AG2018/919, Transcript of Proceedings [2018] FWCTrans 340 (18 September 2018)

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PN1

THE DEPUTY PRESIDENT: Yes, just bear with me. All right, I'll take appearances please.

PN2

MR H DIXON: May it please your Honour, my name is Dixon. I seek permission to appear with my learned friend Mr Morris on behalf of Alcoa of Australia Limited in accordance with the submissions filed on Friday afternoon.

PN3

THE DEPUTY PRESIDENT: Thank you.

PN4

MR S CRAWFORD: If it pleases the Commission, Crawford, initial S from the Australian Workers' Union and with me today is Mr Duncalfe, initial Z. Also, for the Australian Workers' Union and I can note, your Honour, as we've indicated in writing already that we don't oppose permission being granted for the applicant to be legally represented.

PN5

THE DEPUTY PRESIDENT: Thank you. All right. This is a hearing today to deal with Alcoa Australia Limited's application under section 225 of the Fair Work Act to terminate the Alcoa World Alumina Australia WA Operation AWU Enterprise Agreement 2014 which I understand expired on 31 March 2017. I understand the Australian Workers' Union has opposed the application. Having regard to the nature of the application and the circumstance of the parties and your views this hearing is appropriate in this matter.

PN6

Before we proceed, we must address the matter of legal representation. I note that the respondent relies on 596(4) and does not object to the applicant being represented in these proceedings. I have decided to grant permission for the applicant to be legally represented having determined that 596(2)(a) is met. I consider that representation will assist the Commission as it will enable the matter to be dealt with more efficiently, taking into the complexity of the matter and will assist in identifying the issues that are relevant to the applicant's application.

PN7

The factual matrix is complex, extending over a period of some one and a half to two years. There are multiple witnesses, files of evidence and forensic cross-examination that will inevitably be required. Further, critical to the determination is consideration of subsections of the Act where there is a body of jurisprudence which in and of itself may be considered complex. Viewed in its totality, the resolution of this dispute by arbitration is not without complexity of a kind that travels beyond a simple factual dispute and simple undisputed application of well-settled principles. Legal representation should allow the applicant to provide appropriate argument and assistance to the Commission in hearing and determination of these issues.

PN8

Now, the purpose of the hearing is to enable you to both present your cases to the Commission, including any relevant evidence and submissions. This in turn will enable me to make a decision in this matter and to issue any appropriate orders determining this application. Given the nature of this application under section 225, it would appear that section 226 of the Act is the most relevant provision and it follows that the matters which appear to arise for determination by the Commission include whether it is not contrary to the public interest to terminate the 2014 Alcoa agreement and it is appropriate to terminate that same agreement after taking into account all of the circumstances.

PN9

Those circumstances that the Commission is required to take into account, include the views of the employees, employer and an organisation covered by the agreement and the circumstances of those employees, employer and organisation including the likely effect the termination will have on each of them. If the Commission is satisfied that it is not contrary to the public interest to terminate the 2014 Alcoa agreement, and the Commission considers it appropriate to terminate the agreement, having taken into account the aforementioned circumstances, then the Commission must terminate the 2014 Alcoa agreement.

PN10

I'll just ask is there any other matters that you consider arise, Mr Dixon, concerning this matter?

PN11

MR DIXON: If the Commission pleases, not in relation to the matters that your Honour has just identified, if the Commission pleases.

PN12

THE DEPUTY PRESIDENT: Thank you. Mr Crawford?

PN13

MR CRAWFORD: No, there isn't, your Honour.

PN14

THE DEPUTY PRESIDENT: Thank you. Each party has provided material to the Commission and each other in the lead up of this hearing and I assume for the purposes of proceedings over the next five days that each party has copies of the material. I note that I do have copies of the material and they won't need to be handed up to me, though my associate will show them as they're provided to the witness. Each party will make their opening submissions, with the applicant going first. My associate will swear in each of the witnesses who is going to provide evidence in this matter. Witnesses are excluded from the hearing room until they are due to give their evidence. They are not to congregate while waiting their turns to give evidence. They will be brought in and sworn. You should appreciate that having been sworn in, all of the statements as to the facts in this hearing will be subject to that oath or affirmation, and witnesses must tell the truth as they know it to be.

PN15

During the above processes, I may ask you questions and explore your respective positions. However, you should clearly understand that it remains your responsibility to present your own case and to ensure that I am informed of all relevant facts. When the witnesses have provided their evidence and the cases have come to a conclusion, I will give you the opportunity to summarise your respective positions. The applicant will go first, followed by the respondent, with the applicant having afforded a brief right of reply at the end. Having heard your cases, I will then make a decision in this matter, which will be reserved. A recording of this hearing is being taken for future purposes and it is my understanding that it will be made available on the subsequent hearing day, but we will clarify that with my associate. Are there any questions or issues that you would like to raise at this time? Mr Dixon?

PN16

MR DIXON: May it please the Commission. May I just clarify one issue? My learned friend, Mr Crawford, and I have had a discussion and our witnesses, subject to any ruling your Honour makes, would be present for opening but of course not during the giving of evidence of any other witnesses.

PN17

THE DEPUTY PRESIDENT: Yes.

PN18

MR DIXON: I understood your Honour's indication to be to that effect.

PN19

THE DEPUTY PRESIDENT: Yes. Mr Crawford, anything further with regard to that?

PN20

MR CRAWFORD: Can I just clarify, your Honour, that your preference would be for us to give our opening submission at the beginning before any evidence is called, is that correct?

PN21

THE DEPUTY PRESIDENT: Correct.

PN22

MR CRAWFORD: Yes, that's fine.

PN23

THE DEPUTY PRESIDENT: Thank you. Mr Dixon?

PN24

MR DIXON: May it please the Commission. As your Honour has indicated that the application in this matter enlivens the provisions of section 226, the application was made and supported by a statutory declaration made by Mr Gleeson on 12 March 2018 on form F24C. We seek to rely on that statutory declaration, and if your Honour - I don't know whether your Honour would want to mark those - - -

PN25

THE DEPUTY PRESIDENT: Yes, I think that's a good idea. It might be the case that the statutory declaration I don't have in one of the files, so if there is a copy to hand up I would be appreciative of it.

PN26

MR DIXON: Yes. Attached to it is an undertaking, which we also will seek to rely upon, and as your Honour may have noticed, the undertaking is an undertaking being proffered on certain terms, which I'll come to in a moment.

PN27

THE DEPUTY PRESIDENT: So you would like this to be tendered, Mr Dixon?

PN28

MR DIXON: To the extent it's necessary, I would tender the statutory declaration together with the undertaking, which is an attachment to the statutory declaration, if the Commission pleases.

PN29

THE DEPUTY PRESIDENT: Thank you. We'll mark that exhibit A1, tendered on 17 September, and that's titled stat dec and undertaking.

EXHIBIT #A1 STATUTORY DECLARATION AND UNDERTAKING

PN30

MR DIXON: May I just very briefly draw your Honour's attention to the matters contained in the statutory declaration? Under the public interest, your Honour will note the matters set out in clause 2.1, and we would submit in due course, as your Honour will see from our submissions, that those matters there set out support a conclusion that it is not contrary to the public interest. In relation to the effect on employees and the union, your Honour will see a brief summary of that at paragraph 2.3, and in 2.3 under the heading, "Effect on employees and union", there is reference to the fact that in the event that there is a termination, and of course there's no agreement reached, the terms of the Aluminium Industry Award will apply as are meant from time‑to‑time, and then in subparagraph (a)(ii), there is reference to the undertaking that is being proffered on the terms briefly summarised in that paragraph.

PN31

The undertaking that is attached, if I may briefly just deal with that so we don't have to come back to it, in paragraph 1.2 the Commission will see that it's an undertaking that certain terms would apply from the termination date, which is a defined term, in addition to Alcoa's obligations under the NES and the award. 1.4 sets out when the undertaking will cease to apply - either a new agreement is made or workplace determination exclusions that really mean that the instrument that is made overtakes the effect of an undertaking. 1.5 deals with the timeframe of six months, or at a later date if Alcoa determines to that effect. And the undertaking then goes to a number of matters, firstly, to maintain rates of pay, as set out in 3.1, and allowances on the basis that those shifts are worked as set out in 3.2. For the limited timeframe of the undertaking, Alcoa will maintain redundancy payments at a rate higher than would otherwise apply under the NES if the NES definition is met. That is dealt with in 5.1, and in 5.1(a), your Honour will see fairly generous redundancy payments on the scales there set out, of course for the limited period that this applies. Superannuation is dealt with in 6, and also there is an undertaking to maintain payment for leave entitlements, which would otherwise fall back on a much lower rate of pay than would occur under the award, and the purpose of course is to ameliorate for a period of time the impact or effect of termination, and also the timeframe is aimed at permitting a further opportunity, after very lengthy bargaining, for the making of a new enterprise agreement satisfactory to the parties.

PN32

Your Honour, we seek to rely on the applicant's outline of opening submissions filed on 27 August 2018. I'm not familiar with your Honour's preference as to whether your Honour would wish to mark those submissions, or whether they just form part of - - -

PN33

THE DEPUTY PRESIDENT: No, that's fine. Thank you, Mr Dixon. They form part of the file.

PN34

MR DIXON: Thank you. Your Honour may be familiar with the operations of this applicant, but very briefly - and I'm saying this partly just so that there's a record of it - of course there are mining operations and refining operations. The mining operations concern Huntly Bauxite Mine that supplies bauxite ore to Pinjarra and Kwinana alumina refineries, and the Willowdale Bauxite Mine supplies bauxite ore to the Wagerup Alumina Refinery, and there are separate teams that work in each of those relevant establishments, but one agreement obviously covers the entire operation. Briefly, as your Honour mentioned in the introductory remarks from the Commission that the 2014 AWU agreement as we've called it, was approved on 10 March 2014. It commenced operation on 17 March 2014. And the nominal expiry date was 31 March 2017. There was a correction if there's anything in the Commission's material to make sure that the nominal expiry date was recorded as the 2017.

PN35

THE DEPUTY PRESIDENT: Thank you.

PN36

MR DIXON: As we will come to explain in more detail, Alcoa's position is that there are a variety of terms which prevent or inhibit Alcoa from achieving the operational efficiency and productivity which it desires and seeks. There are terms of the agreement that are inconsistent with sound operational decision making as it now applies to these operations and there are terms which are completely outdated and no longer have relevance, or should not have any further relevant to the operations. And in essence Alcoa has since December 2016, before the expiry of the nominal date on 31 March 2017, been attempting to negotiate an agreement which removes or satisfies its concerns in relation to a variety of terms because Alcoa is no longer prepared to be bound by the those terms in this agreement because they have an adverse and unsatisfactory impact on its operations.

PN37

Before turning to the specific terms of the enterprise agreement may I touch on some of the principles and considerations which arise from section 226 of the Act and the relevant decisions of the Commission. May I do so in the first instance, if the Commission pleases, by reference to the applicant's outline of opening submissions of 27 August 2018 and ask that your Honour has that document to hand in perhaps facilitating following the submissions which we seek to make. Your Honour, we could make another copy available if that's going to - - -

PN38

THE DEPUTY PRESIDENT: Yes, we'll need another copy. I think Mr Dixon will make a copy of the submissions available.

PN39

MR DIXON: We have a copy to hand up if that makes it easier.

PN40

THE DEPUTY PRESIDENT: Thank you.

PN41

MR DIXON: Your Honour, I was going to deal with some of the principles concerning termination and I ask your Honour in the first instance to turn to paragraph 30 of those submissions. And the purpose of paragraph 20 is to set the context, in other words, all the statutory provisions of part 2.4, in which section 226 is to be interpreted. Your Honour will tell me at any stage that I should not go into more detail if you're familiar with any of this material but - - -

PN42

THE DEPUTY PRESIDENT: Yes, that's fine, Mr Dixon. You continue with your flow.

PN43

MR DIXON: Thank you. Your Honour will see that what we emphasise in paragraph 20, subparagraph (b) and subparagraph (c) is that they are two distinct and separate processes accepted under the Act. There is an agreement making variation termination process and separately there is the other provisions which you are very familiar with for the making of an enterprise agreement. In other words, the whole process from the period of the notice, to bargaining, to taking protected action, response action, the protected ballot, all of those things. These are two processes which part 2 � 4 contemplate can operate simultaneously or separately and there is nothing precluding the separate processes from occurring simultaneously or side by side. And of course there is nothing special about one process occurring without the other process occurring. But in this case, as the Act recognises, the parties are pursuing those separate remedies which the Act contemplates and they are still pursuing them at the same time. And it might be helpful if we just highlight the Full Bench's reasoning and the Full Court's reasoning about those processes by reference to the decision which is at footnote 34, which is the case of the CEPU v Aurizon Operations Limited 2033 FCR 301 and it's also reported under 251 of the industrial reports.

