learn a very valuable lesson, that maybe if there is no difference between an MX arbitration and consent arbitration, maybe we should have tested our arm, but we say that we're not wrong on that point and therefore the Commission we say under this provision is entitled to make its decision without necessarily following all the guidelines set down by the 170MX arbitration.

PN514

THE COMMISSIONER: I have just one general observation in terms of MX awards as I was on the most recent Full Bench that dealt with ambulance in Victoria. The hearing of the matter ran over almost the first half of this year. I spent over a month, not in a continuous period, in the first half of this year on the Full Bench hearing the matter. The employees in the end got no more than what you've got definitely on offer. The employers obtained a lot more flexibility.

PN515

The employees have not had a wage increase and I'm now going from memory, I've put it somewhat behind me after the first half of the year, but from memory a couple of years since their agreement had expired and you're right, eventually bargaining periods were terminated and thus a very long process was gone into for that sort of outcome and clearly the Full Bench I was on, whilst we didn't deviate in my opinion from the sort of principles that a limited number of other Full Benches had, looked at nevertheless I think the crucial point that comes out of it is that one of those principles was that each case was obviously decided on the individual merits, as you know, and that's exactly what happened. I would have to observe, whilst I haven't made an conclusive view at this stage, but clearly the requirements on the Commission under 111AA are not prescriptive like the MX, particular (5) and other subsections in MX are in terms of what the Commission must do.

PN516

MR WOOD: Yes, that's essentially what we're saying, Commissioner. You know, I went through the Caltex Kurnell and I see this exercise far different from what occurred in that place and I think the most telling point about all of that is that it was the union that convinced the workforce that this process is far more, for want of a better phrase, user friendly than going through a Full Bench arbitration.

PN517

THE COMMISSIONER: I couldn't disagree with you on that.

PN518

MR WOOD: Now, in respect to the submissions, outlines of submissions by Caltex, the wage claim, in paragraph 11, they say the Caltex dispute, increments 3, 5 and 6 claimed by the AWU totally six per cent over the life of the agreement should be paid as a claim without any accompanying efficiency improvement. We're saying - that's clearly not what we're saying. We're saying the improvements are there. We're saying we're committed to the improvements.

PN519

We're saying that we'll even go out of our way to ensure that the improvements do occur. We're saying to the company if you need us, if you need the union to go down to the workforce and ensure that our co-operation in all aspects, whether it be de-manning or anything, we will be there. The company has got enormous improvements right through this whole system and it is now felt by not only the workforce and the delegates, but the union, is that the essential keys that we wanted are not incorporated in the agreement as yet.

PN520

All of what the company has wanted is in there now. The company has nothing to lose on this now. They've got all of what they've wanted. The outstanding issues that we are seeking basically brings balance to the whole agreement, so it's not right to say that we want the wage increase, including that six per cent on top of the 10 without accompanying any efficiencies.

PN521

We're saying we are, but what we are saying and this is probably what they don't like is they've got to manage it. It's no good, right throughout their witness evidence by their refinery manager, Mr Brewer and their production manager,
Mr Callaghan, was that the obligation of doing all this is yours, your obligation. Well, that's got to change. Good refineries in this country, the best refineries in this country, it takes two people to make this whole system work.

PN522

They have to learn to start to manage. They can't implement an annualised salary on the one hand and then sit back and say, look, these clauses are there, they've never brought the clauses up, people are working excessive overtime, we were told just give it to us, we'll go away. That seems to be the whole approach by this company, that they're there when the rewards are handed out, but when it get a bit difficult, they go missing.

PN523

I'm saying to them now and I'll say to you and I'll say to them that we've got a management there for the purpose and the purpose is to manage. Now, all we're saying is that we can't do any more than give you all of what you have to give. We're giving you provisions within the agreement. Unlike most agreements that come here and get certified, the ability of a company to come here and say to the Commission we don't want this and this to be paid and the union has even agreed to that because they're not complying or they're not doing something.

PN524

Now, that's what we're giving them, but they're saying, no, that's not good enough. It's our submission that the history of this refinery has been that the management have not managed and therefore the consequences of the two threshold matters that we're seeking in there actually forces the management to manage. It forces the management to look at the annual leave. It forces the management to equitably share. It forces the management to be mindful of excessive hours and it forces the management to look at the manning levels and we're not afraid of that.

PN525

If a refinery can operate with less manning there and that means the refinery stays profitable for longer, well, well and good. I might have cost 15 people a job, but I've saved 140 from losing their job, so we're not frightened of de-manning. It's a nonsense to say that the union or its members are going to covertly or overtly sit back and sabotage this whole process.

PN526

That's just a nonsense from our perspective. We can do any more than come to the Commission and say that if that was to happen, we don't think it would happen, but if it was to happen, we'll be there, we'll be there with bells on to make sure that it doesn't happen. We want this refinery to be the best refinery in the country.

PN527

One of the guidelines raised by Caltex was the level of remuneration at paragraph 15 and the conditions of employment for the same class of workers in the same industry is one factor which is appropriate to take into account. Now, right through these proceedings and more importantly right through the negotiations the union has constantly talked about other refineries.

PN528

Now, I accept as a principle of what matters have been put before the Commission, they are not in there in any detailed formula, but Caltex Lytton and its refinery managers know they are one of, if not the worse paying refineries in the country. I've said on a number of occasions that the difference between the wages paid and the hours worked between Caltex Lytton and BP Bulwar are $411 a week on average.

PN529

That $411 is made up of the difference between the wages that are paid and also the 273 hours that has to be worked in order to get those wages at Caltex Lytton opposed to not having to work those hours at BP Bulwar because they're not on an annualised wage. That's how it comes out to about $411 a week, keeping in mind that BP Bulwar are not on an annualised wage, but comparisons have been given to the company about the top rates in the refineries in general and it is safe to conclude on that that when you look at Shell Geelong which is 110,000 for their top rate, BP Kwinana is 111,000, you do a comparison of what is BP Bulwar that Caltex Lytton refinery is much less than the refineries that are operating in this country.

PN530

Now, at clause 16 in their submissions, outline of submissions, they draw some comparisons between first of all in 16.1 Shell Geelong. Well, convenient as it might be, the company, they've been either not knowledgeable enough about the whole workings of the agreement or they've just selectively picked out certain issues to compare themselves with, because I did the Shell Geelong refinery agreement and apart from the CPI and the one per cent increase, there was also an increase in the GTRA rate which is the Geelong travel allowance rate.

