C2006/173, Transcript of Proceedings [2006] AIRCTrans 1264 (5 December 2006)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 16159-1

JUSTICE GIUDICE, PRESIDENT
VICE PRESIDENT LAWLER
SENIOR DEPUTY PRESIDENT MARSH
SENIOR DEPUTY PRESIDENT KAUFMAN
COMMISSIONER GRAINGER

C2005/4801 & others – Wages and Allowances Review 2006

MELBOURNE

10.06AM, MONDAY, 4 DECEMBER 2006

Hearing continuing

PN225

JUSTICE GIUDICE: Any changes in appearances? Any new appearances?

PN226

MR E R COLE: There is one change, an additional appearance for the Commonwealth, your Honour, MR J STEWART now also appears for the Commonwealth.

PN227

MS D WAWN: Your Honour, I appear on behalf of the National Farmers Federation. We were unable to appear at the last matter. Thank you.

PN228

MR R CALVER: If it please the Commission, for the Master Builders in matters C173 to 174, C181 to 182. On the last occasion this matter was heard, ACCI represented us and the members of our organisation.

PN229

MS L YILMAZ: If it pleases the Commission, I appear for the Victorian Automobile Chamber of Commerce, with me, MS G MARTIN. Also appearing for the MTA of South Australia.

PN230

MR LAWRENCE: If the Commission pleases, I seek leave to appear and I seek leave to intervene on behalf of the Australian Catholic Council for Employment Relations.

PN231

MS E WATT: If the Commission pleases, I appear on behalf of the Timber Merchants Association and Cabinetmakers Association and the Furnishing Industry Association of Australia, VicTas, in matters 3646, 3635, 3634 3837, 3833 and 3835.

PN232

MR KLEMIS: If the Commission pleases, I wish to register a new registration in the Bread Manufacturers Industrial Association of Australia. Thank you.

PN233

MR M PERICA: If the Commission pleases, on behalf of the CPSU.

PN234

MR MCCAUGHLIN: If the Commission pleases, I seek leave to appear for Harris Scarfe Ltd in 3801, and Swan Transit Pty Ltd and Swan Transit South Pty Ltd, in 373 and 374.

PN235

MR M FOLLETT: If the Commission pleases, I seek leave to appear on behalf of Caltex Refineries New South Wales Pty Ltd in matter C2006/3942. Might I just foreshadow to members of the Commission at this time an application to have this particular matter referred to a panel head for determination due to some particular issues that arise in relation to the allowances in this particular award. There's been some discussions with the union representatives in relation to this award and that's a consent position.

PN236

JUSTICE GIUDICE: Yes. Which award is that?

PN237

MR FOLLETT: That's the Caltex Kurnell Refinery AIMPE Manufacturing Award 2001.

PN238

JUSTICE GIUDICE: Thank you. You will make submissions about that in due course?

PN239

MR FOLLETT: Yes.

PN240

JUSTICE GIUDICE: Thank you.

PN241

MR P X HOULIHAN: May it please the Commission, I seek leave to appear for NatRoad Ltd in those matters of the Long Distance Road Transport Award and the 1998 Local Drivers Award for the TWU.

PN242

MS N WALSH: If the Commission pleases, representing Master Grocers Australia. Thank you.

PN243

MS S PENNINGTON: If the Commission pleases, appearing for Adsteam Marine Ltd in the matters 3900 and 3901.

PN244

MR M FELL: If the Commission pleases, Jobs Australia, I seek to continue my appearance in this matter.

PN245

JUSTICE GIUDICE: Yes. Mr Watts?

PN246

MR WATTS: Thank you, your Honour. Your Honour, in addition to those affiliates of the ACTU that we appear on behalf of, we also indicate that I appear on behalf of the CSR and Rinka Salaried Staff Association, which is an organisation before you which is not affiliated with the ACTU. Your Honour, we ask that the ACTU outline of submissions be taken as read. We don't intend to reiterate those matters that are contained within the ACTU's submissions that were provided to the parties. We will today concentrate on dealing with those submissions that the ACTU received on Friday evening, or over the weekend, from various parties. Your Honour, what we say is that this is an unusual and extraordinary case. It's the first of its kind. It's not the usual safety net review of wages process that the Commission and many of the parties here today have been involved in, in the past.

PN247

This is a fact that some of our opponents appear again. The commencement of the Work Choices Legislation on 27 March 2006 and the subsequent decision of the Fair Pay Commission on 26 October this year have increased rates of pay found in the Australian pay scale changes a great deal. The considerable number of applications before this Bench is indicative of the significant, indeed extraordinary, change and unique circumstances that confront us all. The primary reasons there are a considerable number of applications before you is the opposition by employer organisations to an operative date of 1 December. Quite frankly, the union has been waiting for over a year and the employers are saying that this should continue, they should continue to wait, employees should continue to wait.

PN248

The ACTU is not prepared to ask our affiliates to wait any longer. Nor are we in a position of picking winners. What are opponents are asking you to do is to go through a process where each application is dealt with in order. What order, we're unaware of. We're not in a position to put to the Commission, should our position not be favoured by the Commission, that an alternative position be adopted. We are not in a position to say that the award should be dealt with by the Bench in alphabetical order, or in an order in a manner in which they receive the order, in which they receive any other order. We seek an operative date of 1 December. The ACCI, at paragraph 1.3 of their submissions says that the so called problem is that there is a number of applications before the Bench, and that this is of the ACTU's making. We reject this assertion. The reason there is so many applications before the Bench is because the employers oppose the full flow-on with a AFPC decision. An integral part of the AFPC's decision is the operative date of 1 December.

PN249

Paragraph 1.4(c) of the ACCI submission, it is said that the ACTU's approach is inconsistent with the statutory requirement. This bald claim is not taken any further. This is not surprising because we say it's simply not true. The ACTU's positions, in terms of the process that the ACTU seeks in these matters is completely consistent with the Act. The ACCI submissions add very little to these proceedings. ACCI, like other respondents, appears to concede that in all likelihood you will flow on the full quantum sought by the ACTU and the Commonwealth. The ACCI makes this concession at paragraph 1.9(d) of their submissions and goes on to discuss what it describes as the primary issue in these proceedings, the issue of the appropriate operative date. ACCI asks that each matter be distributed to panels to be programmed and subsequently heard. We reject this. These are matters that are legitimately before this Bench.

PN250

ACCI's proposition raises a serious question of equity; who chooses which awards go first, and therefore have an earlier operative date. I haven't seen the ACCI's solemninstic formula to choose the winners and losers. At 1.19 of the ACCI submissions, the ACC asks what is the alternative? We say that it's consistent with the requirements of the Act that the Bench in this case adopt a decision of the AFPC in full, including the 1 December operative date. Now, the alternative that we propose to what's alleged to be chaos and mayhem is that the 1 December operative date be adopted and that the parties are given between two and four weeks to finalise draft orders. In the first instance, they do so between themselves and if need be, they avail themselves of panel members or members of this Bench, whichever is convenient to the Commission, to resolve any outstanding issues.

PN251

It's our understanding of where issues have been raised to date the vast majority of those have been resolved. Those award variations that require further explanation or exploration will require the parties to communicate, and if necessary, ask the Commission assistance to finalise draft orders. We believe that the vast majority of these issues revolve around some confusion as to the effect of the Work Choices Legislation, the amendments to the Act and the issues that I think will be raised by a number of parties including some issues that have been raised by the NFF, issues that have been raised, I think, in the Caltex awards, as to what forms and allowance; what is an allowance and what is a component of the rate of pay. In most instances, we believe these issues can be resolved readily.

PN252

It is open to the Commission to make a decision that these applications currently before it will be varied in accordance with the 26 October 2006 decision of the Fair Pay Commission, as of 1 December this year. It is also open to the Commission to make a similar order, should there be any further applications of a similar nature. We'd indicate that that's likely.

PN253

JUSTICE GIUDICE: Mr Watts, I think your submission suggested that in relation to applications yet to be filed, the operative date ought be the date of the order.

PN254

MR WATTS: Your Honour, what we say is that the - it is open to the Commission to make an earlier operative date. Our view is that those matters that are currently before the Commission, there should be an operative date of 1 December. Should there be any applications that come before it post today, that it is open to the Commission to provide a 1 December date. However, we recognise that the - and having said that, I think we foreshadow, your Honour, that it is likely that there will be some consent view on a number of awards, employers and employees, that there be an operative date of 1 December in relation to those, some applications that you are yet to receive. So we put it to you that we require some flexibility as regards this. We understand what our earlier submissions said. We stand by those submissions. We do, however, say that it's open to the Commission to make an earlier operative date. That is, a date of 1 December, if indeed there is consent between the parties or if justice or equity necessitates it.

PN255

JUSTICE GIUDICE: Well, without putting words into Mr Cole's mouth, I understood the Commonwealth's position to be that the operative date in all variations would be 1 December.

PN256

MR COLE: Your Honour, I should perhaps clarify that because there is a slight inconsistency in our written submission. The Commonwealth's position, now that this hearing is proceeding on 4 and perhaps 5 December, is that any pay increases should operate as close as possible to 1 December. When we were last assembled here, it was prior to 1 December and we expressed on that occasion support for the increases operating from 1 December, which was at that stage a prospective date. Now that it's the 4th or perhaps the 5th, our position is that increases should operate as close as possible to the 1st. In other words, that the resolution of these matters should be, with respect, handled as expeditiously as possible by the Commission and a decision handed down as quickly as possible. If the Commission pleases.

PN257

JUSTICE GIUDICE: Thanks, Mr Cole.

PN258

MR WATTS: Your Honour, what we say is that the proposition forwarded by the ACTU is an orderly process that addresses the near hysterical claims of some of the employer respondents. That a two to four week period will allow a reflective approach and ensure that draft orders are considered in an appropriate timeframe where there are issues, genuine issues, that need to be discussed, most of them of a technical nature, there's ample opportunity for the parties to deal with those issues.

PN259

JUSTICE GIUDICE: What's the position in relation to orders arising from the Fair Pay Commission decision?

PN260

MR WATTS: Sorry, your Honour?

PN261

JUSTICE GIUDICE: What's the position in relation to orders arising from the Fair Pay Commission decision?

PN262

MR WATTS: In relation to the allowances component or in relation to all - - -

PN263

JUSTICE GIUDICE: No, no, the wage setting decision? Has the Fair Pay Commission issued instruments which vary the pay and classification scales?

PN264

MR WATTS: Well, your Honour, the Fair Pay Commission has not issued any instruments, and my understanding is it's not the intention of the Fair Pay Commission to issue any instruments. That there will be no instruments issued. There will, as I understand, or there has been an attempt by the Commonwealth through one of its websites associated with the legislation to vary the awards as they understand them to be. There's not been any discussion between the parties. It's a unilateral position taken by the Commonwealth. There are some, I understand, disagreements over some of the calculations that are found on that website. I can't say that most of those unions that I represent have had an opportunity to look at those rates, but there will be no orders as such issued by the Fair Pay Commission.

PN265

What we say, your Honour, is that the employer organisations can't demand legislative change that strips the Commission of most of its powers and places the Australian - places within the hands of the Australian Fair Pay Commission the - provides them with the power to become the pre-eminent wage setting body in Australia, then argue that the status quo should remain, that we should just do what we've done before. They can't argue that this is what the Bench must do, that it's required to follow a precedent of the past. What the Bench is required to do is to take into consideration the decision of the Fair Pay Commission. Now, the ACTU has previously raised a concern that separate operative dates cause considerable confusion. Whilst there were separate operative dates in the past, the landscape has substantially changed.

PN266

The vast majority of award-reliant employees received a pay increase as of 1 December 2006, the vast majority. A common operative date was put in place for the vast majority of those persons who rely on awards to set their rates of pay and conditions. To not grant the same amount on the same date, operative date, will cause further confusion. In a period of dramatic change, further confusion is not desirable. Our opponents played down the level of confusion and dislocation that will occur should the situation arise where employers will be required to make a decision whether they are a constitutional entity or not. This is not a small issue, certainly not for employees. We concede that it is a real issue for employers that in many instances they do need to decide whether they are a constitutional entity or not and they need to do so regardless of whether rates of pay change, which just adds to the need and adds to the confusion, should there be separate rates of pay. It becomes a real and immediate issue if they - - -

PN267

JUSTICE GIUDICE: Wouldn't they have had to decide that when the Fair Pay Commission decision was announced, because they'd need to know whether or not they were bound by it.

PN268

MR WATTS: One would think so, your Honour, but in fact on a daily basis or a weekly basis, they need not necessarily decide. They may in terms of accrued entitlements or other benefits that might arise from time to time, and it may indeed be an enforcement issue that arises. It becomes a daily, or indeed, an hourly issue if there is a separate operative date and a separate rate of pay is provided for constitutional entities and non-constitutional entities. It becomes an immediate issue.

PN269

JUSTICE GIUDICE: I follow, yes.

PN270

MR WATTS: But we certainly concede the point that you make, and indeed, the point that some of the employer respondents make, that is an issue that has to be addressed. What we say, though, is that there is considerable confusion. We deal with it every day and in fact, ACCI in their submissions state that they deal with it daily as well with employers, that they give advice as to whether they are constitutional entities or not on a daily basis. It's a live issue out there. The ACCI, at paragraph 2.20 in their submissions, we'd suggest, is disingenuous when they say that all employers - all employers - have known about it. There's 20 applications that were before it from November 2005. What we say is these applications are of no surprise, that there seems to be a view expressed that there was no forewarning of the possibility on any part of the employers that there be an attempt to flow on the Fair Pay Commission's decision.

PN271

Now, whilst that might be formerly the case, that it was not until the applications are formally lodged, that the employers would know exactly what was being sought, we say that these matters are of no surprise to the employers. The respondents were well-aware for some time what the ACTU and the applicants would be seeking. Technical issues and other minor issues aside, the respondents are well-aware of what is before them. The ACCI's assertions that they don't know what they had before them, at paragraph 2.55(b), we say is simply nonsense. At 2.58 of their submissions, ACCI says that the ACTU have undertaken a usual process of using vehicle awards to establish a test case. What we say in fact, that the test case for the establishment of wages, the benchmark for wages in this country, was in fact handed down on 26 October 2006. That was the Fair Pay Commission's decision.

PN272

We say that the onus is on the respondents to argue by the AFPC decision should not be adopted in full, including the operative date. We understand, having said that, that this paragraph - and that assertion might well come back to us in subsequent years should we not be so desirous of the AFPC's decision. But you can't have your cake and eat it too, and we understand that. We say the employers can't have their cake and eat it too. We say that the power is open to you to have a different decision, a different operative date, but the onus should fall upon those who argue that you should not meet your statutory requirements to be consistent and have a decision that's consistent with that of the Fair Pay Commission decision. Your Honour, there's nothing in these proceedings that a calculator and a little commonsense can't resolve. It appears that the respondents don't have either. If the Commission follows the ACCI's proposal, there will be considerable delay. Some, if not most awards, will not be varied until next year with an operative date some time hopefully early in 2007.

PN273

The next decision of the Fair Pay Commission is due in June 2007. At paragraph 2.88, ACCI says that the ACTU's approach would result in rushed orders, errors and other problems. We are proposing an orderly approach to the issuing of orders. Paragraph 2.90, ACCI appears to contradict themselves. They say there's no confusion regarding the constitutional status of employers, and yet claim to be answering employers' question on this status on a daily basis, as I mentioned earlier. At 3.7 of their submissions, ACCI claims the 12 month rule is a fundamental tenant of this Commission. We say this is not the case. We're not following past practice, this is not a safety net review of wages case. This is not more of the same. This is something completely different.

PN274

JUSTICE GIUDICE: What did the Fair Pay Commission say about the 12 month rule?

PN275

MR WATTS: They said nothing regarding the 12 month rule, your Honour. In fact, by indicating that their decision - their next decision will be less than 12 months, one would assume that they're not following any 12 month rule at all. There is no explanation as to why the Fair Pay Commission intends to issue a decision in June next year. One might guess that it might be that a decision might be forthcoming before the next election. One can only guess. There's no explanation as to why the Fair Pay Commission has decided to have a decision prior to the expiration of 12 months from its 26 October this year.

PN276

JUSTICE GIUDICE: I rather thought the Fair Pay Commission timing was related to the fact that there had previously been 12 month reviews and that this year there hadn't been, but they intended to get back onto that sort of cycle.

PN277

MR WATTS: That may be the case. I'm not sure whether Fair Pay Commission decision makes that clear. That is certainly, your Honour, one possibility. But we certainly say there isn't an 18 month rule, and beyond, which is what would occur if indeed you follow ACCI's proposal, that we would be waiting in an orderly process, but continue to wait and have delay while each case is dealt with, each award is dealt with in turn into next year. Certainly if this Commission is to adopt and continue to enforce the 12 month rule, there would certainly be an issue of that flowing on to the next decision of the Fair Pay Commission and this Commission, being its statutory obligation, have a decision that at least is consistent at least in terms of the date, with the Fair Pay Commission decision.

PN278

SENIOR DEPUTY PRESIDENT MARSH: Mr Watts, did the Fair Pay Commission adopt any rule with respect to flowing on the 2005 Safety Net Adjustment into awards that haven't been adjusted and a lag or timeframe between the operative date of its decision?

PN279

MR WATTS: Indeed, they did have a requirement, and indeed, did flow on the 2005 Safety Net decision. Interestingly, of course, they did not flow on previous decisions, and one would assume from that, that what flows is that decisions, where awards had not been varied for previous safety net decisions prior to 2005, that may in fact - will not be in a position to be varied by the Fair Pay Commission. That does not preclude this Commission from doing so. In terms of time lag, your Honour, I'd have to have a further look at the Fair Pay Commission decision and get back to you on that, but in relation to that there was a variation as of 1 December for the 2005 decision of this Commission, for an implementation of that, and indeed, a similar date of course for the $27 or $22, as the case may be. So they flowed both of those on as of 1 December.

PN280

In terms of a lag for further - or any other lag that might apply or delay that might apply, I think I'd need to take advice on that and come back to you. There's just a few other issues we would raise in relation to ACCI's submissions, and at 3.8 of their submissions, ACCI states that there should be a requirement that a new commitment clause be inserted into awards. Now, whilst we are not jumping up and down on this point with any great vigour, we don't see this as necessary and oppose insertion of the clause sought. It certainly may be - and the principle is not opposed, it's a question of whether or not the clause that is sought by ACCI is one which is appropriate. Certainly, having received ACCI's submissions in relation to this and other matters that relate to the principles, and particular suggestions for change to the principles that ACCI has proposed, they were received after hours on Friday, not in a position to consult with any of our affiliates on any of those matters.

PN281

Our general view is - and I'll get to our general view in terms of what the principles should be - but our view on the commitment, the changes that ACCI seeks to the commitment clause, we don't see that there's a requirement that that be inserted, or inserted in the form sought by ACCI. However, having said that, the Commission could insert a clause in relation to the commitment up to the end of the second sentence on page 46 of the ACCI submission. Essentially, that would stop after the word "award" in the sentence commencing, "Rates prescribed in the award", we would have no objection to a commitment clause of that nature. We don't suggest it, or see that it's absolutely necessary, but we have no fundamental objection beyond that. We believe that it may be problematic. We believe that the first two sentences effectively provide the vehicle - do the majority of the work required by that clause, for that clause.

PN282

Now, just a few more matters on the ACCI submissions. ACCI says that the ACTU is seeking to abandon a longstanding principle, 8A. What we say in relation to that is that we didn't abandon it, John Howard did. These changes effectively moved us on beyond that position. At 3.99 of the ACCI submissions, ACCI says the Commission must be satisfied that the requirements under section 553(4) are met before it can vary each award. That is, that the Commission must look at each award and satisfy itself that that requirement be met in each and every instance before it can move on. Well, we just say that's simply nonsense. We would be here forever if that was the case. What we say in relation to that is that ACCI's approach would ensure that section 553(4)(b)(i) is in fact not followed. Section 553(4)(b)(i) requires the Commission to meet a number of conditions before making award variation; (b)(i) of course is that the award as varied would not be inconsistent with the decisions of the Australian Fair Pay Commission.

PN283

We would say that the approach sought by ACCI, by its very nature, inevitable delays that would result would ensure that there would be an operative date some considerable time into the future, and that any subsequent decision would therefore be clearly inconsistent with the decision of the Fair Pay Commission. There is some discussion at 3.103 of the ACCI submissions where it's argued that the unions that have lodged applications to vary ACT and Northern Territory awards have been erroneously lodged. Now, we don't agree that they have been erroneously lodged, at least not in so far as the monetary allowances in the awards can be varied. There are issues that need to be resolved in relation to these awards, or some of them, it appears. We say that the period of two to four weeks that we propose to resolve draft orders can deal with those matters.