PN44

We have a bundle of cases and the case that I wish to refer to is in that bundle and may we hand it up to the Commission.

PN45

THE DEPUTY PRESIDENT: If you don't have an extra copy I've got all of the cases, myself.

PN46

MR DIXON: We have an extra copy, so would your Honour like another copy, or not?

PN47

THE DEPUTY PRESIDENT: Preferably not.

PN48

MR DIXON: If your Honour pleases. Thank you. May I then ask your Honour to go to � I've just got to make sure that your Honour's list is the same as mine, but the case of course if the � I think it's listed the second case in the bundle and it's the Full Court decision at 233 FCR. Your Honour will see at paragraph 15 that there is an extract from what the Full Bench decision was, which was analysing the Tahmoor, T-a-h-m-o-o-r, Coal decision and at page 307 of volume 233 FCR, or paragraph 15, the Full Bench was looking at where section 226 fitted into the scheme of the Act, and the third paragraph of that extract from the Full Bench decision, we wish to draw to your Honour's attention where the Full Bench said:

PN49

There is no basis for concluding at a level of generality that continuing the operation of an agreement that is past its nominal expiry date will be any more an effective means by which the objects of section 171 to be achieved than terminating that agreement.

PN50

And I don't read but invite your Honour to look at the balance of that paragraph. And the towards the end of that quote from the Full Bench decision there's a sentence which also says:

PN51

Further, there is nothing in the structure or content of the Act to suggest that its object of providing a balanced framework for a co-operative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians is to be exclusively or primarily to be achieved by enterprise level collective bargaining.

PN52

To similar effect was the observations by the Full Bench quoted by the Full Court at paragraph 17 of the Full Court decision, half way down.

PN53

There is nothing in those provision when read harmoniously which would suggest the emphasis of promoting productivity in section 3(a) is primarily to be achieved through collection bargaining et cetera.

PN54

We also rely on what is set out at paragraph 18 of the Full Court decision, again, quoting from the Full Bench and the passage at about two thirds through that paragraph which says:

PN55

The framework that is established by part 2(4) provides for applications and orders to be made for the termination of an enterprise agreement that is past its nominal expiry date. It is not too difficult to suppose that such an agreement in particular circumstances, might no longer deliver productivity benefits or that such an agreement has never done so. It is not too difficult to suppose that termination of such an agreement might better support good faith bargaining for an agreement that delivers productivity benefits at the enterprise level.

PN56

Each of those observations are pertinent in our respectful submission to the matter before your Honour.

PN57

Then, the Full Court went on at paragraph 23 and following to talk about how it saw those sections and at 23 it was said, at the end:

PN58

It will be the section or group of sections that applies directly that will most usefully indicate that it was the legislature that was seeking to achieve in a particular situation.

PN59

The other part of the Full Court decision which we wish to emphasise is that at paragraph 25. I don't want to read the whole paragraph and your Honour doesn't want me to read the whole paragraph, I know. But the passage which we seek to rely upon is really half way through that paragraph in the context of an ongoing single enterprise business, the most obvious situation et cetera, to the end.

PN60

The effect of that judgment by the Full Court is really to emphasise that it is fully contemplated by the Act that after the nominal expiry date, both processes can operate and the fact that they are operating simultaneously does not detract from or provide a reason why termination should not occur.

PN61

In paragraph 21, we've sought to emphasise what respectfully your Honour has summarised for us at the beginning of today's proceedings. I don't want to emphasise the way we set it out too much, other than to reaffirm that subparagraph (a) is the negative factor and in your Honour's opening remarks, your Honour in our respectful submission, correctly spoke about satisfaction in respect of subparagraph (a) which we deal in subparagraph (c) and consideration in respect of (B)(d) and then (f).

PN62

Can I then emphasise that in paragraph 21(b) the reference to the public interest involving considerations distinct from and broader than the interests of the parties? What I would hope to do further, as we go through, what I think are fair to say, fairly extensive references to cases, just highlight some and the first case in relation to this area that I wish to take the Commission to is that of the Full Bench decision in the Griffin Coal Company case which is at tab one of the materials. That case, which is reported at [2016] 216 IR 265, emphasises at paragraph 44 that the concept of public interest considerations are those set out in Kellogg Brown & Root v Esso Australia Pty Ltd and of course, endorsed by the Full Court in the decision to which we took your Honour earlier.

PN63

And 48 in that judgment, it was re-emphasised that it was the Full Bench considered that the Commissioner was entitled on the evidence to take into account the potential benefits of increased productivity as much as these could create or facilitate job retention and expansion.

PN64

Then if I move on to the inclusion of the objects of the Act which is in paragraph 21(c), there are observations by Cloghan C, in the Griffin Coal case at first instance which is at tab 18 which I just wanted to touch on in opening. Does your Honour have that decision? At paragraph 116, the Commissioner, having quoted the objects of the Act in paragraph 3 at 115, and then at 117 it's tab 18.

PN65

At 117 the Commissioner noted and we ask your Honour to note this.

PN66

Important to note that the law set out in part 2 are intended to arrive at the object of enterprise agreements that deliver productivity improvements.

PN67

Then there's a reference to the submission. At 130, the Commissioner said:

PN68

In summary, I have construed the public interest in part as the various means to achieve the objects of the FW Act including part 24, flexibility for businesses, the promotion of productivity and economic growth. These have to be balanced against an enforceable guarantee safety net in the Black Coal Award.

PN69

Then at 132, the Commissioner said:

PN70

I am also satisfied that before and since the vote, the proposed agreement that termination of the maintenance agreement will assist the parties in arriving at a mutually satisfactory successful enterprise agreement. Encouraging the parties to reach agreement is consistent with the public interest and the objects of the FW Act.

PN71

The third case is then the Murdoch University case which I wish to refer to in opening and that is at tab 12. We would ask your Honour to note from the decision of Williams C [2017] FWCA 4472. The Commissioner starts with a reference to Aurizon at 304 and at 309 to 311, there he repeats some of the public interest matters which we seek to rely upon. Also, because in our respectful submission those are entirely consistent with the earlier authorities which the Commissioner is referring to.

PN72

At 407, again when there is a reference to the modern award objectives it said that:

PN73

Whilst the employee's concern about possible reduction in financial benefits are understandable the context is that the awards which absent any undertaking from Murdoch beyond the first six months will apply to them on each safety net of relevant and enforceable minimum terms and conditions as the Full Bench has previously held.

PN74

And that reference there if it assists if the reference to the Griffin Full Bench decision. Your Honour will then see at 442 there's a consideration of the appropriateness, and although I'm going ahead into appropriateness territory, may I at this point just highlight paragraphs 458 to 461 and indicate to your Honour that we seek to rely on those passages, as well.

PN75

The fourth case is a case that is relied upon by our learned friend, as well, but for different purposes is the Viterra case, V-i-t-e-r-r-a, Operations Proprietary Limited [2018] FWCA 1161 at tab 20, a somewhat unusual case given the approach adopted by the AWU to effectively disavow any participation in the proceedings. It was heard without opposition but in my respectful submission Commissioner Hampton nonetheless carefully examined the issues and recognised any opposing potential argument. At 62 the Commissioner said:

PN76

Amongst other implications of these and other authorities is that the object of the WA Act in section 3 may be achieved by means including enterprise level collective bargaining and potentially by other means such as the termination of an expired agreement and the continuation of collective bargaining that has commenced in good faith and at an enterprise level for an enterprise agreement that delivers productivity benefits.

PN77

That is relevant in our respectful submission. Paragraph 63 is relevant because you will see that the learned Commissioner says that:

PN78

The Full Bench of the Commissioner in Aurizon placed particular weight on the impact of the restrictive provisions of the enterprise agreements concerned upon the productivity and efficiency of the applicant's employer business.

PN79

And in our respectful submission it doesn't matter materially if at the time that the Commission is determining the application as to how those restrictions arose in the past. 64, we wish to rely upon and then in relation to appropriateness, and I'm jumping ahead but I want to avoid coming back to the case, you will see that the Commissioner recognised at 72, that determination will have some impact upon the bargaining dynamics. Then at 74 the Commission has said:

PN80

Importantly and for reasons more fully outlined earlier, et cetera - - -

PN81

He is making reference to section 226 and then your Honour will see there is the comment in the next sentence:

PN82

Each case of the cases discussed earlier dealt with circumstances where there were important matters arising from considerations established under 226(b) which supported the termination of a relevant enterprise agreement.

PN83

And this is the particular aspect which we want to draw your attention to, it's at paragraph 74. "Beyond the impact upon the bargaining dynamic and bargaining positions of the parties", and the reference at 74 in our respectful submission where the Commissioner said:

PN84

Beyond the impact upon the bargaining dynamic and bargaining positions of the parties is a reference to the restrictive provisions which were under consideration.

PN85

In that case in paragraph 75 makes that clear. The uncontested evidence there was the agreement having an impact upon its productivity and competitive position and as you would have gathered from our submissions the Commission in this case can be more than satisfied of that proposition in the present case. You will see from paragraph 22(d) that the likelihood of terminating an agreement may enhance or reduce the prospects of a new agreement being reached. Alcoa's position, of course, is that the history and evidence will demonstrate that it will enhance the prospects of an agreement being reached.

PN86

In relation to the appropriateness we have attempted to set out relevant principles in paragraph 23. I will assume that the Commission would pick up the others that I'm not directly referring to. But in relation to the appropriateness ones you will note what we've said in paragraph 23(b) and (c) that it's not contemplated under the Act that an agreement should continue in perpetuity. And then I want to indicate that in subparagraph (f) the fact that the remuneration will be reduced if termination occurs does not mean that it is not appropriate to terminate the agreement. That's been emphasised in a number of cases.

PN87

Of course, the bargaining history is relevant to a consideration in appropriateness and that is dealt with in paragraph 24(a), and in a nutshell if I can just highlight the position, we do summarise it in paragraph 8 through to 19 but there have been multiple, multiple bargaining meetings between the bargaining representatives of the employer and the employer, starting in December '16. At the end of 2017 not much progress was being made at all and I'm being fairly conservative in making the submission in that way. Alcoa at that stage contemplated putting the agreement to a vote because it could not get agreement with the bargaining representatives. There were then steps taken to put that off. At the beginning of 2018 an application was made under section 240 by Alcoa to seeking the assistance of the Commission to deal with the bargaining dispute.

PN88

That turned into IBB conciliation which was conducted over a considerable period of time. That did not produce any outcome. There has been for a considerable period, protected industrial action taken on the part of the AWU's members and that continues and that avenue remains available. So a very relevant consideration is the length of time in which Alcoa has sought to achieve an agreement that meets its needs and accommodates some of the concerns of the employees. The question of an undertaking is a relevant consideration and the terms of the undertaking are relevant considerations and as I indicated earlier in relation to the undertaking it goes to questions of wages allowances, leave redundancy and so on.

PN89

Can I then in relation to paragraph 24(e) go to the proposition that the Commission may terminate an enterprise agreement even though the termination is opposed, but I also wanted to ask the Commission to have regard for a different factor that is well‑illustrated, in our respectful submissions, in the AGL Loy Yang cases? At first instance, the case has got the description AGL Loy Yang Pty Ltd T/A AGL Loy Yang [2017] FWCA 226. Your Honour will find it at tab 7. The case stands for a number of propositions, but it's necessary to go into a little of the factual aspect of that case to get a proper understanding of the outcome.

PN90

At paragraph 35, Clancy DP set out the Loy Yang contentions about the restrictions in the relevant enterprise agreement, and you will then see there's further references to those issues at paragraph 40, restrictions on recruitment; paragraph 43, no compulsory redundancies - that was a matter relied upon by Loy Yang, and the effect of that is set out at paragraph 44; and then at 117, the Deputy President set out the Loy Yang proposition in favour of terminating the agreement, and the CFMEU's position was dealt with at 123 and 124. But if one then turns to paragraph 146, the question arose as to the fact that Loy Yang operations were profitable, and at 146, the Deputy President refers to the Aurizon decision:

PN91

The capacity to effect operational changes that might enhance productivity and flexibility seems compromised. There is a significant incidence of overtime, a prohibition on "forced" redundancies -

PN92

et cetera, as we will come indicate that the present agreement contains a number of similar restrictions. But at 147, the question arose about the financial standing of Loy Yang and in relation to the basis of appropriateness, and your Honour will see after making reference to section 226, his Honour the Deputy President said - and this is the latter part of paragraph 147:

PN93

In the circumstances of this Application, I do not consider the fact that AGL Loy Yang is a profitable and productive business should weigh against termination of the Agreement. As outlined above, it has previously put two offers with the wage increases outlined and I consider it has a rational basis for pursuing the changes it seeks to make to the Agreement and it is legitimate for it to seek to become more efficient and productive through bargaining.