PN531

There were two extra days given as annual leave days. There was an increase to double time and a half for the first two hours worked in overtime for operators. There was an increase of 10 per cent in the shift penalty rates. That was all calculated to then put in to an allowance. There was also training days, two extra training days were done away with and it was decided that because they were the best paying refinery in the country, that what would happen was that rather than chasing more dollars, they would chase better conditions of employment.

PN532

That's why the wage increase was not as great there because there were other effects. Now, there was considerable debate about whether we should adopt that approach or not. We had to give a presentation to the workforce and we calculated if you took into account the two extra annual leave days, the two seven-hour days that had gone, the increase in the GTRA rate, the CPI plus one per cent, it was equivalent to about seven per cent per year.

PN533

Shell Clyde, because they're the same company as Shell Geelong, of course, different union but I understand that they did similar types of things. Our AWU executive passed on to them what the whole shooting match was as to what we've agreed for and therefore they incorporated aspects of that into their agreement. In terms of BP Kwinana, once again they talk about CPI being 3.4 per cent.

PN534

Again the delegates from BP Kwinana came down, spoke to us about the Shell agreements which had expired in the middle of the year and theirs expired in November, what the outcome was and I explained to them as well that it was decided not to go chasing money this time. It was about lifestyle and explained those conditions and that was the approach that they took.

PN535

If you look at the BP Kwinana bonus system, for instance, their bonus nearly went up 50 per cent from what they normally got. They'd normally get $3500. Now they get $7000. They got an extra two days' annual leave as well. Their analysis as well came out to about seven per cent, but we're not necessarily relying upon what BP Kwinana got and what Shell got, but what we are saying is that Caltex is in the market of selling petroleum in Australia.

PN536

Now, as much as they want to turn around and say, look, we want to compare ourselves to the efficiencies of other refineries and what we buy crude oil for and the design of our refineries, management structures. You can't escape the inevitable that people in this industry compare wages. That's the whole reason why they, when I talk about they, the oil industry, managers sit twice a year and compare notes about what each other is doing and so does the AWU operators and so does an organisation called AROD.

PN537

They come together and they compare like for like, so you can't escape the fact that wages are going to be compared with refineries. Now, as much as Caltex would like to say, well, we want to compare ourselves in some aspects to other refineries, but in wages we want to compare ourselves to the general wage outcomes of this country, it's just not feasible, just not feasible.

PN538

They want to compare wages to mushroom pickers, to curtain makers, to wig makers, to sandwich bar people. Well, you know, maybe if they were making sandwiches instead of petrol, they might get some sympathy from us on that, but the fact is that they can't do that. We say that it's inappropriate to do that and that's probably what's led to the differential in wages between what Caltex Lytton people are getting and what the rest of the oil industry are getting.

PN539

That's going to stop one way or the other by the AWU and we're going to continue to make claims based on what is the oil industry and what the right compensation for the hours that they put in and what they should be paid for. Now, we have heard that Caltex Lytton on certain criteria are the worst performing refinery. That's personal index, hours worked, 100 EDC and the personal cost index using American dollars in clause 20.

PN540

All we can say about that is we had some doubts about the validity of the Solomon reports. There are certain people, particularly the person who started the Solomon report out, but we don't think it gets us anywhere to say, well, it's a good report or it's not a good report or whatever. As a matter of fact, we think on the opposite, that if it does show that in some aspects Caltex is the worst, it proves our point.

PN541

They can't continue to go on the way in which they've gone on and not embrace some of the concepts that the AWU is talking about, because if they do that, they're doomed to fail. As we say, we get - the return to the AWU for having a profitable Caltex Lytton refinery is that it stays open and we get members. We're not about putting in bad practices, making the place unefficient, getting high wages and low returns, because we're sensible enough to know that all that's going to lead to is the company saying, well, we want to close it down, but apparently and unfortunately, we're going to have to bring the management along kicking and screaming with the best refineries in this country.

PN542

We're not asking them to pick up any bogus or draconian type of method of how they work their hours and how they have the efficiency there. We're giving them what the best refineries in this country are doing. That's what they've got and they're fighting it, so you've got to ask yourself if they're fighting that and it's the best that is around in the refineries, how bad is their management and on top of that, they say tie your wage increases to our ability to manage and we say simply to the Commission that we can't afford to do that.

PN543

We wouldn't do that to the best performing refineries in the country. The best there is have asked us, you implement this and we'll pay you. We said no. Senior Deputy President Polites put forward a suggestion of how we could do it. Now, that was the best refinery. Here is one of the worst performing refineries and they're saying again let's tie your wage increase to our ability to manage and we say no to that.

PN544

Now, at paragraph 41, it's been raised in the submissions about the threshold of banked overtime hours and whether the definition would occur if the reductions didn't occur. Now, we've heard evidence about that. I just want to recap for the benefit of the Commission to understand. At no time did I during the negotiations ever believe that the management weren't going to de-man.

PN545

All their evidence said that they are going to de-man, so I never really had to turn my mind to the point of, well, if they don't de-man, do you still have defined hours? Now, put on the spot at the particular time, I thought, well, if they don't de-man, I don't really see a problem with that, so I agreed with their position. When I had it explained to us because the operators know better than anyone else the consequences of all of this agreement, when they pointed out to us that all of the improvements of the clean fuel, the continual improvement clauses, the significant change clauses, the extra work that's coming on, irrespective of whether they de-man or not, they needed that protection and that made sense to me, so when the company were invited back into the room, we put the position, but I can assure the Commission that I'd always approached these negotiations on the basis that the company was going to de-man.

PN546

It never crossed my mind for one second that they wouldn't, that they were going to do it, come hell or high water and all of their evidence supports that, so as I say, I never gave it any consideration as to the fact that they wouldn't do it. Therefore, the defined hours is always going to be there and it came up at that meeting, well, if we don't de-man which sent some alarm bells ringing in my mind, anyway, given the concept that they say they don't want to pay for manning, that caused me some problems.

PN547

Now, in terms of the hours of work in clause 45 and 46 or paragraphs 45 and 46, all we can say is that again is another demonstration of the company and even with evidence that we've heard today. There seems to be a bit of a concept of here and this has been even said in negotiation, there are people, management people, that believe because you pay the 273 hours, that the workforce has to work the 273 hours.

PN548

Now, that thinking has to stop because sooner or later, what will happen if that continues, people are going to have to quickly come to the conclusion, well, what was the point of changing? If we get a lump of money per week and we add it up and everyone is working the bank and then we break the bank and we're working over there and as I've said to the company before, there are some people that have gone 800 hours over the bank, what about those?