PN284

If indeed there needs to be any amendments to those applications, or rather, the orders that flow, we say that they can be dealt with. What ACCI says is that some of the applications before it, without naming the particular applications, I think, deal with excluded employers, excluded employees, not transitional employees and there's applications to vary rates. Correctly, ACCI says at one point, that the ACTU is not in a position to be on top of all these award variations that we have. Whilst I have a mountain of applications before me in my office, I don't have all of them, I must say, for one reason or another - - -

PN285

JUSTICE GIUDICE: I know where you can get a complete set if you want?

PN286

MR WATTS: Tempting as it may be, I have other Christmas reading, your Honour, although provided by my children, the orders might be more interesting sometimes. Your Honour, we say that whilst there might be issues that arise from a number of applications, that they can be dealt with in the two to four week period. At 3.109, ACCI says that the Commission must ensure that each application is within ambit, that in fact what they're asking is that the Commission discover the ambit for each application that it has before it, that assure itself that the applications remain within ambit and then progress forward. We say that the onus is on the respondent, indeed, in these cases to argue that the ambit has expired. That the Commission, if it adopted the process sought by the ACCI, that we would be here for some considerable period.

PN287

We assert that ambit has not expired in any of the applications you have before you. Now, I think that submission on the part of the ACCI is a bit cheeky, given their publicly-expressed views on the role of ambit claims and the Commission's adversarial approach, or so called adversarial approach. Nor do we agree with the ACCI's claim at 3.112, that precedent and historical application of National Wage Case decisions should still apply. This is not a national wage case decision. For better or worse - we would argue worse - the situation has changed. We also reject the ACCI's claim at 3.115 that the AIRC doesn't have the power to make a general order. We say the new Act encourages just such an approach. We say that enforceability is enhanced when there is a common operative date.

PN288

There are a number of submissions in relation to the principles by the ACCI. We do not believe that it is appropriate to deal with the principles here, at least not in any great length We reiterate our previous position on this matter, insofar as the principles are not barred by statute, the Commission and users of the Commission should assume that they continue to exist. The ACCI advocates changes now. We're not in a position to deal with those changes at this point in time. Simply not in a position to receive any instructions or to consult with our affiliates in relation to those proposals.

PN289

At 43.1 the ACCI claims the ACTU were seeking to overturn existing principles by changing the way awards are varied. The ACCI needs to wake up. They logged it for change and they got it and now they say the status quo should remain. Now, we strongly oppose all of the ACCIs proposed changes to the principles but we do agree with paragraph 4.18 of the ACCIs submissions where they suggest a conference of the parties to discuss the formulation of the principles. We also suggest that there may be a role for state tribunals in this process who historically have followed the principles adopted by this tribunal.

PN290

We understand that a number of the state tribunals have had discussions with the parties about the formulation of principles in to the future. At 5.2 the ACCI raises issues concerning Victorian common rule awards and applications applying to territory awards. Victorian common rule awards applying to constitutional corporations are varied when the underlying award is varied. Our position in this matter in relation to how that process works we don't believe there's any substantial disagreement between the Commonwealth and ourselves or any other party in relation to these matters. The issues that ACCI raises I think without going into depth are hard to respond to, but we believe they're a bit of a smoke screen.

PN291

It has been raised that there may be issues and therefore there needs to be delay. We need to have a cautious approach, take an award by award approach. We don't see that in relation to the common rule awards that there needs to be an award approach in relation to those matters at all. The applications that are currently before the Commission seek to vary rates of pay and allowances for territorial awards remain valid at least for the allowance variation component. Once again, the two to four week period that we suggest for the finalisation of draft orders to resolve those issues. Any confusion regarding the effects of the Work Choices Legislation should not be used as an excuse for further delay in these proceedings.

PN292

The ACCIs submission relating to apprentices and supported wage we also have some considerable difficulty with. It appears that the ACCI believes the insertion of school based trainee or apprenticeship and supported wage clauses into awards is an automatic process. Now, this is a misreading of the Act. We would suggest a deliberate one in this case. The Commission must be satisfied that it is appropriate that these clauses and appropriate in each case that these clauses be inserted into awards. Now, we have previously indicated in our submissions we do not have any difficulty with the proposals or the wording of the clauses suggested by the Commonwealth. They are in fact, as the respondents have indicates, they're a product of previous discussion between the parties. There is no issue with that.

PN293

It is a question about whether it is appropriate. The Act recognises that it must be appropriate and seen to be appropriate that they be inserted into awards. Rather than deal with the pages of what we suggest is childish finger pointing in relation to these ACCI submissions on this matter, we'd suggest a practical resolution to this process and it be that the opportunity be provided in the next two to four weeks of those opposing the insertion of the clauses the Commonwealth proposes to state why the insertion of such clauses are inappropriate. We then say that the onus would then fall on those who refute these claims to show why the insertion of the clauses are appropriate.

PN294

Now, we can indicate that there are a number of individual employer respondents as well as unions who are of the view that in certain industries it would be inappropriate to insert the clauses at least in a form that are proposed by the Commonwealth. That will not surprise the Commission, but having said that, what we say is that we have no difficulty with the clauses and we agree with clauses of that nature and the intent behind them being inserted in. We believe that there is room for further movement for those clauses and filling those gaps that that is not something of a general position that we oppose, but there is a statutory requirement that they only be inserted where it's appropriate. When someone says it's not appropriate they then say that the onus should fall on those who say that it is.

PN295

Now, we must say that we note with some considerable displeasure accurate reporting and we say inaccurate reporting of the ACTUs position discussed at private conference. This is something we feel is not appropriate particularly when it's dealt with inaccurately, or our position is reported inaccurately. Now, we've proposed a practical resolution to those matters that will take that issue forward. We say that the Bench should not be persuaded by the ACCIs lengthy and sanctimonious and flawed indeed submissions on those matters. In relation to the AIGs submissions, it was first struck by perhaps the number of references to companies and firms and other descriptions of employers within the AIG submissions, but we are not dealing with companies here today.

PN296

The AIGs submissions talk about the status quo and talk about the fact that retrospectivity and granting retrospectivity would be dangerous. How it would be dangerous we're not entirely sure. We say that Henny-Penny stuff. We simply say this, that any decision of this Bench that does not incorporate a 1 December date is not flowing on the AFPC decision and is therefore not consistent with the AFPC decision. Now, the AIG argues that a single date variation adopted by the AFPC has caused confusion and is unworkable. We suggest that adopting a different date or indeed multiple dates will result in further confusion and more further confusion if any exists now.

PN297

Without saying so, the AIG appears to oppose the flow on of the AFPC decision because the AIG claims the economy has turned and the companies are doing it tough. Companies are not, as I said, the subject of these proceedings insofar as the rates of pay are concerned. The economic data and submissions of the AI Group are therefore irrelevant. An example is paragraph 65 of the AIGs submissions which state that companies can't afford wage increases or companies are not going to be granted a wage increase as a result of these proceedings. Again at paragraph 75 and at paragraph 87 the AI Group says that companies can't afford wage increases. Perhaps the AI Group should speak to Professor Harper, not this Bench.

PN298

Now, in relation to those submissions by the AI Group that state that the economy has turned and the OECDC recognises that I wish to tender an exhibit if I could, your Honour.

PN299

JUSTICE GIUDICE: Yes.

EXHIBIT #WATTS2 ACTU OUTLINE OF SUBMISSIONS DATED 24/11/2006

PN300

MR WATTS: Thank you, your Honour.

EXHIBIT #WATTS3 PRESS RELEASE FROM THE TREASURER, PETER COSTELLA, 28/11/2006

PN301

MR WATTS: Your Honour, I don't intend to take you to this document other than the first line. It simply says, this is a press release from the Treasurer, Peter Costello of 28 November 2006, headed OECDC is a Strengthening Australian Economy and the first line is that:

PN302

The OECDCs latest economic outlook presents a positive outlook -

PN303

And it's in the eyes of the Treasurer at least -

PN304

for the Australian economy of economic growth over the next two years expected to accelerate.

PN305

Now, we say that the AI Group's submissions that the economy has turned a refuted at least by the treasurer. In their submissions the AI Group discusses the importance of the economic incapacity principle. Now, to clarify the ACTUs position we are not seeking its removal. We do not disagree with the general submissions of the parties including that of the National Farmers Federation and the Master Builders and the AI Group that the existing formulas used to determine allowances continue to be used, or that the economic incapacity principle be applied.

PN306

At paragraph 16 of their submissions the National Farmers Federation say that the only role for the AIRC in relation to agricultural awards is to vary allowances and that these need to be accurately identified. We agree in part at least and believe that the two to four week period proposed by the ACTU should suffice to deal with those particular submissions of the NFF. The NFF also asks that the Commission only grant an increase in rates of pay consistent with CPI increases. Now, at table 3 on page 19 of the ACTUs submissions we in fact show that the AFPC decision is in fact less than inflation for the relevant period.

PN307

Your Honours, I won't take you to that now but I've just become aware of references which I will provide in due course to the parties and to the Bench, a quote in fact - perhaps if I can be indulged to reading it into transcript?

PN308

JUSTICE GIUDICE: Yes.

PN309

MR WATTS: It's a report from Workplace Express dated 24/11/2006.

PN310

JUSTICE GIUDICE: I'm sure it's a very good publication but is it authoritative in any of these matters?

PN311

MR WATTS: It relates to a quotation within there of Professor Harper in relation to this particular point, what Professor Harper is reported to have said in relation to inflation and its relative impact on the Fair Pay Commission decision.

PN312

JUSTICE GIUDICE: Yes. Go ahead, I'm not sure how much use it's going to be to us.

PN313

MR WATTS: What weight you give it, your Honour?

PN314

JUSTICE GIUDICE: Well, it may be unchallenged for all I know.

PN315

MR WATTS: It may well be. What we say in relation to these matters, in fact table 3 on page 19 of the ACTU submissions none of the parties have objected to or raised any alternative position. It's uncontested, that in fact the CPI data shows quite clearly for the relevant period that there is in fact a negative outcome for the majority if not all in fact of the wage outcomes as a result of the AFPC decision given the length of time, fluctuation of time. In relation to Professor Harper, what Professor Harper says and he is reported in Workplace Express as saying:

PN316

Every other pay classifications, ladies and gentlemen, goes down in real terms. That is, every other classification other than the first two levels goes down in real terms. The weighted average increase over all the pay and classification scales of this decision is 4.5 per cent over 18 months. Inflation over 18 months we estimate to be about 5.4 per cent.

PN317

We say that that simply supports the position adopted or position shown in fact by the ACTU and the ACTU submissions at table 3, so it's a fact we say. So though the NFF - - -

PN318

JUSTICE GIUDICE: That's not part of the decision, is it? That's not a part of the AFPC decision?

PN319

MR WATTS: Indeed it's not apart of the AFPC decision and we're not suggesting that you follow a decision as a matter of course where the be a negative outcome in real terms. What in fact the NFF is suggesting that the Commission grant an increase in rates of pay consistent with CPI increases. Now, as reluctant as we to do this and as a generous an offer as it would be to follow a CPI increase over the relevant period since the last adjustment would result in a higher increase than that awarded by the AFPC.

PN320

JUSTICE GIUDICE: Perhaps not the way the NFF calculates it.

PN321

MR WATTS: No, that wouldn't surprise me at all, your Honour. But the way the ABS calculates it I think that would show that to be the case. In our submissions at table 3 our uncontested material shown at table 3 we believe clearly shows that to be the case. Now, we accept the generous offer of the NFF in relation to adjusting our claim or claims but reluctantly we can't accept it. In relation to the NFFs other matters, the economic incapacity principle can continue to be utilised by the NFF. It is conceded that production levels are down in agriculture. It also must be recognised that in many cases, not all cases, that the percentage increase in prices in many areas has exceeded the percentage decrease in production, Canola production for instance is an example of that.

PN322

Other areas that is not the case and we concede that there are real issues or there may well be real issues in the agricultural industry in the forthcoming year. The economic incapacity principle is one that can be availed of the NFF and we say simply that the NFF would not serve itself well to offer more than we are seeking in relation to if they seek to flow on the CPI increase for the period. There are a number of other matters raised in various submissions including Master Builders and others - - -

PN323

JUSTICE GIUDICE: Mr Watts, sorry to just take you back for a moment, but on your understanding is anybody suggesting in these proceedings that the incapacity principle should not be available? Is it a matter of contention do you know?

PN324

MR WATTS: I don't believe it is, your Honour.

PN325

JUSTICE GIUDICE: No.

PN326

MR COLE: Your Honour, I should indicate that I'm still expecting some clarification on my instructions in respect to that particular matter which I may only be able to obtain this afternoon.

PN327

JUSTICE GIUDICE: Very well. Thanks, Mr Cole.

PN328

MR WATTS: Subject to what the Commonwealth may say in relation to that, I think in terms of the principles what we essentially say is that where the principles, it's not practical that the principles be adopted or it's barred by statute that they be adopted.

PN329

JUSTICE GIUDICE: Yes.

PN330

MR WATTS: But it served the parties the well, it would only add to considerable confusion should those principles not continue to apply and where they can apply.

PN331

JUSTICE GIUDICE: But isn't one of the potential problems and I'm now looking at it very much in a general sense, potential problems that it's not necessarily clear the extent to which the legislation and the changes in the Commission's powers and functions have affected the operation of the statement of principles that it might be something we'd need to have a look at rather than make a general statement about them continuing so far as they can?

PN332

MR WATTS: Yes, I can understand the difficult position it puts you in, your Honour. Unfortunately these are complex matters and I think all the parties have turned their mind to the issue. We don't believe there's been sufficient time to turn our mind to it in a manner which would provide a proper assessment of those principles. Indeed it may well be that there are two sets of principles we're looking at, one that relates to transitional awards and one that relates to allowances, a variation of monetary based allowances.

PN333

JUSTICE GIUDICE: Yes.

PN334

MR WATTS: But insofar as they apply to transitional awards the process is a little easier, although still complicated by the amendments to the Act.

PN335

JUSTICE GIUDICE: Yes, thank you.

PN336

MR WATTS: Your Honour, there are a number of matters within the various submissions of the parties that have been provided to the ACTU and we presume to the Commission. Some of those deal with technical matters including issues relating to whether allowances are indeed allowances or form part of a rate of pay, but these are issues which indeed need to be discussed between the parties and if need be, need to be resolved by the Commission. This is where our proposal that a period between two and four weeks be adopted to deal with these issues. They have been raised to date. They are, we believe, been dealt with with good will and expeditiously.

PN337

It may well be that there needs to be some guidance, general guidance from the Commission on some of these points to assist the parties but certainly where peak bodies have been involved and have discussed these matters we believe that they've been readily resolved. We don't believe that there's considerable or any real disagreement. The Master Builders Association raises an issue in relation to a particular allowance which its name will come to me in a moment.

PN338

MR CALVER: Follow the job.

PN339

MR WATTS: Follow the job, thank you very much. My friend tells me it's the follow the job allowance which is correct. The issue is whether indeed it's an allowance or not and that is an issue which we suggest can be resolved in that two to four week period, along with issues that have been raised by Caltex and issues that have been raised by others that fall within the same category. There's, we believe, an orderly process that can be adopted to deal with those. They need not hold up these proceedings or indeed need not hold up an in principle decision in relation to those particular awards with an operative date of 1 December. But certainly in relation to the allowance variation on the actual technical nature of the draft order, how it's to apply, whether or not particular quantums form part of an allowance or part of a basic rate of pay, those issues need to be dealt with as they arise and we certainly give a commitment to the Commission that we'd assist the parties in whatever way we can to deal with those matters expeditiously.

PN340

Your Honour, in conclusion, the main matters that are before you is not the quantum. No party is seriously opposing the quantum adopted by the AFPC. We are not saying that as a matter of principle the Commission must or as a matter of legislative or statute requirement must adopt the quantum without question, that it is a matter that should be looked at on a case by case basis. So whether the onus we say would fall upon those who argue that you should not. That onus has not been met by the other parties. Perhaps they don't like it and they'd rather you do something else. In most instances they don't say what, other than NFF that says you should follow CPI. As we say, that would be more generous.

PN341

So we say that the quantum is not really an issue before you, it's the retrospectivity of the operative date. Now, we rely on our submissions that we've already provided on those matters. We say that to not provide a 1 December operative date would cause considerable confusion, real confusion. It would not be consistent with the decision of the Fair Pay Commission and would not be equitable or just. Now, we simply face a barrage of minor issues that arise that deal with claims that there is a need for an orderly process. Well, how more orderly can you get than to simply set an operative date of 1 December and then deal with the issues as they arise, the technical issues as they arise?

PN342

Of course we agree there needs to be properly based orders, there needs to be a resolution of issues that arises in the settlement of those orders, that is a relatively simple process, a relatively simple process, a relatively simple process. Now, where there are any real issues they should be addressed expeditiously by the Commission. They should be dealt with either by this Bench or by panel members who are aware of the particular awards and have some expertise. Those are positions that are put by the employees and we don't disagree with that. It's not inconsistent to have an operative date of 1 December and then to deal with those issues in an ordinary manner.

PN343

I think that it simply doesn't flow from raising these issues, pages and pages of minor issues that there needs to be an operative date some time into next year for these awards and what will be an operative date into next year for most of those awards. If the Commission pleases.

PN344

JUSTICE GIUDICE: Thanks, Mr Watts. Yes.

PN345

MR MAXWELL: Thank you, your Honour. Your Honour, the CFMEU supports in general the submissions of the ACTU. We would however like to clarify our position in regard to a number of matters. First of all, in regard to the issue of school based apprentices, school based trainees and the supportive wage, the CFMEU does not support the model clauses put forward by the Commonwealth. As members of the Commission will be aware, the issue of school based apprenticeship in the National Building and Construction Industry Award went through a lengthy and arduous process before Commissioner Smith which resulted in an arbitrated decision and an order issued by Commissioner Smith found in print PR952835.

PN346

Now, that order departed from the model clause in a number of areas, specifically in regard to the issue of tool allowance and the payment of fares and travel allowance. It is the position of the CFMEU that in the appropriate awards that be the model that be used for the appropriate building industry awards and we understand that the National Builders Association supports that viewpoint. In regard to school based trainees, the National Building and Construction Industry Award contains trainee rates of pay which apply irrespective of age. We would see any school based arrangements be arranged in regard to those wage rates already contained within the award but we are prepared to look at a provision based on clause 14.6 of the National Training Wage Award which deals with part time trainees. So we are not opposed in principle to the insertion of school based trainees, it is just the form of the order.

PN347

Finally in regard to the supportive wage system clause, the CFMEU is not opposed in principle to the insertion of such a clause, however we note that the section 62, schedule 6 provides that if appropriate awards be varied to include a supportive wage system clause. Now, we would raise that it is our position that a number of the awards to which we're a party, in particular the On Site Construction Awards and the Mobile Crane Hire Award it may not be appropriate to insert a supportive wage system clause. We would like to discuss those issues with the parties to the award and deal with those issues at the appropriate time when orders are settled before the Commission.

PN348

Your Honour raised an issue in regard to the - which is an issue that's raised by the Commonwealth when we were last before you in regard to the issue of allowances in pre reform awards and whether or not such allowances were included in the basic periodic rates of pay. Well, your Honour, we have what we would contend is an unsatisfactory situation where the Australian Fair Pay Commission has issued a decision but when we checked with the Fair Pay Commission they informed us that they would not be issuing any orders, that it is the decision of the Fair Pay Commission that any such advice would be dealt with by the department.

PN349

Now, over the last week the Work Choices website which is, as I understand - sorry, the Work Choices website which comes under the responsibility of the federal government has begun issuing pay scale summaries. Your Honour, I would seek to tender the pay scale summary for the National Building and Construction Industry Award.

PN350

MR CALVER: If it assists my friend, your Honour and the Commission, I was also going to tender that document and I have spare copies if that would assist.