PN94

That, of course, was in the context of the Deputy President noting that Loy Yang is a profitable and productive business, and the Full Bench on appeal of that case, which is at tab 21, Construction, Forestry, Mining and Energy Union v AGL Loy Yang Pty Ltd t/a AGL Loy Yang [2017] FWCFB 1019, at paragraph 18 set out the challenge to the decision at first instance on the CFMEU's grounds of appeal, and your Honour will see that some of the grounds there were that there wasn't a proper weighing of the conflicting considerations, but at 119 the CFMEU submissions are set out, and in the first dot point: In this connection the CFMEU pointed to five specific examples.

PN95

In consideration of the changes, the Deputy President found that AGL Loy Yang was a profitable and productive company but discarded this as a relevant consideration in paragraph 147 on the basis that the capacity to apply for termination of an enterprise agreement was not confined to employees suffering financial distress. 147, I took you to, and the Full Bench at paragraph 33 rejects the CFMEU's challenge and very relevantly said that the Full Bench considered it was reasonably open to the Deputy President to treat the fact that AGL Loy Yang was a profitable and productive business as a neutral factor rather than as something necessarily weighing against the appropriateness of termination of the agreement, and we certainly would be inviting your Honour in this proceeding, when you come to consider an argument that it has been a profitable year for Alcoa, that it should in any way account against termination, and you will see there is also a reference to the bargaining dynamic at the third dot point, which the Full Bench could find no fault with.

PN96

In our respectful submission, the Fair Work Act does not preclude or act as a barrier or obstacle to operations seeking to be more profitable or more productive. The Fair Work Act does not contemplate, in our respectful submission, that profitability being achieved or sought should stand in the way of a termination application if there is merit for the removal of barriers that affect productivity and efficiency.

PN97

I am now, if your Honour pleases, going to deal with the summary of the position that is set out in paragraph 29 of the outline of submissions, which identifies various elements of the 2014 agreement, and we have taken the liberty of underlining some of those matters in paragraph 29, because properly understood, the relevant clauses to which reference is made have different effects. They either prevent certain conduct from happening, or they restrict or inhibit certain conduct from happening, or have the effect of restricting or limiting certain conduct, and those have been set out in the various subparagraphs in paragraph 29. But before dealing with those clauses and their effects, may we take your Honour to the 2014 award and various terms? I have a spare copy to tender of the agreement. Does your Honour have a copy of the 2014 award that we're dealing with?

PN98

THE DEPUTY PRESIDENT: I would be appreciative if I could have it.

PN99

MR DIXON: In its present form, it consists of 287 pages if the Commission pleases.

PN100

MR CRAWFORD: I've got a copy.

PN101

MR DIXON: Sorry, I didn't hear you. Your Honour, what I propose to do is simply, in the first instance, to identify the clauses that we're going to readdress in a little bit more detail. The Commission will note firstly, clause 4.1. This is a clause which the parties rather ambitiously thought they would achieve the results that I set out in 4.1(b) and in our respectful submission, the matters - the need there identified was not fulfilled, but 4.1 is background material in one sense, although you will see in 4.1(b)(ii) that the parties agreed that there was a need that there be no demarcation of work between members of the AWU and other Alcoa work groups and also some potential restriction on - sorry, no limitation on staff other than where it would undermine employees' job security and long term employment capacity. When I say staff, I mean staff doing work that might be regarded as "AWU work".

PN102

4.3 also has the undertaking of the parties to remove in (b), all restrictive work practices to ensure total flexibility of movement. The evidence in this case will show that that has not been achieved. Clause 4.5 is one that features in this case. Your Honour will immediately see - I'll come to address the terms later and it might be better if I just identify the particular clause at the moment.

PN103

Subject to certain conditions in 4.5(c), the agreement provided that Alcoa would do certain things and in subparagraph (c), it's conditional on no unprotected industrial action, continue to provide 'the same level of support to the AWU site representatives as they did under the 2005 agreement'.

PN104

Next one:

PN105

Continue to apply the same approach in relation to the matters there set out.

PN106

The next dot point:

PN107

Continue with the arrangements for union convenors as current at the time this agreement was negotiated including permitting such convenors with reasonable access to crew members during the course of negotiating the next agreement.

PN108

Of course, there's nothing in this instrument that defines what the current arrangements were in any way which can be regarded as definitive. There was a condition attached to that obligation and that is in note 2, but I don't need to trouble you with that at the moment.

PN109

Clause 6.3 is one I should draw the Commission's attention to. On its face it's a statement which one doesn't need to have in an agreement, but you will see in the evidence that it was relied upon by the AWU representatives or employees to raise a very silly dispute. It's the sort of provision which ought not to have given rise to such conduct.

PN110

9.2 deals with the remuneration increases that were granted under that agreement. You will note that there was a four, four and four increase in 9.2, percentage increase and the grades are set out in the table on page 10. There is a somewhat unusual provision in clause 9.3, the effect of which is that, as you will see, in order to permit time for orderly negotiations in a replacement agreement, and the preconditions being met, the employees will be eligible to an additional remuneration of one per cent per quarter applied quarterly in arrears.

PN111

It's not in contention that Alcoa applied that clause for three quarters because - so there was, post the nominal expiry date there was three one per cent increases granted to employees. The fourth one was not payable because employees commenced protected industrial action. The Commission will hear matters in relation to supplementary shifts. These are shifts that must be offered in accordance with clause 11 and the payment level for those shifts are set out at clause 9.5.

PN112

Clause 10 then deals with hours of work. There are restraints in clause 10.2 and 10.3 which Alcoa seeks to remove. You will note that in clause 10.2 that notwithstanding the spread of hours that are set out in 10.1, where there's a temporary change sought, it's dependent upon, even though notice is given in subparagraph (i) to be only possible even for a temporary change by agreement and is less voluntary.

PN113

In relation to 10.2(b), where such changes will be permanent, such change will be either by agreement between the employer and affected employees. Or, subparagraph (b)(ii), by agreement between the parties. Because parties is defined in clause 3 of the agreement, that would include agreement between everyone, the AWU included. Clause 10.3 also has similar provision.

PN114

Now, the supplementary shifts are dealt with in paragraph 11 and there is an explanation required in my submission, your Honour, that unlike some agreements, this agreement does not contain a provision for the working or payment of overtime. Supplementary shifts were an arrangement that was brought in to achieve what is set out at clause 11.1, namely where work activities exceed the capacity of existing manning levels, working according to usual rosters and where Alcoa chooses to use employees, employees will be allocated supplementary shifts in accordance with this clause.

PN115

You will note at 11.12 that the obligation on Alcoa is to offer a minimum of 5000 supplementary shifts per year across the operations for the life of the agreement. We come deal with whether that obligation should persist when there is no operational need for such a minimum obligation.

PN116

The supplementary shifts clause has other features which Alcoa seeks to be relieved of. At 11.2 you will see that the obligation to offer those shifts must be on the basis of a roster system and the roster system is said to have been developed on a "fair and equitable basis". Irrespective of the relevant capability of the persons to do the particular work at a particular time.

PN117

11.5 sets out the options if supplementary shifts are cancelled and employees can either elect to take the opportunity of coming in and doing other work even though it wasn't the work that was necessary for the call to be made, or the offer to be made in the first instance and if the cancellation is a shorter period of notice as set out in 11.6 there is an election to either undertake other duties or get paid four hours. And the other feature of this clause is that irrespective of the quantum of work required, 11.7 provides that other than in exceptional circumstances the offer should be for a full shift.

PN118

The other clause which features in the evidence to which I must draw attention if your Honour pleases, is the clause dealing with termination of employment. And there is a feature to this. Clause 17 deals with the ordinary rules of terminating employment of employees on notice and then there is a separate provision for voluntary early retirement and commonly described as VERA's, V-E-R-A, and this is dealt with in clause 17, subclause (e). And whereas the redundancy situation occurs there is an ability to offer voluntary early retirement packages, voluntary ones, but it's got to be as agreed between the parties. So there is no automatic right of deciding that a position is surplus to requirement and the employees' employment should be terminated. Any package that's got to be offered must be as agreed. Subparagraph 17(e) subparagraph (6) is one of major significance. The Commission will see � it's on page 34:

PN119

Subject to there being no requirement for major closures or shutdowns and subject to no employee taking industrial action there will be no forced redundancies for the life of the agreement because the parties have agreed that any reduction in manning will be achieved through a combination of the three matters set out in the three dot points � natural attrition, relocation, or VERA.

PN120

You will hear evidence from Alcoa about the need that it seeks to be relieved of those obligations because they do not allow it to operate its business in the way in which it seeks to or should be permitted to do, or should not be permitted to do.

PN121

The next clause is the disciplinary procedure clause. There's a particular feature of the clause 18(e) and (f) which we want to draw attention to. The Commission will see that if a company takes a decision to terminate � it says, "an employee", but of course it means, "the employment of an employee", "the persons there named shall be notified prior to the termination taking effect and if the matter is then put into dispute it must do so within 24 hours.

PN122

And it's what happens if the matter is then put into dispute. In subparagraph (f) you will note that it proceeds to a stage 4 of the dispute resolution clause and whilst the matter is in dispute there is a continuation of pay and entitlements, subject of course that no industrial action is taken over the matter. And that clause does not apply, as is set out in subparagraph (i), to serious misconduct. But what is significant is that unlike the standard unfair dismissal provisions in the Fair Work Act the Commission in dealing with such a dispute does not apply those criteria but simply what is fair and reasonable, and Alcoa seeks to change that arrangement. It is inducive(sic) to disputation and there is no reason why the Commission's normal rules of unfair dismissal should not apply. There is evidence about this which we will address. The dispute resolution procedure is set out in clause 19 and there are a number of features of that clause that are relevant.

PN123

Firstly, it relates to all disputes in clause 19(a) including disputes in relation to the NES. You will note in subclause (b) of clause 19 that whilst the resolution of a grievance or dispute is being processed in accordance with the clause the status quo as defined, "the normal conditions and arrangements in existence immediately prior to the cause of the dispute arising will be observed." So if someone has a grievance the raising of agreements has the automatic effect of putting on hold any step being taken, for example, or any change sought to be introduced. And the dispute can be invoked by the employee, delegate or union.

PN124

And it is also a provision which is highly descriptive if you were to look at subclause (e) and then the various descriptions on the tables that follow, and the fact that if someone is not available in subclause (e) the Commission will see, "The process will not stop for the availability of any one individual unless the individual who is unavailable is participating in prior scheduled stage meetings with another dispute matter via the dispute resolution procedure. In this case the required stage meeting will take place at an agreed time as soon as practicable and all other involved participants if the involved personnel identified below are unavailable", et cetera. All of this is highly prescriptive and adds to management time and consideration. Alcoa seeks, as you will see from our evidence, a much simpler process. Clause 23 deals with labour hire and contractors. Clause 23.1(a) sets out an obligation on Alcoa to require a labour hire company to pay employees at a particular rate. These are set out in clause 23.1(a). And I don't need to read this but your Honour will see there are then provisions in subclauses (c), (d), and (f) and (h) which all impose obligations in relation to the use of labour hire from a labour hire provider.

PN125

Then may I come to deal with the manning numbers clause in clause 24. Clause 24 imposed on Alcoa from the commencement of this agreement an obligation to maintain minimum manning numbers as set out in those tables, subject to there being no requirement for major closes or shutdowns and subject to no employees taking industrial action. If you leave out the subject to major clauses or shutdowns, it is still a highly prescriptive provision which prevented or prevents Alcoa from employing people according to its operational needs and there is a dispute about whether what is set out for 2016, the minima for each one of the sites was intended to continue post that date, but such disputes of themselves are grounds for removing a clause of this kind. But it is a significant impediment. The similar restraints appear in appendix 11.

PN126

Appendix 11, your Honour, I think it starts at page 283. This is an appendix that was 2005, Pinjarra specific arrangements that were carried over. Clause 6 on page 287 deals with what is described as an agreement in relation to manning. Your Honour will see that at the commencement of the operation of the agreement, there was requirement to maintain numbers at 495 at the Pinjarra refinery and in the evidence it's referred to as the soft floor.