PN549

Now, the whole system doesn't appear to be working. I'll be the first to admit that, but there has to be a concept embraced by the management to say we've got annualised salary, but the reason why we've got it is not to work the bank of overtime, is not to work any overtime. If you look at the best refineries in this country, the concept of both BP and Shell is that we don't work any overtime, not we can work up to 275 or, you know, you've got protection there.

PN550

The idea is that you don't work any. Now, if you're not working any or you're getting nowhere near the bank, that in itself causes the workforce to try to keep driving down overtime. That's why it's been successful at Shell and that's why it's successful at BP because they - and we've got in the Shell agreement, we've got if you break the bank, you're going to get - they're nowhere near it.

PN551

They work 12 hours per operator per year. They're nowhere near breaking the bank, so all the thinking of the workforce is how do we limit the use of overtime? The management are thinking that, the workforce is thinking that. It's not happening here. What the management are thinking, how do we get them to work overtime and all the workforce is doing is given I'm going to have to work all this overtime, the idea is how do I work enough overtime that I break the bank, that I'm back on overtime, anyway?

PN552

It's a wrong concept to come down and if that's their view, if that's the way they want to progress their refinery, they should abandon the concept of annualised salary because it won't work, if that's the way in which they're going to do that. Now, the conflicting evidence that we get out of all of that is that on the one hand the management say you've got safeguards and we've got all the protections that we needed in there and the idea of annualised salary is not to work high levels of overtime and the concept here is we're going to have equal sharing, but in their own witness evidence and in their submissions here, they don't see anything wrong with it.

PN553

They don't see anything wrong with breaking the bank, so the management have to come up with their own conclusions on this. We can't give them to them, but what I can say to them, if their view is that the bank is there to be used and therefore it's not significant overtime and therefore we can work it, it's not going to work. They really need to abandon the whole idea of annualised salary.

PN554

Now, in paragraph 51 of their submissions, the concept of having - they make a claim about the AWUs claim in attachment (c) is indicative of the initial basis for this bank overtime hours claim being made by the AWU, mainly a concern that a reduction in the shift operators. Our whole basis of this particular claim is this, that unless we have some hours there that we can point to to say that what was the expectation before we went into this agreement?

PN555

What were the hours that you were expecting us to work when we went into this agreement, because what we want to be assured of is that whatever their expectation was and whatever our expectation was of whatever the workforce then voted on and agreed to, that we don't find out later on, look, we made a mistake there, we thought it would be 90 hours, but it's finished up 400 hours.

PN556

We want to say and give some assurance to our members to say, listen, it's not the company's intention to give you all this work and all these obligations, that it's going to create more overtime. We're saying to you, they're saying to you it's not going to create any more overtime. What are those hours is what we're saying? Now, on historical data over the last couple of years, we've now identified for the groups and the areas as to what those hours are.

PN557

There hasn't been any evidence presented to this Commission to say that that's wrong. We've gone as far as we can do to incorporate all of their concerns. If you took out the role of the Commission and defined hours and you say, well, what's your expectation of the hours that would be worked by an individual in that area, you'd probably agree with us. The issues that they don't agree with is that there is any protection that if they don't do the right thing, we can bring the matter to the Commission to get rectified and we're saying based on not only their performance, but anyone, take the best refinery in the country, we'd still be saying that.

PN558

As a matter of fact, we did say that to them. The concept that we're talking about, defined hours, not breaking the bank, being externally accountable was all architected by BP, not me, that they said, look, we are genuine about this, we want you to go into this new agreement, we want you to de-man, we want to automate some of our plant, this is what we've got planned and we are prepared to be externally accountable.

PN559

We don't think you're ever going to need it and they were right. I've never had to come to the Commission since 2002, since 2000, bring a matter to the Commission to say that they've broken it because they were prepared to be externally accountable. That's all we're asking of the company here. We're saying if everything you're saying is right, our claims don't eventuate, but if you're wrong, you have to be accountable to someone and we're saying that is to the Commission.

PN560

Now, again just going through Mr Callaghan's witness statement at paragraph 24 and 31, again the company wants to compare the Lytton refinery with other refineries and in other cases, we say that the company doesn't want to compare wages in relation to other refineries. In paragraph 57, there were a number of changes that the company wanted to implement and we say, we would ask them to have those processed through the facilitative agreement, but the company refused to do that.

PN561

In paragraph 79, this was raised in discussions as well as in their witness evidence that there is some work that is not the work of the AWU. We've said to the company if you want us to take that work on, what you need to do first is talk to the other unions. If they're agreeing to give that work up, by all means come and talk to us then and we'd be - our initial reaction would be that we're happy to accommodate you on the basis of getting some defined hours and that is an important point that we make in all of this.

PN562

We're saying to the Caltex management team now that the operators will take on any work that they want to give us, but they're only doing that on the basis that there is some protection there. If there's no protection there, because they're working an annualised salary, we can only come to the conclusion that what will happen is that they're paying the money, anyway, so they want it done within the bank and only those who break the bank are going to benefit from it, other than the company and therefore is at odds with the concept of annualised salary because annualised salary is about hopefully not working any overtime.

PN563

In terms of the row torque valve, that's been incorporated in the agreement. We just wanted to note to the Commission that that matter hasn't been pursued by the company through the Industrial Relations Commission. In terms of paragraph 124, Mr Callaghan's statement, we just simply say that there's never been a ban in place on the north pipeline.

PN564

In terms of paragraph 154, what we say about that is that it's our belief that the majority of the overtime that has been created has been created by the management taking people off shift and putting them on special projects and therefore leaving the resources short in an area that necessitates the calling in of people, that is either on the banked overtime or overtime in general and finally in Mr Callaghan's statement in paragraph 165, now, we could be wrong on this, but it was our understanding that apart from Mr Downes' view on the defined hours, it was felt that Caltex was fully aware of the defined hours applying irrespective of whether de-manning occurred.

PN565

Now, I suppose that's just a matter of opinion, but certainly from the delegates' point of view, it was their understanding that Caltex fully understood that was the position. They're my instructions. I'm not sure that takes us anywhere, but certainly from the views of the delegates, they were very convinced that this wasn't new to Caltex.

PN566

We've heard evidence from Mr Field about the union's attempts to try to facilitate a defined hours in the various classifications and groupings. You've heard submissions from the AWU to say that whilst we had our initial position about the groupings in the defined areas, that the evidence given to the Commission and it was not challenged in any way was that it was felt that given that the management had to manage this process if we were to be awarded the threshold issues, that it made sense that the company got the groupings and the areas that it could identify and manage more appropriately, so it was for those reasons that that particular issue was agreed to. Now, in terms of Mr Brewer's evidence, at paragraph 20 in the last sentence it is said:

PN567

However, I am fully committed to achieving the reductions of shift positions at the refinery.

