AM2014/260, Transcript of Proceedings [2014] FWCTrans 730 (26 November 2014)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 1051007-1

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT HAMBERGER
COMMISSIONER BISSETT
COMMISSIONER BULL

AM2014/260

s.156 - 4 yearly review of modern awards

Four yearly review of modern awards

AM2014/260 Building and Construction General On-site Award 2010

(ODN AM2008/15)
[MA000020 Print PR986361]




Melbourne

3.37PM, WEDNESDAY, 19 NOVEMBER 2014

THE FOLLOWING PROCEEDINGS WERE CONDUCTED VIA
VIDEO CONFERENCE AND RECORDED IN MELBOURNE

PN1

JUSTICE ROSS: Can I have the appearances in Melbourne, please.

PN2

MS M. ADLER: Thank you. Adler, initial M, for the Housing Industry Association.

PN3

JUSTICE ROSS: Thanks, Ms Adler. And in Sydney?

PN4

MR S. MAXWELL: If the commission pleases, Maxwell, initial S, from the Construction, Forestry, Mining and Energy Union.

PN5

JUSTICE ROSS: Thank you. My apologies for the delay in getting underway but the real estate matter took a little longer than we had anticipated. We've received written advice from the MBA, from Mr Calver, indicating that he's content to rely on his written submissions and has nothing to add. What would you like to add to your written submissions, Ms Adler?

PN6

MS ADLER: Thank you, your Honour. We've filed written submissions on 27 October and I would just seek to add to those this afternoon. I will try not to be too lengthy, I know it's near the end of long three days. This is the way I propose to deal with it, your Honour: firstly, I'd just like to make some opening comments; then highlight some key elements of the background to the current proposed provision; then I'll go to the proposal that's on foot; then I'll address section 154 of the Fair Work Act and state those differences; then I'll look to the context within which the proposed variation arises. Then I would like to address two further matters that arise from the CFMEU submission, being the competency based wage progression model and work value; and then I will just close off with some closing remarks.

PN7

Just in opening, HIA proposed a retention of rates of pay for two-year residential apprenticeships in the Building and Construction General On-site Award. Under the current clause these rates of pay operate on a transitional basis and if nothing is done, their operation will cease on 31 December this year. In practical terms, if the commission were to allow the provision to operate in its current form, rates of pay for individuals undertaking a two-year residential apprenticeship would disappear, essentially making them inoperable. Our proposal that would in effect enable the continuation of two-year residential apprenticeships is supported by cogent evidence. The statement of Dale Alcock attached to our 27 October submission goes directly to the matters raised in the modern award objectives.

PN8

Mr Alcock was instrumental in establishing the two-year residential apprenticeship. He has over 30 years' experience in the industry and is the managing director of one of the largest construction companies in Western Australia. He also has extensive experience in the development and delivery of apprenticeship programs in the residential construction industry. We say this evidence goes largely unchallenged and that it should be given significant weight. The argument's levelled against the proposal provide, we say, no significant reason not to grant the variation. With respect, we say the unions are grasping at straws.

PN9

The retention of these rates of pay can only facilitate and encourage the engagement of individuals in apprenticeships in the residential construction industry and we can see no practical negative outcome. Mr Alcock notes in his statement that to allow these rates of pay to lapse would remove access to a valuable pathway to the attainment of a formal trade qualification - paragraph 35 of his witness statement - and would stymie innovation in the delivery of training for both prospective apprentices and employers in the residential construction industry - paragraph 36. As such, the retention of rates of pay for two-year residential apprenticeships within the award is a significant issue for the residential construction industry.

PN10

If I can just go now to the clause that's currently within the Building and Construction General On-Site Award. That clause is found at 19.7(d) of the award and as I've mentioned is a transitional provision and will cease to operate on 31 December 2014. The statement issued by the commission dated 3 October outlines the background to this transitional provision. I have copies to hand up if that assists. I just wished to take the bench to one paragraph of that statement.

PN11

JUSTICE ROSS: Sure.

PN12

MS ADLER: So if I can just take the bench to paragraph 9 of that statement, which is on page 5, where the statement quotes from a decision of the award modernisation full bench (2009) AIRCFB 989 and of particular relevance is the following passage at paragraph 20 of that decision where that bench said:

PN13

We will include a new transitional provision, as follows, to regulate wages for those apprentices undertaking two-year residential apprenticeships in Western Australia. We will make the variation as a transitional provision, to allow application to be made to vary the award substantively, in the context of the setting aside of the Western Australian NAPSA or some later time, if there exists a continuing need to accommodate such apprenticeships in the award.

PN14

Critically the full bench at the time realised that the award should be varied if there was seen to be a need to accommodate two-year residential apprenticeships.

PN15

JUSTICE ROSS: No, I'm not sure that's how you read it. It's to allow an application to be made to vary the award substantially if there exists a continuing need. So if you're suggesting that the benches say that if there's a continuing need, the award should be varied substantially, I think that might be a different - - -

PN16

MS ADLER: That's what I'm seeking to put, your Honour. That might be one way of reading it.