EXHIBIT #CFMEU1 PAY SCALE SUMMARY OF THE NATIONAL BUILDING AND CONSTRUCTION INDUSTRY AWARD

PN351

MR MAXWELL: Your Honour, if I could just take you to the last page, you'll note that there is a disclaimer there from the Work Choices website to the extent that the unions agree that the Commonwealth does not invite reliance upon the summary, so we have a situation where according to the Fair Pay Commission you go into the Work Choices website to get a summary of the position but the website has a disclaimer as to any reliance on the figures produced which leaves us in a difficult position because without any orders by the Fair Pay
Commission - - -

PN352

JUSTICE GIUDICE: I'm sorry, Mr Maxwell, where is that?

PN353

MR MAXWELL: It's on the last page of the - - -

PN354

JUSTICE GIUDICE: It's on the last page, I'm sorry.

PN355

MR MAXWELL: Yes, on page 11 there's a disclaimer at the bottom.

PN356

JUSTICE GIUDICE: So is the position that there is no authoritative document saying what the minimum rates are in the Australian pay and classification scales?

PN357

MR MAXWELL: Well, your Honour, that's the position that we come to, that you're correct that there is no authoritative or document that anyone can rely on. Now, unless the Commonwealth can advise us of any other place where can find such documents I think that is the situation we have. Your Honour, if I can just briefly take you to page 4 of this pay scale summary you'll see that the construction worker level 3, CW3, according to the Commonwealth department the basic hourly rate is $15.94. Now, we can only presume that that is taken to be the basic periodic rate of pay. Your Honour, if I can hand up a copy of the draft order that we submitted in regard to the transitional version of the Building and Construction Industry Award.

PN358

JUSTICE GIUDICE: Yes.

EXHIBIT #CFMEU2 DRAFT ORDER RE TRANSITIONAL VERSION OF THE BUILDING AND CONSTRUCTION INDUSTRY AWARD

PN359

MR MAXWELL: Your Honour, I'll just briefly take you to the first page. If I can take you down to the wage rates that the union seeks in its application to vary the transitional award. For the construction worker level 3 we have a weekly rate there of 605.66. Now, that is calculated using the existing base weekly rate and adding the $27.36 awarded by the Fair Pay Commission. Now, if you divide the 605.66 by 38 you arrive at a figure of $15.938 which rounded up is 15.94 which is the hourly rate that's published by the Fair Pay Commission - sorry, that's published by the Work Choices website.

PN360

So we would submit that it would appear from the pay scales published by the Commonwealth on the Work Choices website that the basic periodic rate of pay does not include any allowances which to some extent will be consistent with section 178 of the Act where the definition of the basic periodic rate of pay excludes any loadings an monetary allowance. So to the extent that that may assist the Commission in seeking to clarify whether the basic periodic rate of pay includes any allowances we believe that's the extent that we can provide any assistance.

PN361

Your Honour, we understand that the Master Builders Associate has made submissions and we believe in regard - we support the submissions of the ACTU that those matters are best initially dealt with in discussions between the parties and with the assistance of the Commission if necessary. However, we do say that we disagree with the MBA in regard to the follow the job loading or the calculation of the hourly rate under the MBCIA is an allowance or a redundancy pay in which we say it's neither, it is a matter but it's incidental to the wage rate contained within that award.

PN362

Your Honour, in regard to the draft order submitted by the CFMEU, we have received - or we have been contacted by the Master Builders of New South Wales in regard to the National Building and Construction Industry Award and by the AIG in regard to the National Joinery Building Trades Products Award and we have agreed that there are some minor corrections that are necessary and again those matters can be dealt with at the appropriate time when the individual awards are considered. In regard to the Boral Australia Gypsum Award, we understand that the Commission has received correspondence from Clayton Utz in regard to that award that Boral Australia does not oppose the variation sought by the union in that award and that is in C number 2006/197.

PN363

Your Honour, we also understand today I'm also representing mining and energy division that there have been submissions made by Gillespie Consulting Services. Again we believe that those issues can be dealt with at the appropriate time when the individual award is considered. If the Commission pleases.

PN364

JUSTICE GIUDICE: Thanks, Mr Maxwell. Are there any other union submissions?

PN365

MR WATTS: Your Honour, there is one thing I neglected to mention, there appears as if there's been no application as usual in these type of procedures, not that this a - this follows previous national wage case matters, but there's been no application by any of the parties as we understand to adjust trainee rates of pay. Now, in previous wage case matters the trainee rates of pay have been sought to be adjusted, usually I think by the relevant retail awards and we've sought to have those flowed on, that's not occurred on this particular occasion. What you will receive today is a National Training Wage Award application by the AMWU in relation to awards, the names of which I don't have before me but they will be received today.

PN366

JUSTICE GIUDICE: Well, those matters - - -

PN367

MR WATTS: Sorry, I'm being informed that it will be the National Training Wage Award 2000, there'll be an application to adjust the rates of pay contained within that today. We would say that subject to the parties checking, including ourselves, checking that application, that we would support that application and that we would seek flow on however appropriate of those particular - or we'd support that variation and affiliates would support that variation at large. So it's just something that we've neglected to deal with in both our submissions and in our oral submissions earlier. There will be an application. Unfortunately I don't have that application before me at the moment but it will be registered by the registry today.

PN368

We don't believe that there will be anything contentious in that. It will just simply seek to flow on with the similar operative date and quantum with the Fair Pay Commission as it would apply to the National Training Award 2000. If the Commission pleases.

PN369

JUSTICE GIUDICE: Has there been any discussion about the order of submissions? Mr Houlihan.

PN370

MR HOULIHAN: Given nobody bounded forth, your Honours and Commissioner, I'm here for the NatRoad Ltd, your Honour, and we are concerned - they are the principal employer organisation in the long distance road transport industry and one of the major employer organisations in the other local, the 1998 award, the local award with the TWU. Our concern is simply pre-eminently this, that we were unaware of these proceedings until Thursday of last week. NatRoad had received nothing on any of these proceedings prior to I think it was about
3 o'clock on Thursday of last week. Our position as outlined - or the position as outlined by the ACTU seems not unreasonable to us and that is that there should be an adjournment for the various parties to get together.

PN371

We have major objections both to the mathematics involved in the draft orders proposed by the TWU but more importantly, we have objections to the methodology that they use and we think simply the mathematics is not simply wrong but the methodology more importantly is wrong. But our biggest single concern is clearly this process has been ongoing now for some - you know, there's been a previous hearing and there's been obviously submissions made and considered and in this important industry, this important organisation, was just simply unaware that this was happening. May it please the Commission.

PN372

MR FOLLETT: If it please the Commission, it might be an opportune time to deal with the matter that I raised earlier. In light of the ACTUs submissions that the actual methodology used to finalise draft orders take two to four weeks with discussions between the parties in that regard, my client wouldn't have any objection to that. They don't wish to say anything in general in relation to the application. It was the specific amounts that the award was varied by, pre reform award that deals with allowances only. As to operative date, my instructions are that there's a pre reform certified agreement in operation that excludes the operation of this award until 31 January 2009, so we would say that in this particular case no prejudice could arise to the union parties should that award not be varied, with an operative date of 1 December and that it is varied in the two to four week period as foreshadowed by the ACTU. Apart from that I have nothing further to say on that, if it please the Commission.

PN373

JUSTICE GIUDICE: Thank you. Mr Cole, in light of the Commonwealth's position on the operative date and which may well have been the reason why the submissions were filed when they were, it might be appropriate if the Commonwealth went next. Is that a convenient course for you?

PN374

MR COLE: Yes, your Honour. Bearing in mind that I did mention that I have to seek clarification of my instructions on that precise issue, but I’m certainly happy to present the rest of our submissions.

PN375

JUSTICE GIUDICE: Yes. What we might do, Mr Cole, is to take a short break I think and I appreciate you may not be able to get instructions in that period but we'll have a break anyway and we'll resume at 20 to 12.

<SHORT ADJOURNMENT [11.28AM]
<RESUMED [11.46AM]

PN376

JUSTICE GIUDICE: Yes, Mr Cole?

PN377

MR COLE: If the Commission pleases, the Commonwealth filed and served its written submission on 24 November. Could that be marked as an exhibit, your Honour?

EXHIBIT #COLE2 - COMMONWEALTH WRITTEN SUBMISSIONS FILED 24/11/2006

PN378

MR COLE: Thank you. The Commonwealth's written submission sets out the Commonwealth's position and supporting arguments comprehensively, and there is little we wish to add, but there are a few matters of emphasis we will address. The Commonwealth of course supports the flow on of the Australian Fair Pay Commission's minimum wage decision of 26 October 2006 to wage rates and wage-related allowances and in transitional awards. The Fair Pay Commission's decision provides pay increases for the majority of employees who are reliant on minimum rates of pay. In light of that, the Commonwealth strongly submits that it is fair and reasonable that the residual group of employees who are reliant on minimum rates of pay in transitional awards should receive the same pay increases as close as possible to the same operative date as their counterparts who benefit from the Fair Pay Commission's decision.

PN379

There are three points we would emphasise in support. Firstly, as the Commonwealth's written submission emphases, a decision to flow on the wage increases provided by the Fair Pay Commission would be fully consistent for the relevant objects and other detailed provisions of the amended Workplace Relations Act relating to the exercise of the Commission's powers to vary transitional awards. Second, in the Commonwealth's view, there are no valid or sufficient grounds to not approve the flow-on of the wage increases provided by the Fair Pay Commission's decision, and thirdly, we say this Commission can support the flow-on of the Fair Pay Commission's decision, confident in the knowledge that to do so is entirely consistent with the requirements to which it, that is this Commission, must have regard under the Workplace Relations Act.

PN380

The Commonwealth has supported and continues to support the expeditious hearing and determination of this matter so that any award wage increases can operate, as I've said, as close as possible to 1 December 2006.

PN381

VICE PRESIDENT LAWLER: Do we correctly infer that you therefore oppose any retrospectivity?

PN382

MR COLE: Well, your Honour, the Commonwealth is not making any specific further submission on the question of retrospectivity.

PN383

VICE PRESIDENT LAWLER: Thank you.

PN384

MR COLE: We are mindful that the unions are putting one position, the employers have a different position and the issue will need to be determined by the Full Bench, including taking account of clause 66 of Part VI of schedule 6 to the Act, which relates to date of effect of orders and includes reference to exceptional circumstances.

PN385

VICE PRESIDENT LAWLER: I suppose that then really becomes this, does the Commonwealth have a view on whether or not the fact that the Australian Fair Pay Commission has made its first decision and the timing of all of that constitutes an exceptional circumstance?

PN386

MR COLE: Well, your Honour, apart from acknowledging that that is an issue for determination in light of the competing submission of the parties, the Commonwealth has no specific submission to make in that regard itself. Now, as to wage-related allowances, the Commonwealth supports the adjustment of wage-related allowances in both transitional awards and in pre-reform awards. We submit the calculation of the appropriate quantum of increases in such allowances should be performed in the usual manner. That is, in accordance with the formula in the Furnishing and Glass Industries Allowances decision, Print M9675. But based of course on the wage increase provided by the Fair Pay Commission's decision.

PN387

In the event that there are any complications arising in respect of adjusting allowances, in particular pre-reform awards, we say that need not delay the adjustment of allowances in transitional awards. These adjustments should also take effect as close as possible to 1 December 2006. If the Commission pleases, the Commission will have noticed that the major part of the Commonwealth's written submission is directed at the issue of filling gaps in the coverage of the supported wage system and filling gaps in the coverage for school-based apprentices and trainees. That matter is raised not least because of the requirements of clause 62 of Part VI of schedule 6. Now, the Commonwealth is actually proposing that this Full Bench adopt a policy of filling the gaps in the coverage of the supported wage system and in respect of school-based apprentices and trainees.

PN388

The Bench would apply that policy in respect of the applications presently before the Bench and by adopting the policy it would effectively bring about a situation when the Commission, if otherwise constituted to consider later applications, would be bound to insert provisions for the supported wage system and for school-based apprentices and trainees in awards where there is potential for employees to be engaged under the provisions that the award does not currently include such provisions. In effect, the Commonwealth is submitting that in the present proceedings the Full Bench should determine that, in the words of the Act, it is appropriate for these provisions to be included. We say that it is open to the Full Bench to itself determine the issue of appropriateness and to make a binding policy, and as appropriate to give effect to that binding policy, by making principles under clause 40 of schedule 6.

PN389

Now, the Commonwealth submission as set out the model clauses that would be drawn upon the fill the gaps in awards. We specify the circumstances in which the proposed policy would require an insertion of model provisions. The key supporting arguments in support of filling the gaps in respect of the supported wage system are set out at paragraph 3.3 of the written submission. I don't rehearse those arguments, but I do ask the Bench specifically to have regard to the four dot points in paragraph 3.3 that summarise the key grounds on which we say the policy we propose in respect of the supported wage system should be adopted. Similarly, the key arguments supporting filling the gaps in awards in respect of school-based apprentices and trainees are set out in paragraph 4.6 of the written submission. Again, there are four points and we ask the Commission specifically to have regard to the four key arguments set out in that paragraph.

PN390

Now, the Commission will be mindful that there is in fact general support among the participants to these proceedings to fill the gaps in respect of these matters, as the Commonwealth is proposing. Now, the ACTU written submission at paragraph 102 asks:

PN391

That the Commission adopt as model clauses the proposed clauses by the Commonwealth and that there be a presumption that such clauses will be inserted into transitional awards.

PN392

The ACTU also submitted in its written submission at paragraph 101 that a number of affiliate unions consider it inappropriate to insert the clauses in the current form, or in any form, in certain transitional awards. The ACTU in its written submission appeared to be seeking the opportunity for such objections to be raised on an award by award basis. My friend, Mr Watts' submissions this morning have certainly confirmed that latter point. That is, that the ACTU does seek an opportunity for objections to be raised on an award by award basis. What concerns us, however, in respect of my friend's oral submissions this morning was that it does appear the ACTU may be backing away somewhat from the presumption that they referred to in their written submission concerning the inclusion of the relevant clauses.

PN393

Now, it will be clear, I think, from what I've already said that we seek to take the matter further than the ACTU in the present proceedings, by asking the Commission to adopt a policy and to make the principle to which we refer. So what we say is that - - -

PN394

VICE PRESIDENT LAWLER: Does the Commonwealth say we have power to make principles or set principles in relation to awards, as distinct from transitional awards?

PN395

MR COLE: Well, we are in this regard talking about transitional awards and it's clause 40 of schedule - - -

PN396

VICE PRESIDENT LAWLER: Mr Cole, I may be mistaken, but I thought that the Commonwealth's submission went beyond adding the supported wage system and the school-based apprenticeships and traineeship causes in transitional awards and extend it to all awards that have been varied in relation to wage-related allowances. Did I misread that?

PN397

MR COLE: Yes, I may have misled your Honour and the Bench in that regard. This submission is pitched entirely to the transitional awards, and that's against the backdrop that the Fair Pay Commission decision itself has had the effect of providing universal coverage in respect of these matters, in respect of constitutional corporations. Indeed, it is one of the key arguments in support of what we seek be done in respect of the transitional awards, that this Commission bring about a result consistent with the outcome of the Fair Pay Commission determination. Now, that relates to the supported wage system. In respect of the school-based apprentices and trainees, it was in fact an amendment, a legislative amendment, to the - implemented through the Work Choices Amendment Act and which came into effect from 14 December last year, that brought about that universal application to constitutional corporations of the model school-based apprentice and school-based trainee arrangements, that the effect of that legislative amendment has subsequently become part of a preserved pay scale.

PN398

Now, what we wish to put to the Commission is that any party opposing adoption of the course of action should put argument to the Full Bench in the current proceedings. That is, any party to the applications before the Bench should put their argument in the current proceedings and the Bench should take that into account, together with any responses to that such an argument in determining whether it's appropriate to adopt the policy to which we refer.

PN399

JUSTICE GIUDICE: How many awards would that involve us looking at in these proceedings?

PN400

MR COLE: I'm sorry, your Honour?

PN401

JUSTICE GIUDICE: How many awards - your submission is that we should look at that question in all the applications before us?

PN402

MR COLE: No, your Honour.

PN403

JUSTICE GIUDICE: I'm sorry.

PN404

MR COLE: The proposition is that if there are any parties who oppose the adoption of the binding principle to which we refer, those parties should put their case to the Full Bench. Now, it remains to be seen if there are any such parties. I'll come and deal with the submissions by my friend, Mr Maxwell, in due course.

PN405

JUSTICE GIUDICE: Yes. If the Commission were generally supportive of the Commonwealth's approach, presumably it could be dealt with on the basis that if after discussion there was no agreement in a particular award, then that matter would have to come back to be dealt with.

PN406

MR COLE: That course would obviously, as a matter of discretion, be open to the Full Bench. Now, we are concerned, however, looking at this issue over a broad sweep of time, that events can conspire to in fact turn this into a never-ending story. We say it's time now to reach finality in terms of providing access to the supported wage system and the school-based apprentice and trainee arrangements. There are five key points that we wish to draw to the Commission's attention as supporting the argument as to why this matter should be dealt with now, avoiding any possibility of it drifting into inconclusive developments in the future. The first argument is - and this relates to the supported wage system, and we say any further delay is highly undesirable because in the absence of the supported wage system provisions in awards, the employment of workers with a disability who are unable to earn the full minimum adult wage for the job is effectively prevented.

PN407

Because in the absence of the supported wage system provisions, these employees would have to be paid the full wage, notwithstanding that they do not have the capacity to work at that level, and therefore they become - or would be uncompetitive in the labour market and we say that that is a highly undesirable situation to be allowed to continue. Now secondly, there's abundant precedent and support for making the supported wage system widely available to people with a disability. In some jurisdictions, it's been made available under all awards without exception, and this has provided a test of whether there are any areas of employment where the inclusion of the supported wage would cause problems. These jurisdictions have shown in practice the obvious benefits of providing universal access and that they can be reaped without producing any difficulties.

PN408

Now, an example of where there is universal coverage for the supported wage has been achieved, or where it has been achieved or supported, includes the introduction in Queensland of blanket coverage in 1996 through a supported wage award. Another example is the insertion of the supported wage system model clause in all Victorian minimum wage orders in July 2004. A further example is the establishment by the South Australian Industrial Relations Commission in February 2006 of the supported wage as the minimum standards for all employees with a disability in this jurisdiction in open employment. The Fair Pay Commission, as I have already acknowledged, fill all gaps in the coverage of the supported wage within its jurisdiction and this Commission has repeatedly endorsed the wide coverage of the supported wage system commencing with its own 1994 test case decision that established the supported wage.

PN409

So the supported wage has been tested many times in many jurisdictions and has repeatedly proven effective and beneficial. It's 12 years since it was first adopted by this Commission and it's now time to provide universal coverage, we'd say. Now, the third of the five points we wish to make relates to the school-based apprentices and trainees. We say any delay in providing universal access by spreading these arrangements to transitional awards is highly undesirable because it's an essential element of the response to current skills shortages. The Commonwealth and all State and Territory governments have recognised this through the Council of Australian Government's Agreement on school-based apprenticeships. The COAG Agreement includes the removal of industrial barriers by 31 December 2006 to enable participation in school-based apprenticeships in skills shortage areas.

PN410

They identified priority trade areas, metals and engineering, automotive, building and construction, electro technology and commercial cookery. Now, with respect, the deadline of 31 December is very important because it's necessary to ensure that access to school-based apprenticeships is available for the 2007 school year. Delays that could result from the ACTU proposal would risk jeopardising achieving this objective in this jurisdiction. Now, fourthly, some unions have sought to use the pre-existing terms of awards to prevent access by young people and by employers to school-based apprenticeships and the Commonwealth is strongly of the view that this is inappropriate. We say there's no possible justification for structuring for safety net of minimum wages in transitional awards in a way that employment that any category of employees is prevented.

PN411

VICE PRESIDENT LAWLER: Mr Cole, how do you suggest in a practical sense the applications be dealt with to avoid the problems you have just identified, the 31 December deadline?

PN412

MR COLE: Well, your Honour, essentially that at least in respect of all the applications presently before the Full Bench, that when orders are made to determine those applications, that the model clauses that we have put forward be included in those orders.

PN413

VICE PRESIDENT LAWLER: And the tension between that and Mr Watts' position and Mr Maxwell's position is that they want to leave open the possibility that individual awards might need, by reference to the interests of the particular unions and employer parties who are respondent to those awards, may need to be treated as separately and the Commonwealth's position is, no, don't do that, just include these provisions in all awards, and it's up to specific parties to make application to prevent that occurring, if it's not to occur.