PN127

During the term, the number may be reduced to a minimum of 470. That is referred to as the hard floor and should the company limit production below 495, the company will meet the union to discuss the changes and the reason for them. Of course, such matters could be the subject of dispute notification and therefore, subject to status quo. The company agreed not to undermine or erode the manning agreement.

PN128

Those minima, whether one looks at 495 or more particularly 470, remain obligations on Alcoa. Both in respect of clause 24 and elsewhere, there have been court proceedings brought against Alcoa as we will show because of allegations of not meeting those requirements. In a nut shell, Alcoa wishes to be relieved of those obligations. It wishes to not be subjected to disputes over those matters. It wishes to be relieved of any threat of breaching its obligations under the agreement and falsely those provisions do not now, suit its operational requirements.

PN129

The other appendix which has some relevance is appendix 2. That is the extended sick leave policy which appears I think, your Honour, starting at page 51. It's a policy which aims to provide protection to employees beyond their sick leave entitlements under the agreement and with the aim of providing some financial security. You will see in clause 4 on page 52, in paragraph (i), that one of the requirement is that before being eligible to apply for extended paid sick leave an employee must use all accrued sick leave entitlements to a minimum of 80 hours.

PN130

Mr Gleeson gives evidence about the incentive that the provision like that provides for employees to use all their accrued sick leave because of the safety net which effectively applies - doesn't matter whether you've used all your sick leave or not, if you then qualify, you're going to get extended payment under this instrument. The rate of pay is set out at (vi) on page 54. Extended paid sick leave will be paid to the employee's normal salary rate inclusive of any shift premiums and allowances.

PN131

Can I then just indicate to your Honour the reasons that Alcoa seeks to change those provisions and the bases upon which it seeks to do so. It may be most convenient because these matters have been summarised and dealt with in our written submissions. If I invite your Honour to have regard for our written submission as I go through the particular clauses.

PN132

May I start with the minimum manning levels which were in clause 24 and also in relation to the Pinjarra refinery Appendix 11, clause 6. We've dealt with these at paragraph 33 and following of our submissions. The rationale and reasons for seeking to be relieved of those obligations are set out at paragraph 33. As I mentioned earlier that alleged non-compliance with these provisions has led to Federal Circuit Court prosecution which is provided in the evidence because of an alleged failure to meet the requirements.

PN133

For so long as this agreement remains in place, post its nominal expiry date, that exposure in respect of minimum manning requirements, at least for the Pinjarra refinery, but on the position that is proposed by the AWU in relation to all other manning levels, subject to further prosecution. Alcoa's position is, as set out in paragraph 35, it is no longer prepared to retain those restrictions to its operations. Our submissions are that there are sound operational reasons that are set out for removing the provisions. I won't read paragraph 35, but would invite your Honour to have specific regard to them.

PN134

I want to add this submission to what we say at paragraph 34:

PN135

The effect of the clause as it is sought to be applied in 2018, is that the numbers dictate operational decisions.

PN136

Alcoa is simply arguing and saying it is seeking the freedom so that operational decisions dictate the numbers of its workforce and the present system, where the former dictates operational decision making is untenable in its future operations and it wishes to be relieved of such obligations. Absent termination, it can't be relieved of such obligations, if it's unable to make an agreement to achieve the same result.

PN137

At paragraph 37 there are (a) and (b) set out examples of the restrictions faced. Alcoa is in the commodity market. The market dictates demand. It wishes to be able to respond to that demand for operational reasons without these minima imposing on its obligations. In its present terms, you will see what we've said in paragraph 38, that there are other reasons which are obvious in that they restrict the ability to utilise technological and other mining efficiencies such as those set out in paragraph 38 and paragraph 40.

PN138

In relation to paragraph 40, can we also add this observation, which your Honour would, in my respectful submission, immediately appreciate? If there is a consideration of whether to outsource some small operations, for example, and the decision is made that it suits the organisation to do so now, then it's effectively making a decision that to retain those employees to do the work now - it's almost for life, because there are minimum numbers, no forced redundancies, and so it actually inhibits or has the potential for inhibiting employment, because once you have done so, even if you later want to outsource the work, you can't reduce the numbers to take the benefit of the outsourcing. These provisions are no longer relevant to a modern operation of this kind competing in the international commodities market. There is also, for example, an inability, as set out in paragraph 41, to simply adjust the personnel mix between tradespeople, for example, and others, because you've got the minima applying to the AWU members and it's a major restriction in trying to adjust the mix of employees in a particular area at a particular point in time.

PN139

We deal with the question of supplementary shifts at paragraph 44 and following. In a nutshell, Alcoa no longer wants to be bound by a minimum number that must be offered independently of operational needs. The roster system, which I identified earlier, does not suit its needs or operations, and the rate of pay at 1.7 above ordinary rates is, in its view, too high - I mean, overtime rates would not be at that level, and at paragraph 49 we set out Alcoa's reasons based on the evidence as to why it is seeking change to those provisions. The minimum rate of pay for labour hire employees, clause 23, you will see that that is dealt with at paragraph 50 of our submissions, and as a result, a more cost‑effective alternative to the using of supplementary shifts where there would be no fixed lengths, no cancellation obligations, or restricted by reason of those provisions.

PN140

The redundancy provisions are dealt with in paragraphs 58 and following, the reasons. Your Honour would appreciate that even on the assumption that Alcoa is operating above the minimum manning levels, its ability to forcibly retrench employees whose positions are redundant are significantly curtailed and limited. Its reasons for seeking to be relieved of those onerous obligations are summarised at paragraphs 58 and 59, and the difficulties in relation to VERA we have dealt with in summary form at paragraphs 60 and 61.

PN141

In the hours‑of‑work provisions, the evidence will go to a number of circumstances where Alcoa seeks to highlight the need for flexibility. One example, which is set out in paragraph 65, it wants to have greater ability to move employees across shifts in order to ensure that manpower resources are balanced and to provide for better performance outcomes. The present systems at least are opposed in the sense that it is suggested Alcoa cannot do that as of right.

PN142

The dispute resolution procedure, I've effectively summarised in going through the difficulties which Alcoa faces. Paragraph 75 sets out the reasons, but it is over‑prescriptive, it is any grievance, the status quo can be invoked at any time, and a number of examples of the adverse impacts of the present clause are illustrated in the paragraphs that follow paragraph 78 and following.

PN143

The disciplinary procedure, clause 18, the particular features of that unusual clause are identified in paragraph 81 through to 82. May we indicate to the Commission that in paragraph 81(b), it is submitted that once disputed clause 80 in effect requires the Commission to rule upon the fairness or reasonableness of Alcoa's intention to dismiss an employee, which imports a test that is different from the harsh, unjust or unreasonable test that is prescribed by section 387, and you will note in the footnote 119 that that is a view that arises from a decision of the Commission in the Australian Workers' Union v Alcoa of Australia Limited T/A Alcoa World Alumina Australia [2017] FWC 5276 at 13 to paragraph 17, because the view of the Commission was that it's the power of private arbitration and the general provisions do not apply. Alcoa does not see the benefit in having that distinction. The Fair Work Act has a range of protections in section 387, together with the protections in order to have a valid reason in relation to redundancy and the like. So those clauses in their present form are outdated and Alcoa no longer wishes to be bound by them.

PN144

The sick leave provisions are dealt with at paragraphs 83 to 85, and you will note that in relation to those clauses, not only does Alcoa need to make the generous package available in its present form, it also adds additional costs because employees on EBSL are required to be back‑filled at additional cost to Alcoa, and the current provisions do not strike the right balance in relation to the various interests.

PN145

Can I then come to deal with the union structures clause 4.5? Your Honour, in my respectful submission, those clauses do not provide a balance within the organisation to meet the needs of employees to be represented and meet the needs of Alcoa to efficiently operate its business. They are terms that are, as recently applied, been demonstrated to be obsolete and do no longer, in Alcoa's view, have in the present terms a role in its operations. The first case that I want - the starting point really to demonstrate the difficulties that Alcoa confronts is the decision - does your Honour have a tab 19(a)?

PN146

THE DEPUTY PRESIDENT: No, I would appreciate a copy of that.

PN147

MR DIXON: Yes, I've got a copy. Thank you. It's a case that we added to our list so it's probably - - -

PN148

THE DEPUTY PRESIDENT: Sorry, Mr Dixon.

PN149

MR DIXON: No, it's not a problem, Commissioner. There is a bit of history that comes out of this Western Australian Industrial Gazette decision reported at volume 50 of the WA Industrial Gazettes at page 472. And the reason that we draw attention to it was a number of decisions that looked at the role of shop stewards and at page 474 the then Commissioner Court of the State Commission set out a summary of what had been decided on a number of occasions and in paragraph 2 at page 474 you will note that decisions of the State Tribunal and Court had said:

PN150

A worker under his contract of employment has rights and obligations which are not altered on his being appointed as a job representative. Existence of a contract of employment between a worker and employer makes it legally impossible for the worker to accept and discharge obligations as a job representative which are incompatible with his contract;

PN151

And thirdly:

PN152

The job representatives may undertake obligations to perform certain functions but those functions must be consistent with a contract of employment, et cetera.

PN153

And the evidence in this case as you will see is that the job representatives, particularly the convenors, are of a view that those basic rules to not apply to them. And it is time that those provisions must be removed. You will hear evidence that there are five full time paid convenors at Alcoa's operations, none of whom perform productive work. In total there appear to be some 166 delegates or shop stewards across the operations who are under the old arrangements, "entitled", to have monthly meetings, quarterly meetings, and other meetings. The time has come for those generous provisions in these ill-defined arrangements to end. Alcoa's view and submissions and evidence is that they are inefficient, they encourage disputation, the result in lost productive work, and they do not promote an environment where the employer can in the first instance resolve matters with employees directly.

PN154

In respect of the question of bargaining to achieve change we will in due course highlight for the Commission the lengths that Alcoa has gone to try and reach a new agreement which removes or alters the terms no longer acceptable to it, and it has not been able to achieve that result. Mr Gleeson deals with this in his first statement in significant detail at paragraphs 126 and following. And I'll return to those later. The submission we make, your Honour, is that extensive bargaining has not resulted in a new enterprise agreement. There has been a recent vote which I will indicate in a moment on a proposed enterprise agreement. The vote was not to make an agreement. It appears that an impasse has been reached and the problematic terms will therefore remain unless the enterprise agreement is terminated. And in our respectful submission there are sound grounds for their removal and it is at the moment the only means presently available to achieve that result is through termination of the agreement.

PN155

In respect of the evidence we submit that there can be no question that termination of the 2014 agreement will remove significant restraints on Alcoa's efficiency and productivity. As we indicated the Full Bench in the Aurizon decision recognised that the Act contemplates that efficiency and productivity can be achieved by termination of an enterprise agreement. And we submit that termination will enhance the prospects of the parties making a new agreement. There will be the Modern Award, Aluminium Award as the underpinning starting point looking forward and it is clear in our submission that the approach of regarding the terms in the enterprise agreement as the norm from which departure must be justified, has proven to be inimical to the making of a new flexible agreement.

PN156

We then come to the question of evidence. As your Honour would have seen, no doubt, that Alcoa seeks to rely on the evidence of three witnesses, Mr Matthew Gleeson, Mr Liam Smith, and Mr Justin Fennessy. My learned friend and I have had some discussions about whether there's a need for either side to put to the other side's witnesses matters that they have already dealt with. And our position is that because there are written statements Alcoa put on its first three statements. There were essentially three employee witness statement responding so they've had an opportunity of dealing with matters that affect them. So there is no need for either party to put those provisions to the other party, so that the rule in Browne v Dunn will not apply in those circumstances. In respect of any matters that Alcoa has dealt with in its reply statements form the three witnesses, to the extent that there is a need for those matters to be put, I would need to do so if I think it's relevant.

PN157

Then before calling those witnesses may be tender some additional materials. Again, I believe that there is no issue about this. I don't know whether the 2014 agreement that � I apologise. Mr Crawford has indicated to me before I come to deal with the evidence, he may make his opening. Is that Your Honour's understanding of the required - - -

PN158

THE DEPUTY PRESIDENT: Yes.

PN159

MR DIXON: If the Commission pleases.

PN160

THE DEPUTY PRESIDENT: Thank you.

PN161

MR CRAWFORD: Your Honour, could I possibly request a brief break, just five minutes? I don't anticipate I'll be anywhere near as long as my learned friend, if that assists.

PN162

THE DEPUTY PRESIDENT: You have no opposition to a short adjournment?

PN163

MR DIXON: No, Commissioner.

PN164

THE DEPUTY PRESIDENT: Yes. I have a tendency just to go for eight hours and not stop, so you better ask me when you want a quick break.