PN17

SENIOR DEPUTY PRESIDENT HAMBERGER: So just so I understand this, your position would be that this would apply for people in any state, in principle.

PN18

MS ADLER: That's right.

PN19

SENIOR DEPUTY PRESIDENT HAMBERGER: But these two-year apprenticeships don't exist in WA.

PN20

MS ADLER: At the moment, yes.

PN21

SENIOR DEPUTY PRESIDENT HAMBERGER: Is there any evidence of any move to role them out broadly?

PN22

MS ADLER: I don't seek to speak for state training authorities.

PN23

SENIOR DEPUTY PRESIDENT HAMBERGER: So you're not aware of any?

PN24

MS ADLER: I'm not aware of anything, no.

PN25

SENIOR DEPUTY PRESIDENT HAMBERGER: As far as I seek to take that is that there was a recognition that these apprenticeships existed in WA. There was a need for a transitional arrangement and then there was contemplation that the award should be varied should there be seen to be a continuing need to accommodate. We would say, on the basis of our evidence, that there is.

PN26

MS ADLER: To talk briefly to the proposed variation which is set out at paragraph 3.1.1 of our submission, the provision proposes or provides rates of pay for two-year residential apprenticeships in the same terms as the transitional provision; that is, a rate of 55 per cent of the standard trade rate for a first year apprentice and 75 per cent of the standard trade rate for a second year apprentice.

PN27

SENIOR DEPUTY PRESIDENT HAMBERGER: How does that compare to a normal apprenticeship, if I can put it that way? What are the equivalent rates? I should know the - - -

PN28

MS ADLER: It depends if you've completed year 12 or not.

PN29

SENIOR DEPUTY PRESIDENT HAMBERGER: Right.

PN30

MS ADLER: If you've not completed year 12, stage 1 is 50 per cent, stage 2 is 60 per cent, stage 3 is 75 per cent, and then stage 4 is 90 per cent.

PN31

SENIOR DEPUTY PRESIDENT HAMBERGER: Thanks.

PN32

MS ADLER: So the two differences between what we prepose and the transitional provision are obviously the removal of the sunset date; and secondly, the specific reference to Western Australia. I will elaborate on that latter point now. So at the time of writing and filing our submissions the commission would be aware that the transitional issues common matter was on foot. Those proceedings dealt extensively with the interpretation of section 154 of the Fair Work Act to do with state based differences within modern awards and on that basis at the time we did not seek to reargue those matters in our written submissions.

PN33

As the CFMEU now claim that the proposed variation offends section 154, I would seek the indulgence of the bench to spend some brief time expanding on our written submission in this regard. The principal point of contention is the interpretation of subsection (1) of section 154 which provides that:

PN34

A modern award must not include terms and conditions of employment (state-based different terms) that: (a) are determined by reference to state or territory boundaries; or (b) are expressed to operate in one or more, but not every, state and territory.

PN35

Both the union and in our submission refer to the same paragraph of the explanatory memorandum to assist in understanding the intended operation of section 154. In our submission the relevant paragraph is extracted at paragraph 3.1.3 and states:

PN36

It is not intended that clause 154 would prohibit modern awards including terms that have different practical operation in different states and territories, provided that they are capable of applying in each state or territory. For example, a modern award could contain a provision that allowed for the payment of a remote location allowance or tropical allowance to address a particular degree of remoteness or a particular climatic condition.

PN37

We say this example should be viewed as entirely uncontroversial and that our proposed variation is of the sort contemplated by this example. Expanding on that example, a modern award may contain terms establishing an allowance based on a condition precedent for the allowance and this condition may only or usually arrive in certain states or parts of states. Therefore, work in particular climatic conditions identified by reference to temperature, humidity or rainfall my attract an allowance. In practice, this allowance will not ever be paid to an employee working in, for example, Northern Australia but wherever climatic triggers are present. Anywhere in Australia the allowance would be payable.

PN38

We say the same reasoning applies in the case of our proposed variation. The condition precedent to the payment of the wage rate may only arise in a certain state, and where it does, the rate of pay is applicable. In practical terms, the wages may only ever be paid to employees working in Western Australia, where the trigger is present, being the provision of the relevant state training authority or the two-year residential apprenticeship. But were the course to be offered anywhere else in Australia, those rates would also apply. The fact that the course is at the moment only offered in Western Australia, we say should not be a determinative factor for consideration under section 154. We say that the proposed variation of this application is not determined by a reference to a state or Territory boundary, nor is the proposed variation expressed to operate in one but not every state. We therefore submit that section 154 provides no bar to the granting of the proposed variation.