PN414

MR COLE: Well, we say that the parties have been on notice, with respect, prior to today, your Honour, that the Commonwealth would be seeking the inclusion of the model clauses in awards. Indeed, more generally, the parties have been on notice since at least the commencement of amended Workplace Relations Act in March that it was part of the transitional provisions that the Commission, in making any orders to vary transitional awards, would of necessity, if it considered it appropriate, apply its mind to this issue. So there has been substantial advance notice from March in that respect and more particularly since the for mention proceedings in respect of the present matters in front of this Full Bench, it has been abundantly clear, and the Commonwealth actually tabled an exhibit to this effect, that Commonwealth would be seeking the inclusion of the model clauses in orders arising from the present proceedings.

PN415

So we say the parties have been on notice and if any parties have any reason to demur with the Commonwealth's proposals, they have had and still have the opportunity to speak up in these proceedings.

PN416

JUSTICE GIUDICE: Mr Cole, I think there are about 900 applications. Many of them were lodged during the course of last week and many people were only notified of today's hearing very late last week. Now, it may be a reflection of the lack of contention for the most part in the ACTU applications, lack of contention about them that there hasn't been more concern expressed about that. But in relation to the answer you just gave, there must be a probability that many people respondent to or affected by the awards simply don't know what the Commonwealth filed two weeks ago, or a week ago.

PN417

MR COLE: Well, I'm not sure that we would concede the proposition your Honour puts to me. I can understand that such a suggestion might be made,
but - - -

PN418

JUSTICE GIUDICE: Well, it's not normally the way we do things. We do try and give people a bit more notice, and of course if somebody comes along today and says, well, they have been disadvantaged, we'd obviously give them an opportunity to be heard. But in this case, I just wonder whether all of the parties concerned actually know at this stage what the Commonwealth is proposing.

PN419

MR COLE: Yes. Well, I understood that the Commission had cause to - the Commonwealth's exhibit to be displayed on its website in connection with the proceedings.

PN420

JUSTICE GIUDICE: Yes.

PN421

MR COLE: But the Commission will nevertheless, I hope, see that - we are heavily promoting a course of action that will see conclusive results achieved in the short term, and against two key considerations; the fact that within this Commission and this is not to attribute any responsibility to any particular party, but within the Commission, particularly as to the supported wage but also in respect of school-based apprenticeships and traineeships, the process has had, as of today, if it had been allowed to continue to evolve in the manner in which it has been evolving, it would frankly be difficult to see an end in sight. That's the first consideration.

PN422

The second consideration is that by dint of the Fair Pay Commission decision and the legislative change to which I referred operating from December, the position is that employers and employees in the area of constitutional corporations have the benefit of access to the arrangements we're talking about and as the Commission appreciates, it's clearly intended by the amended Act that employers and employees covered by transitional awards not be placed at a disadvantage in respect of employers and employees in the area of constitutional corporations in respect of wage matters. That's what we're talking about. We're talking about wage-related matters and so for those two key reasons, we are seeking that the Commission adopt a course of action that will bring the - achieve the result where there is effectively universal coverage of these arrangements and to achieve that result in the very near term future.

PN423

In that regard, I don't underestimate the importance we also attach to the fact that the amendment to the Act operating from March has effectively given people abundant notice that this would be an issue that would necessarily have to be considered in connection with the making of any orders to vary transitional awards. Now, the fifth and last round on which we commend the course of action we propose is that the arrangements for school-based apprenticeships and traineeships have themselves been fully tested in practice over a number of years and have proven successful and they have attracted widespread support. In particular, Queensland has had universal coverage for all school-based apprentices and trainees for many years without difficulties. As I have already referred to Work Choices made appropriate minimum wages and conditions universally available for school-based apprentices and trainees covered by constitutional corporations and that has operated since 14 December 2005.

PN424

The National Training Wage Award 2000 has provided far-reaching industrial coverage for school-based trainees since 1997. Unions New South Wales recently applied to the New South Wales Industrial Commission to have a new single state award made which would enable school-based apprenticeships to be undertaken in the skill shortage trades identified by COAG and this Commission endorsed a model clause that included school-based apprenticeships in 2000, and in 2004, Commissioner Smith undertook a very thorough arbitration of school-based apprenticeships under the National Building and Construction Award, finding in favour of inclusion of the model clause. Now, if the Commission has any difficulty with the Commonwealth's primary position, in our respectful submission it should, as the minimum, ensure that provisions for school-based apprentices are available by 31 December for the new school year in the skill shortage areas identified by COAG.

PN425

That is, metals and engineering, automotive, building and construction, electro technology and commercial cookery. That would include varying the Metal Engineering and Associated Industries Award which currently excludes school-based apprenticeships being undertaken in electrical, electronic and plumbing trades. Now, in respect of the submissions on behalf of the CFMEU, there are really three particular matters raised in this regard. The first was that the amendments provided by Print 952835 departed in two respects from the model clause, by including tool allowance and fares and travelling allowance. So we don't have any difficulty with acknowledging that those matters might be included in the relevant provisions in other building awards.

PN426

The second matter raised by my friend, Mr Maxwell, and this was in the context that he made clear that the CFMEU is not opposed in principle to the inclusion of school-based traineeships, but it did seem that from what I could understand from Mr Maxwell's submission, that there may be some issue in the CFMEU's mind, about the appropriateness of the actual rates of pay. Now, school-based trainee rates are pitched to people who are at school. There are two rates, a year 11 and a year 12 rate. We are not aware of any reason that would necessitate or justify some variation from the established rates, simply for them to apply in the building industry. Finally, Mr Maxwell seemed to raise a doubt as to whether the supported wage system would be appropriate, at least in respect of a couple of awards that he nominated.

PN427

But in our submission, it is inappropriate to foreclose on the possibility that regardless of the nature of an employee's particular disability that affects their capacity, that they should be excluded totally from some area of employment. Now, we suggest that it is not appropriate to foreclose on the opportunity for people, regardless of circumstances, to work in a particular area of industry which it did appear to us that that was suggestive, my friend's submission, that he was saying completely disregarding what may be the restriction on the capacity of an individual, but people with reduced capacity should be totally excluded from those - - -

PN428

SENIOR DEPUTY PRESIDENT MARSH: Mr Cole, can I just take you back to the submission you made that if the Commission wasn't with you with the primary policy approach, particularly in relation to school-based apprentices, that we should nevertheless follow the COAG conclusions and findings with respect to certain areas, which I think you identified, and then indicated that that would involve variation to the Metal Industry Award. Is that submission consistent with the areas identified in your paragraph 4.39 of the Commonwealth's submissions, removal of industrial barriers, metals and engineering, automotive, building and construction, electro technology, commercial cooking, how is that different, the conclusion from COAG? I'm just trying to - you said the variations with the Metals Award, but those areas that you're referring to in the written submission, that would be wider than the variation of that award. Is there anywhere in your submission where you identify your secondary position, if I could put it that way?

PN429

MR COLE: Well yes paragraph 4.39 is of course as your Honour points out is much broader than the Metals Award.

PN430

SENIOR DEPUTY PRESIDENT MARSH: Yes, that’s why I’m raising the question.

PN431

MR COLE: What we were think - - -

PN432

SENIOR DEPUTY PRESIDENT MARSH: Well can you repeat your submission on what you think we should do in the fall back in circumstances where your primary position is not totally adopted, that might be an easier way of me clarifying to me what you are asking us to do.

PN433

MR COLE: Yes, well I’m sorry for not having made this clear your Honour. So this alternative submission is that the Full Bench should ensure as a minimum that provisions for school based apprentices are available by 31 December 2006, for the new school year in the COAG identified skill shortage industries and they are metals and engineering, automotive, building and construction, electro technology and commercial cookery.

PN434

Then I went on to particularize one area that would be encompassed by that, which is the Metals Award, because the Metals Award whilst it does make provision for some school based apprenticeships, currently makes no provision in respect of electrical, electronic and timing trades. So that was a particularized example of something that would be encompassed in what we propose to the Bench in the alternative submission.

PN435

SENIOR DEPUTY PRESIDENT MARSH: But that’s not exhaustive of the award that you say should be varied to cover these other industries?

PN436

MR COLE: I’m sorry your Honour I didn’t catch the question.

PN437

SENIOR DEPUTY PRESIDENT MARSH: Well you’ve outlined a number of industries and you’ve just repeated that and then you went to a particular instance and that is varying the Metal Industry Award which excludes certain types of school based apprenticeships.

PN438

MR COLE: Yes.

PN439

SENIOR DEPUTY PRESIDENT MARSH: Is that the extent of your submission or are you saying that awards covering commercial cookery should be varied?

PN440

MR COLE: Yes.

PN441

SENIOR DEPUTY PRESIDENT MARSH: Well have we got a list of those awards in front of us?

PN442

JUSTICE GIUDICE: There are some in 4.22, I don’t know whether that’s comprehensive is it?

PN443

SENIOR DEPUTY PRESIDENT MARSH: I’m just trying to get a practical scope of your alternative position.

PN444

MR COLE: Yes. We more have lists in our submission of awards that currently contain provisions rather than lists of awards that don’t.

PN445

SENIOR DEPUTY PRESIDENT MARSH: Yes, that’s right in one of the appendices, that’s right.

PN446

JUSTICE GIUDICE: The practical issue is what awards are you asking us to vary and do we have the power to do so on our own motion?

PN447

MR COLE: Well certainly if any of these awards are – to the extent that the relevant awards in those industries are before the Commission we say the Act does authorize the Commission indeed require the Commission with respect in making any orders to vary those awards to give consideration to including those provisions.

PN448

JUSTICE GIUDICE: Yes, I understand that but if the awards aren’t before us? Mr Cole, perhaps we’ve just alerted you to an issue that you might be able to deal with by some subsequent statement. Obviously we’d like to have the awards identified as far as they can be if need be.

PN449

MR COLE: Yes we’ll give consideration your Honour to how we can best assist the Commission in that regard. So if the Commission pleases, that actually completes the outline of the five key reasons we say support the Bench dealing with the question of filling the gaps in the coverage of these matters, that is the supported wage and school based apprenticeships and traineeships without further delay.

PN450

That indeed, completes what the Commonwealth wishes to put in support of its written submissions. We commend the outcomes that we have proposed to the Commission. I think that leaves simply the matter of incapacity to pay which I indicated I was seeking to have my instructions on and I would seek the indulgence of the Bench, as soon as that matter is resolved to inform the Bench later today what our position is in that regard.

PN451

JUSTICE GIUDICE: Mr Cole could I ask you a question about the principles, the statement of principles – I’m referring there to the Commission’s statement most recently in the Safety Net Review 2005 decision and the situation which has been brought about by Work Choices, the change in the Commission’s functions and powers. If we’re to deal in this decision with the manner in which transitional awards and pre-Reform awards are to be varied which are not before us at the moment, but which may seek to implement the Fair Pay Commission decision, the question arises at what powers the Commission has to do that.

PN452

I’m speaking fairly generally here but it appears that there are – there is a power in clause 40 of schedule (6) for the Commission to establish principles in relation to transitional awards. There doesn’t appear to be any specific power to establish principles in relation to the safety net based variation of pre-Reform awards. Does the Commonwealth have any submission about those questions of – I suppose ultimately the questions of power.

PN453

MR COLE: I think I should provide your Honour with a fully considered response for that matter.

PN454

JUSTICE GIUDICE: Yes, I’m not sure the extent to which we’re going to solve all the problems about the statement of principles in the next day or so, but there are nevertheless some questions I think about how the result of this decision might be implemented in applications that haven’t yet been lodged.

PN455

MR COLE: Yes, well your Honour if I may have an opportunity to obtain precise instructions on that important matter.

PN456

JUSTICE GIUDICE: Yes, I think it’s actually resolves really down to the question of the pre-Reform awards.

PN457

MR COLE: Yes, as the Commission pleases.

PN458

JUSTICE GIUDICE: Thank you. Mr Lawrence?

PN459

MR LAWRENCE: If your Honour pleases, I’ve spoken to the matter that my friend has been speaking to and I would participate at this stage. The position that the Australian Catholic Council for employment relations has adopted is broadly supportive of the ACTU position. Recent submissions were filed on Friday, dated 1 December, I tender those if the Commission pleases.

PN460

JUSTICE GIUDICE: Yes.

EXHIBIT #ACCER 1 SUBMISSIONS DATED 01/12/2006

PN461

MR LAWRENCE: If the Commission pleases there are three matters that I wish to go to. First of all, the real wages issue. Secondly flow on considerations from decisions of the Fair Pay Commission and thirdly, the operative date aspect. I won’t take the Commission to the first four pages of the submission because they’re by way of background to the position that’s been adopted by ACCER in these kinds of cases in the past, the particular concerns that ACCER has had in the past.

PN462

At page 5 from paragraph 11 of the submissions we refer to the Fair Pay Commission’s inaugural determination. There are some matters that I wish to refer to in the written submissions. The Fair Pay Commission decision was made in the context of a very strong Australian economy in which ACCER submitted to it minimum wage workers, particularly those on lower paid classifications should receive real wage increases. ACCER submitted to the Fair Pay Commission that the maintenance of real wages must take into account all of the movements in the Consumer Price Index since the last adjustments by the AIRC in June 2005.

PN463

At the AFPC – that’s Fair Pay Commission’s closing date for the filing of submissions which was 28 July 2006, there have been five quarterly increases in the index. The most recent of which was released only on 26 July 2006 that is two days before the deadline. Those increases totalled 4.6 per cent. Now the AFPC decision was published on 26 October 2006, one day after the release of the Consumer Price Index movement for the September 2006 quarter. It is important to recognise that this movement, the September quarter movement was not taken into account by the Fair Pay Commission.

PN464

This is evident from page 35 of its decision where the members of the Fair Pay Commission signed the instrument, page 35 recites:

PN465

On 6 October 2006 we –

PN466

And the names are set out:

PN467

-collectively comprising the Australian Fair Pay Commission make this decision to be known as Australian Fair Pay Commission Wage Sitting December 1/2006.

PN468

If one looks at the – at least he PDF version one will see that the text of the instrument as I call it, is not quite as sharp as the text for the reasons and this would seem to indicate that it was a separate document that was in existence prior to the publication of the final complete document which included the instrument and the reasons. That’s by the way whether it was a separate document or not, the fact of the matter is that the decision, the determination was dated 6 October, 20 days before the publication of the decision and 19 days rather, before the September quarter CPI was made available.

PN469

Now there was some discussion earlier today about the instrument and whether or not had issued an instrument, in my submission the document which appear up to page 35 of the Fair Pay Commission’s decision and the schedules that follow after page 35 constitute the instrument. As I would understand the thinking would be that if one was involved in a question of enforcement of an entitlement under the legislation, and one was involved in litigation where there was a need to prove what the appropriate rate of pay was, one would have to tender the relevant award at the time of the commencement of the amendments in March 2006 and then the instrument that was made by the Fair Pay Commission so that the two instruments would give the figures that would be the entitlements of the worker concerned.

PN470

So in this context, that is, in the context of the submissions due in by 28 July ACCER argue that there were no circumstances that would warrant a decrease in the real wages of the 20 per cent of Australian workers who depend on prescribed minimum wages. ACCER said in the submission that the mere maintenance of the real wages at the time would require for example, weekly increases of $22.30 at the Federal minimum wage level and $26.60 at the base trades level. That is the base trades level at $578.20. It’s said that these figures would need to be increased if the AFPC were to hand down its decision after the release of the September 2006 quarter consumer price index movement.

PN471

ACCER argued that the increases should be in excess of that which is required for the maintenance of real wages. It supported an increase in minimum wages that reflect the strength and prosperity of the Australian economy and distribute the benefit of national productivity gains to low paid minimum wage workers. It also relied on the delay to annual adjustment to wages brought about by the transition to the new wage setting system. It argued that the increase should be more than that which was needed to compensate for the 4.6 per cent increase in prices to the June 2006 quarter.

PN472

The Commission will recall just on that question of the delay when there was some debate in the Commission in the safety new review case of about 12 months ago, when there was some debate as to whether or not the matter should be adjourned the Commonwealth’s position was that the Fair Pay Commission would be able to take into account the delay beyond the usual anniversary of the usual time for the handing down of these decisions and so to compensate employees who would have to wait. Now the way in which they would compensate the Fair Pay Commission would have to compensate the employees who had to wait wasn’t spelt out, but there was a general position put by the Commonwealth.

PN473

So ACCER put a number of reasons why there should be more than a real wage increase. Any evaluation of the Fair Pay Commission’s decision must therefore be made on the basis that the decision was made before the publication of the September 2006 quarter increase in the consumer price index and the delay from 26 October to 1 December 2006 for that decision to come into effect. The appropriateness of this delay is a matter which may give rise to some debate between the parties, but we are presented with a situation where it’s a delay of over five weeks and whether or not that is an appropriate length of delay is a matter the parties differ on.

PN474

However it is clear that the September 2006 quarter price movements should be taken into account when the Fair Pay Commission undertakes its next review and there were notices published in at least one newspaper that’s a notice on Saturday that the Fair Pay Commission has invited submissions for the 2007 review and those submissions are to be in by the end of March 2007. So leaving aside the delay and the operative date of its decision, the decision by the Fair Pay Commission to increase wage rates by $27.36 of those workers on classifications up to $700 per week has increased the real wages of workers on the Federal minimum wage by a small margin for approximately $5 per week.

PN475

Progressively smaller real wage increases apply to those earning up to approximately $595 per week. The increase of $27.36 per week does not maintain minimum real wages for workers on classifications above that point. That is above $595 or thereabouts particularly those on classifications above $700 per week because of course workers on classifications over $700 per week will only receive $22.04 per week. Now the number of minimum – the number of workers rather employed on the Federal minimum wage is limited and the Commission may recall that in the past ACCI has put forward some material to the Commission in the last two safety net review cases.

PN476

In fact, dealing with what it calls the effective minimum wage, which was an amount which was substantially above the Federal minimum wage, which they said was the effective minimum wage on which people are employed in Australia. Now even if one took that position, there was – the wage increase that would be required for the Federal - effective minimum wage we would calculate at $520 per week would have had its – sorry that figure would have maintained its real value if the increase were $23.92. The other calculations indicate the limited real wage increases delivered by the Fair Pay Commission’s decision. But the fact of the matter is as I’ve indicated there were real wage increases for those at the bottom end of the scale.

PN477

The ACTUs written submissions of 24 November 2006 in this case referred to claim for real wage deductions caused by the Fair Pay Commission’s decision. This is set out at paragraphs 32 and 34 and table 3, for the reasons that I’ve just given the ACCER disagrees with the detail of that material in relation to the lower paid classifications and the higher paid classifications, because what’s been done in that table and what’s implicit in the paragraphs is that the September quarter 2006 figure should be taken into account. However, ACCER would agree with the heading which states that the decision was not generous.

PN478

Now in the course of his submissions today my friend Mr Watts referred to Professor Harper’s view on the real wages question. The real question there is on what date did Professor Harper speak, because if he were to speak today or yesterday then he would be clear that the real wages of lower paid workers had fallen behind and again you could do the figures and calculate that perhaps only those at the bottom end of the scale at this point in time are maintaining their real wages.

PN479

JUSTICE GIUDICE: Mr Lawrence I think we’d be guided by published decisions of the Fair Pay Commission rather than press releases or speeches or anything of that kind, simply on the basis that if you depart from the published decision you might invite all sorts of difficulties in deciding on exactly what was taken into account.

PN480

MR LAWRENCE: Understand your Honour, what we are very clear about and we think that others can be very clear about is that the September quarter CPI it was not there and it is out there waiting to be compensated for at the next stage. So we would like to disabuse anyone of the view that this decision comes into effect or has come into effect on 1 September includes compensation for that particular CPI movement.

PN481

SENIOR DEPUTY PRESIDENT MARSH: Mr Lawrence doesn’t table three of the ACTU document and I’m sure they can speak for themselves refers to June 2006.

PN482

MR LAWRENCE: Sorry.

PN483

SENIOR DEPUTY PRESIDENT MARSH: The table three my reading of table three of the ACTU document on page 19 does refer to June 2006. But that’s a matter of clarification it’s just that you – I thought you had intimated that the ACTU had factored in the September quarter CPI? Anyway don’t trouble yourself now.

PN484

MR LAWRENCE: Yes table three does include September 2006, point 9.

PN485

SENIOR DEPUTY PRESIDENT MARSH: I see down the bottom, yes I see, I follow the argument.

PN486

MR LAWRENCE: Point 9 is there and then they give – they identify they box a number of movements and they identify the movement as being 5.4

PN487

SENIOR DEPUTY PRESIDENT MARSH: Yes, understand, yes.