PN568

I think that they are, Commissioner. I think they are fully committed to reducing. That's what led me to believe that the issue of defined hours, they were always going to do that, they were always going to apply. We say the only issue that we have some reservations about and this is another reason why we wouldn't tie our wages to this is that we don't think the company has a right in terms of the first five, being reduced through natural attrition.

PN569

Even if you weren't to accept the idea of natural attrition, people weren't going to be displaced unless they wanted to become displaced or picked up new jobs unless they wanted to pick up new jobs. If they wanted to be offered a new contract, well, they could do that, but all of that is based on what we would say is some form of attrition in any event.

PN570

Now, what we say about that is why we don't think that will work is because we have first-hand knowledge of the membership when this issue was reported on, asking many questions about how is it going to work when the first five leave without redundancy and if you're six, up to 15, you're going to get the redundancy?

PN571

Now, my only answer to that is I don't know either. We've got our position. They say they're prepared to take a risk on that. We say that they're not taking a risk because what they want to do is tie our wage increases to their strategy and their strategy is flawed. Now, if they had have said, look, the first 10 can go onto a redundancy and then the last five, we're not going to have redundancies, that would have been a different concept, but by putting the first five, the first five people who put their hands up or leave or take on new employment, retire, whatever, don't get any redundancies, we think that is fundamentally flawed.

PN572

They say they're prepared to take a risk on that which I accept, but don’t take the risk and then at the same time say, well, we want to tie your wage increase to this philosophy, because we say that it won't work. Now, in terms of the witness,
Mr Brewer, at paragraph 23, in the evidence that we attempted to get out of that and it's a matter of opinion as to whether it came out, it goes back to the issue that I have previously submitted, that it is an obligation of the company to manage the whole process.

PN573

It's not good enough to continually turn around and say the operators have to do this, the operators have to do that and it's my belief in reading that and any fair minded person is going to say that what the refinery manager wants to do is to say there's the six per cent and you can only get it when you de-man and I'm going to sit there, put some things in place and you have to do it and if you don't do it, you don't get the six per cent, but if you do do it, you get the six per cent, but I also get my whack, too.

PN574

Well, we're saying that's not good enough. What we're saying is that we'll give the commitment to de-man. If you want to put in and you want to manage it and you want to actually earn your money, good luck to you. We'll help you, but you're not going to get it by just sitting there and saying you de-man and you get the six per cent, if you don't de-man, you get nothing, because that's the whole approach.

PN575

I think that Mr Brewer means to manage this process. He means to take this issue by the scruff of the neck and say, all right, we've been given the approval to de-man, it's been incorporated into the agreement, if the union or its members are causing obstacles to that de-manning, we can come to the Commission, but I'm going to manage the process and I'm going to make it happen and as a result of making it happen, I'm going to get some money out of it and they're going to get their money out of it as well. That's what needs to happen, but that's not what's happening here. What's happening here under this proposal, under the Caltex proposal, is I'll sit back on the backside and let you do the work and if you so happen to do it, I'm going to get some extra money and we say that is fundamentally wrong in that approach.

PN576

Now, in terms of paragraph 28, I don't think that I've been to a refinery in this country in 10 years where they all haven't threatened to shut down the place. BP Kwinana gave the same submission to Senior Deputy President Polites that unless we get this and unless we get that, we're going to shut down and I think it becomes a bit tiresome and it becomes a bit old world thinking when workforce hears that all the time.

PN577

I'm not saying it doesn't happen. You know, refineries do shut down, but my view is they shut down for many reasons other than manning, whether they become competitive, whether the refinery is old, the return on investment, but not because there's 15 too many people there. We've all seen what happens when there's too many people there in some more draconian countries as to what they do about that.

PN578

Now, once again we say - Mr Brewer says in paragraph 34, fundamental to the issues proposed in reductions is the linking of wage increases and the implementation of those reductions. He believes that this is for a number of reasons and what we have to say about that is that while that might be the view of Mr Brewer, no other refinery in this country has had to get the improvements and the flexibilities and the de-manning by linking wages to it and you've only got to look at the history of the refining business in this country over the last 50 years.

PN579

I don't know of any time and all refineries have gone through significant changes and when I say significant changes, back in 1990 there were right across the refinery business, there were many more operators in 1990 than there are in 2005. We've gone through 15 years of change now, but in all of that and the 50 in years in which refineries in general have been operating, nowhere will you find that you've linked wage increases to reductions of refinery personnel.

PN580

It just doesn't happen, mainly because, except for this refinery, management manage, the same as I put a question about Telstra. Believe me, there is no agreement from the CEPU that the 12,000 employees of Telstra can be made redundant, but the manager is going to manage and he's going to make those changes. Now, the significance of that is that we've actually agreed to the company, yes, you can and you can take these people out and we'll help you, but they want even further than that, they want to tie the wage increase to that particular provision and we say that has never happened in the history of the refinery business in this country in the 50 years that I am aware of different wage increases applying.

PN581

In terms of the witness evidence of Belinda Paris, first of all it was admitted Belinda wasn't involved in any EBA negotiations. Her evidence was primarily centred around the Solomon report. We say in respect to that, that that only further supports the reason why the AWU would have some concerns about the issues it raises to be incorporated into the agreement.

PN582

We don't take issue one way or the other with the Solomon report, but we do say this, that those reports are made up of all of the components, whether it be the purchase of the oil, the design of the plant, the industrial relations system working there, the flexibilities, the type of structures that are in place, both management and union, all of those components are made up and the reason why Solomon doesn't pick one against the other is because they are all different in some respect, but the outcome of all of that is that what that Solomon report does show is that Caltex Lytton needs drastic attention.

PN583

Now, I don't believe the Commission or the union or the company for that matter should just sit on its hands and let it continue on the way it's going, because clearly that is why they are the worst and I'll say that in terms of when we look around this country and I look after directly five refineries, Caltex Lytton is the worst, even if they don't want to admit it.

PN584

It's these types of clauses that we're trying to insert into the agreement that hopefully turns it into being the best, but we'll say this, that we can only give the company the best industrial relations practices and flexibilities that we can do. Other things like the component, the design, the purchase of oil, all those types of things may still very well have Caltex Lytton down the bottom, but what we want to achieve out of this is that in terms of our involvement in the refinery, our capacity to operate it, it's that component that we want to be considered the best industrial relations in oil refineries in the country.