PN39

I'd now like to draw the commission's attention to some key elements of our written submission in relation to the context within which the two-year residential apprenticeship came about. Here I'll go to the evidence we provided to substantiate our claim and also address some of the arguments made against us. The CFMEU submit that the variation is unnecessary as the two-year residential apprenticeships are not being used and points to commencement data to substantiate that position. We say three things in response to that: firstly, the data relied on by the CFMEU only goes to the past three years. The two-year residential apprenticeship was introduced in 2006.

PN40

JUSTICE ROSS: And had been on the witness statement 70, completed since 1 May 2006 to date.

PN41

MS ADLER: That's right. If I can compare apples with apples, the commencements were 129, which is the data relied on by the CFMEU. So we've had 129 commencements since 2006.

PN42

JUSTICE ROSS: Yes.

PN43

MS ADLER: Mr Alcock's evidence also points to a legitimate explanation for the low take-up of this type of apprenticeship over the last 12 to 24 months, at paragraphs 28 and 29 of the witness statement. Secondly, we say this past data does not conclusively indicate future take-up. We say that the evidence of Mr Alcock as to the desire for the two-year residential apprenticeship to be available to industry should be given greater weight than a shorter period of commencement data. Finally, the evidence shows as the housing recovery continues this may well be a preferable option for both employers and employees looking to get qualified to take advantage of the up swing in the housing starts.

PN44

At paragraph 31 of Mr Alcock's witness statement in his view as the residential construction industry starts to gain momentum significant value will be attached to the two-year residential apprenticeship and can provide a much needed injection of skilled trades to meet the growth in the activity in the sector. Just to underscore that point made by Mr Alcock in his statement, I do have some data which I seek to hand up which goes to what we call trade availability and dwelling starts.

PN45

COMMISSIONER BULL: Just while you're doing that, Ms Adler, I notice that you say that Mr Alcock talks about not having engaged in apprenticeship in the last two years because of the industry down-turn. My understanding in WA, at least, is that there's a boom in residential building and if you want to build a house currently you're told there's a delay because they can't get bricklayers. He doesn't seem to have appointed anyone in the last two years because there's a downturn - or he says cyclical nature.

PN46

MS ADLER: But that's his evidence. I think more recently we've seen an increase in activity in WA but based on his evidence over the last 12 or two years we've started to see the incline but now - and based on the data that's just before you, as dwelling starts get to the sort of 180,000 annually we're going to start seeing more skill shortages, which is the point we make about not being able to get a bricklayer.

PN47

JUSTICE ROSS: But we've been seeing increases in dwelling starts on this data since June 2012.

PN48

MS ADLER: Nationally on an annual basis. So these aren't WA specific figures.

PN49

JUSTICE ROSS: If they're not WA specific figures, how are they going to help us?

PN50

MS ADLER: I'm just trying to demonstrate that as activity nationally starts to build there may be an appetite across the state to look at other options for getting skilled people into the industry.

PN51

JUSTICE ROSS: And you want to tender this.

PN52

MS ADLER: Yes, thank you.

PN53

JUSTICE ROSS: Mark that exhibit HIA1.

EXHIBIT #HIA1 DOCUMENT

PN54

COMMISSIONER BISSETT: Ms Adler, are you suggesting that if were to grant this application it would open up opportunities in other states besides WA?

PN55

MS ADLER: It would provide a facility to provide a course for a two-year residential apprenticeship.

PN56

COMMISSIONER BISSETT: And how would that sit with the national training packages and so on around apprenticeships? I'm aware that this has been a matter of intense contention for a number of years.

PN57

MS ADLER: Yes. I can't talk to the national training packages. All I can speak to is the desire, based on our evidence, to have this option available and that having an option like this available and providing rates of pay in the award would provide other states with another training option. The actual mechanism of implementation of that, I can't speak to.

PN58

VICE PRESIDENT HATCHER: But that would involve setting the rate of pay before we know what the nature of the training arrangement in the other states would be. That's the wrong away around, isn't it? We want to know what people are doing being for we set a rate for them.

PN59

MS ADLER: I think having the rate in the award provides one less roadblock, opening up the opportunity for states to investigate that sort of option.

PN60

VICE PRESIDENT HATCHER: And how would we know we're setting the right rate for a concept that hasn't been developed in five states out of six?

PN61

MS ADLER: They - - -

PN62

VICE PRESIDENT HATCHER: It could be any rate and it wouldn't remove the roadblock, whether it's 90 per cent, 50 per cent, whatever?

PN63

MS ADLER: Based on what's happened in Western Australia because it's probably - - -

PN64

JUSTICE ROSS: But it's based on an assumption that what's happened in Western Australia will then operate in the other states.

PN65

MS ADLER: Yes.

PN66

JUSTICE ROSS: That might be an optimistic assumption given the history of interstate cooperation about these sorts of things but - - -

PN67

MS ADLER: I guess our key submission is leaving the door open to these and removing the rates would make that very difficult we say.

PN68

SENIOR DEPUTY PRESIDENT HAMBERGER: Just to understand that: so obviously once you've done your two years you're entitled to full trades rate. So there is a way of being able to access that full rate sooner than you would normally.