PN488

MR LAWRENCE: I must say there appears that there might be some rounding error of point one, of 1 percent between the ACTU figures and the figures that we use. We use 4.6 per cent which if you add point 9 to you don’t quite get 5.4.

PN489

SENIOR DEPUTY PRESIDENT MARSH: That’s probably compounding, I understand the submission you are making thank you.

PN490

JUSTICE GIUDICE: Mr Lawrence we are going to adjourn until 2.15.

<LUNCHEON ADJOURNMENT [12.50PM]
<RESUMED [2.17PM]

PN491

JUSTICE GIUDICE: Mr Lawrence?

PN492

MR LAWRENCE: If the Commission pleases. I've said all I want to say in relation to the real increases question. The next point I wish to touch is at paragraph 21 and following of the written submissions and it concerns the foreshadowed opposition by ACCI to the flowing on of the increases granted by the Fair Pay Commission. That foreshadowed opposition occurred on 20 November 2006 and it may be that my understanding of the opposition is not quite the correct one given the submissions that ACCI have filed more recently.

PN493

But nevertheless, that position of opposition, or any position of opposition from another party raises some questions about the construction and constitutionality of clause 8 of schedule 6 of the Act, a clause which I don't need to refer to in any detail because it would be well known to the Commission and other people here. Taking the construction question first. The construction question concerns the ability of the Industrial Relations Commission to have regard to factors that are outside of those specified in clause 8. For example, can the Commission take into account fairness in dealing with the wage applications that are before it and in dealing with applications that the decision of the Fair Pay Commission not be followed.

PN494

That may raise a question as to whether or not fairness is implied in the - or is to be observed by the Fair Pay Commission in making its decision. In any event, even if it is the case that fairness is a matter which can properly be taken into account by the Fair Pay Commission it raises the question as to whether or not, in having a look at that decision, this Commission might revisit questions of fairness. So there are questions about the basis upon which a decision might be made by this Commission and in particular as to where or not the matters that are specified in clause 8 are limiting factors.

PN495

Then there's the second question, the constitutional question and I simply want to make the point that schedule 6 is based on the conciliation arbitration power in the Constitution and that power limits the power of the Commonwealth parliament to constrain the tribunal when it is exercising the powers conferred in that constitutional provision. The limitation on the power was summarised in a 1967 case in The Queen v The Commonwealth Conciliation Arbitration Commission ex parte AEU by the then Chief Justice Barwick. Part of the quote that's set out there is the following:

PN496

The Parliament is unable itself to legislate the level of wages to be paid, nor has it power to direct the arbitrator as to the level of wages he shall prescribe in settlement of a dispute as to wages ...(reads)... purports to constrain this Commission in an impermissible way.

PN497

Now, these are important issues in my submission and are matters which this Commission will most likely to address, either in the present case or future cases. ACCER submits that if ACCI or any other party presses its opposition to the ACTU claim in this case, and argues that this Commission should depart from the Fair Pay Commission decision, then it is entitled to do so. In particular ACCER would state that there's nothing in the legislation or in the legislation as is permissible under the Constitutional head of power to regard the Fair Pay Commission decision as being a presumptive position for this Commission and there is no basis for construing the provisions as a statutory presumption in favour of rubber stamping of the Fair Pay Commission decision.

PN498

As I said, ACCER would support the entitlement of any party to challenge the Fair Pay Commission decision, but in this case ACCER supports the flow on of the Fair Pay Commission decision. It submits that there are simply no economic or other circumstances that would justify the denial of any of the benefits conferred by the Fair Pay Commission's decision.

PN499

Now, the last point I want to touch on is simply the operative date. ACCER supports the ACTUs submissions as to the operative date for the wage increases and it supports the date of 1 December 2006. This of course involves a departure from the past practice of this Commission where ordinarily pay increases have been applicable from the beginning of the first pay period on or after a specified date. Now, if that provision, or that practice was to apply, then an order would be, in this case, beginning of the first pay period, on or after 1 December, one would expect that there'd be very pay periods that would start on 1 December, on a Friday, and that most of the pay periods, you would think, would start on a Monday, that is, today.

PN500

Now, there are some considerations to do with efficiency or clarity, considerations arising out of past practice that might indicate that it would be a better course for the Commission to take, to adopt the beginning of the first pay period on or after a specified date as the operative time for the increase, but the fact of the matter is that the Fair Pay Commission has decided that it be 1 December, and that means it will be 1 December even if it is within a pay period and that employers will have to turn their mind to that particular aspect in complying with that decision of the Fair Pay Commission.

PN501

That being so, it seems to us consistent with the Fair Pay Commission and not unduly disruptive for employers to also, when dealing with the questions of allowances, and in relation to transitional awards wages and allowances, to adopt the same date. We think that in the end if one was to choose between denying workers $5 or thereabouts pay increase for last Friday in the name of efficiency of clarity that it would not be justified. It would be better to have the workers receive that increase even though it might require some specific calculation on the part of employers.

PN502

Now, they're the only matters that I wish to put to the Commission on behalf of ACCER. If the Commission pleases.

PN503

JUSTICE GIUDICE: Thanks, Mr Lawrence. Mr Barklamb?

PN504

MR BARKLAMB: Thank you, your Honour. Your Honours, Commissioner, firstly there's some preliminary matters. ACCI lodged our outline of submission on 1 December by email. Our apologies, I understand that it was received perhaps 15 minutes after the close of business, our apologies. It sometimes gets through our system and those of others. It was distributed to the same list of email recipients, as I understand, or as I received in fact from Mr Watson's email service of his documentation along with some other email address that I had access to. If anybody hasn't got it, please contact me. I do understand I've only just seen this over the weekend, there were some return emails from some unions in particular, and I wonder whether it's a signal to parties that some people's emails settings may reject emails with large documents attached to them. So as we go through this change of time and technology, it's worth having regard.

PN505

JUSTICE GIUDICE: The submission is on the Wages and Allowances Review website.

PN506

MR BARKLAMB: Yes, thank you, your Honour, that makes it even easier for those that may not have had access to it to date. We also at that time appended our ACCIs AFPC submission following the practice of our colleagues from the ACTU. That is also available in full from the AFPC website. It's not at all something I intend to take the Commission today, but it is worth providing for the completeness. I'd also note, and I think one of the other parties has mentioned this today, by way of a preliminary that the second AFPC review has been advertised in the papers of last weekend. We say this is potentially relevant for how we address this case with any discussions we might be able to have towards a more orderly and agreed approach on the next occasion.

PN507

With that, your Honours, we'd like in introductions to take stock of where we're at in relation to these proceedings. As at 2.30 on Friday, according to the AIRCs Wages and Allowances Review website for this matter, we thank you, your Honours and Commissioner for providing that, I understand from the Excel spreadsheet that I looked at that there are 1433 matters before this bench. However with doubling up of the pre Work Choices awards and the revision of some orders, it appeared to me that translated into perhaps four or maybe more than 400 individual awards being before the Commission in this matter.

PN508

JUSTICE GIUDICE: I'm sorry, Mr Barklamb, did you say 1400 or 400?

PN509

MR BARKLAMB: There are 400 individual line items on the spreadsheet. We believe this translates to 400 or so of the individual awards of this Commission pre Work Choices, so double the transitional or pre reform awards, with the addition of some orders and revisions of orders under particular items, so that hence my rule of thumb sort to assessment is around 400 applications that are before you today or at this stage. We'd hazard a guess that this is the most applications a single bench of this Commission has ever had or had before it.

PN510

We come back to this, but it represents, we say, a massive practical challenge for all of us and we're starting to get into some of those issues today. It's quite a level of complication that is not particularly easy to resolve. We say this arises because the ACTU is trying too much, attempting too rapidly to vary too many awards and there are dangers in the practicalities of what's proposed of overloading the system. What's needed with this level of applications is an orderly approach and we would dispute that the ACTUs revised approach, and I'll return to that, but it's an approach that was revised to date, this business of having two to four weeks to settle orders from a date of a decision in this Full Bench with a reversion of a 1 December operative date.

PN511

We would dispute that is in fact orderly and we would say there's a superior course which I'll get to shortly. We say the Commission should in fact look to its existing experience, existing approaches and the proven ways of doing things that we are all involved in year after year as to how to resolve this. Just to provide a further update, ACCI members are involved as we speak in a pretty furious process of trying to check orders where they happen. The reports from the people I've been speaking to, my member organisations, particularly those that deal with multiple branches of awards across industries, is that they're in a process of trying to speak to unions to settle orders, try to obtain orders where they've not been lodged and we welcome Mr Watts' indication that even he doesn't have all the orders, in his comment about his Christmas reading.

PN512

It certainly is the case we have more applications, more matters have been triggered in this matter than in fact have been reduced to the specificity of a detailed order to vary an award. We say that's a material issue on how the Commission proceeds at this time, and indeed, from what I understand, there's really some quite significant and very rushed work going on out in the employer representative community with their union counterparts they deal with each year on this matter. Our members, and we presume all users of the system are looking for some guidance in how to address these things.

PN513

We're looking for some central clarity in these proceedings, and that clarity really is two-fold. It's how the orders are to be addressed, the mechanics of how individual variations are to be checked and to proceed, but there's also another dimension to that. We have issues of calculation, of rounding and a number of very practical things which are not clear in relation to what we take from the Fair Pay Commission's decision and translate into individual awards.

PN514

I want to make also clear, your Honours, in the introduction of what I'm saying today, is talking to our outline, what employer priorities in this matter are. Essentially our priorities are in the areas of clarify, efficient implementation of Fair Pay Commission decision, the nuances I'll get to shortly, capacity for our employer association members to advise their members accurately, comprehensively and consistently with the legal and, indeed, registration obligations upon us with our raison d'etre being to provide consistent and appropriate legal advise as accurately as possible, and consistent with this, the other thing that's motivating us in this matter is avoiding back pay, which we know from other years to be costly, confusing, complex and potentially for workplace relations and both employers and employees at the workplace level.

PN515

It is a process or an eventuality of payroll which this Commission and all parties over years have quite rightly strived to avoid in relation to the variation of particular matters and we say that that should continue to be the case. Employers are not at all motivated by trying to delay the applications of these increases. This is not about us saving money. It's not about us holding back something which is due as such. We're very happy to have this matter subject to appropriate expedition. Indeed, I'll discuss shortly some matters, some options for individual approaches at the panel level, but we want to have increases to take effect as early as they practically can and can consistently with the operation of the system. We don't support forcing an expedition on this process which we say would offend against the Act, which would be unbalanced or unmerited or cause more problems than the ACTU claims it is seeking to alleviate.

PN516

It's also worth noting in introduction, for what it's worth, that it's no one's fault the system has had to adjust to a new process. We're merely trying to operationalise for the first time a new way of doing things. It's inevitable that we had to grapple with the issue of how to give effect to the initial AFPC decision, challenges to grapple with it correctly and set this element of the Work Choices changes off on the right course. So what is the ACCI proposal? At section 1.1 of our outline on page 2 we outline the ACCI proposal. As a formality and there was an exchange between your Honour, the Vice President, and I in relation to this when we programmed this matter and I thank you for assistance in clarifying that as a formality, to the extent this matter asks us a question, should the AFPC decision be given effect to for transitional awards, wages and allowances. We saw a different outcome, for quite valid reasons, we say.

PN517

We still genuinely believe a more moderate increase would have been a better outcome from the AFPC process, and that would have been closer to the underlying rather than headline rate of inflation and would not have been factored upwards for a misapplication or misunderstanding, we say, of any perceived delay in a 2006 wage increase. I don't however seek to advance that argument with you, as my colleague from the ACCER has just indicated. Happy to proceed on the basis today that we're having a discussion of the how of applying the AFPC increase, not the whether of applying the AFPC increase beyond putting that formal matter before you.

PN518

To turn to how to give effect. I've indicated the Commission has to chart a course and it's beholden upon all of us to assist, and that's the spirit of which we're trying to approach this. We say you best give effect as outlined in subsection 1.1.2 of our line from page 3. That is, using the established approach of this Commission, in terms of procedures and mechanics applying the centralised increase, the AFPC decision, in a manner analogous to your application of the previous safety net adjustment process.

PN519

Secondly, using the panel structure of the Commission to finalise the variation of individual awards, and I mention that there may be options to expedite things at the panel structure. We certainly are not indicating that each and every award need to be called on singly, nor that there aren't options for the aggregation of matters wearing the opinion of the panel head, having regard to things like employer respondency and the union party to awards. It can be done efficiently, to matters being processed on the paper. We certainly don't oppose expedition at the panel level where it doesn't prejudice the proper and accurate variation of an award and where orders are extant, are necessarily in place at the correct time.

PN520

Generally, though, we think the panel structure of the Commission is in existence precisely to facilitate the variation of masses of awards in the wake of a centralised decision, and that's really what we're talking about here. My colleagues mentioned before that we perhaps had failed to adjust to a new reality and we don't have safety net adjustments any more. That's not to correctly understand what we're saying in this regard.

PN521

We're not saying that this is a safety net adjustment, therefore it must be done a particular way. We're saying this Commission has an experienced and an evolved process for dealing with the mass variation of the number of awards it has and an orderly process, and a sound one at that, which there should be a strong presumption towards applying to this matter. The final branch of our position is of course that the operative date for each award is a date not earlier than the date that award is varied, which again is to continue the existing approach of the Commission. I'll return shortly in some detail to some issues of operative date.

PN522

In practice that would see referring the 1400 plus matters, or indeed, 400 award matters currently before this Bench, we would say, essentially for programming and for the determination of how this matter is addressed, rather than the substance of each and every one of the individual matters. Turning those back to the panel structure with central guidance on the application of the AFPC increase in regard to technicalities and the variation of individual awards.

PN523

Now, there are two other things that were mentioned this morning which I think it's worth clarifying. (a) is - I think the wisdom of Solomon was mentioned this morning - we're not claiming a Solomon like wisdom as to which ones goes first or a particular order. We're certainly not proposing it be done alphabetically or numerically or something like that. I think I indicated before, that a certain batching or rapid processing of large numbers of variations, where that's possible, should proceed. We're in the Commission's hands as to whether, as a second branch of this argument, we're in the Commission's hands as to whether a certain number of awards need varying or be varied in this matter to give essential guidance to other members of the Commission or whether that can be achieved without the variation of awards.

PN524

So by way of analogy in the previous system we had, the ACTU selected a set of vehicle awards. They were varied by the National Wage Bench and in the National Wage proceedings, and then that generated principles and approaches which were applied by individual members. If that need be the approach again, then we think this system should be quite capable of selecting a group of those awards to provide those variations as central guidance. But we don't say that's obligatory. The Commission should provide guidance in this matter through a decision or commentary in regard to the variation of awards.

PN525

We go to this shortly, but we'd certainly say that doesn't represent - the course I just proposed to you does not represent any further materials away to this process. We think it's a process which can deal with some expedition with the variation of awards to give effect to the 2006 Fair Pay Commission decision. If parties wish to approach this bench on an exceptional basis, that some people feel a particular urgency to being ready to go this matter, that's a matter for individual parties. But that would be, we would say, very much an exception rather than the rule. Essentially what we propose therefore is applying the status quo approach to dealing with this matter and dealing with the flow on of the 2006 safety net system as we dealt with previous safety net adjustments.

PN526

A great deal is said in this matter, notwithstanding an arguable congruence, or a greater congruence between the ACTU and ourselves on quite a deal of matters outside the operative date. A great deal has been said about onus, and indeed, we see a great deal in our outline about this and where onuses correctly lie in this matter and we do indeed address that at 1.3 of our submissions from page 8. Validly so. We propose dealing with the current challenge, this shift of approach with this new system of the AFPC decision needing to be given effect to and the mass variation of awards in the wake of centralised decision.

PN527

We propose dealing with that using established mechanisms, and using the prospective date of effect which is both assumed and prioritised under the Act, which I'll come to shortly, and is the way we have dealt with the variation of awards for wages and for the safety net adjustments in preceding years. We may be in new territory, but our believe is that we can and should deal with as business as usual. The ACTU is seeking an approach which departs from that, which seeks effectively a general order and a level of retrospectivity both in weeks and quantum, and indeed, in its breadth across the mass of hundreds, if not thousands of awards which is an unknown concept to this Commission and is a concept which raises very serious issues and considerations for you under the Act.

PN528

Now, as such, the ACTU assumes an unshirkable onus. It's got to prove to you that this approach is a superior one to the way this Commission's evolved doing its business over some decades, and indeed, the ACTU has to tell you that the Commission should throw out its experience and disturb the status quo. Finally, for this part of our preliminaries as such, the other things is to apprehend that this could be something, a one-off problem. We are perfectly willing to have constructive and appropriate discussions with the Commission and parties in the wake of the finalisation of this matter and prior to any 2007 review decision of the AFPC about lessons learnt from this and any measures which can be taken to expedite consideration of the next matter without prejudice to what any of us may wish to do on that occasion in regard to giving effect.

PN529

So we're certainly happy to address this further in advance of the next decision than we were able to in relation to this one, and hope that that might be able to bring us a little closer in understanding as to how we address what we want to say about this on the next occasion. Two parts essentially to what I want to say then in my submissions today. A primary submission on giving effect to the decision and the timing of it, and secondly, to address the Commonwealth proposition on closing gaps on minimum wage coverage for persons undertaking small business apprenticeships and persons with a disability.

PN530

I'd like to turn to the issue of date of effect, and that's addressed in section 2 of our outline of submission. This is, if your Honours rule the key issue in debate between the ACTU and ourselves, the ACCI position is that dates of effect should be prospective to the variation of each award and as I hope I've indicated, and I'll indicate again, I think that's something which should be able to be achieved for a number of awards with some expedition during December. The ACTU seeks to prosecute its case for mass retrospectivity on a number of grounds which I'd like to go to now.

PN531

At section 2.3 we address the proposition that there is a delay in this matter. We simply say that we think this matter has been dealt with with some expedition. The Commission held programming in this matter only in recent weeks. We've had an exchange of submissions in pretty even time addressing these issues and we are sitting here very close to the 1 December date on which the Fair Pay Commission decision has come into effect.

PN532

It is certainly not the case that we had any understanding of the quantum or exactitude of the AFPC increase to particular awards prior to any date, indeed, prior to the settlement of orders in particular matters, which were particular not, as the ACTU would have it, right back into even 2005. We just don't understand those submissions saying that we could have had a material understanding of the outcome of this matter and indeed, should have, based on the fact that some applications were lodged seeking markedly different relief in an earlier year, and we address this on page 14 of our submission.

PN533

Generally we say the fore-warning charge that the ACTUs argument doesn't stand up to a logical examination. Very importantly though, and my colleague, Mr Watts didn't say a remarkable amount about this, is the proposition for retrospectivity. We are all aware that this Commission and the legislation does not embark upon retrospectivity lightly. Indeed, may put it slightly stronger than that. There is a strong statutory assumption, if not a statutory pathology against retrospectivity, now represented in what is now section 572 of the Act.

PN534

The Commission must be satisfied that there are exceptional circumstances to issue an order or an award which comes into effect on a day specified which is earlier than the date of the award or order. That has been reinforced, that very strong statutory reticence , has indeed been reinforced in a case - and I'll return to this in a second - in the Victorian Shops case which is mentioned at page 17 of our submissions. The finding there was, as I understand it, that even where the predecessor to section 572(2) did not apply, the Commission echoed and reinforced its general reticence and very strong reticence to grant retrospectivity. The ACTU has to clear the hurdle in the Act to advance the retrospectivity proposal it would have you adopt. We say that is a very, very difficult proposition in regard to the mass of awards.

PN535

The ACTU need necessarily prove that there are exceptional circumstances in this matter in the particularity of each award, we would say. The Full Benches of this Commission have also taken a number of factors which, at best, could be said to be drawn analogous to this matter, and have said that they don't form grounds for retrospectivity. At paragraph 2.32 of our submissions on page 17, the Commission has run through in that Victorian Shops matter I mentioned earlier, Print PR922761 of the Commission dating from 24 September 2002. The Commission has considered matters which, whilst I won't concede they are analogous to the circumstance at hand in the sense of assisting the ACTU argument, at best the types of delays which are countenanced in that area are considered and dismissed in dealing with a retrospectivity claim.