PN585

In relation to the agreement, it was pointed out at clause 10 of the agreement, 10.3, there's a number of issues that now have been agreed, the delegates have asked me to make special note of the fact that during the PIW there were some issues and we used the word stalled. Basically, those agreements are now incorporated in the agreement.

PN586

It does require, however, some explanation to the Commission to simply put it this way, that while we have defined hours, again we say bring it on, bring as much work on as you want to, because you're going to manage it and we've got some protection there now and it's because of that defined hours that we're seeking now that all of those additional works from (a) to (e) have been incorporated in the agreement, because we see that they're no longer stalled issued, we're going to take them on, but in order for the management to manage, we want defined hours in there and that would give us the protection that is needed.

PN587

Apart from those issues from (a) to (e), there is also the continuous improvement and significant change included in this agreement that would be deemed a significant change would be the new BHU unit in area north, the additional diesel hydro-treater in area east, the sat gas plant in area east, the replacement quench pumps, doubling up exchangers, nonene exports and the dedicated line and the new acetylene.

PN588

THE COMMISSIONER: Where are you getting those from?

PN589

MR WOOD: They're in my background submissions, the bottom of page 2.

PN590

THE COMMISSIONER: Yes.

PN591

MR WOOD: And the top of page 3. Now, we say that because of this extra work that's been taken on, it's our submissions that the two remaining issues should be incorporated in our award. Now, in terms of attachment (a), we say that the AWU submits and the following words support our case. We say at 10.1, in recognition of past efficiency not previously acknowledged and the changes resulting from this agreement, employees shall receive increases beginning on the first full pay period on or after the relevant trigger dates below.

PN592

Now, we say that and we say what is really important here is the past efficiencies and the acknowledged changes resulting from the agreement. There have been a number of changes that have taken place over the last three years. Now, some haven't gone through as outlined in Caltex submissions with great ease, but there are others that have. It's those efficiencies and the efficiencies that are incorporated here we say that justify the wage increase.

PN593

In terms of the issues that we have with Caltex' proposition is that first the increases are tied to the production manager reviewing the proposed reductions. At this stage, the production manager can just say that I've reviewed the de-manning and I've made a decision not to proceed, therefore Caltex don't have to pay the six per cent.

PN594

We say despite all the commitment and all the good will in the world, that is a very real possibility, that if as Caltex put it, that the production manager can review the reductions and he's the production manager that's got all the control just says, look, I've reviewed them, we're not going to de-man, therefore we say the employees don't get the six per cent.

PN595

Now, we've heard evidence that the union can bring a matter to the Commission where Caltex hasn't shown commitment, but our answer to that is that Caltex may very well be able to show commitment, but commitment doesn't mean delivery. If they would guarantee us that these reductions would occur and they would guarantee us therefore the money would follow, that's a different proposition, but that's not what they're saying.

PN596

They need time to look at that and we don't begrudge them time to look at it. We are saying that in the fullness of time, that is quite acceptable, but what is not as acceptable is that our wages are tied to it. The second problem is that even if the employees want to change, if the production manager does not give prior approval, no payment is made even if the workforce want to accept the de-manning and finally we say that the production manager can only approve the change if the appropriate change systems have been adhered to and it also must be safe, of which the union says it agrees with that as well.

PN597

But in looking at their proposal about the implementation of the review of the de-manning, there are far too many obstacles there that could be used by the company to not pay the union its expected increase of 16 per cent over the two years and it's with that in mind and the obstacles that are being put in place and the full control of whether we get the money or not is in the hands of the company. Whereas we say what is more fair is that the money is paid and incorporated in the agreements as everyone else in this country is, but a provision is put in to say that if the union is doing something or the workforce is doing something to prevent the implementation of the agreement, that the matter is brought to the Commission and the Commission has the ability to order that payment is not made.

PN598

Now, that's much fairer than the proposition that the company is putting and once again, the proposition that we put is not only what we see as fair, but we say has been adopted by and suggested by Senior Deputy President Polites in the BP matter. Now, in clause 10.2, we say that it's been accepted by the AWU and its members that in relation to the numbers 3, 5 and 6, Caltex may want to bring a matter to the Commission if the AWU or its members are not working to the intent of the agreement.

PN599

As part of this agreement, it would be open to the Commission to make an order that payment or payments in relation to 3, 5 and 6 would not be paid in full or in part if it was found that the AWU or its members were preventing the implementation of the agreement, but would only do so if the matters in question were within the control of the AWU or its members.

PN600

Again we say that is very fair in terms of giving the Commission the capacity if it was found that we were preventing any of the changes occurring, that we didn't get the six per cent or we didn't get part of the six per cent if we were being the obstacles to implementing change, but what we do say is that if we do everything right and we give 100 per cent commitment, we give all our ideas that we can possibly come up with to the management, no fault could be laid at the workforce or the union.

PN601

It is fair in our submission that the workforce gets its increases, being sought by the union. In attachment (b), the AWU sees the words below the trigger number need to be included if the AWU do not have attachment (j) adopted by the Commission. The AWU accepts that as a consequence of the Commission adopting attachment (j), these words do not have to be included.

PN602

It follows that if the AWU has its protections in defined hours and attachment (j), the company will not have any trigger numbers. As long as they stay accountable to the AWU, its members and the Commission, trigger numbers are not necessary. This we say is as a consequence of how the Commission decides. It's our submission that our fundamental protection comes from the defined hours.

PN603

Once we have that in place, any reference to trigger numbers or overtime or whatever, amount of work we do, is not necessary, but what we do say is that in the event that we weren't successful in getting attachment (j) adopted by the Commission, it is going to be a continual issue with the workforce and we say it's going to be a continued issue for these reasons.

PN604

You can't expect the workforce to continue to work for the period of the length of the agreement if it hasn't got any protections there and more and more work comes on there, no defined hours are there and more overtime has to be worked and you're breaking the bank, because as we say, that's not what annualised salaries were designed to do in the first place and I take note of what was submitted by my colleague in reference to the consequential provisions and it has dawned on me the issue about, well, the union did agree that certain things needed to change at the refinery.

PN605

During the process of all the negotiations, that's true, but it's true in this context. It was always my belief and firm held view that at the end of this process, we would have in place defined hours. We would have the company agreeing that there shouldn't be excessive overtime about what is expected to be worked and it was questionable as to whether they would be accountable to the Commission or not, but it was that in mind that I agreed with the company that you can take our reference of trigger numbers, because it's not the way in which I want the workforce to go forward.