PN69

MS ADLER: Yes.

PN70

SENIOR DEPUTY PRESIDENT HAMBERGER: And in terms of the actual training that you do to get - so the apprenticeship counts as a full trades training - - -

PN71

MS ADLER: That's my understanding, yes.

PN72

SENIOR DEPUTY PRESIDENT HAMBERGER: So what are you not doing to get there? If you can do it in two years instead of three or four, what are you not doing?

PN73

MS ADLER: My understanding is that the focus is on more the practical side than the formal training. In Mr Alcock's statement at paragraph 46 he says that:

PN74

There's approximately one-third less technical units than the nominal three-year apprenticeship.

PN75

So I guess people will have differing views around how somebody comes out of a two-year, three-year, four-year apprenticeship but the point is that the two-year apprenticeship is based on practical outcomes and it's more of a competency based type of arrangement with less technical formal training than the three, four-year type arrangement. That's my understanding, and based on the evidence from Mr Alcock.

PN76

SENIOR DEPUTY PRESIDENT HAMBERGER: Thanks.

PN77

MS ADLER: So I don't seek to take that data any further. It was just to highlight that as the housing recovery starts to increase, as indicated by the figures, we're going to see more pressure on skilled trade. Having rates of pay in the award, we say the two-year apprenticeships will provide an option that other states may consider appropriate to help to meet the demand. We say the two-year apprenticeship course was established at the request of industry and industry maintains it is necessary for the two-year residential apprenticeship to remain available. As such, we say the CFMEU's assertions as to the lack of any need for the variation on the basis of low take-up should be given little weight.

PN78

We've already touched on it but I'll go to the issue of competency based progression and the CFMEU's claim that our variation is inconsistent with the Modern Awards Review 2012 - Apprentice, Trainees and Juniors decision as it does not provide for competency based wage progression. We say that this is misconstrued. Further, we would say as opposed to the variation being inconsistent with the outcomes of the 2012 Modern Awards Review decision in that apprentice matter, it is clear from the evidence of Mr Alcock that the two-year apprenticeship is premised on the ability for those undertaking the course to progress on the basis of the attainment of competencies.

PN79

JUSTICE ROSS: But it's still a time served system, isn't it?

PN80

MS ADLER: Yes, and Mr Alcock's statement deals with that. My recollection - in paragraph 18 he notes that:

PN81

The inclusion of a nominal time period would seem as appropriate in order to create some certainty in relation to completion of the apprenticeship.

PN82

So the focus is not on time, the focus is on the practical implementation of skills and the attainment of competencies.

PN83

JUSTICE ROSS: So under this arrangement they could move to full trade in a year if they were competent.

PN84

MS ADLER: If they were competent. If they could do - - -

PN85

JUSTICE ROSS: Where does it say that in the material that is attached from the government gazette that sets out the evidence and how it works - or in the regulations?

PN86

MS ADLER: I don't think it's expressly set out in the regulations. That would be part of the training plan, I would imagine, and the work of the employer and the apprentice and the training authority to facilitate that sort of progression.

PN87

COMMISSIONER BISSETT: The proposed award clause doesn't say it, does it?

PN88

MS ADLER: No, it just provides one year and a rate. That doesn't prevent anything occurring in a different way to that, I would surmise. We would say that because of the focus of the attainment of competencies under this training arrangement, it's not inconsistent with the full bench determination, the 2012 modern award review decision. In fact it was part of the impetus for desiring the two-year apprenticeship which is outlined at paragraph 11 of Mr Alcock's statement which states:

PN89

I was of the view that there was a need for competency based outcomes in relation to training arrangements pertaining to the residential construction industry.

PN90

Further, the two groups identified by Mr Alcock as benefiting most significantly from the two-year apprenticeship, being the mature age and those with learning difficulties, benefit from the focus of this clause being the practical application of skills as opposed to the completion of formal training. I might just add as well that given that these are housing specific courses, there's necessarily less elements of those courses than if it was a broad course aimed at both residential and commercial. That's why they're residential apprenticeships. Their focus is on housing construction as opposed to housing and commercial.

PN91

Just going back to Mr Alcock's statement at paragraph 42 and 47. He provides evidence that the emphasis of the two-year residential apprenticeship is on the practical application of skills. We say that the two-year residential apprenticeship is based on outcomes according to competency and therefore is not inconsistent with the outcomes of the 2012 modern award review decision in the apprentices, juniors and trainees decision.

PN92

Now, if I can just move to the issue of work value. The CFMEU argue that the proposed variation would effectively introduce new rates of pay and as such the variation seeks to vary minimum wages and therefore must be justified on work value grounds. We say work value considerations are not relevant to the proposed variation as we do not seek to vary modern award minimum wages. Section 284(3) of the Fair Work Act provides that:

PN93

Modern award minimum wages are the rates of minimum wages in modern awards, including: (a) wage rates for junior employees, employees to whom training arrangements apply and employees with a disability.