PN165

MR DIXON: If the Commission pleases.

PN166

THE DEPUTY PRESIDENT: All right, we'll have a short adjournment and return at five minutes to.

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PN167

THE DEPUTY PRESIDENT: Mr Crawford?

PN168

MR CRAWFORD: Thank you, your Honour, for that brief break. Your Honour, I'd like to start by turning to just a little bit of case law in response to the opening submissions from my learned friend this morning. We also have a folder full of the cases that we refer to. Would it not assist to give you that, or are you confident - - -

PN169

THE DEPUTY PRESIDENT: No, I'm happy for you to give me that, because I've just got this one here.

PN170

MR CRAWFORD: The three cases I'd like to take you to briefly, your Honour, all appear in the AWU's bundle and obviously also in the applicant's bundle. The first one, if I could take you to tab 9, that's the first instance decision in the Loy Yang proceedings. My learned friend this morning took you to some paragraphs, the effect of which on his argument, I think, was that just because an employer may be making money, that doesn't preclude them from applying to terminate an enterprise agreement. I mean, obviously that is right to some degree because they are able to apply. We're here today. They have applied. But I wanted to point out some important differences between that case and the case that you are faced with here, your Honour. Firstly, can I take you to paragraph 10? Do you have that?

PN171

THE DEPUTY PRESIDENT: Yes, thank you.

PN172

MR CRAWFORD: The point I would like to make that is highlighted in that paragraph is that the financial position of the relevant employer in this case was not as clear as it is for Alcoa. You will see that there's reference in paragraph 10 to a loss being recorded by the owner of the relevant employer, but there's reference to the CFMEU relying on a number of other factors to say that the actual employer was profitable, and then AGL Loy Yang, the employer, noting the official statutory result - which was obviously that it recorded a loss - submitted that it was arguably profitable. So the point I make is that the profitability of that employer in that case was not abundantly clear like it is in this case, and we'll obviously deal with that as the evidence unfolds.

PN173

Can you now please turn to paragraph 22, your Honour? I highlight that paragraph because it points out that there was actually a history of privatisation for the relevant employer in that case. There's reference to privatisation in the mid‑1990s, and it reads:

PN174

It was also submitted by AGL Loy Yang that these conditions also substantially reflect the terms and conditions that applied during the previous era of State-owned and run power generation in the Latrobe Valley.

PN175

So again, we say that history of public sector ownership, which I'm sure your Honour would recall, was also an important issue in the Aurizon proceedings, there is a history of privatisation in the Loy Yang case, and obviously Alcoa's situation is quite different. Can I next, your Honour, take you to paragraph 60? I highlight that paragraph because in this Loy Yang situation there had been involvement from the Commission and Roe C had actually issued a recommendation to the parties about what he considered should form part of their new agreement, and the employer largely I guess was prepared to seek approval from its employees for his recommendation, but the union in that case, the CFMEU, was not; they rejected the recommendation, and again, we would say that raises an important distinction between that Loy Yang case and the case you're dealing with here. Can I next, your Honour, take you to paragraph 148? Do you have that?

PN176

THE DEPUTY PRESIDENT: Yes. Thank you.

PN177

MR CRAWFORD: If I can just take you to the last sentence of that paragraph, your Honour:

PN178

I accept AGL Loy Yang has inherited longstanding terms and conditions that appear restrictive, inflexible and inefficient.

PN179

Again, a totally different situation for Alcoa in this case. They have not inherited anything from an external party. All these conditions they complain about exist because they have voluntarily agreed to them over the years. Finally, your Honour, I'd like to refer you to the next paragraph, paragraph 149. I believe it's the second paragraph that reads:

PN180

Having considered the evidence regarding the present state of the electrical power generation industry, predictions regarding its future and the possible implications for AGL Loy Yang, including its financial outlook, I accept that the industry is going through a period of transition and is subject to variables.

PN181

Again, I say that is a significant difference between that case and the case that you are faced with in these proceedings, your Honour. I would say in this case, Alcoa's evidence does not stretch higher than basically saying these are restrictive clauses that exist in our current agreement; we would like to get rid of them. There is no evidence of any objective changes in the market, you know, competition that's making it difficult for Alcoa. They haven't presented any evidence of those issues because we say it doesn't exist. This is a company that's doing perfectly well under their existing agreement. All they have done here is identify clauses in the agreement that are restrictive and say that they don't like those clauses for these reasons, and their evidence does not stretch higher than that.

PN182

Next, your Honour, can I please take you to the case behind tab 1, and that is Allen & O'Brien Pty Ltd T/A O'Brien Electrical Services Enterprise Agreement 2010‑2014

PN183

[2016] FWCA 1906. It's a decision of Gostencnik DP dated 1 April 2016. This on my research is one of the relatively few cases, one of the few applications, that have actually been dismissed post the Aurizon litigation. I'd like to take your Honour to paragraph 16 and 17. About halfway down, that reads - it refers to an:

PN184

assertion made by Mr Harrington in his evidence that the Applicant's business remains uncompetitive in a changing market place and that this is as a consequence of the Agreement no longer being appropriate for the business.

PN185

But the Deputy President pointed out that assertion -

PN186

is not supported by any credible evidence by way of market analysis which would underpin the assertion made.

PN187

Then in paragraph 17:

PN188

In this regard the applicant's attempt to frame its case to coalesce with the circumstances in Aurizon fails because of the absence of any evidence of market conditions or competitive pressures, except for the bare assertions made by Mr Harrington.

PN189

Those paragraphs tie in with the point I've previously made, your Honour, that Alcoa's case is just about three managers complaining about terms they don't like in the agreement. There is no financial evidence presented by Alcoa at all. That is telling, because normally an employer would present evidence of its own financial performance.

PN190

In these proceedings, the financial evidence that you have before you, and that is obviously an extremely important evidentiary issue in cases like this, the only evidence is from the AWU. The obvious explanation for that is Alcoa didn't want to file that evidence because it hurts their case. They know that on any objective assessment they are thriving. They are recording huge profits and that's why they haven't relied on any market factors, any objective economic evidence. All they can bring is managers complaining about conditions that they have voluntarily agreed to for a number of years.

PN191

Just finally on the case law, your Honour can I take you to the Matero decision which is behind tab 12. Can I please take you to paragraph 74? At this stage, I may refer to this paragraph again shortly, but I just want to refer to the last sentence which is:

PN192

As is also clear, each case must be determined in its own circumstances, having regard to the relevant statutory considerations and there are no presumptions as to the outcome to be made by the Commission in approaching that task.

PN193

We say that's a very important statement. We say it's a clearly correct statement because I sensed from Alcoa's opening submissions that a lot of their argument is, well all these various cases the applications have been granted and the relevant agreements have been terminated. But there is no - as this decision and others make clear, there is no presumption that should be applied to the outcome of this case. Admittedly, there is no presumption based on case law now that an expired enterprise agreement will operate indefinitely into the future. We accept that.

PN194

But equally, there is no presumption that an enterprise agreement that has expired, should be terminated by the Commission just because it contains what might be regarded as restricted provisions. There is no presumption to that effect. The cases do not establish that at all. That is a critical element of this case. You need to carefully assess all the evidence about the situation of Alcoa, it's employees, the bargaining and make an assessment. No presumption as to the outcome of this case can be gleaned from the case law either way.

PN195

Your Honour, in early January 2014, Alcoa of Australia Limited, which is the employing entity. I'll just refer to them as Alcoa. The AWU agreed to the terms of the 2014 agreement. They were subsequently voted up by the relevant employees. The terms were approved by the Fair Work Commission on 10 March 2014. Mr Gleeson, who was obviously a witness for Alcoa in this case, actually filed a statutory declaration, the form F17 in support of the 2014 agreement being approved. Mr Gleeson declared to the Fair Work Commission that this agreement, including all its terms that are apparently so problematic, Mr Gleeson declared to the Commission, not long ago in 2014 that the Commission should approve each and every single one of those terms.

PN196

Now the terms of the 2014 agreement, your Honour, have been developed very carefully over time. On my research I saw the first all-sites agreement was struck in 2003. Prior to that, there were different agreements for the refineries and mines et cetera. But from 2003, it appears there has been a consolidated all-sites agreement. We say the terms of the 2003 agreement have developed gradually over time in response to claims by both Alcoa and the AWU over the years.

PN197

It is simply not the case that the terms of the 2014 agreement have remained frozen since the privatisation process or anything like that. If you look through the different agreements, they have evolved over time. They've always been negotiated. There have been claims by both parties. They have developed over time to respond to the needs of both parties.

PN198

Your Honour, the 2014 agreement provides Alcoa with the flexibility to operate continuously throughout the year in a profitable manner and it provides employees with fair and reasonable conditions including those relating to job security in the role of the union. It has benefits for both sides. It is not all one way. That is why the parties have been able to strike agreements without anything like the trouble we faced during these negotiations for a number of earlier years.

PN199

That's early 2014, your Honour, the 2014 agreement is approved in March. The parties then got back to doing what they do best, working together to mine bauxite, refine it into alumina and then transport it around the world. Alcoa's net profit for 2014 was $215.7 million. Alcoa's net profit for 2015 was $645.5 million. Alcoa's net profit for 2016 was $249.1 million.

PN200

In late 2016, bargaining commenced for the new agreement. Despite Alcoa's on any measure, outstanding financial performance, the AWU's claims are actually quite modest. However, Alcoa sought to dramatically reduce the current conditions of employment for its affected employees. That means at some point between March 2014 and late 2016, a range of terms in the 2014 agreement which previously Alcoa had been quite comfortable with, suddenly became entirely unacceptable, we cannot accept those conditions, they have to change.

PN201

Now, your Honour, we say that is quite interesting because we can identify nothing of objective significance in terms of Alcoa's economic or operational requirements that actually change between 2014 and late 2016. Alcoa is part of a large multi-national group of companies. It has been competing internationally for many years. The 2003 all-sites agreement, the first all-sites agreement that I refer to previously reads:

PN202

The parties recognise the need to build workplace arrangements that contribute toward the long term viability of the enterprise in a highly competitive international marketplace.

PN203

That's 2003. Obviously, bauxite and alumina prices have always fluctuated. They will fluctuate into the future. International competition and fluctuating prices for commodities are not new issues that Alcoa suddenly had to face after 2014. Those issues have been around throughout Alcoa's recent history. They do not explain why Alcoa was quite happy with these agreements in 2014 and then suddenly in late 2016, they all have to disappear.

PN204

Your Honour, this submission may be - I mean the other side won't like it, but I'll make it anyway. Our best guess is that the changed position in 2016 actually arose because our co-owner's lawyers simply realised that they had an opportunity to try and change the conditions and terminate the agreement following the rise in litigation in other cases.

PN205

MR DIXON: (Indistinct) my learned friend anticipated, he ought not to make submissions for which there is absolutely no evidence. An opening statement ought to be based on the facts presented. This is simply for a media grab and it is nonsense. Your Honour should not permit this type of submission to be made and put on the transcript.

PN206

THE DEPUTY PRESIDENT: Mr Crawford?

PN207

MR CRAWFORD: Your Honour, I'm happy to withdraw that submission.

PN208

THE DEPUTY PRESIDENT: Yes, it's rather presumptive about intent, isn't it?

PN209

MR CRAWFORD: I'll accept that.

PN210

THE DEPUTY PRESIDENT: Continue.

PN211

MR CRAWFORD: Yes, thank you. So your Honour, Alcoa make these claims in late 2016. The parties negotiated throughout 2017 and the AWU members continued working. Alcoa then recorded a net profit of nearly 1.1 billion dollars for 2017. With this result Alcoa's net profits, net, after tax, profits, while the 2014 agreement has been operating, in 2014, 2015, 2016 and 2017, averaged 552 million dollars per year. This is a truly remarkable financial result. On any objective measure it is not a result that could consistently be achieved if the 2014 agreement genuinely prevented Alcoa from operating efficiently and competitively.

PN212

I'll come to this in the evidence but Alcoa's CEO actually referred to 2014 and 2015 as challenging years, publically in 2016 and that was largely due to fluctuations in the resource prices. But even in those challenging years Alcoa was able to make huge profits under the 2014 agreement. Even when times are tough for this business in their external operating environment they can, under the 2014 agreement, make net profits of over 500 million dollars per year. So shortly after recording an annual net profit of nearly 1.1 billion dollars for the 2017 year, Alcoa apply in March 2018 to terminate the 2014 agreement. They have applied on the basis that they cannot operate effectively and productively with the restrictions in the current agreement, this was, and remains today, a bold claim. Alcoa, the poor restricted employer that only made a net profit of 1.1 billion in 2017. Australia's heart should bleed for this majority American owned company.