PN536

We would also note that the Commission has previously rejected cases where delays were incurred between the filing and hearing of applications of awards to give effect to safety net adjustments, and we note that at paragraph 2.37. So there's another analogous situation or arguably an analogous situation in which a retrospectivity claim was rejected. The ACTU places a great deal of reliance on the decision of former Riordan SDP in the Meat Industry Union and Others, Print J0916, and the appellate decision in that matter, the latter appellate decision in that matter which reinforced the Deputy President's decision. We would say a couple of things about that, and we note that is the sole retrospectivity precedent that the ACTU has taken us to in support of a proposal for thousands of awards varied to the extent of retrospective date.

PN537

I note a couple of things about the decision of the Deputy President. Firstly, that case was 1990. It preceded the current construction of the Act, it changed in the role of award safety net from formerly pay rates instruments, from instruments of very a centralised and standardised approach to a safety net. It preceded the very strong emphasis in the legislation of bargaining which may have provided an avenue in a number of those very old retrospectivity precedents to deal with the matters raised. The preceded the refinement of a number of allowable award matters that may invalidate some of the retrospectivity circumstances, and it also turned very narrowly on some facts which were made out to prove exceptional circumstances under the former provisions of the Act. Those circumstances don't stand as analogous to the one here.

PN538

As we understood it, that was a particular hot dispute, if you will, in a workplace. It was about redundancies in a meat works which had been made. Those redundancies had been made in the face of the disputation about the insertion of the standard TCR clause arising from the 1984 termination change and redundancy test case. In doing so, the form of relief, the form of order which would have been at hand was quite specifically understood by all parties across the system. By 1989, the exact formulation of the TCR test case would have been well-known, and it was a situation in which, without that retrospective relief, there would have been no relief at all for the workers concerned. So the retrospectivity was going back and placing that termination change and redundancy clause in an award to account for a circumstance where the redundancies had already been made.

PN539

Notwithstanding that of course, the Deputy President did on that occasion make clear his understanding of the reticence of the Commission to grant retrospectivity, and we note that at paragraph 2.40 of our submissions on page 19. We'd say that there have not been any analogous circumstances in retrospectivity matters from which the ACTU could draw solace in supporting the course it proposes. That is because retrospectivity in the Act, (a) is inherently a product of particular disputation, particular circumstances, and even if you will, the workplace level workplace relations. Why does one have retro? Because one party has stood badly or conducted itself badly in negotiations. Or because particular factual circumstances precluded relief in a particular industry that then were ruled essential by the workplace circumstances that came to play, ie. you had an argy-bargy on whether you have a TCR clause, then you had a mass redundancy in a meatworks and you had to try and deal with it backwards.

PN540

In support of that, we note that section 572(2) demands the Commission be satisfied that there are exceptional circumstances. Now, I don't make this submission with extra elucidation in the Act, but it strikes us that exceptional means an assessment of the individual circumstances at hand, and that that section of the Act is not included in there to envisage an approach where on the mass the variation of this Commission's awards was done with a retrospective effect. It is also worth, and this is the next point of our materials from page 20, to think about what exceptional means. Now, my colleague didn't use that wording when he introduced what he was saying. I think the words he used were "unusual and extraordinary." Well, extraordinary and unusual do form part of the definition of exceptional as we included on page 21, but the concept is exceptional itself. Not new or novel, not unknown to the Act or arising in its first circumstances, like the processing of an AFPC decision, but something that is so unusual and unknown to be extraordinary.

PN541

For the ACTU to make out its case it would have to show that that is the case. Show that this qualitative hurdle is met in section 572 of the Act, and show indeed that it could be met in line with the wider role of awards and the wider statutory schema under which awards are a safety net and responsibility for workplace relations is primarily resting at the workplace level. We would also say that of itself, and I think I have alluded to this, but just in terms of following the order of what we have said, we'd also say that a delay has been found to not of itself constitute exceptional matters, and you will see from the balance of our submission that we question whether there has in fact been a delay in these matters.

PN542

Now, on page 22, we have included the question mark of whether the ACTU created the circumstances it relies upon, and I'm not trying to be rude in that regard, but to the extent that it was argued this is exceptional because there are 400 applications, well, the 400 applications have been lodged by the applicant now arguing that it's exceptional; there's a little circularity to that. It would force potentially upon the Commission in the future retrospective effect of standard operative dates at the whim of an applicant. Now, I'm sure that is not what is intended, but that's to follow through the logic of something becoming exceptional just because so many people have sought it as simultaneous relief. My colleague did actually say in introduction I think, from memory, that we were the cause of there being 400 applications, or 1433 applications, due to our opposition to a 1 December operative date in the current circumstances.

PN543

Now, our opposition to the 1 December operative date is not inherent in the date itself, it's in the retrospective application of increases and in the exercise of back pay. But having said that, our understanding is that no party ever assumed that these awards could be varied without applications. Indeed, without applications for - separate applications for both the transitional award and the pre-reform award. So that there are applications seeking relief for each of the awards of this Commission is not of itself an extraordinary circumstance and it's certainly not one which we would say we are in any way responsible for. It's not a matter of responsibility, it's simply how the work of this Commission is done on application and by application.

PN544

From section 2.5 of our submission, we address this question that we have been forewarned, we should have known this was coming. In fact, without putting words into my friend's mouth, I understand that in fact the submission is we did know what's coming and do know what's coming, and reliably, we can have a 1 December operative date on that basis. From page 22 of our submissions, we address this proposition. In particular, we'd like to draw your attention to a couple of matters. We don't know the detail of the proposal in relation to particular awards. This is the matter that's being grappled with by my colleagues in my member organisations. That really is the only meaningful expression of forewarning, to the extent that concept has any meaning. Employers don't engage the detailed variation of awards, nor can we, until we see the very specific request for a change in award standards, line by line, allowance by allowance, wage rate by wage rate.

PN545

There are indeed still uncertainties in this matter in relation to the calculation of allowance increases and wage increases which actually, we would say, render what the ACTU claims we should be able to know, as unknowable. And they also go, indeed, to the central guidance this Bench can provide on precisely such matters.

PN546

JUSTICE GIUDICE: Mr Barklamb, doesn't the Act itself warn employers that a decision of the Fair Pay Commission is likely to be flowed on to transitional awards?

PN547

MR BARKLAMB: In regards to that, your Honour, and that takes us into schedule 6 of the Act, and item 8 I presume, we would say that item 8 indicates to our members there is a presumption, that a Fair Pay Commission decision will be given effect to, that where a Fair Pay Commission decision is in existence, it will be addressed a particular way, but it doesn't necessarily of itself indicate that A will follow B in all circumstances, such that employers can definitely and with confidence in their legal obligations say that that is the case. I think we had some discussion earlier about whether constitutionally in relation to this conciliation and arbitration-based part of the jurisdiction, whether it could be that directive. It is not that directive in the form that's been included in schedule 6. We'd also say that there is a level of generality.

PN548

JUSTICE GIUDICE: But just because an application had been lodged, for example, wouldn't put the matter beyond doubt either. But it's just a question of warning.

PN549

MR BARKLAMB: Your Honour, we would say that neither of those two possibilities is a warning as such. It's not until we receive a draft order which says increase allowance A by X cents and B by Y cents, that we have a definite understanding of the precise possibility that employers are being alerted to. Indeed, just to close the loop on how members of our organisations do their work, definite advice to the employer community is not provided until we see the legally-sealed obligations and increased obligation details from decision-makers.

PN550

JUSTICE GIUDICE: Well, how does that work in relation to the Fair Pay Commission decision?

PN551

MR BARKLAMB: Your Honour, that is indeed a matter which we're currently examining. We have been assisted by the advice and assistance the Commonwealth has provided in recent days and our members are making appropriate assessments of the advice they can offer in the timescale of 1 December and are working to resolve a number of issues where they arise in relation to particular award increases.

PN552

JUSTICE GIUDICE: So there's no certainty in relation to the Fair Pay Commission decision?

PN553

MR BARKLAMB: The application of the Fair Pay Commission decision to individual rates of pay occasions all the same questions the application of the Fair Pay Commission rises for individual rates of pay which we're alluding to in our written submissions. So where, for example, there is a repeated formula in awards of this Commission prior to Work Choices which demanded some complexity and checking and the application of precedents that may not be apparent from a bald reading of the award and approaches, all those same challenges are there in the application of the Fair Pay Commission decision from 1 December for that part of the jurisdiction where awards no longer set rates of pay.

PN554

JUSTICE GIUDICE: Well, why should employees under transitional awards be treated any differently in that respect to employees under pre-reform awards who are covered directly by the Fair Pay Commission?

PN555

MR BARKLAMB: We say this Commission has obligations, your Honour, to ensure accuracy and enforceability of its judgments. It has established
approaches - - -

PN556

JUSTICE GIUDICE: Does the Fair Pay Commission not have that obligation?

PN557

MR BARKLAMB: Your Honours, we will have further discourse with the Fair Pay Commission on that in due course. We'd certainly support a situation in which there was, at some stage in the future, formal issuing of orders in relation to all of the APCS rates of pay, but we'll be endeavouring to do all we can in relation to that jurisdiction to ensure greater clarity over time as it evolves and does it work in future years.

PN558

JUSTICE GIUDICE: Yes. It would seem to be desirable.

PN559

MR BARKLAMB: In relation to the notion of a common operative date and the flowing on of increases from a common operative date of 1 December, which is advocated by our colleagues from the ACTU, it's worth noting that if you follow the logic of that proposition, we know the increase and we know that it has to be applied to individual matters. We can set a standard operative date and then clean up the orders in due course. If you followed that logic, you have to ask the question why, in each year in the past, the standard operative date was not the date your Honours issued each safety net adjustment decision. Your Honours issued a $17 decision in June 2005. Why was that not given the operative date of - I'm not sure of the date, 12 June, for example's sake, why was that not given an operative date of 12 June and then all the orders issued in due course after that.

PN560

The answer lies, as we point out in our submissions, in relation to notions of accurately varying each award of ambit, and of correctly ensuring that awards have a prospective application to allow for their proper variation in particular matters. Your Honours, from section 2.6 we address a number of matters which the ACTU seems to place some reliance on, and I only want to go very briefly to those. Notions of employers benefiting from a delay in the safety net increase. We can't reconcile that kind of notion (a) with the decision of the Fair Pay Commission, and (b) with the construction of the Act in regard to giving effect to it in relation to the transitional awards and pre-reform awards. For the reasons we say there, we just don't think that in any way advances the claim of exceptionality in relation to the course proposed.

PN561

The ACTU makes a claim of hardship with employees in what would be a very brief period until award wage rates are resolved. We say a couple of things in relation to that. One would be to recall, and I just flick slightly backwards in our outline, but the same proposition appears to have been effectively dismissed in relation to the Victorian Shops matter where the Full Bench of this Commission, at paragraph 2.32 of our submissions, appears to have effectively denied that there would be hardship and has not chosen to find matters exceptional or warranting of retrospective relief with some days' effluxion of time in the settlement of matters. It's also a fairly bald contention from the ACTU on hardship. They don't develop it, they don't show that it is linked to any particular areas covered by transitional awards or apply any economic rationale to it.

PN562

JUSTICE GIUDICE: Mr Barklamb, why are there transitional employees? Why does the Act distinguish between employees covered by the Fair Pay Commission and transitional employees?

PN563

MR BARKLAMB: As I understood it, your Honour, it was to continue the coverage of the awards of this Commission where they had coverage to non-corporations in particular going into the transition to the Work Choices system and ensure a consistency and continuity to the safety net.

PN564

JUSTICE GIUDICE: Does that mean it's because it was not seen to be within the constitutional competence of the Parliament to bring these employees within the Fair Pay Commission jurisdiction?

PN565

MR BARKLAMB: I think, your Honour, that is indeed the reason for it and I think - I'm embarking on something that I should have prepared for in more detail, but I think there was some discussion. My colleague from the NFF may address that in more detail than I. I was just merely going to allude that I understood there were some passages to that effect in the recent High Court decisions about whether Parliament chose to avail itself of one power or another in its capacity to do so in the decisions of the minority - majority and the two decisions of the minority. At 2.8 we address this suggestion from the ACTU that it will avoid complexity somehow to generate a common operative date, and indeed, that our members are troubled or experience difficulty in correctly being advised on their status, or advised based on their status as corporations, trading corporations or otherwise.

PN566

We would probably just go back and repeat what we said previously on this, and indeed, I put my previous exchange with your Honour on the transcript at page 28. Our members have (a) long been familiar with dealing with individual employers based on their corporation status, their constitutional status, and (b) in particular from March this year, have been able to advise people. The reference we put in here to advising people on a daily basis doesn't mean the same people come back to us and ask us if they're a corporation each second day. I don't think that's what Mr Watts was saying.

PN567

What it means is that we are well and truly familiar particularly within industries where there are only so many different variations you can have of an employing entity, once you've done that we're quite familiar and quite able to advise, (a), on people's constitutional status and coverage under Work Choices, but (b), then what that means for their ramifications and what their rights and obligations are. So as a practical piece of feedback we'd say that that concern to the extent my friend has brought it before the Bench is not a valid one. It's something we are quite familiar and able to deal with.

PN568

If the ACTU was correct in its reasoning on this in the alternative, if there were areas of uncertainty its reasoning would be restricted to the areas of uncertainty and I make this without absolutely any prejudice to any particular industry, but wouldn't the logic be that it would only be private education or local governments or social and community services. If it's said there is some ambiguity in your ability to advise people it would only be in those areas that the reasoning would stand if that's the tranche argument that's been advanced, and indeed you'd need to take feedback from those particular industries on that, hence you need some capacity to examine things award by award.

PN569

We say the public interest is not met by trying to draw a distinction on that regard. I won't take your Honours into our treatment of various state tribunal comments on industrial equity from section 2.9 on page 29 other than to note that that precedence is almost as old as I am and is really in very different circumstances to that we currently find ourselves in. It's a product of a different age and indeed a system for the application of national wage decisions to state tribunals which proceeded quite some quite confusion in the early 80s as I understand it and there are others here that might be more familiar with it than I, but a number of pieces of state legislation I’m certainly familiar with.

PN570

The Western Australian approach was revised at that time in the context of the various wages pauses, wages freezes, et cetera, to re-examine the capacity of state tribunals to give effect or not give effect and it's that era of provision which was examined in detail in the recent state wage cases when the commonwealth addressed the state benches seeking to have matters adjourned. So that we've had some exposition of the ability of state tribunals to depart from the federal case and we've also had a more recent extrapolation or more detailed extrapolation of the state abilities to give effect to or not give effect to national decisions at that time. Perhaps at this point it would be relevant to say something else about the states and that is to note how the states deal with the situation which whilst I don't concede is analogous some may claim that.

PN571

State tribunals in the wake of each national wage decision are faced with a situation in which they have an essentially determined wage increase and they face the challenge of potentially varying state awards to give effect to it. There's a mix of approaches. In some states there are general orders from single operative dates, in some states there are general orders from operative dates which are based on the previous variation of awards, i.e not less than 12 months from when the award was varied. Even within states that contain or do follow a general order approach I don't understand that's done on each year. It's a matter of argument from year to year and there are states that don't adopt that approach at all.

PN572

Indeed we examine from paragraph 2.100 on page 32 the application of the most recent safety net decision of this Commission at the state level and show that it's quite a mixed and certainly not standardised approach to that. We don't think that offers a lot of solace to the ACTU in advancing its cause. Finally, the ACTU apparently for reasons of completeness looks at some of the other issues that have been examined in retrospectivity cases over the years, a lot of that material isn't relevant. The comment about clean hands, that's very relevant when you're seeking retrospectivity in a hot dispute where the conduct of the parties is at issue. That's not something we say is at all awakened in this case.

PN573

You've got therefore, your Honours, we say a statutory presumption against retrospective effect. You've had some claims from the ACTU which we say we rebut in our materials and at the point of determination in this matter we'd say to you a claim for retrospectivity isn't made out. We'd also say a couple of other things about the practicalities of what we face now and this goes to section 3 of what we say in our outline of submission and I can give your Honours the solace that I'm intending to address all elements of our outline in this particular form of detail that I am at the moment. Under the heading Variation of Wages and Allowances we address a range of practical considerations which we say support the variation of awards at the panel level or using the expertise of particular members or Full Benches of this Commission, as the case may be.

PN574

We note there the prevalence of errors and hard cases. Members of the Commission will be quite aware that each and every year in relation to numbers of awards errors are made in the generation of draft orders to give effect to relatively simple propositions, a $17 increase in all award rates of pay. It's pretty simple in its conception or explanation but the detailed application of that to derive rates of pay to rates of pay where they're in embedded formula that are historically contained in particular rates. I mean just as an example, my colleague, Mr Harris, of our organisation took an opportunity with Ms Gaynor some years ago explain the application of a safety net adjustment to the National Training Wage Award because it needed to be put down on transcript because it was a fairly complex process.

PN575

There are hard cases in each year and errors are made and the feedback from our members incidentally and I might return to this shortly, but the feedback from our members to date on what's been going on is that the orders that have come through from unions contain errors, no more or less than other years in particular, but errors are inevitably, it appears, generated year in and year out in the application of increases to particular awards. Page 37 we provide an example before his Honour Senior Deputy President Kaufman of an error that was made and I don't bring that forward as an example of anything other than this is the day to day work of members of the Commission and parties and indeed associates in the settlement of orders in particular matters.

PN576

This is precisely the reason we need to make best use of the established machinery of the Commission for resolving these issues. Now, my colleagues proposes a circumstances because there would be an answer to this, it would be, well, we're talking about providing two to four weeks from the date of decision in this matter to resolve precisely these hard issues. Well, it's 4 December now. Two weeks is 18 December. Four weeks takes us right into New Year's Day as I understand it. If we're talking about resolving the whole range of these things within the time frame of Christmas and New Year in particular manner with back pay back to 1 December I think that's a difficult proposition. I think we are best to refer these back to panels and for panel heads to prioritise these matters with unions and employers and I have some confidence that even within this period we can get through this expeditiously with enough will and see those awards which have greatest application to persons still reliant on the award system varied with some expedition.

PN577

It's been alluded to and my colleagues from the VACC who were also appearing for the South Australian Motor Trades were going to allude to this further, I mentioned earlier that it's easy to say in preceding years there's a $17 increase but that issues and difficulties arose in the application of particular awards. We've got some even greater complications in according the decision of the Fair Pay Commission or incorporating that within the legacy of award rates which arise from this Commission and indeed the transitional awards. There are a number of issues and we start examining these and I'm sure some other parties as we go on in this matter shortly will have further examples, but under the heading of Essential Guidance is Needed on Calculations from Section 3.4 we address a number of issues there and indeed, and I didn't do this deliberately, but I actually I think I may have made an error in my calculations there in trying to work one of these rates back down to an hourly rate of pay because the Fair Pay Commission's decision is quite materially about an hourly increase.

PN578

If I can go at this point to the Fair Pay Commission decision and indicate that its decision, and I think our friend from ACCER talked about where the decision materially commences from and ceases, the decision to us is items (a) to the end of the schedules in the Fair Pay Commission decision. So that would commence on page 19 and conclude on page 57. That quite clearly talks about increases in hourly rates. The 27.36 and 22.04 are generated, as we understand it, for illustrative purposes only and appear in the non decision extraneous materials of the Fair Pay Commission, the decision, or if you will, the reasons for decision rather than in the decision itself.

PN579

So we have an issue of turning what was in this system always weekly rates of pay and weekly increases, we have an hourly increase which has to be rendered, as we understand it, to derived hourly rates of pay which would then be brought back into weekly rates of pay for inclusion in transitional awards of this Commission and this is proving quite a complex process. One particular issue which arises in relation to that is that around - we would say it's a material of the AFPC decision that amounts are rounded midway through that process up to the nearest cent and in that regard we'd note that section (e) of the decision on page 22 indicates exactly that.

PN580

As we understand it, some of the draft orders that have been drawn up in this matter follow the former approach of this Commission and round up or down to the nearest 10 cent amount in addition to all other calculations. These are precisely the sort of things that need to be identified and discussed and we say the process we adopt offers the best opportunity to do that. There are particular issues which can arise with annualised increases and derived rates like those for juniors, apprentices and some casuals which are relevant.

PN581

JUSTICE GIUDICE: Is there any reason why the Commission should change its previous practice in relation to rounding?

PN582

MR BARKLAMB: Your Honour, we would indicate in relation to rounding two reasons for that. One is that we would say that item (e) is a material part of the AFPC decision.

PN583

JUSTICE GIUDICE: What's item (e)?