PN94

Subsection (4) provides that the varying of modern award minimum wages means the varying of -

PN95

the current rate of one or more modern award minimum wages.

PN96

Therefore we say that in order to enliven section 156(3) of the Act a proposed variation would be seeking to vary or change the minimum wage that applied to apprentices. Firstly, the rates for apprenticeships are calculated by reference to a percentage of the standard trade rate, being in this case 55 per cent for the first year and 75 per cent for a second year apprentice. These percentages are, as I've outlined, identical to that which was provided by the transitional provision. So we're saying no change is sought to the percentages or how they're calculated. Secondly, the premise of the CFMEU argument we say is based on a misconstrued notation of how the modern awards operate. They do not operate within states or territories, they operate nationally. As has previously been discussed, can't contain state based differences.

PN97

Therefore, to argue that the proposed variation seeks to introduce a new wage rate in certain states and territories we say is at odds with section 154 and the underlying principles associated with the national nature of these modern awards. The CFMEU seemed to assert that because a rate of pay may have effect in, for example, New South Wales where it did not before, we seek to introduce a new wage rate. We say this is an incorrect assessment of what the proposed variation seeks to do, which is to retain the existing percentages of the trade rate that apply to those undertaking a two-year residential apprenticeship.

PN98

We say that to enliven work value considerations would be to introduce a new rate within the modern award or seek to change the percentage of the trade rate. The potential ability of the proposed variation to provide rates of pay for two-year apprenticeships across Australia does not we say in any way vary or change minimum wages, and as such the need to consider work value we say does not arise in these circumstances.

PN99

Just in closing, I just seek to reiterate a few points in support of our proposal. Firstly, HIA has provided uncontested evidence as to the need for the variation to the Building and Construction General On-Site Award in order to ensure that the award meets the modern award's objectives, which no party has sought to challenge that proposition. Secondly, we say that if the provision were allowed to lapse and rates of pay were moved for two-year residential apprenticeships, the Building and Construction General On-Site Award would fail to meet the modern awards objectives. We say that on three key arguments: firstly, the removal of these rates of pay would be at odds with the objective of providing social inclusion through increased workforce participation. Removing these rates of pay makes it impossible to engage an individual on a two-year residential apprenticeship. Without rates of pay in the award, there's no mechanism within which an individual can be engaged under such an arrangement. The evidence of Mr Alcock demonstrates that removing the ability to undertake a two-year residential apprenticeship may disenfranchise two groups from being able to gain employment; that being the mature aged and those with learning difficulties.

PN100

Secondly, we say the removal of these rates of pay will have a negative impact on business and employment growth. The evidence of Mr Alcock substantiates the desire of businesses within the residential construction industry to continue to have the option of engaging apprentices under a two-year residential apprenticeship and removing that option would adversely impact businesses within the industry and we say employment growth more broadly.

PN101

Finally, we say that allowing the current provision to lapse would go against the desire to ensure simple, easy to understand and sustainable modern awards. As outlined in our written submission within section 2.2, in Western Australia the Building Trades Construction Award 1987, the pre-reform award, still regulates unincorporated entities. It was this pre-reform award that was originally amended in 2006 to provide the rates of pay for two-year apprenticeships. Attachment C to our submission extracts the relevant material from the Western Australian Industrial Gazette. This, combined with the fact that the two-year residential apprenticeship is currently on the list of apprenticeships provided by the Western Australian Department of Training and Workforce Development - which is attached to Mr Alcock's statement at annexure C - demonstrates that there would be clear inconsistencies that would arise should these rates of pay be removed from the Building and Construction General On-Site Award.

PN102

We strongly submit that the proposed variation is necessary to ensure that the Building and Construction General On-Site Award continues to meet the modern awards objective. I would reiterate that we have provided largely uncontested evidence in the form of Mr Alcock's witness statement that support the proposed variation and we say this should be given significant weight. To allow this provision to lapse would rob the residential construction industry of a vital option in the development of skilled tradespeople. We would strongly urge the commission to grant the proposed variation. Those are my submissions.

PN103

JUSTICE ROSS: Thank you.

PN104

MS ADLER: Thank you.

PN105

COMMISSIONER BULL: Ms Adler, before you sit down, you mentioned unincorporated employees. So they wouldn't be able to continue, is that what you're saying?

PN106

MS ADLER: Sorry?

PN107

COMMISSIONER BULL: Unincorporated employees in the residential industry in WA would still be able to have the two-year apprenticeship.

PN108

MS ADLER: Yes.

PN109

COMMISSIONER BULL: Which I would think, is it not, an insignificant amount of employees in the residential industry - - -

PN110

MS ADLER: I get mixed feedback on how many unincorporated entities there still are in WA.

PN111

COMMISSIONER BULL: And you say simply by taking the wage rates out of the award, despite the fact that such an apprenticeship existed under the various government legislation (indistinct) prevents you from employing a two-year apprenticeship because there's no wage rate.