PN606

It's not the way it's been presented to the workforce in terms of saying, well, that's all out now, but we will go to the arbitration to argue that you have defined hours in there and there is your protection. You see, the protection used to come about by trigger numbers, so you had some protection about defined hours, you had some protection about the banked hours and you had some protection above the banked hours that you would get paid, but you also had a protection that if the numbers fell below a certain number, that caused the trigger to re-hire people.

PN607

That was another protection. Now, I've said to the company you can take that out because if you can operate this refinery safely and with less numbers than the three that we're talking about, the three shift positions we're talking about, well, good luck to you, so trigger numbers weren't necessary, so they were all taken out of the agreement, but we say to the Commission that the principal reason that was was because the union had in its mind that it would have some protection in defined hours, that it wasn't going to work extra hours over and above what it was expected to work in any event, therefore the trigger numbers could come out.

PN608

Attachment (c), if the AWU is awarded attachment (j), no words to be included into the agreement, but if the AWU is not awarded attachment (j), the words provided unit manning is maintained and the duty of care is met that Caltex will not exercise the need to review the decision of employees not to provide additional hour coverage. If attachment (j) is not awarded, the above words are required. Attachment (d), the AWU position on this issue is again as a consequence of the AWU being awarded attachment (j). The AWU accepts the company needs the words one operator on leave per shift area, exceptions to be agreed by the shift manager, shift manager to inform the area superintendent, needs to be included into the agreement.

PN609

Once again this is a consequence of what we say is part of the management role to manage. In the past there may have been for good intent reasons to let more than one person in one area go on leave, but we accept as a consequence of this and the de-manning and being externally accountable, they're going to have to be more diligent in dealing with this particular issue and therefore it may as a consequence of the AWU being awarded attachment (j) that those words are needed.

PN610

What we do say is that in the event that attachment (j) was not awarded to us, being externally accountable wouldn't apply, coming to the Commission wouldn't apply, defined hours wouldn't apply, so therefore the need to reduce the amount of people on leave we say would not apply. Attachment (e), the AWU accepts the consequence of the AWU being awarded attachment (j), the company would need to have more control over the overtime hours and therefore would need the provision of more than 24 hours to be included.

PN611

On the other hand, if the AWU was not granted attachment (j), the AWU submits that the need to control overtime is less and therefore the requirement of the 24 hour provision is not needed. Attachment (f), the AWU accepts again as a consequence of the AWU being awarded attachment (j) that the company needs to ensure that employees stay at the level as possible with overtime. This would include employees building up a bank of overtime where the employees were aware that they were taking time off.

PN612

This provision basically indicates that if you know you're going to be off for a long period of time, it might be that you in order - say, for instance, they might be off for two months on either long service leave or they might for instance be having some operation that's going to have them off work for a considerable time, where it's within their control, they should we say build up a bank over and above what the others have done to compensate, to make sure that at the end of any period of time, that all people have worked equal levels of overtime.

PN613

THE COMMISSIONER: This might be an appropriate time, Mr Wood. The Commission stands adjourned until four o'clock.

<SHORT ADJOURNMENT [3.49PM]
<RESUMED [4.06PM]

PN614

THE COMMISSIONER: Yes, Mr Wood?

PN615

MR WOOD: Yes, if the Commission pleases, attachment G needs a little bit of explanation, in that currently the shift swaps can occur, but are done in accordance with the award and that means that there is a notice period that has to be provided. The union has agreed in this case that if the union was granted attachment J, that for the purposes of minimising overtime, those provisions, provision 17.1.3 and 18.1 would not apply and that means that shift swaps could occur without the notice periods. We say that that’s a significant change, but a necessary change, in order to make the system work. But again, that follows as to why the union presses as strongly as it does the threshold issues being incorporated into the agreement.

PN616

Attachments H and I are self-explanatory within my submissions. Attachment J is one of the key issues and without wanting to labour the point too much, the union intends to take the Commission to each of the paragraphs within attachment J to explain why it’s necessary that be incorporated into the agreement. The first provision is as a condition of this agreement, it’s not intended to impose increased overtime hours. The following process shall be used to address concerns related to excessive hours and manning levels. The evidence that you have heard supports that it’s not the intention that excessive hours are caused as a result of that agreement and that provision is quite normal.

PN617

It was suggested by the company that the definition of hours and the grouping and the areas be incorporated as the next provision and we’ve done that to reflect what the expectation is consistent with the historical data that has been collated by the union. The next part is:

PN618

As part of this agreement, the AWU undertakes that the AWU not bring any case in relation to this matter to the Commission unless there is substantial increase in the expected overtimes hours as defined in each area and within each grouping with classification. “Substantial” is defined as 10 per cent above the defined hours in each area within each classification grouping.

PN619

That provision doesn’t appear in the BP clause, but it was an issue that was raised, concerns by the company about the union bringing a claim to the Commission and we were hoping that, taking into account the historical difference between the two refineries, what has traditionally happened, the intent of going into the agreement coupled with the intention of the union not to bring to the Commission unnecessary individuals that may go above the defined hours, that it be looked at in groups, we say accommodated all the concerns raised by the company. The next provision is:

PN620

In the event of the employees having a concern regarding excessive hours, the following assurance process will apply. The concerns must be based on factual data collected over a reasonable period of time, say, six months - - -

PN621

MR DOWNES: Three. Three months.

PN622

MR WOOD: Sorry. The concern will be deemed valid, so not only do we say it’s got to be factual data, it can’t be perceived, it has to be in place. We also go to the extent of saying a concern is only deemed valid if excessive hours display either of the following, and they have become a pattern of hours, so it’s not something that’s just happened in isolation. What’s been worked in the past since annualised salary, and have created demand significantly above the customary hours arranged and defined in the agreement, and have not already been addressed by management as part of this process.

PN623

So if it’s already been addressed, it can’t be raised. There has to be a pattern of hours and it has to create demands significantly above the customary hours of the agreement defined in the agreement. So you go back to the particular definition of the area and you have to make sure that what you’re complaining of is in excess of that, and it’s actually become a pattern. Even at that stage, that’s identified the problem. It still hasn’t at this stage got to the Commission. The issue then is investigated by a small group of people - - -

PN624

THE COMMISSIONER: Sorry, just before we go off that, so is it any of the 1, 2 and 3? Is it or any of 1 or 2 or 3? Is that is what is proposed?