PN213

MR DIXON: I object. If my learned friend wants to get into the gutter then he should continue like this. This is not a forum for this nonsense. I object to him making these submissions and would ask him to withdraw them and to stop behaving in a way that is incompatible with his status as a lawyer.

PN214

THE DEPUTY PRESIDENT: Mr Crawford, what do you have to say in response?

PN215

MR CRAWFORD: Your Honour, I think the comments from my learned friend are a stretch. This is a highly emotional and difficult situation. We've had AWU members out receiving no income since early August 2018. It is quite a difficult situation, probably an unprecedented position that our union is facing. And it's difficult to remove all emotional from the case. But nevertheless, again I will withdraw the latest comments that I just made and I'm happy to move on.

PN216

THE DEPUTY PRESIDENT: Yes, perhaps if you could focus on looking at the matters that require determination and assist me with your submissions by focussing on that.

PN217

MR CRAWFORD: I accept that, your Honour. So turning to that, your Honour, importantly this is not a case where the AWU has stubbornly refused to contemplate any change. The terms of the all site agreements including the 2014 agreement, as I have previously said, have evolved progressively over time in response to claims by both parties. They have not remained frozen for a number of years. The AWU has always adopted a pragmatic and reasonable approach to the terms of the agreement and it has done so, once again, in these negotiations. Subject to the 2014 agreement being terminated during bargaining the AWU has formally agreed that the new agreement can contain provisions to the following effect.

PN218

No manning levels. The AWU has agreed, subject to the agreement being terminated that the new agreement will not contain minimum manning levels. That issue is what a large proportion of Alcoa's evidence focusses on. The AWU has agreed, subject to the agreement being terminated, to an increased ability for Alcoa to offer voluntary redundancies and an increased ability to make forced redundancies although we do make the point that the 2014 agreement does actually already allow forced redundancies for closures and shutdowns if unprotected industrial action is taken. But nevertheless the AWU has agreed that there consent would not be required for voluntary redundancies under the new agreement and that after Alcoa seeks volunteers, and provided that the particular employee being made forcibly redundant that their job is not being outsourced, Alcoa can then even make forced redundancies based on the AWU's concession.

PN219

In terms of labour hire the AWU has agreed subject to the agreement being terminated that Alcoa can pay labour hire workers market rates for the first six months. That means Alcoa can utilised labour hire workers for the first six months, which I would have thought should be a long enough period to engage a labour hire worker continuously. Alcoa can pay market rates for that period. Your Honour would be aware that numerous agreements around the country at the moment contain what I would refer to as "parity wages conditions", where labour hire workers have to receive the same rates that employees working under the agreement receive. The AWU is not in that situation. I mean, not even under the current 2014 agreement is there a parity wages provision. There is already scope for Alcoa to pay labour hire workers significantly less than its own employees. Well, not Alcoa pay, obviously, but the labour hire employer would pay. But they can engage labour hire workers at lower rates than their employees receive. The AWU has moved even further subject to the agreement being terminated, to say that there will be no safeguard for the first six months. And I reiterate that six months to engage a labour hire worker should be long enough.

PN220

Supplementary shifts. The AWU has agreed, subject to a decision being made to terminate the agreement, that Alcoa can offer supplementary shifts at its discretion. There would be no minimum offering of 5000 shifts per year. The roster system would go away. Alcoa can pick who works the shifts. Again that concession seems to resolve Alcoa's evidence on that issue.

PN221

In terms of hours of work, even though we say that the 2014 agreement already contains very flexible conditions concerning hours of work, the AWU has conceded, subject to the agreement being terminated, that even more flexible conditions can apply for Alcoa under the new agreement. As we have seen in the evidence, Mr Gleeson in his form F17 for the 2014 agreement actually pointed out quite correctly that some provisions in the 2014 agreement concerning hours of work and overtime are actually inferior to those appearing in the aluminium industry award already, but the AWU again has agreed to provide Alcoa with even more flexibility.

PN222

Extended sick leave entitlements. The AWU has agreed, subject to a decision being made to terminate the agreement, to substantially reduce the rates that employees would receive on extended sick leave. That amendment would deliver significant cost savings for Alcoa. In terms of the disciplinary procedure and the ability of employees to contest a proposed dismissal before the dismissal is actually implemented, the AWU has also agreed to amendments to those provisions that are in favour of Alcoa and would also likely generate some cost savings for Alcoa. Again, that concession is subject to the agreement being terminated.

PN223

In terms of the dispute resolution procedure, Alcoa complains considerably about the use of the current status quo provision. The AWU again has conceded, subject to the agreement being terminated, that the status quo provision will operate in even more confined circumstances than it already does. And in terms of union conditions, the AWU has conceded, subject to the agreement being terminated, to reduced conditions relating to the union in terms of the amount of meetings that are held each year during paid time and travel expenses for union representatives.

PN224

Despite all of those concessions, your Honour, the AWU's claim for wage increases has been and will remain modest. We would say most employers having just recorded a net profit of $1.1 billion for 2017 could be relatively pleased with all those concessions and a relatively small wage increase, but not Alcoa; they seem to just want more, more and more. In his evidence, Mr Gleeson in his reply statement says that AWU convenor, Simon Price, is attempting to impose his views on 1500 intelligent employees who are perfectly capable of making their own decision on these matters. Well, they recently did, your Honour. Eighty per cent of employees did not agree to Alcoa's proposed agreement and they voted that agreement down, even though they had been enduring - most of them had been not receiving income from Alcoa for a month, around a month, when they voted.

PN225

Your Honour, Alcoa's CEO wrote an article in the Financial Review last week. It was titled, "Management, not unions, should be running Alcoa to make it competitive." In terms of inflammatory comments, we would say that clearly - - -

PN226

MR DIXON: Could I just object to the relevance of this? This is not in evidence. It's irrelevant to these proceedings. I don't know what my learned friend is trying to do by going to Financial Review reports about matters.

PN227

THE DEPUTY PRESIDENT: Mr Crawford, if I may, a preliminary view of the files, I haven't seen such an article.

PN228

MR CRAWFORD: I accept that, your Honour. I'll move on. As I indicated previously, your Honour, we say Alcoa's evidence in this case does not stretch higher than simply identifying clauses that three managers don't like in the current agreement and speculating subjectively about what implications could arise from those clauses. They present no objective economic data to substantiate that. That is one element of their evidence. The other is listing disputes that have arisen under the 2014 agreement, and the theme of their evidence seems to be that the AWU has been unreasonable and they're sick of having to deal with those disputes. It is important - I mean, I make no allegation here - but it is important to note that the AWU and its members have a workplace right to raise disputes under the current enterprise agreement, and ordinarily that should not be used against them in any other proceedings. They are entitled to dispute matters that arise under the agreement and to seek assistance from the Fair Work Commission, and presumably if, as Alcoa seem to suggest, that the issues were just frivolous, then the Fair Work Commission would be pretty quick to point that out.

PN229

So we say not much should be made of the lengthy evidence from Alcoa to the effect that all these disputes were raised by the AWU during the course of the agreement - we don't like it, so the agreement should be terminated. The reality is any new agreement struck will have a disputes resolution procedure in it based on the law in Australia at the moment. Alcoa no matter what they do, because it's a condition of the Act for a new agreement to contain a disputes procedure, there will always be an ability for the AWU to raise disputes about matters arising under the agreement, and the termination of this agreement cannot possibly remove that, your Honour.

PN230

Your Honour, we accept that agreements have been terminated by the Fair Work Commission in a number of recent high‑profile cases, but this case, your Honour, we say is like none of them. Alcoa is an extremely profitable multinational company that has been well‑served by sensible and reasonable enterprise agreements that it has voluntarily agreed to over a number of years. The financial performance of Alcoa is testament to this. Objectively, it is clear that 2014 agreement is not stopping Alcoa from recording huge profits, even in challenging years. Alcoa has not inherited the 2014 agreement conditions from anyone; it has no public sector history or the conditions in the 2014 agreement appear because Alcoa has voluntarily itself agreed to them over a number of years. Secondly, the AWU has not repeatedly just opposed all of Alcoa's claims for reform. The AWU has never done this. Over the course of the existence of the all‑sites agreement, the AWU, as it always does, has adopted a pragmatic, reasonable position that is always prepared to negotiate with employees about legitimate changes that will assist them. We get that changes can help businesses to be more successful and ultimately that can benefit everyone including AWU members. The AWU as a union gets that. It has got that for a number of years. The AWU has been pragmatic in these negotiations. I've already outlined all the concessions that are clear. I'm making them on transcript here. There is no doubt about them at all. All those concessions are there for Alcoa to adopt, but it's not enough. They seem to just want more, more and more.

PN231

Your Honour, can I just quickly refer you back to paragraph 74 of the Viterra decision? In that case - do you have that, your Honour?

PN232

THE DEPUTY PRESIDENT: Yes, I do. Thank you.

PN233

MR CRAWFORD: It reads:

PN234

Importantly, and for reasons more fully outlined in 4.1 above, I do not consider that the present authorities of the Commission mandate the use of a s.225 termination application simply as a means to pressure employees to accept a previously rejected proposed agreement. That is, each of the cases discussed earlier dealt with circumstances where there were important matters arising from the considerations established under s.226(b) which supported the termination of the relevant enterprise agreement beyond the impact upon the bargaining dynamic and bargaining positions of the parties. In my view, in most cases, something more than simply applying additional leverage will be required to warrant the termination of an Enterprise Agreement during a bargaining process.

PN235

And I've already taken you previously to that last sentence. We say that paragraph fits perfectly, your Honour, with the circumstances of this case. Alcoa desires the relevant changes to the enterprise agreement. It doesn't need them at all. There is no objective evidence to show it needs these changes at all. All the objective evidence is entirely to the contrary. This business has averaged net profits in excess of $550 million per year while the 2014 agreement has been operating. The Fair Work Act does not state an enterprise agreement should be terminated simply because it imposes restraints on an employer because it refers to the legitimate role of the union or because it allows for union convenors. The Act does not say that just because an agreement contains conditions to that effect that it should be terminated on application. Indeed, it's hard to imagine, if Alcoa's position in this case is accepted by the Commission, where even though they are making huge amounts of money, they have no objective evidence of negative outcomes arising from the provisions of the agreement.

PN236

Just because you can turn up, identify that all these clauses in the agreement we don't like, they restrict us, bargaining has been going on for a long time, there's been no agreement reached. Well, I wonder why no agreement has been reached, because Alcoa has tabled all these dramatic changes to the current agreement. It's been trying to pressure the union into agreeing to them. It's now instigated these proceedings.

PN237

That is why no agreement has been reached over a lengthy period of time. It's not because the AWU has been unreasonable, it's not because of the AWU is for example, seeking five or 10 per cent wage increases in response to Alcoa's amazing financial position. The reason that bargaining has been going on so long is that Alcoa has remained fixed in trying to achieve all the long list of dramatic changes that it sought at the outset of bargaining. We say it is no wonder that a lack of wages growth is currently crippling this country is an employer who records a net profit of $1.1 billion can respond by reducing its employees' wage rates by up to 60 per cent to the safety net.

PN238

Your Honour, this application should be dismissed. Alcoa should be directed to take the AWU up on its very reasonable and generous concessions, finalise a new agreement; move on and get people back to work. Get back to making money. In contrast, if the application is granted, we say the most likely outcome is ongoing pain, suffering, disputation and damage to important relationships at these work sites that may take many years to repair if at all. We say that outcome is clearly contrary to the public interest and it is not appropriate on any measure.

PN239

Those are my opening submissions, your Honour.

PN240

THE DEPUTY PRESIDENT: Mr Dixon, would you wish to say anything in reply at this point? Or would you save that to closing submissions?

PN241

MR DIXON: I appreciate your Honour offering me that opportunity. There's only issue that arises and that is my learned friend made submissions about prices have always fluctuated and will continue to fluctuate and that that apparently, as far as I know and can recall, it's not in the evidence. I may need leave just to ask Mr Gleeson some questions to respond to that allegation or submission that has been made, because it's not made on any evidence that I can recall that has been put.

PN242

THE DEPUTY PRESIDENT: I think Mr Gleeson made a statement with regard to 40 per cent. I'm not sure whether that pertained to the fluctuations, but a need to make changes because of the - I think, but I'm not sure.

PN243

MR DIXON: That's the issue. The way in which it was put, as my note says, the case that seems to be put against us is that fluctuating market prices is irrelevant to what Alcoa is doing, or is sought to do. If that is being put, then I would seek leave to answer that question because it's not in evidence against us to that effect.