PN112

MS ADLER: That's right.

PN113

COMMISSIONER BULL: So it's not a question of not being covered by the award, they simply can't be employed.

PN114

MS ADLER: There's no mechanism to pay someone engaged on such a program if there's no rates in the award. If you're an incorporated entity in WA, then there wouldn't be rates of pay for a two-year residential apprenticeship.

PN115

COMMISSIONER BULL: Yes, but does that still mean - - -

PN116

VICE PRESIDENT HATCHER: I think the question is if there's no award rate of pay, does that prohibit you from engaging an apprentice?

PN117

MS ADLER: On a two-year residential apprenticeship we say yes.

PN118

VICE PRESIDENT HATCHER: Why is that?

PN119

MS ADLER: There's no rates of pay.

PN120

VICE PRESIDENT HATCHER: You might be award-free or free of an award rate.

PN121

MS ADLER: There may be other circumstances other than award covered employees that may take up the two-year residential apprenticeship and they may negotiate a different sort of rate of pay but I think in light of the modern awards providing a fair and relevant safety net, there should be minimum rates of pay for two-year residential apprenticeships in the award.

PN122

JUSTICE ROSS: That's one question, whether there should be; but if there aren't, is that an impediment to people being employed under these arrangements?

PN123

MS ADLER: We say it is. There's no certainty of a minimum rate of pay.

PN124

JUSTICE ROSS: There isn't any certainty for the rate of pay for anyone who's award-free.

PN125

MS ADLER: I'm talking about award covered employees.

PN126

JUSTICE ROSS: Yes. So if they're award covered, they should have a rate of pay.

PN127

MS ADLER: That's right.

PN128

JUSTICE ROSS: Yes, I follow.

PN129

COMMISSIONER BISSETT: Could they otherwise - I notice in your attachment to the CFMEU material, the CFMEU have included the determination giving effect to the apprentices, trainees and junior rates decision, which incorporates competency based progression for certainly the four-year apprenticeships. If the rates that you seek to maintain weren't in the award, would it be possible for those competency based rates to be used as a basis for payment to two-year apprentices?

PN130

MS ADLER: I'd say there would be no certainty as to the rate that would be paid. We would try to apply those four-year competency based wage progression rates to a two-year residential apprenticeship.

PN131

JUSTICE ROSS: Why couldn't you just get an enterprise agreement and provide certainties?

PN132

MS ADLER: I'm talking about award covered employees and I don't - I mean if an employer wants to set up an enterprise agreement to cover these sorts of arrangements, there's obviously opportunities for them to do that. What we are concerned about is the award providing no minimum rate of pay for two-year residential apprenticeships.

PN133

VICE PRESIDENT HATCHER: So would the employers be award dependent?

PN134

MS ADLER: The employers would be, yes. For these minimum rates to apply they would have to be covered by the award in the first instance.

PN135

VICE PRESIDENT HATCHER: So my question was housing industry employers in Western Australia primarily pay on the award or on some other basis?

PN136

MS ADLER: I wouldn't want to speculate too broadly but my experience is that they're award covered in the housing sector.

PN137

SENIOR DEPUTY PRESIDENT HAMBERGER: And they're paying award rates as opposed to paying (indistinct) in many cases for apprentices.

PN138

MS ADLER: Apprentices - - -

PN139

JUSTICE ROSS: Certainly agreement activity, bargaining activity, is more common in commercial construction than it is in the residential sector.

PN140

MS ADLER: I would agree with that, yes, Commissioner.

PN141

JUSTICE ROSS: And the unionisation levels are very different between the two sectors.

PN142

MS ADLER: Yes, your Honour.

PN143

COMMISSIONER BULL: Ms Adler, I understand your argument about having certainty with minimum rates. Some of that's self-explanatory. But I still don't follow how you say that unless you have certainty of minimum rates that you can't employ people under a two-year apprenticeship if the state legislation allows you to do so.

PN144

MS ADLER: What should I advise my member to pay a first year - - -

PN145

COMMISSIONER BULL: No, that's a different matter. But taking the rate out of the award doesn't stop you doing what the apprenticeship provisions allow you to do, does it?

PN146

MS ADLER: No, I'm not saying that WA couldn't continue to provide two-year residential apprentices. I'm saying in practice, why would somebody take one up when they don't know what to pay their potential apprentice.

PN147

COMMISSIONER BULL: You'd probably advise them to pay what's in the award at the moment, I would imagine, but anyway.

PN148

MS ADLER: But the percentages aren't attributable to a two-year scheme, they're attributable to a four-year scheme based on competency based - - -

PN149

COMMISSIONER BULL: No, I understand that. But aren't there rates in the state system?

PN150

MS ADLER: For the pre-reform award there is but that would only apply with an unincorporated entity in WA.

PN151

COMMISSIONER BULL: Yes, but why should they get different rates? So someone under an unincorporated apprenticeship, their rates are set by the state commission.