PN584

MR BARKLAMB: Item (e) reads as follows, it's on page 22 of the AFPC decision, and I quote:

PN585

Unless otherwise prescribed in a pay scale, hourly rates are adjusted to the nearest cent with point 5 of a cent and above being taken upwards.

PN586

JUSTICE GIUDICE: But we're not adjusting hourly rates, are we? We're adjusting weekly rates?

PN587

MR BARKLAMB: No, your Honours are indeed adjusting weekly rates, we would say, after the hourly rate manipulation that's required in the AFPC decision.

PN588

JUSTICE GIUDICE: But nobody knows what that is.

PN589

MR BARKLAMB: No-one knows what the hourly rate manipulation is, your Honour?

PN590

JUSTICE GIUDICE: Yes.

PN591

MR BARKLAMB: Well, and I hope I'm not miring any of my colleagues that wanted to go to particular rates in particular awards. Item (a)(i) talks about varying wage rates - sorry, pardon me. Sorry, pardon me, item (c) of the Fair Pay Commission decision talks about varying rates and preserved pay scales by either 72 cents an hour or 58 cents an hour. So it talks quite specifically about what the hourly rates would be and it talks quite specifically once rates have been rendered hourly about how they're rounded. The question for this Commission is then how to translate that into weekly rates of pay in awards as they come before you.

PN592

It's a process with which, your Honour, I'm perhaps not necessarily the right person because a number of people have grappled with this in some detail and probably can take your Honours to better examples, but it's precisely the type of issue that needs to be grappled with and my colleague points out to me that section 203 of the Act talks about basic periodic rates of pay needing to be expressed as monetary amounts per hour. So that is the reason if you will that the Fair Pay Commission decision is in hourly form and is expressed in hourly form. So the decision which your Honours are required to consider giving effect to is in that hourly form, hence we would say that requires or supports a process in which your Honour have to engage in the detail of hourly rate arrangements into weekly rate arrangements.

PN593

JUSTICE GIUDICE: I'm sorry, I still don't understand. Can't the Commission's awards simply be varied by the amounts, the weekly amounts specified in the Fair Pay Commission decision?

PN594

MR BARKLAMB: Your Honour, we say there are no weekly amounts in the Fair Pay Commission decision and if your Honour has the decision I can show you that. The reference to $27.36 and the increase of 22.04 on page 6 of the submission are in the executive summary.

PN595

JUSTICE GIUDICE: Yes.

PN596

MR BARKLAMB: And it would be analogous to me saying to the Commission, I'm going to get my maths wrong here, but it would be analogous to someone trying to explain a decision of this Commission to me of $20 a week to say it was $1040 a year.

PN597

SENIOR DEPUTY PRESIDENT MARSH: Well, what do we make of the table on page 63 under reasons for decision when it says it grants general pay increases that were just standard FMW and preserved pay scales and it then proceeds to set out an hourly rate and a weekly rate? Do we not give that any weight because
it's - - -

PN598

MR BARKLAMB: Your Honour, I do not and I will explain to you why that we would say that's the case.

PN599

SENIOR DEPUTY PRESIDENT MARSH: Why have they put it there if they say it's in a box, highlighted decision, the Commission grants a general pay increase and then sets it out? So that's to be totally disregarded by everybody?

PN600

MR BARKLAMB: Well, your Honour, we say that should be interpreted as being lesser weight and if I can take you to page 18 of the decision which is the prelude - perhaps if I can go back a step. The decision is that which appears, and my friend from the ACCER is quite correct that it's fuzzier than the rest but I have no idea why that is, it's that which appears from page - well, we would say from page 19 to page 57. The rest is the reasons for decision. Well, I'd perhaps go back to analogy, your Honour - - -

PN601

SENIOR DEPUTY PRESIDENT MARSH: Well, just answer my question, please. Do we give that table set out on page 63 no weight at all, even though the Fair Pay Commission has decision, it's in a box, it's highlighted and it says we grant these pay increases? It's your submission, is it, on behalf of ACCI that we totally disregard that box, because it's on page 63 and it's not on page 6?

PN602

MR BARKLAMB: Well, perhaps if I - would it be a lot easier for our members if we simply sat here and said we're applying 27.36 or 22.04 to the weekly rates of this Commission? It really would. The maths would be easier, the whole thing would be easier.

PN603

SENIOR DEPUTY PRESIDENT MARSH: I've just asked you a question,
Mr Barklamb, are you asking us to disregard that part of the Fair Pay Commission's reasons for decision which heads this decision and says it grants a general pay increase along these lines, it's get an hourly rate and a weekly rate. I'm not interested in what's easy for your members. I want to know what weight and what I don't give any weight to this table.

PN604

MR BARKLAMB: Your Honour, sorry, I'm not trying to be difficult or evasive and my raising of my members I would like to come back to because I don't make that with any - - -

PN605

SENIOR DEPUTY PRESIDENT MARSH: No, it's not relevant to the question I'm asking.

PN606

MR BARKLAMB: Indeed, okay. Your Honour, the Fair Pay Commission only has a power to deal with wage rates on an hourly basis and that's - - -

PN607

SENIOR DEPUTY PRESIDENT MARSH: Okay. So you say that this table on page 63 is for convenience?

PN608

MR BARKLAMB: Yes. And indeed if we go to 203, your Honour, we'd say that's quite clear.

PN609

JUSTICE GIUDICE: Mr Barklamb, how can it be that we would be required to go through some conversion back to hourly rates and come up with via that means a weekly rate which differed from the weekly rates which the Fair Pay Commission specified?

PN610

MR BARKLAMB: Our reason for saying that, your Honour, I do say that would not necessarily be our preferred approach, in terms of ease and convenience adding 27.36 or 22.04 would be a lot simpler in the application of this matter. Our reason for saying that is the filter of the reduction of the former weekly rates back down to hourly rates under the preserved pay arrangements and that the decision of the Fair Pay Commission is not an amount per week, it is 72.58 per hour.

PN611

SENIOR DEPUTY PRESIDENT KAUFMAN: Where does it say that?

PN612

MR BARKLAMB: Your Honour, that is item (c) of the Fair Pay Commission decision and it talks about the variation of the specific preserved pay scales.

PN613

VICE PRESIDENT LAWLER: Section 203 appears to support your submission.

PN614

The AFPC must ensure these rules are complied with in exercising its powers to adjust and preserve APCS or make or adjust a new APCS.

PN615

And the first rule is:

PN616

Rate provisions on APCS must be such that basis periodic rates of pay determined by the provisions are expressed as a monetary amount per hour.

PN617

MR BARKLAMB: Thank you, your Honour, and that's the precepts of the Act that are leading us into this conversion back down to hourly and back again. As I said, it wouldn't necessarily - - -

PN618

VICE PRESIDENT LAWLER: You don't profess that he's failed to follow the legislation, Mr Barklamb?

PN619

MR BARKLAMB: Sorry, your Honour. And that difficulty we've just been through is extrapolated when you talk about derived rates. Very complex formula in some awards get that treatment drawn out at a level again and that's one of the reasons that we say the orders need to be settled at the panel level. There is also the increase of exactly when the increases apply and we note what's already been said about the relevance of the first pay period commencing on or after approach. Our preferred position in this matter is that this Commission continue its established approach and commence its changes to both wages and allowances on the first pay period commencing on or after the date of variation of an award or some date prospective to the date of variation from a particular award.

PN620

We note some other matters there your Honours in section 3 talking about the relevance of 12 months elapsing between increases. We think that remains a pertinent consideration for the Commission. Increases were arbitrated on a specific basis in preceding years. We think it remains a sound approach to consider that in two respects. The first is in wages and allowances were varied between the 1 December last year or late December last year and the commencement of Work Choices in late March and less than 12 months may elapse if an award were varied without regard to that.

PN621

The second is that a number of the members of the Commission have varied allowances as we understand it for changes in the CPI and those sorts of matters within the last 12 months or indeed, since the commencement of Work Choices and we would need to take care that there was not a double counting of allowances beyond the approaches and precedence which have been evolved in the system to date. We talk about the importance of continuing scope for incapacity claims. Your Honour with that I think that is getting to a lot of what I wanted to say about section (3) and I would like to move on potentially to the issue of the principles.

PN622

Perhaps only noting to repeat our – to repeat what we said about common orders or general orders not forming part of this Commission and the ACTU not giving the Commission a basis on which you conclude that there is a general order power. We say that the Commission has rightly not adopted that approach in previous decades and unless some party can talk to you about why that might be possible in the current context that’s not something that should be embarked upon. With that we would like to address the principles, that’s at section (4) of our submissions and I would just like by way of introduction to indicate the basis on which we have provided the information at part 4.

PN623

We weren’t seeking to embark on a mass revision of the principles in our own regard and indeed, I think we indicate in there that that’s not something which we say should necessarily occur on this occasion. We, like the ACTU support the continuation of the statement of principles. We don’t seek to necessarily engage the details of revision for those principles on this occasion. We really were seeking to do no more than assist the Commission by identifying particularly things like the introductory principle A seems very much a product of the old Act and didn’t seem particularly sensible in its current form in regard to the new statutory areas.

PN624

We noted merely the kind of consequential revisions the Commission might want to consider in relation to the decision it has to make in this matter. Elsewhere in the submission we note that the ACTU or the course it proposes would in fact despite it’s stated support for the principles, would do them no little damage. In particular that’s principle 8(a) about the prospectivity of wage increases. Now my colleague indicated I think that he thought John Howard had read the principle 8(a) if I can recall correctly, I’m not sure that’s a particularly useful contribution.

PN625

All we say is that the Commission has over many years in its principles expressed clear central guidance on how awards are to be varied and on the dates of those variations and for the reasons that we have said elsewhere – we’ve indicated to date both orally today and in writing we would say that should be continued. Indeed just once again the Commission’s statement of principles itself should be continued. The ACTU raises a range of other matters in its submissions which I don’t wish to take you to in detail they are addressed in section 5 of our submission. We think there’s a number of discussion elements, not too many, in relation to this which don’t assist the Commission particularly. Commentaries on the Fair Pay Commission, commentaries on industrial reform really aren’t material at all to what your Honours need to do.

PN626

Your Honour I intend to briefly move on shortly to the propositions about school based apprentices and wage rates for persons with a disability. I might just take a moment to check that there are any further matters that Mr Watts addressed in his submissions which I wish to go to. Your Honours in section 5 of our outline of submission we address the variation of awards to provide a more comprehensive minimum wage safety net for school based apprentices and persons with a disability and in essence our submission is that the Commonwealth has correctly identified the situation in regard to these key areas. That there are gaps in minimum wage coverage and that these proceedings provide a suitable opportunity and indeed imperative to close those gaps.

PN627

In addressing this matter I must acknowledge what my colleague said about misunderstanding the position of the ACTU or indeed, misrepresenting it and I can assure you that was inadvertent. The ACTU at paragraph 100 of its submission states a reservation ion regard to the capacity of its affiliates to address particular awards in relation to the variation for school based apprentices and to provide a supported wage system for employees with a disability. I must acknowledge the ACTU has at all times maintained or sought to preserve scope for its affiliates to argue that and to the extent that our submissions say otherwise I was in error.

PN628

However, however, we don’t at all concede the legitimacy of the type of arguments the ACTU preserving the capacity for its affiliates to make. We spent quite some time in the submission questioning the basis on which test case standards of this Commission which have been evolved by agreement at the central level over some years which have been subject to efforts of the Commission through matters being called on of their own motion. Through the National Wage Bench reiterating the importance of awards being varied to include the support of wage provision and indeed, of organizations like our own taking on the responsibility of mass variations to awards to the efforts of the Commonwealth over many years to ensure a more comprehensive safety net is applied that the test cases are applied.

PN629

We remain flumished by the reticence of the some organizations to see awards varied to provide a wages safety net, the young people seeking to enter training arrangements and potential employees with a disability. If there are issues relating to the policy of – of policy issues relating to training or concerns with the employment of people with disabilities they are not best met by denying people wages coverage and they are not best met by effectively excluding people from employment training opportunities by the denial of the minimum wage. That in essence is the basis on which gaps need to be close in this area.

PN630

It is our understanding that that is the basis on which the Fair Pay Commission closed gaps in minium wage coverage for employees with a disability and it’s the basis on which we say it should happen now. We support this matter in the broad, these applications being the trigger as proposed by the Commonwealth for the variation of any outstanding awards for these test case provisions. We would however note what was said this morning in the alternative as I understand it about potentially allowing some period in relation to the current proceedings for those who do argue that their industry should be excluded to pipe up if you will. We were getting at a very similar point in our submissions.

PN631

So to the extent that any industry wants to say that people with disabilities shouldn’t be allowed to work in the industry, the extent that somebody wants to get up and say that young people at school should not be allowed training opportunities in its industry or that wages shouldn’t be accorded for them, we think that it is suitable that there be an opportunity in the current period to get up and say that. We would support potentially the first half of what was said this morning in relation to this and I don’t want to misrepresent my friend I don’t know whether it was in the alternative or the primary.

PN632

But the first half of what was said in relation to this is that there could be a very short window to identify any areas where this shouldn’t apply. If that is the course the Commission proposes or would prefer to that advanced in the primary by the Commonwealth if that’s the course that wishes to be adopted, we think that’s a valid one as a second best option. Let’s have a one off opportunity we’ve talked about this for years, we’ve expended a lot of efforts for years and a number of awards have still evaded a quite essential part we would say of the safety net.

PN633

Where we would differ from the course outlined this morning, would be of course, in regard to onus. This is a test case – or these are test case provisions of a Full Bench of this Commission of the purest form. They apply as an absolute standard without deviations in wording to by far the overwhelming majority of awards of this Commission. Any party seeking (a) to not have them applied, or (b) a customisation of those test cases, should face the imperative, or the onus, to show the Commission (a) that that should happen and that (b) the specific model they propose should be preferred over the general model. That is we say the appropriate course in this matter.

PN634

So with that your Honours and again my apologies to my colleagues if I have misrepresented their position. That is a very important issue for us, you will see from the expression of it in our submissions it’s an issue we take seriously as do a number of parties at the bar table and it’s something we say it is time to have addressed in awards of this Commission. With that your Honours, if it pleases the Commission.

PN635

JUSTICE GIUDICE: Mr Barklamb. Mr Smith?

PN636

MR SMITH: Yes thank you, your Honours we filed our submission on Friday and in that submission is annexure A which sets out the matters that we have an interest in. I will just hand up an amended version of annexure A, it’s been quite a huge exercise to keep track of all these applications and which ones we do have an interest in.

EXHIBIT #AIG 1 AMENDED VERSION OF ANNEXURE A OF SUBMISSIONS

PN637

MR SMITH: Thank you, your Honour there may be some additional ones. But we believe that there are some 161 applications that we have an interest in and put out services to our members advising what rates in relation to these issues. In respect of the outline of submissions that were filed we don’t intend to go through all that, but there are some important issues that I wanted to deal with and particularly address some of the points made by the other parties.

PN638

JUSTICE GIUDICE: Yes.

EXHIBIT #AIG 2 OUTLINE OF SUBMISSIONS

PN639

JUSTICE GIUDICE: Just pardon me for a moment, Mr Smith. Mr Barklamb I’m not sure whether you formally tendered ACCI submissions or not but I think consistent with the practice we’ve been adopting I’ll mark those.

EXHIBIT #B4 ACCI SUBMISSIONS

PN640

MR BARKLAMB: Thank you, your Honour.

PN641

JUSTICE GIUDICE: Sorry Mr Smith.

PN642

MR SMITH: Yes, thank you your Honour. If I could perhaps go to section 3 initially of our outline and this is the approach that we believe the Commission should take to dealing with this huge number of applications. We’ve heard various different assessments today ranging from 400 up to 900, but we believe the figure would be somewhere closer to 900 than 400 applications. It is a little difficult on the Commission’s website given that the draft orders and so on are listed there as well.

PN643

JUSTICE GIUDICE: Well a rough approximation Mr Smith is that there are 450 awards involving about 900 applications.

PN644

MR SMITH: Does that include the transitional awards and the pre-Reform awards?

PN645

JUSTICE GIUDICE: It does.

PN646

MR SMITH: Okay, good.

PN647

JUSTICE GIUDICE: Whatever you’re thinking, double the number.

PN648

MR SMITH: Yes. Whichever way it is looked at it is a huge number of applications and it has generated a massive workload within AIG, we’ve had a team of people working for the last two weeks to try to resolve all of these issues and amongst all of the parties I guess there wouldn’t be too many or perhaps any other parties that would have an interest in as many awards as us, so I think we can say with some authority that this has been an incredibly complicated and difficult process.

PN649

The directions as your Honours would be aware require that the unions file and serve an outline of submissions by the 24th but also and it was an issue that I quite pressed strongly at the mention, we felt that we were entitled to receive and needed to receive the draft orders and the Commission accepted that point of view. Now in many, many circumstances those draft orders were not provided. It is difficult to get an assessment in how many cases the directions were not complied with because it appears that on that table on the Commission’s website when a draft order is filed it’s been given the same date as the original application, not the date of filing.

PN650

So where we’ve got the draft orders off the Commission’s website in many cases they’ve been filed weeks later than the date that appears to have been assigned to them. I might be wrong on that but when you do have a look those 900 or so entries it seems that in all cases where the draft order is listed the date is the same for the draft order and the original application. Whichever way it is looked at it is evident that in many, many cases the draft orders were not filed and served. What I would like to do now is hand up an exhibit that seeks to put the 160 applications that we have an interest in, into different categories.

EXHIBIT #AIG 3 LIST OF 160 APPLICATIONS IN DIFFERENT CATEGORIES

PN651

MR SMITH: Thank you, your Honour and as you can see your Honours from this exhibit, there are three categories. The first one is applications where either the initial draft order was correct or where we’ve had discussions with the relevant union or unions and an amended draft order has been agreed upon and filed, with of course the exception of the operative date. There’s another, and the abbreviation on that front page is where we’ve got the draft order off the Commission’s website. There’s another group starting from the fourth page where agreement has been reached but the union yet has not provided the draft order, there’s a range of those.

PN652

Then there’s another basket of I would estimate a hundred or so where there a whole range of unresolved issues where either we’ve contacted the union and they haven’t returned our calls, we’re still in discussions, we haven’t yet had an opportunity to contact the relevant union because they were filed quite late. I think your Honours would appreciate the amount of work involved with this 160 amongst the 450 or so. Some of the abbreviations might be a little bit cryptic, but where it’s saying no call back that means that the union hasn’t returned our calls. We are not seeking to put any weight on that, it’s simply a matter that there’s been a lot of work to do over a very short timeframe.

PN653

One of the things that we do wish to point to here your Honours is that we have taken a view on the issue of rounding whereby we do not agree that this is an issue that the Commission can’t adopt a practical approach with. In many cases the unions have rounded these draft orders and we’ve consented to that rounding. If the submissions of ACCI are picked up and it has to be by the dollar, then there’s 73 or 71 agreed draft orders will have to be reviewed in the light of that. Some of them are rounded and some of them aren’t, but on that issue we took the view that as long as the approach on rounding seemed fair, if the union sought rounding or didn’t seek rounding, then we accepted the union’s position on that as long as the rounding was fair and consistent with the approach taken in the past.

PN654

We submit, your Honours, that despite the substantial effort and resources that we've devoted to this as well as other parties over the past two weeks to try to deal with this unprecedented number of applications that have been made, we believe the whole process of having all of these matters dealt with by this Full Bench, if this is the way the Full Bench will end up dealing with it, to seek to finalise all of these applications, we think it is totally unworkable. The unions have not complied with directions, which we believe were fair and practical and reasonable.

PN655

We also think it is a waste, of course, of public resources for the Commission at Full Bench level to be dealing with issues of detail relating to particular award matters when that is best dealt with by individual members of the Commission from the relevant panel and we do have a concern about the very short time frame. We have put, as I've said, a lot of resources into the 160 or so that we have an interest in, but the other 300 of them, in many cases it would appear there have been - you know, there's been no scrutiny of the draft order if indeed one has been provided. It's likely that there are a large number of parties that aren't aware of these proceedings and we believe this is an important issue of principle, an important issue of justice and something that would set a dangerous precedent for the future if proceedings were to be repeated in subsequent years in the way that we say is quite unworkable.

PN656

Not because of anything the Commission has done, but simply the way the ACTU and its affiliates have bombarded the Commission with hundreds of applications and then sought to have them dealt with over this period. Now, the Commission would be aware that we were all searching for a streamlined way of dealing with these issues and in good faith we have sought to achieve that, but the way that it has come out, your Honours, we don't think this is achieving it. The longstanding prior approach of using a small number of awards to deal with issues of principle at the Full Bench level we think is appropriate.