PN625

MR WOOD: Any of the 1, 2 or 3. So it might be area north, group 1 that there’s a pattern of significant overtime hours beyond what is expected to be worked, and that would then trigger the company and the union sitting down to look at that problem, why is that occurring. Keeping in mind that there is four classifications in that grouping, in that one area.

PN626

THE COMMISSIONER: Yes, thank you.

PN627

MR DOWNES: Sorry. Commissioner, I’m not sure if Mr Wood has understood the question, because I understand that matter, his position differently. I understand that what they say is that a concern will be deemed valid and that they will bring an application to the Commission if all three of those circumstances in any one classification in any one area. So a matter will be brought - this is how I’ve understood their claim - if it has become a pattern of hours above what has been worked, and it has created demand significantly beyond the customary hours, in other words, 10 per cent above the threshold, and that it has not already been addressed by management.

PN628

There is a process by which it first goes to management, so my understanding of the AWUs position is what happens first is there’s a pattern developing;
secondly - - -

PN629

THE COMMISSIONER: I follow the point. That’s why I’ve raised it. I mean, it’s and or it’s all or it should be neither. I mean - - -

PN630

MR WOOD: It is the whole three. So it’s the three together.

PN631

THE COMMISSIONER: So if all of the following apply?

PN632

MR WOOD: Yes, yes.

PN633

MR DOWNES: Yes.

PN634

MR WOOD: So there has to be a pattern of hours and those patterns have to create demand significantly beyond the customary hours as defined in the agreement, and the complaint we made can’t be one that’s already been progressed. So we can regurgitate it again and say - if there’s a process in place to deal with that, we can’t bring it back there. So it’s those three.

PN635

THE COMMISSIONER: All need to be present - - -

PN636

MR WOOD: Yes.

PN637

THE COMMISSIONER: - - - for a concern to be deemed valid?

PN638

MR WOOD: Yes. We say, then, that the issue is then investigated by a small group of employees made up of the employee representative, shift manager, close to the facts so once those three elements are present and we raise the issue, we say that there’s a small working party that goes and addresses the issue. If the issue is not resolved, then it would progress to a work group meeting and be resolved if possible at that level, so it may go to that particular area, the work group would then get involved if they haven't been able to find a solution to the problem to see if they can resolve it at that level.

PN639

The next one is if the issue is not resolved, then it will progress to the local management, senior site delegate, State branch and resolved if possible, so if it can't be resolved therefore at the area, it would be then brought to the attention of the local management and the senior delegate and the State branch to see if they can resolve the issue, so as can be demonstrated in here, there are a lot of steps to be taken before even the union gets involved to resolve the problem.

PN640

If the above steps do not resolve the issue, Caltex has a responsibility to develop a plan to remedy the complaint. Caltex must identify the route causes of the excess hours and develop a plan to bring the hours worked back to the plant levels, so again even though the union gets involved, we're giving to the company the right and obligation to, despite all of that, come up with a plan to reduce the hours.

PN641

The requirements of any such plan once it can be successfully executed in a reasonably prompt period of time, that the steps are measurable, that Caltex will give a report progressively on the plan to all affected employees, site delegates will report to the union until the plan is successfully completed. This is to take no longer than eight weeks, so we're saying at that stage of the delegate getting involved and we can't fix it there, again the company develops its own plan to fix the problem.

PN642

We're saying that plan has to be measurable, has to be done over eight weeks. They've got to report the plan and the steps that they've taken to the affected work group and still at that stage, there's no application to the Commission. It further then says that Caltex is prepared to be externally accountable to the AIRC to guarantee that the assurance plan process is properly followed and they're the ingredients remedied, so again this is where some external accountability other than its workforce is to the Commission that it's got a plan, it's put it in place and it's guaranteeing to the Commission that the assurance plan will fix the problem.

PN643

As such, Caltex do not foresee any reasons why the dispute regarding excessive hours will not be remedied by this step. The Caltex plan may include the revision of working arrangements, increased manning levels, reduction of work load, modified procedures in the refinery to restore customary hours, so again at this stage, we still don't come to the Commission.

PN644

We're externally accountable to everyone, we've been allowed to manage it, but they've got to be given an opportunity to fix the problem. They've got a plan in place, they're advising people how that plan is going to work out and the plan could include working arrangements, increased manning levels, reduction of work load, et cetera, evidence that was given by the company, so we'd say that up until now, all of what we're saying is basically what their evidence is and they don't think they're going to have to be externally accountable to the Commission because those procedures that they've put in place may very well fix the problem and we acknowledge that.

PN645

However, if it is found that the manning levels are responsible for the increase in customary hours and the problem has not been rectified as required by management, it is clearly understood that management still have the responsibility to fix the problem insofar as additional hours are concerned and agree the level of additional hours that have been worked by employees concerned.

PN646

Now, I think this is where the Commission can probably see where this has been written by companies, not by a union, because there's ample responsibility there. Even on the next step, we go back, that the company will do it, you know, and they put their hand on their heart there and we've transported what BP have said into this agreement.

PN647

The next thing is that the employees concerned will be required to recover these hours by flexing off within the ensuing six months or as agreed by the parties. Flexing off means the employee taking time off when spares are available. That was an important provision for us because what we said to the company was that, all right, we've identified a problem, there's been a pattern, people are working, you might have fixed the problem, but what do we do about those that have been affected by the problem?

PN648

This provision allows that when there's sufficient numbers over a period of six months and there's enough spare ratios there, that those people will be able to take that time back to bring them back into the defined hours. The next step, if after following all the above steps, the solution is still unsuitable to either party, then the disputes procedure will follow.

PN649

The disputes procedure then, attachment (k), is self explanatory, but the disputes procedure in attachment (l), we have no problems with the steps from 1 to 4. Our significant issue is in relation to this issue, we say that in the case of overtime hours, it is agreed that this matter will be submitted to the AIRC if required. If the matter submitted is in relation to overtime hours, the parties accept the Commission's decision is final with no appeal.

PN650

The union is happy to put forward that proposition. We need some certainty as we explained to the workforce how we believe certainty would be given if in the event the company failed to bring the excessive hours down. It is accepted by the parties to this agreement that the matter submitted to the AIRC shall include those set out in clause 12.9 and the parties accept in arbitrating the issue of manning or hours beyond what is expected to be worked, the Commissioner must in his or her decision provide a plan that brings the hours of work to the level agreed in the definition, so it's our expectation in bringing it here, if they haven't fixed the problem, we're going to ask the Commission to fix it.

PN651

Now, there are going to be given the very detailed steps to take forward. Before a matter could come to the Commission, there would have been ample opportunity for the company to fix the problem. The problem would be well known, it would be based on factual data and all I can say is that fortunately, whilst this has been in place, we haven't had to use this provision.