PN152

MS ADLER: Yes.

PN153

COMMISSIONER BULL: You could advise your members to do the same, couldn't you?

PN154

MS ADLER: If they're covered by a different award.

PN155

COMMISSIONER BULL: No, I'm saying how are they covered if their classification is not in the award?

PN156

MS ADLER: The employer would be covered by the award.

PN157

COMMISSIONER BULL: Yes, I understand that but they're only covered, what, to the extent of the classifications that are relevant, aren't they?

PN158

MS ADLER: There would be a potential classification for one of those apprentices under the award because they would be carrying out an occupation that falls within the classifications within an award.

PN159

COMMISSIONER BULL: That may be true, I don't know. You say that a two-year apprenticeship is still covered by an award that's got a four-year or three-year apprenticeship.

PN160

MS ADLER: Sorry?

PN161

COMMISSIONER BULL: Are you saying that the award which doesn't provide for a two-year apprenticeship still applies to someone who works under a two-year apprenticeship?

PN162

MS ADLER: I'm saying the award would apply to the occupation being carried out by that individual but there would be no rates of pay to facilitate the progression of the apprenticeship.

PN163

COMMISSIONER BULL: Thank you.

PN164

JUSTICE ROSS: Thanks, Ms Adler.

PN165

MS ADLER: Thank you.

PN166

JUSTICE ROSS: Mr Maxwell.

PN167

MR MAXWELL: Your Honour, do you mind if I remain seated?

PN168

JUSTICE ROSS: No, that's fine. We can hear you better if you remain seated.

PN169

MR MAXWELL: Thank you, your Honour. Your Honour, we rely on our written submissions because we believe they address the substantial issues. I would just like to briefly raise or go over a couple of points. (indistinct) that in regard to section 154 of the Fair Work Act which Ms Adler raised and particularly what was set out in the explanatory memorandum in paragraph 5, line 7 about the power of clause 154 (indistinct) We say that the issue here is that the two-year apprentice wage rate would not be capable of applying in states other than Western Australia because there are no two-year apprenticeships in those states. So that is the basis on which we say the application (indistinct) section 154.

PN170

In regards to the desire of keeping two-year apprenticeships, we submit that the figures on commencements speak for themselves. Attached to our submission we set out the (indistinct) of apprenticeships in the building and construction industry in Western Australia and we find that as of 30 June 2014 there are 3807 apprentices in the building and construction industry in Western Australia. When we look at the (indistinct) qualification in regards to certificate III in carpentry and joinery, in 12 months to approximately June 2014 there were 707 commencements in certificate III in carpentry and joinery, 367 in certificate III in bricklaying and blocklaying, and 184 certificate III in painting and decorating. I won't take those any further but when we then look at the commencement figures for the two-year residential qualifications we've managed to provide (indistinct) show that there were no commencements in the year 2012-2013 and no commencement in the year 2013-2014, and in terms of completions there were three completions in 2012-2013 for certificate III in carpentry and housing and one in 2013-2014 certificate III in (indistinct) housing.

PN171

Clearly whilst the industry in Western Australia are (indistinct) experiment with the introduction of two-year housing apprenticeships and also the introduction of three-year apprenticeships, which is a reduction from the four-year apprenticeships, and that dealt with (indistinct) qualification on (a) in the statement of Mr Richardson, the industry has spoken in that they have now decided that they are quite happy with the three-year apprenticeships and the two-year apprenticeships in housing (indistinct) as shown by the level of commencements.

PN172

I also refer to the statement of Mr Alcock at paragraph 28 where he admits that (indistinct) -

PN173

not engaged in apprenticeships under a two-year apprenticeship for approximately 12 to 24 months.

PN174

If you contrast that with paragraph 9 in his statement where:

PN175

At the time of swearing this statement (indistinct) had 300 (indistinct) apprenticeships (indistinct) including (indistinct) and carpentry and joinery (indistinct)

PN176

So there the (indistinct) is showing a preference for engaging people under the three-year apprenticeships rather than the two-year apprenticeships and the witness statement of Mr Richardson at paragraph 22 concedes that there has been a lull of up-take of the two-year residential apprenticeships in Western Australia since it being introduced in May 2006. So it's (indistinct) by and large the two-year apprenticeships in Western Australia are obsolete.

PN177

The next issue (indistinct) is the decision of the full bench in the (indistinct) to be varied. The big concern is that the HIA were a part of those proceedings. The Western Australian government put in a submission in regards to those proceedings and in it the full bench decided on (indistinct) model. In paragraph 13 of our submission we refer to a number of paragraphs in that decision but if I can just take you to paragraph 270 because the full bench made the clear distinction between competency based progression in terms of - or competency based conclusion of apprenticeships as opposed to competency based wage progression (indistinct) completion is where the apprentice can finish early if they complete all competencies required for their qualification.