PN657

If matters are dealt with by individual members of the Commission from the relevant panel, then those members of the Commission are closer to those particular awards, are able to look at the issues of detail, are able to ensure that time and attention is paid to service issues and it certainly avoids the wastage of resources that would result from the 450 applications being resolved by the members of this Full Bench. We do have a very strong view about this idea of some general form of order, not a general order but a general form of order that might vary all of the individual awards without providing the individual calculations. We strongly submit that that would be a very retrograde step.

PN658

That approach was adopted by the Australian Fair Pay Commission and has resulted in confusion and uncertainty. There are rates that we are having debates about with various parties.

PN659

VICE PRESIDENT LAWLER: Doesn't adopting a different approach again add to the confusion and uncertainty, because people then have still got to deal with the Fair Pay Commission approach, then there's a different approach. Isn't there some value in having consistency?

PN660

MR SMITH: Your Honour, we say absolutely not because the Fair Pay Commission has trialled this approach and we will be putting very strongly to the Fair Pay Commission, as we did on this occasion, that it needs to issue the pay scales. Now, we put that position to the them, the Award Review Task Force put that position and I think in the light of the experience, it will just highlight that this was not the way for the Fair Pay Commission to go and we believe that this practical approach that this Commission has had to this issue is something that should be continued. Now, the ACTU totally misrepresented our position, your Honours, on what we were saying about the Fair Pay Commission. We weren't criticising the Commission on the issue of the single date, but we were saying that this whole issue of not publishing the pay scales has led to a lot of debate about what those rates are.

PN661

Now, unlike the Fair Pay Commission, this Commission is bound by section 568 of the Act which does require that awards and award related orders be expressed in plain English and are able to be easily understood. There is no equivalent provision in the section dealing with the Fair Pay Commission, though, of course, it is a desirable objective. But that is something that - - -

PN662

COMMISSIONER GRAINGER: Isn't there a statutory requirement for the Fair Pay Commission to make, APCs or - APCSs?

PN663

MR SMITH: What it's required to do, your Honour, and it's very similar to section 567 which requires this Commission to reduce its decisions to writing. There is an equivalent provision with the Fair Pay Commission. It's required to reduce its decision to writing, which it did, but it doesn't seem to have an obligation to publish the pay scales, despite the strong view we expressed to them that they should do that.

PN664

COMMISSIONER GRAINGER: I see. That only applies if they're making a new APCS?

PN665

MR SMITH: Yes, well, they did that with the ones that they made dealing with the supported wage area and the other matters, but the other thing about this is, apart from the department's initiative in publishing pay scales for up to 100 of the couple of thousand - or some four thousand pay scales, if you take the State pay scales and the Federal ones, so we may have 100 of them at some stage soon, or maybe they're already there. I haven't counted how many are on the government's website, but this Commission has all of the awards on its website. Now, if this Commission departed from the approach of issuing specific rates of pay, then that very useful service that is provided of having all the awards there publicly available, which is exactly what we think should happen with the Fair Pay Commission, that becomes meaningless and all of those awards are totally out of date.

PN666

So we strongly urge the Commission not to depart from this, and I don't think any party really is suggesting that you should.

PN667

JUSTICE GIUDICE: The combination of the two approaches would be simply announcing a decision and the variations that follow in due course when the orders were settled, but that would combine, to some extent, the two approaches and make the best of circumstances which are quite - I won't use the word extraordinary - but - - -

PN668

MR SMITH: I'll have something to say about that when we get to the issue of retrospectivity and prospectivity, your Honour.

PN669

JUSTICE GIUDICE: Yes. It really goes to that, yes.

PN670

MR SMITH: But the other thing that arises here is of course it's not necessary for the Commission to have the same view on allowances as what it does have on pay rates for transitional employees. Now, we say there should be no retrospectivity for any aspects, but the issue of allowances in the pre reform awards create a lot of complexity and the calculations that we are struggling with at the moment, in the main, relate to the allowances more so than the wage rates, but we do strongly oppose any retrospectivity in both areas.

PN671

Now, what we believe, your Honour, should happen is that the applications which were filed in accordance with the directions by 24 November where draft orders were provided, that should be the dividing line between those that should be settled either by the Full Bench or in reference to one or more members of the Commission, but those are ones that could logically be put into a category and it's not an unreasonable grouping like Mr Watts tried to allude to with various other approaches. These are ones where the requirements of the Commission's directions were adhered to.

PN672

Now, we do modify our position just slightly because of all the work that has been done there are now those 71 or so where we have reached agreement. So if there are specific awards where parties have reached agreement like that on the draft orders, subject to that grounding issue that I mentioned, then there's no reason why they shouldn't go through, wouldn't want to be going along to hearings just for the sake of it. Other applications - - -

PN673

JUSTICE GIUDICE: Where do you see the grounding issue, Mr Smith? Where does AIG stand on the grounding issue?

PN674

MR SMITH: We believe that it's one of those issues where the Commission is able to take a practical approach and allow - it is akin to the issue of first full pay period on or after the issue of the incapacity principle, which everyone is supporting, subject to the Commonwealth confirming its position. All of those things are practical issues that reflect the way business is being conducted in a very practical way in this tribunal. We don't think that is inconsistent with the Fair Pay Commission's decision. We don't believe that you need to apply every word of the Fair Pay Commission's decision.

PN675

What we believe the Commission has to do, it has to meet the requirements of the legislation and I'll get to that in a moment, those requirements do not say every word in the Fair Pay Commission decision must be adhered to. So what we say, your Honours, is that other applications should be referred to individual members of the Commission to deal with including determination of an appropriate operative date, which is prospective of the date when the matter is heard and determined by the individual member.

PN676

Now, the ACTU is proposing a time frame of two to four weeks. We believe that is totally unworkable, totally unfair, amongst other parties, on members of this Commission. Christmas Day is in three weeks' time and Mr Watts talked about the idea of enjoying time with his kids and reading and so on. Surely members of the Commission - - -

PN677

JUSTICE GIUDICE: Reading draft orders, perhaps.

PN678

MR SMITH: That's right. But surely members of the Commission are entitled to a reasonable Christmas as well. If it was decided that - - -

PN679

JUSTICE GIUDICE: Your concern is really effective.

PN680

MR SMITH: It's a genuine one, though, your Honour. We all want to deal with this issue in a speedy way, but it has to be recognised that this is unprecedented, the number of applications that have been made, and it is totally unreasonable on the Commission and the parties to try to settle all of these matters in the next couple of weeks.

PN681

JUSTICE GIUDICE: The only think, Mr Smith, is that there are still many other awards potentially affected. When is it expected that all of those would be processed? There are something like 2000 Commission awards, taking the rough approximation I indicated earlier, there were something like 450 applications. That still leads quite a lot that would have to be processed at some time. Now, on the sort of scenario that you're alluding to, it might be some months before all of those are dealt with.

PN682

MR SMITH: Yes, your Honour, but this is not unusual. This is the way that it has always been done and there's no - - -

PN683

JUSTICE GIUDICE: Well, could I give you an opportunity to raise something else in that connection. The Commission safety net adjustments have obviously fallen into a pattern consistent with the 12 months for all, so that the material before safety net benches about the timing of increases and generally speaking there's a fairly big grouping within a couple of months of the decision and then the others are spread out over a period of time. Some are never varied, very rarely, but it seems to me that the Fair Pay Commission decision has almost wiped that sort of staged approach to variation and if that's so, shouldn't we be concerned about that so far as the transitional employees are concerned?

PN684

MR SMITH: Well, this is where your Honour, I think, there needs to be consideration of the different statutory requirements on this Commission versus the Fair Pay Commission. The Fair Pay Commission is given the power to make a decision to reduce it to writing and then parties need to work out what that means and we, in addition to all the resources we've devoted to this task, we've put out to our members more than 300 different individual advices on different pay scales where we have made our best assessment of what those pay scales are. Now, we may be wrong, but we've put a lot of resources in it, and in some cases our view differs from the Commonwealth's view as set out on the website and we're working through those issues.

PN685

But with this Commission, the requirements of the Act are quite different. The government, in framing the legislation, has required that individual applications be made to vary each individual award. In fact, the government has gone further because, as we are aware, section 553(2) of the Act requires that individual employers and individual employees be advised to the extent that the Commission believes is practicable of proceedings to vary awards. So it's a very different structure and we do not believe that that structure is consistent with the idea of this Commission trying to mirror the Fair Pay Commission's approach. What this Commission needs to do is to make sure that its decision is not inconsistent, but deal with all the statutory requirements, including the one that says it has to an exceptional circumstance to award retrospectivity which I want to go to.

PN686

To come up with a blanket approach of retrospectivity would not, of course, be extraordinary if every application is made retrospective on what we say case law points to. But on page 11 and 12 of our outline we set out the statutory requirements, in particular clause 8 of schedule 6 where the Commission needs to have regard to these things in making its decision in this matter. It has to have regard to the fact that transitional employees shouldn't be disadvantaged and that transitional employers shouldn't be disadvantaged and it has to have regard to the desirability of decisions of the Fair Pay Commission and this Commission being consistent, but what it doesn't say anywhere there is that the Commission has to take this mechanical blanket approach of picking up every word in the Fair Pay Commission's decision and applying it, and that's where issues of grounding and the concept of the first full pay period on or after and the economic incapacity issue come in where these things are of benefit to all parties.

PN687

JUSTICE GIUDICE: Mr Smith, at 2(b), doesn't that suggest that we should strike to put the employers and the employees covered by transitional awards in the same position as employers and employees under the Federal system?

PN688

MR SMITH: It says that the Commission is to have regard to the desirability of that, but within the - - -

PN689

JUSTICE GIUDICE: It talks about a principle.

PN690

MR SMITH: Yes, having regard to the principle that there shouldn't be disadvantage either way. Now, we recognise that this does give this Commission little scope to deviate in a very significant way from the Fair Pay Commission decision, but again we say this does not stop the Commission having a practical approach and it doesn't detract from all of the other provisions of the legislation that go to issues like the requirement for individual applications to be made to vary awards, the extraordinary aspect of any retrospectivity and so on. They stand alongside these legislative requirements.

PN691

Your Honours, if I could go to the section 5 in our outline which is the section that deals with the decision of the Fair Pay Commission, and we have said publicly and we have the view on this that the decision of the Fair Pay Commission is a risky decision, we regarded it as overly generous, but we do recognise that the requirements of the legislation, as we all know, do require that this Commission to make sure that its decision is not inconsistent with the Fair Pay Commission's decision, and Mr Watts did not - perhaps he misunderstood, but you know, we do not believe that it was an appropriate representation of our submission on the economic aspects to say that we'd totally misunderstood this area.

PN692

We went to the trouble, your Honours, to come up with an economic analysis specifically for this case because the Commission has an obligation to take into account the state of the national economy, likely effects on employment and so on and we saw that this Commission has an important ongoing role dealing with remuneration. Now the transitional employees will be there for five years from 27 March.

PN693

So the wage setting role will only be there for another four and a bit years but the allowance issue is going to be there for the future and that is a very important aspect. So the economic analysis there of the state of the economy, the outlook for the future and also there are a few references to companies in there because the analysis includes an analysis of what we think the Fair Pay Commission's decision will mean for those that are covered by it. But we don't wish to go through all of that. We thought it may assist the Commission given its responsibilities under the Act to take into account those economic issues in making this decision.

PN694

If I could turn now to section 7 which starts on page 33 of our outline and this deals with one of the most important issues of retrospectivity. We strongly say that the Commission should not grant retrospectivity in respect of any of the applications. There has been a very longstanding approach of this Commission in not granting retrospectivity unless there are compelling reasons to do so. The various cases that were referred to in our outline, including the case that was there in the automotive sector a few years ago where Munro J and some other members of a Full Bench looked at this issue of retrospectivity in some detail and the ACTU referred to this decision in their submission.

PN695

But one thing that this Full Bench did say about retrospectivity is that the concept is one where there's a characterisation of the circumstances being rare and singular. We say this issue of singular is very important. The idea of retrospectivity of 450 applications and potentially more does not of course meet any criteria that has anything to do with there being a singular circumstance where this extraordinary set of criteria might apply. There's nothing there in singular or extraordinary about the circumstances before the Commission we submit and we also submit very strongly that it would set a very dangerous precedent and we may be faced at the moment with retrospectivity of several days or a week or a few weeks but in the future, depending upon the Fair Pay Commission's decision and how much lead time, depending upon how tardy or otherwise the unions are in getting their applications in, there might be a significant amount of retrospectivity.

PN696

If retrospectivity is granted on this occasion we believe it would set that dangerous precedent. There are various obvious and compelling we submit why retrospectivity is not appropriate when it comes to the issue of remuneration increases. There are substantial administrative and other costs associated with back pay and also a lot of companies amongst our membership and there are hundreds of them in fact that are in contract labour scenarios, all of the labour hire companies, there are a lot of other labour type scenarios and in many cases in those circumstances those companies have no ability to recover retrospective wage increases from their clients so it is a double dipping scenario in terms of the impact on those companies. We are also concerned about - - -

PN697

VICE PRESIDENT LAWLER: Where's the double dip?

PN698

MR SMITH: Well, in the sense that it's a double impact if you like on those companies because they have to - say there's a margin of 3 per cent or 5 per cent or whatever with the labour costs that they are providing to their client, if they can't recover the costs it eats into their margins, so I guess double dipping is not the right word. It is an unfair impact.

PN699

VICE PRESIDENT LAWLER: So the worker should be at a disadvantage, is that what you're saying?

PN700

MR SMITH: No, there's no disadvantage we submit because the issue of retrospectivity shouldn't arise. You know, the unions are able to make their application - - -

PN701

VICE PRESIDENT LAWLER: The problem you're talking about is a problem that exists independently of the timing of our decision. If the body hire or labour hire businesses have got contracts that extend for a particular period at fixed rates that can't be varied then those employers are going to have that difficulty irrespective of the timing of our decision.

PN702

MR SMITH: Your Honour, some have those type of contracts, others provide labour on a weekly or monthly basis and then if the rates go up then they can't go back to their client for that person they provided two weeks ago and say, well, we want some money back and there is potentially a lot of money involved in this issue. This wage increase has a maximum impact of $40 plus.

PN703

VICE PRESIDENT LAWLER: Can you name a single labour hire business that's not a corporation?

PN704

MR SMITH: I can't off the top of my head but there are a lot of small - - -

PN705

VICE PRESIDENT LAWLER: It's hard to imagine that there would be a single labour hire business that would be a transitional employer, that this is not an example what exists in the real world.

PN706

MR SMITH: Your Honour, our interest in these proceedings we would acknowledge is far more significant in the area of allowance increases because amongst our membership we do have some non constitutional corporations but the vast majority of them are companies. But this issue of allowance increases in pre reform awards is a big issue and it's an even bigger issue because allowances are typically paid even where over award payments are being made. So it may be that 20 per cent of the workforce on various assessments receive the Fair Pay Commission's decision but it could be, you know, 60/80 per cent or more receive allowance increases, so it certainly would be higher than that 20 per cent.

PN707

Our concerns about retrospectivity are greatly amplified if the position of the unions is that an operative date of 1 December applies even for applications made well in the future and we took some comfort from the ACTUs written submission where they said that any applications that were in by today they were seeking the operative date of 1 December, any that weren't in by today would be subject to principle 10 and have to be processed as an application to the President for consideration as a Full Bench and Mr Watts seemed to vary that position today when he said some flexibility is needed, there'll be applications potentially coming in that are agreed.

PN708

We do not support retrospectivity in any circumstances. The issue though of a retrospective application or retrospective operative date for an application that hasn't been made yet and may not be made for a long time into the future is extremely unfair. When you have a look at some of the awards, like take the Aircraft Engineers Award for example, there are about four safety net adjustments that weren't flowed into that award. Some of these awards the unions have not kept up to date and so you could be faced with a scenario where an application is made potentially years in the future and an operative date could be sought for
1 December based on what this Commission might decide.

PN709

We believe that a prospective operative date should apply. The date should be at least two weeks in advance of the date when the orders are issued by the Commission varying the award. That is the absolute minimum we submit that would be reasonable for organisations like ours to advise employers of the variations so that there wouldn't be any back pay and we'd submit this is entirely consistent with the Fair Pay Commission's decision. The Fair Pay Commission's decision was prospective by some five weeks. If this Commission awarded a retrospective operative date that would be inconsistency, not the other way round. There should be prospectivity to achieve the consistency with the decision, not a totally opposite approach to the Fair Pay Commission's approach on this issue of prospectivity versus retrospectivity.

PN710

We can see no logical reason why the same date needs to apply for allowance adjustments and wage increases. There is no way now that employers are going to be able to adjust their payrolls to put the allowance adjustments through at the same time as the Fair Pay Commission's decision because that decision was operative from a few days ago. The ACTU seeks to make a lot of mileage about of the fact that there's this uncertainty about whether a particular employer is a constitutional corporation or not. We don't think that uncertainty is there in most cases and even if it is, the issues go far beyond the operative date for a wage increase. They go to a whole range of provisions within the Work Choices Legislation.

PN711

Your Honours, if I could just turn now to this concept of the first full pay period to commence on or after. We have seen the effect of the Fair Pay Commission's decision and we submit again very strongly that this is a practical aspect of the way this Commission has dealt with wage increases and allowance adjustments and indeed other award variations from time to time and it shouldn't be dispensed with. The idea of a pay increase applying from midnight on a certain date causes practical difficulties for virtually every employer because it's in the middle of pay week for most employers. In the manufacturing sector and in other industries there is a lot of shift work worked and employers have had to deal with the fact that half of a shift is paid at one pay rate and the other half of the shift is paid at the other pay rate.

PN712

It's just an administrative cost and it's more complex than the idea of saying the first full pay period to commence on or after. We don't believe that that's a concept that is inconsistent with the Fair Pay Commission's decision because it didn't say a word about that issue in its decision, so we can only assume it wasn't given a lot of consideration and we will be putting to the Fair Pay Commission on the next occasion that it should adopt the approach that this Commission has had.

PN713

JUSTICE GIUDICE: Mr Smith, we are going to adjourn very shortly. Is that a convenient time to interrupt your submission?

PN714

MR SMITH: Your Honours, I probably got 60 seconds left to go if that - - -

PN715

JUSTICE GIUDICE: That's a tempting offer.

PN716

MR SMITH: There's just a couple of very quick points, the economic incapacity principle, as you know, we support and we say again it's not inconsistent because it's an issue of detail. On the issue of the formula or adjusting wage related allowances and expense related allowances we do believe the furnishing trades formula is appropriate but we don't think it should just be decided that that's going to be appropriate forever more because depending upon subsequent decisions it may not be appropriate, but we do believe it's appropriate on this occasion. And on the issue of the supported wage provisions and the school based apprenticeships, et cetera; we support the approach that the Commonwealth has proposed. If the Commission pleases.

PN717

JUSTICE GIUDICE: Thanks, Mr Smith. We'll adjourn now until 10 in the morning.

<ADJOURNED UNTIL TUESDAY, 5 DECEMBER 2006 [4.20PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #WATTS2 ACTU OUTLINE OF SUBMISSIONS DATED 24/11/2006 PN299
EXHIBIT #WATTS3 PRESS RELEASE FROM THE TREASURER, PETER COSTELLA, 28/11/2006 PN300
EXHIBIT #CFMEU1 PAY SCALE SUMMARY OF THE NATIONAL BUILDING AND CONSTRUCTION INDUSTRY AWARD PN350
EXHIBIT #CFMEU2 DRAFT ORDER RE TRANSITIONAL VERSION OF THE BUILDING AND CONSTRUCTION INDUSTRY AWARD PN358
EXHIBIT #COLE2 - COMMONWEALTH WRITTEN SUBMISSIONS FILED 24/11/2006 PN377
EXHIBIT #ACCER 1 SUBMISSIONS DATED 01/12/2006 PN460
EXHIBIT #AIG 1 AMENDED VERSION OF ANNEXURE A OF SUBMISSIONS PN636
EXHIBIT #AIG 2 OUTLINE OF SUBMISSIONS PN638
EXHIBIT #B4 ACCI SUBMISSIONS PN639
EXHIBIT #AIG 3 LIST OF 160 APPLICATIONS IN DIFFERENT CATEGORIES PN650