PN652

There have been incidents in certain areas in BP that have required attention. There's been a reporting mechanism that's contained in this agreement that they've used and all matters have been resolved without having to bring the matter to the attention of the Commission. Basically in summary, Commissioner, the AWU has approached these negotiations on the basis of it needing a total package.

PN653

It has talked to the workforce about the necessary changes it means to make to make this one of the best refineries in the country. It has spoken at mass meetings of the workforce and raised issues of some people not working anywhere near as many overtime hours as say other people. We've said to our people when you vote for this agreement, you should vote knowing full well that it is the intention of the union, its negotiating team to equally share overtime.

PN654

The days of some people working 1200 hours and some working 20 hours are over. Our objective and this objective of this agreement is to bring in the maximum amount of flexibility, make you one of the highest paid refineries in the country, but there is an obligation that you have to comply to and that is that there's going to be equitable sharing of overtime and if all of this design is to drive overtime down, we've talked about the amount of defined hours, putting in the 10 per cent threshold, that it's our expectation that if all of this works, no-one is going to get anywhere near of breaking any bank, so the concept is that overtime then will be accepted by everyone as something we have to drive down.

PN655

Now, unless these provisions are adopted, it's our submission that unfortunately it just won't work because the company in all of its evidence have not been able to demonstrate what it could do and what it will do if everything fails and that's been our number one problem with their proposal at the moment. We've needed to say to the workforce that, look, we'll give the company every single chance to rectify the problem, but if it's not rectified, we'll bring it here and we'll bring it here under the basis of the agreement said that we should be working to defined hours and the Commission then is free to make its decision on how to achieve those defined hours, because that was the intention of the party.

PN656

In relation to the issue of payment, we say that what the Commission needs to keep in mind, that in terms of other refineries and more particularly let's just look at Queensland, they are significantly behind BP Bulwar. It is our intention and we will ensure that all the co-operation that is possible be given to management to get their reduction, but it is unfair and unjust to have our wages tied to the company's ability to manage.

PN657

The history of this management isn't good. The first three years, we say that almost all of the operators broke their bank in annualised salary. In 1999 they had an agreement to reduce numbers and they didn't do it. There are too many unknown factors as to why the company may for very valid reasons decide they're not going to de-man. It's the expectation of the workforce that they start to get paid the same as other oil refineries around the country and this is a step in the right direction.

PN658

We are putting forward a work strategy consistent with work flexibilities that is the best in the country. We don't shy away from that, but what we do say is that the company can't have it both ways. It can't take all the good things that have come out of this without being accountable, without paying refinery wages, without being accountable to the Commission and say, look, we don't want to do that, but we'll take everything else.

PN659

We're saying it's a whole package and that is why we strongly put to the Commission that in considering all of the evidence put before, the Commission should grant the union its threshold issues. If the Commission pleases.

PN660

THE COMMISSIONER: Yes, thanks very much, Mr Wood. Mr Downes, what sort of duration are you looking at for submissions?

PN661

MR DOWNES: Commissioner, having been embarrassed once or twice before in trying to predict times, I am a bit loath - I certainly don't intend to be quite as long as my friend has been, I would think an hour perhaps, Commissioner, but that's my best guess. We do have tomorrow set aside for this.

PN662

THE COMMISSIONER: Part of tomorrow.

PN663

MR DOWNES: Part of tomorrow, correct, Commissioner.

PN664

THE COMMISSIONER: That's fine.

PN665

MR DOWNES: I am in the Commission's hands. I would say I would rather start and finish in one hit if that were possible, Commissioner, than start and pick it up again in the morning, if that were to happen. That would seem to be false economy, Commissioner, to press on now if we were able to. I know we're listed to commence at 8.30. We might make that 9 o'clock.

PN666

THE COMMISSIONER: It will have to be later than that. The Commission has now got another commitment that will take a bit longer than that. Nevertheless, if you're only talking an hour, even if I conservatively allowed an hour and a half - Mr Wood, in reply, how long would you think in reply?

PN667

MR WOOD: Not as long as I took that time. All jokes aside, depending on the issues that were raised, I wouldn't imagine any more than 15 to 20 minutes.

PN668

THE COMMISSIONER: All right. Yes, thank you. I appreciate it can be difficult to make those estimates, but I do have to attend to a couple of other matters before I go to Sydney tomorrow. Yes, Mr Downes.

PN669

MR DOWNES: Commissioner, I am in the hands of the Commission.

PN670

THE COMMISSIONER: The Commission will stand adjourned until 9.45 tomorrow morning.

<ADJOURNED UNTIL TUESDAY 29 NOVEMBER 2005 [4.33PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #AWU1 SUBMISSIONS PN27
MARK ALLAN FIELD, SWORN PN28
EXAMINATION-IN-CHIEF BY MR WOOD PN28
CROSS-EXAMINATION BY MR DOWNES PN45
THE WITNESS WITHDREW PN55
EXHIBIT #AWU2 STATEMENT OF MARK ALLAN FIELD PN55
ANDREW TERENCE BREWER, SWORN PN124
EXAMINATION-IN-CHIEF BY MR DOWNES PN124
EXHIBIT #CALTEX1 STATEMENT OF ANDREW TERENCE BREWER PN136
CROSS-EXAMINATION BY MR WOOD PN136
THE WITNESS WITHDREW PN203
ANDREW TERENCE BREWER, ON FORMER OATH PN214
CROSS-EXAMINATION BY MR WOOD, CONTINUING PN214
RE-EXAMINATION BY MR DOWNES PN222
THE WITNESS WITHDREW PN225
BELINDA PARIS, AFFIRMED PN227
EXAMINATION-IN-CHIEF BY MR DOWNES PN227
EXHIBIT #CALTEX 2 STATEMENT OF BELINDA PARIS PN238
CROSS-EXAMINATION BY MR WOOD PN238
THE WITNESS WITHDREW PN270
PETER JOSEPH CALLAGHAN, SWORN PN270
EXAMINATION-IN-CHIEF BY MR DOWNES PN270
EXHIBIT #CALTEX3 PRIMARY STATEMENT OF PETER JOSEPH CALLAGHAN PN285
EXHIBIT #CALTEX4 STATEMENT IN REPLY OF PETER JOSEPH CALLAGHAN PN285
CROSS-EXAMINATION BY MR WOOD PN286
RE-EXAMINATION BY MR DOWNES PN454
THE WITNESS WITHDREW PN481