PN178

Competency based wage progression enables the apprentice to achieve a higher wage rate (indistinct) based on the number or the (indistinct) competencies that have been completed. If I can refer you to appendix C of our submission, which includes the clause that was inserted arising out of that (indistinct) and that (indistinct) in variation 2 (indistinct) new divisions that sets out the competency based wage progression for four-year apprenticeship and the competency based wage progression for three-year apprenticeship. In regard to the existence in the apprenticeships in Western Australia, there was no change to their existing provision.

PN179

Importantly, when we go to D, which is found on page 6 of that determination, if you look at the heading for that provision, it says, "Transitional provisions two-year residential apprenticeship in Western Australia commenced prior to 1 January 2014." So clearly the two-year apprenticeship wage rates in the award are required (indistinct) prior to 1 January 2014. They are under no obligation to any apprenticeship that took effect after 1 January 2014. Indeed, the competency based wage progression model (indistinct) by that decision (indistinct) 1 January 2014. So the full bench had a clear distinction: "These are the new wage rates, this is the new model to apply. It applies from 1 January 2014." The two-year apprentices expired or (indistinct) prior to that (indistinct)

PN180

So essentially no two-year apprenticeship wage rates apply in the awards for any commencements after that date. So in the event that the HIA are now seeking to insert two-year apprenticeship wage rates that apply across the country, they are not seeking to insert new wage rates. We say based on the position of the full bench which is referred to in the HIA submission section 3 (indistinct) In 3.2.3 of the HIA submission they refer to the decision of 25 March 2014 of the full bench where the full bench made some general observations about the four-year review. Over the page, on page 4, the full bench said that:

PN181

The previous full bench decision to (indistinct)

PN182

We say there's been no appropriate by the part of the HIA as to why the full bench decision in the (indistinct) case should now not be followed.

PN183

Bissett C I think raised the question in regards to whether the two-year apprenticeships were part of the national funds package in the construction industry. I do have some knowledge of the national pay package (indistinct) and I can call on the fact that the two-year residential housing apprenticeship are not far off the national (indistinct) and there had been no movement for any employee organisations to include them in the national training package and hence the two-year apprentice was inserted into the award in Western Australia.

PN184

Your Honour, I think those are the submissions I, with respect (indistinct) at this stage (indistinct)

PN185

JUSTICE ROSS: Thanks, Mr Maxwell. Anything in reply, Ms Adler? Ms Adler?

PN186

MS ADLER: Just bear with me for one moment, your Honour, I'm just wanting to speak just briefly to the commencement data again that Mr Maxwell has referred to. I don't know if we can go as far as saying the two-year residential apprenticeship has withered on the vine just because in the last three years no-one has commenced. I think we say that the statement and the evidence that we provided by Mr Alcock clearly demonstrates an industry desire to have these continue or - - -

PN187

SENIOR DEPUTY PRESIDENT HAMBERGER: Sleeping rather than dead, possibly.

PN188

MS ADLER: We'd say that the industry would still like the option of being able to provide these apprenticeships and if I can just briefly address the draft determination arising out of the 2012 apprentice, junior and trainee case. As we all know, that was a long exercise. The drafting of those provisions was a detailed and lengthy exercise also. I don't recall specific attention being drawn to the insertion of those words. I'm not saying that it wasn't. I'm saying my attention wasn't directed towards it. As such, I think the weight Mr Maxwell is giving to the inclusion of those words to that transitional provision is more weight than perhaps it should be, given the lack of contemplation by the parties to the attachment of those words in 19.7(d).

PN189

JUSTICE ROSS: But wasn't the determination issued as a draft and went through a process or - - -

PN190

COMMISSIONER BISSETT: This is the file determination which is attached to Mr Maxwell's material.

PN191

MS ADLER: I can't recall at this stage.

PN192

JUSTICE ROSS: Okay.

PN193

MS ADLER: This is the file determination that's attached to Mr Maxwell's submissions. From my memory, at least, of the process it was largely focused on the wording of 15.8 and then the wording within the wage rate tables.

PN194

COMMISSIONER BISSETT: Isn't the wording now the wording, Ms Adler? I mean this is the determination which has been in effect since 1 January this year.

PN195

MS ADLER: Yes. I'm not seeking to quarrel with the fact that that's the words that now appear in the award. What I'm seeking to do is to suggest that the weight that Mr Maxwell attaches to that, to say that all industry have felt that these rates were no longer necessarily is too high a bar to put on that statement. That's - - -

PN196

VICE PRESIDENT HATCHER: That might explain why there hasn't been any new ones.

PN197

MS ADLER: I would just refer back to Mr Alcock's statement, who does explain the low-take up of them as well in his statement. That's all I have in reply. Thank you.

PN198

JUSTICE ROSS: Thank you, Ms Adler. Thank you, Mr Maxwell. We will adjourn and reserve.

<ADJOURNED INDEFINITELY [4.30PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #HIA1 DOCUMENT PN54