PN244

THE DEPUTY PRESIDENT: Yes. Mr Crawford?

PN245

MR CRAWFORD: We've got no issue with that, your Honour. We're not trying to hide anything. We're happy for the Commission to have the benefit of objective evidence about this industry and Alcoa's operations.

PN246

THE DEPUTY PRESIDENT: Yes, thank you. I grant permission then to explore that with Mr Gleeson.

PN247

MR DIXON: If the Commission pleases.

PN248

THE DEPUTY PRESIDENT: Thank you.

PN249

MR DIXON: If I then come to the question of evidence. Does the Commission wish to mark the 2014 agreement?

PN250

THE DEPUTY PRESIDENT: Yes.

PN251

MR DIXON: I tender that.

PN252

THE DEPUTY PRESIDENT: We'll mark this as exhibit A2 tendered by the applicant on 17 September. We'll simply refer to that as the 2014 AWU agreement.

EXHIBIT #A2 2014 AWU AGREEMENT

PN253

MR DIXON: Thank you. There is - Mr Gleeson in his evidence gave a brief history of where matters were up to at the time of the filing of his statement. We indicated that we would be seeking leave to file the notice of protected industrial action which we can tender in a bundle if that's suitable to the Commission.

PN254

THE DEPUTY PRESIDENT: Yes.

PN255

MR DIXON: If I may tender a bundle of notifications of protected industrial action. The first one - sorry, the notice was given with the action to commence at 5am on 8 August 2018. But ongoing, your Honour will see that the last one is dated Monday 10 September 2018.

PN256

THE DEPUTY PRESIDENT: We'll mark this as exhibit A3.

EXHIBIT #A3 BUNDLE OF NOTIFICATIONS OF PROTECTED INDUSTRIAL ACTION

PN257

MR DIXON: If the Commission pleases. Now, your Honour I've discussed this with my learned friend, but there is, as he indicated in his opening, that following the filing of evidence and discussions with the AWU, Alcoa invited its employees who will be covered by a proposed agreement to vote on such an agreement. The proposed agreement that was put to the vote, if I may tender that. It is an agreement that will be known as the Alcoa of Australia Limited WA Operations AWU Enterprise Agreement 2018. It is a document of some 88 pages. If the Commission pleases.

PN258

It might be, if I might respectfully suggest, it might be useful to identify it by reference voted upon somewhere because it will be easier I think to identify it by that reference, if the Commission pleases.

PN259

THE DEPUTY PRESIDENT: Yes, and what was the date again, Mr Dixon, from which it was voted?

PN260

MR DIXON: The voting closed on 6 September 2018.

PN261

THE DEPUTY PRESIDENT: We'll simply refer to that as exhibit A4, Proposed agreement 2018 (88 pages) 6 September 2018

EXHIBIT #A4 PROPOSED AGREEMENT 2018 (88 PAGES) 06/09/2018

PN262

MR DIXON: If your Honour pleases. The results of that vote are in a declaration by the organisation that conducted the vote. May I tender the declaration of result produced by an organisation called CIVS. It's dated 6 September 2018.

PN263

THE DEPUTY PRESIDENT: Mr Crawford you have no objection with regards to this being admitted into evidence?

PN264

MR CRAWFORD: No objection, your Honour.

PN265

THE DEPUTY PRESIDENT: Thank you. We'll mark this A5.

EXHIBIT #A5 CIVS DECLARATION OF RESULT CIVS DATED 06/09/2018

PN266

MR DIXON: Your Honour, we would then seek to call Mr Gleeson. Again, I've discussed this with my learned friend, there are few questions we wish to ask him about exchanges that took place post his last statement with the AWU and also if I could exercise that leave that your Honour granted a moment ago. Would it be convenient if we adjourn now and perhaps resume a little earlier and I'll have an opportunity of discussing that leave question with Mr Gleeson before he gets into the witness box.

PN267

THE DEPUTY PRESIDENT: Mr Crawford, do you have any opposition to that request?

PN268

MR CRAWFORD: No, I don't. There is one quick matter that I might be able to address now before we break, about the objections, unless there's - - -

PN269

MR DIXON: Sure. Thank you.

PN270

THE DEPUTY PRESIDENT: Yes.

PN271

MR CRAWFORD: Your Honour, there have been discussions between the parties about how objections to evidence would be dealt with. I do have a list of the AWU's objections to Alcoa's evidence that I'd like to hand up. Alcoa has seen the document.

PN272

THE DEPUTY PRESIDENT: Have I?

PN273

MR CRAWFORD: No, you haven't, your Honour.

PN274

THE DEPUTY PRESIDENT: I don't think I have, have I?

PN275

MR CRAWFORD: I wasn't entirely clear but I didn't understand the directions to require filing. But your Honour, the position that has been reached is we don't have an issue with all the evidence actually being admitted. I mean, the rules of evidence don't apply in these proceedings so - - -

PN276

THE DEPUTY PRESIDENT: But they are a guide.

PN277

MR CRAWFORD: They can be relevant but in any event the AWU has accepted that the evidence can be admitted. Alcoa has a similar view except for a few portions of the AWU evidence that they do want to actually argue about whether it should be admitted or not, so that will happen later. But that's the position that has been reached.

PN278

THE DEPUTY PRESIDENT: Is it the case that Mr Dixon has a copy of those objections?

PN279

MR CRAWFORD: It is.

PN280

MR DIXON: Your Honour, I think the arrangement that we've made is that when your Honour sees the list we were most concerned that we would be spending days arguing about the admission of one paragraph.

PN281

THE DEPUTY PRESIDENT: Yes.

PN282

MR DIXON: And we sought to avoid that issue. The position of Alcoa to the objections that have been made is that we do not accept that voracity or the legitimacy of the range of those objections but we will address them in closing and in making our submissions because we will seek to demonstrate to your Honour that in relation to the vast majority of those objections that follow a formula, the suggestion that it's not evidence is wrong and that the witnesses are expressing statements of fact. Or where they're not expressing statements of fact they are basing their statements about the reasons that Alcoa is acting based on actual examples or experience. But I will address that again and my learned friend has accepted that and we've adopted the same approach in relation to his evidence subject to some matters that we say are so prejudicial that they should not be admitted at all, but then a small number of them. And it was with a view cognisant of what your Honour said about evidence, we say we would meet that test if one looks properly at the evidence that's put in. But we were not going to get the Commission to spend days ruling on every paragraph.

PN283

THE DEPUTY PRESIDENT: It's the case, Mr Dixon, that similarly you have a document that outlines the objection that Alcoa has?

PN284

MR DIXON: Yes.

PN285

THE DEPUTY PRESIDENT: Are you happy to hand that to me now?

PN286

MR DIXON: Thank you, your Honour.

PN287

THE DEPUTY PRESIDENT: Mr Crawford, do you have a copy of those objections?

PN288

MR CRAWFORD: I do, yes.

PN289

THE DEPUTY PRESIDENT: Thank you.

PN290

MR DIXON: Thank you. Your Honour, I stress, we're of course in your Honour's hands about this. I am not suggesting that this is the course that must be followed but I want to emphasise that we were concerned about the question of timing and having to go through paragraph by paragraph, particularly when we contested and do contest the validity of the objections. But I think we can adequately deal with them by the formula that we're working out. So that when it's, for example, said that the witness is expressing � that it's vague or whatever it is and the witness is stating "Alcoa seeks to change this clause", that's not an opinion, that's a statement of fact. And there are a range of objections of that kind. Now let them go in, we can identify them and your Honour would be able to deal with them on that basis.

PN291

THE DEPUTY PRESIDENT: Yes. Thank you, Mr Dixon. Mr Crawford, are you intending to address the objections in your closing similarly as to what Mr Dixon has proposed to do?

PN292

MR CRAWFORD: Yes, I am, your Honour, and I should note for the record that we have similar views about a lot of the objections raised by Alcoa in their document. I mean, in our view that the evidence led by the parties in general is relatively similar and that a lot of the issues that both parties are claiming arise really overlap. But we're certainly planning to address that in closing submissions, yes.

PN293

THE DEPUTY PRESIDENT: All right, thank you. Yes, I am happy to proceed on that basis. We will take a short adjourn and we'll return at 13.30 hours.

LUNCHEON ADJOURNMENT牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [12.53 PM]

RESUMED牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [1.35 PM]

PN294

THE DEPUTY PRESIDENT: Mr Dixon?

PN295

MR DIXON: Thank you, your Honour. May I call as our first witness Mr Matthew Gleeson?

PN296

THE DEPUTY PRESIDENT: Thank you. And just to confirm with the parties, all the witnesses have left? Mr Dixon, are the witnesses, on behalf of Alcoa or the AWU present, at the moment?

PN297

MR DIXON: They are, thank you.

PN298

THE DEPUTY PRESIDENT: Thank you.

PN299

MR DIXON: And nowhere in earshot by way of video reference.

PN300

THE DEPUTY PRESIDENT: Thank you.

PN301

THE ASSOCIATE: Please state your full name and address?

PN302

MR GLEESON: Matthew Craig Gleeson, care of - I'm not sure of the address, but Alcoa Booragoon office, Perth, Western Australia.

<MATTHEW CRAIG GLEESON, SWORN牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [1.36 PM]

EXAMINATION-IN-CHIEF BY MR DIXON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [1.37 PM]

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XN MR DIXON

PN303

THE DEPUTY PRESIDENT: Yes.

PN304

MR DIXON: Thank you, your Honour. Mr Gleeson, is it correct that you're employed by Alcoa of Australia Limited as director, employee relations and learning and development?‑‑‑That's correct.

PN305

Is your work address 181‑205 Davy Street, Booragoon?‑‑‑That's it, correct, yes.

PN306

For the purposes of these proceedings, you have made two witness statements, is that correct?‑‑‑That's correct.

PN307

Can I show you a document, please? May I hand you a copy of a witness statement consisting of two volumes? It was filed and made on 19 June 2018?‑‑‑Thank you.

PN308

Do you identify the document, Mr Gleeson, as a statement which appears to have your signature above 19 June 2018 following paragraph 246?‑‑‑Yes.

PN309

Is it correct that attached to that statement in total there are 16 attachments?‑‑‑That's correct.

PN310

Do you say that the contents of that statement are true and correct to the best of your knowledge and belief?‑‑‑Yes.

PN311

Does your Honour wish to have it marked?

PN312

THE DEPUTY PRESIDENT: Yes.

PN313

MR DIXON: I tender the statement.

PN314

THE DEPUTY PRESIDENT: We'll mark that A6, witness statement of Matthew Gleeson.

EXHIBIT #A6 WITNESS STATEMENT OF MATTHEW GLEESON DATED 19/06/2018

PN315

MR DIXON: Mr Gleeson, did you also make a second statement which is dated 1 August 2018, and I'll show you a copy if I may?‑‑‑Yes, I did.

PN316

In relation to that statement, is it correct that it was made in reply to the evidence that you had seen filed by the AWU?‑‑‑Yes, it was.

PN317

Does your signature appear following paragraph 69?‑‑‑Yes, it does.

PN318

Is it correct that there are nine attachments to that statement?‑‑‑That's correct.

PN319

Does the statement that you've made on 1 August 2018 contain the evidence that you say to the best of your knowledge is true and correct?‑‑‑Yes, it does.

PN320

I tender the reply statement of Matthew Gleeson dated 1 August, if it pleases.

PN321

THE DEPUTY PRESIDENT: Yes, so witness statement in reply of Matthew Gleeson, that's marked A7.

EXHIBIT #A7 WITNESS STATEMENT IN REPLY OF MATTHEW GLEESON DATED 01/08/2018

PN322

MR DIXON: Your Honour, with your leave, and a matter that I have discussed with my learned friend, Mr Crawford, may I just update a few steps that occurred post the statement and could not have been dealt with at the time?

PN323

THE DEPUTY PRESIDENT: Yes, you may, Mr Dixon.

PN324

MR DIXON: Mr Gleeson, may I draw your attention to page 199 where there is an exhibit, attachment MCG6, being an email from you to a variety of people dated 30 July 2018?‑‑‑Yes.

PN325

Do you have that?‑‑‑Yes, I do.

PN326

You will see in the first sentence there is a reference to Alcoa's proposal which includes responses sent to the AWU on Thursday 26 July 2018, and which you will be sending to employees shortly and will be making presentations and arranging for a vote. Do you see that sentence?‑‑‑Yes.

PN327

When you say there includes our responses sent to the AWU on Thursday 26 July 2018, if you go back to the email of - sorry, the document which is behind MCG4, does that identify the responses which Alcoa made on that date?‑‑‑It does.

PN328

MCG4 contained requests from the AWU to which Alcoa responded?‑‑‑That's correct.

PN329

Of the responses that Alcoa gave, sorry, in respect of the requests are you able to identify off hand which of the AWU requests Alcoa did not agree to?‑‑‑Yes, I can.

PN330

Can you tell the Commission?‑‑‑We did not agree to the request for a change in clause 10.1 which was that we would change the casual employment provisions so that the commitment to a filling a position with a permanent employee which is currently held by a casual for greater than 18 months would not be from the commencement date of the agreement, but would be what the AWU requested to be, which is whenever that person started, so it could be before the commencement date of the agreement.

PN331

What else did you not agree to?‑‑‑Over on the next page 13.2.

PN332

This is on page?‑‑‑192. The AWU requests that Alcoa create wording around the intent of the clause to alter job descriptions so as to not increase the complexity and responsibility of existing job descriptions. We do not agree to that. On the same page the AWU requested that our day supplement a shift which lasts 8.5 hours, should be amended to eight hours. We did not agree to that. On page 194, we did not agree to change the 17.7(b) and (c) which is around coming in early or later, generally it's early. The AWU wanted us to implement words around fatigue management particularly with a view to ensuring that employees could potentially leave earlier than the conclusion of a 12 hours shift, so work nine, 10, 11 hours, whatever the case might be, if there were any evidence of fatigue issues. Then on the next page which is 196, we did not agree to implement any wording about removing lawyers from DSP. We did not agree to no forced redundancies.

PN333

Which is on page 196?‑‑‑Which is also on 196, excuse me. We did not agree to maintain the current exploration drilling appendix.

PN334

If you go back if you will to your email of 30 July which is on page 199. You indicated to Mr Price and others that you would provide the AWU with a copy of the proposed agreement to be sent to employees. May I ask you to look at this email, if you will please?

PN335

THE DEPUTY PRESIDENT: Sorry Mr Dixon, could you refer me to the page number where we might find the 3 August fire day, or is this new?

PN336

MR DIXON: That's new, your Honour, yes. Mr Gleeson has a copy. I'm going to tender it separately, if the Commission pleases.

PN337

THE DEPUTY PRESIDENT: Thank you.

PN338

MR DIXON: Are you able to identify the email of 3 August that I've just handed to you?‑‑‑Yes.

PN339

Can you tell the Commission what that is?‑‑‑It's an email that was sent to the bargaining reps of the AWU and to the Alcoa negotiating team which attaches the EBA proposal that we intended and eventually did send to our employees for voting. It demonstrates that we had made alterations apropos to the AWU's feedback. Then alerts them to some of what I considered the more significant changes, so that they could easily enough check for them, themselves.

PN340

The last sentence of that email says that you will consider any further feedback the AWU wishes to provide. Did Alcoa receive any further feedback to that proposal that was going to a vote?‑‑‑No.

PN341

I tender the email if the Commission pleases.

PN342

THE DEPUTY PRESIDENT: Yes, we'll mark that A8. Email 3 August 2018 Gleeson to Price.

EXHIBIT #A8 EMAIL DATED 03/08/2018 GLEESON TO PRICE

PN343

MR DIXON: Thank you, now Mr Gleeson, one other matter in relation to the material in your second statement. Would you turn to MCG7 which is on page 201, a letter of 24 July 2018 written by Alcoa's solicitors to the Senior National Legal Officer of the AWU. Has Alcoa at any stage received a response to that letter?‑‑‑No.

PN344

Before I deal with the question of leave that your Honour granted this morning, there's one question I wish to ask in relation to total number of employees across Australia employed by Alcoa. May I ask that question?

PN345

THE DEPUTY PRESIDENT: Yes.

PN346

MR DIXON: Do you have knowledge of the total number of employees across all the operations of Alcoa Australia Mr Gleeson?‑‑‑I have approximate knowledge.

PN347

What is the figure?‑‑‑It's around 4270.

PN348

Thank you. You were in the tribunal this morning when her Honour gave us leave to ask you questions in relation to a submission made in opening by Mr Crawford who is on my left hand side here. Mr Crawford indicated that prices have always fluctuated and will fluctuate into the future. What do you say about the proposition that prices for Alcoa Australia's product have always fluctuated?‑‑‑Well, on the face of it, that's true, but what needs to be understood is that historically, they fluctuated in a relatively small and stable and quite predictable band of relatively low highs and high lows. That over the last few years, the last say four or five years, that stability has ceased and the price for Alcoa's product is volatile, it changes quickly and it moves in a band that is not previously been seen in the industry.

PN349

What, if any, role did that fluctuation which became apparently play in the approach Alcoa took to seeking change to its enterprise agreement that it had - - -

PN350

MR CRAWFORD: Objection.

PN351

MR DIXON: What's the objection?

PN352

MR CRAWFORD: Your Honour, I would say that question goes beyond the content of which leave was granted this morning. I mean, that delves into the motivations for why Alcoa applied to terminate the agreement. I mean, that isn't an issue that arose during my submissions this morning. The question has been asked in terms of whether commodity prices have fluctuated. That's already happened. That was the extent to which leave was granted and we say there shouldn't be any further questions.

PN353

THE DEPUTY PRESIDENT: Mr DIXON?

PN354

MR DIXON: Your Honour, the difficulty with my learned friend's submission is that he was trying to put a position as I understood it, to say they have always fluctuated and will fluctuate into the future, suggesting thereby that there was nothing different following the making of the 2003 EA which indicated that Alcoa was operating in a highly competitive market, suggesting that there was nothing different and suggesting that there was nothing different to give Alcoa consideration for changing its position. That was the clear impression we had from his evidence. If his submission is that there was business as usual and this fluctuation could not have been relevant to Alcoa's thinking to change its conditions, if that is the position then I'm entitled - because it's no in the submissions, it was raised in opening, I'm entitled to get Alcoa to respond to that position. And it was my understanding that that is the purport of what he was trying to suggest.

PN355

MR CRAWFORD: If it assists your Honour, Mr Gleeson will have ample opportunity in cross-examination shortly to discuss issues such as this and then my learned friend will have the opportunity to re-examine him afterwards. So we would still say that the questions are going beyond that to which leave was granted. They are unnecessary because this evidence will likely come out. Anyway, if it doesn't then we can reconsider in re-examination whether a further question should be permitted.

PN356

THE DEPUTY PRESIDENT: Yes. Thank you for your submissions. Mr Dixon, anything further you want to say?

PN357

MR DIXON: Your Honour, that's not a fair process because my learned friend might not ask the questions to cover the issue and then we're back and forward. And I understood him to say he has no difficulty with Alcoa dealing with it. It's not in his submissions. It is not in evidence. And now it's being raised again Alcoa and in my respectful submission fairness would dictate that the witness for Alcoa should have an opportunity in responding to that.

PN358

THE DEPUTY PRESIDENT: Thank you, Mr Dixon. Having considered the submission that you made earlier this morning on the grant of permission, I consider that the grant of permission extends to the line of questioning that Mr Dixon is currently asking. With regards to the reasons that you've provided as to why that question shouldn't be asked at this moment, I don't necessarily find them persuasive. So in those circumstances I will permit Mr Dixon to continue with that line of questioning.

PN359

MR CRAWFORD: If the Commission pleases.

PN360

MR DIXON: If your Honour pleases. Mr Gleeson, you answered the question about fluctuation and what had changed, and the question I asked you to which objection was made, is what if any role did those fluctuating factors play in Alcoa's approach to seeking change to its provisions dealing with the AWU employees?‑‑‑It played a highly significant role. The fluctuations, particularly on the downside, were unprecedented. We entered a competitive environment that was extremely challenging.

PN361

Could you put a date on that?‑‑‑2015/2016, those years. We genuinely had real concerns for the future of our business and in Western Australia and we found that the enterprise agreement that we had made with the AWU in 2014 had so many restrictions and limitations on our capacity to adjust our operations to meet those market challenges that it informed us that we should no longer make those types of agreements because they were inappropriate for the market we now operate in.

PN362

When you say that you had concerns for the operations in Western Australia can you amplify what you meant by that?‑‑‑Yes. The Kwinana refinery made significant losses. The Wagerup refinery made losses for short periods. Pinjarra, our most profitable refinery, generally broke even or was slightly profitable. And Alcoa was � Alcoa the corporation, the global corporation, was losing money and was looking intensely at its portfolio of assets to determine which ones would remain in operation. And there is absolutely no doubt that our Kwinana refinery in particular was one of those assets that was being very closely looked at for potential closure.

PN363

If the Commission pleases, thank you.

PN364

THE DEPUTY PRESIDENT: Mr Crawford.

CROSS-EXAMINATION BY MR CRAWFORD牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [1.59 PM]

PN365

MR CRAWFORD: Thank you, your Honour. Mr Gleeson, to start off with, in relation to the evidence you just gave about fluctuations in commodity prices and the state of the various refineries, why didn't you include any of that evidence in your witness statements?‑‑‑Well, the witness statements effectively talk about the bargaining, the approach of the parties to bargaining, the issues we have with the enterprise agreement and the disputation. And we feel they're the major things that are being required to be answered in this case rather than the fluctuating commodity price.

PN366

Do you accept that in the, not one, two witness statements that you've previously filed in these proceedings you articulated the reasons why Alcoa seeks to terminate the enterprise agreement?‑‑‑Yes.

PN367

Then I repeat my question. Why didn't you include, if the evidence you just gave is correct and relevant why didn't you include it in either of those two witness statements?‑‑‑Because I don't believe they're the questions that the Commission has to respond to.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN368

So you say it's not relevant to the questions that the Commission has to respond to, is that your - - -?‑‑‑No, it's relevant to the reason that we are bargaining for change to the 2014 enterprise agreement, unsuccessfully, so far.

PN369

All right. Can I now take you to your first witness statement. Can you please turn to paragraph 46. Do you have that? So your evidence there is, Alcoa's position is that at 2014 AWU agreement is outdated and imposes restrictions, inefficiencies and unnecessary and unreasonable costs on Alcoa's operations, is that correct?‑‑‑Yes.

PN370

"The 2014 AWU agreement is no longer acceptable to Alcoa, it is not compatible with the manner in which Alcoa seeks to operate its business, the terms do not afford Alcoa the ability to adjust its operations quickly and efficiently." Is that your evidence?‑‑‑Yes.

PN371

Mr Gleeson, were you involved in negotiations for the 2014 agreement?‑‑‑Yes.

PN372

And do you accept that it was Alcoa that decided to put the conditions in the 2014 agreement out to a vote of its employees in around January 2014?‑‑‑Yes.

PN373

Do you accept that after the vote was successful it was Alcoa that applied to the Fair Work Commission for approval of those conditions, wasn't it?‑‑‑Yes.

PN374

And you actually filed a statutory declaration in support of those 2014 agreement conditions being approved by the Commission, didn't you?‑‑‑Correct.

PN375

So obviously the terms of the 2014 agreement were acceptable to Alcoa in early 2014, do you accept that?‑‑‑They were.

PN376

And Alcoa has no public sector history at all, does it?‑‑‑Not that I'm aware of.

PN377

And Alcoa didn't inherit the conditions in the 2014 agreement from any other business, did it?‑‑‑No.

PN378

Your Honour, I'd like to hand the witness an Alcoa document.

PN379

THE DEPUTY PRESIDENT: Thank you.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN380

MR DIXON: Do you have that document, Mr Gleeson?‑‑‑I do.

PN381

Is it an Alcoa of Australia 2014 and 2015 Sustainability Highlights document?‑‑‑Yes.

PN382

That's prepared by Alcoa, isn't it?‑‑‑I believe so.

PN383

Can you please turn to page 3 of that document? The third paragraph down reads:

PN384

This report is for the 24‑month period 1 January 2014 to 31 December 2015.

PN385

Do you see that?‑‑‑Yes.

PN386

So you accept that the 2014 agreement was operating for the majority of the time to which this document relates?‑‑‑Yes.

PN387

Can you please turn to page 4? Do you see that's a message from the chairman and managing director, Michael Parker?‑‑‑Yes.

PN388

It goes from page 4 onto page 5?‑‑‑Yes, it does.

PN389

Just incidentally, who is the gentleman on page 5 in that picture?‑‑‑Cransberg.

PN390

What is his position?‑‑‑He no longer works for Alcoa, but he was the managing director.

PN391

But Mr Parker's the person pictured on page 4?‑‑‑Correct.

PN392

Can you turn to the page, right at the top? Do you agree it reads:

PN393

In 2014 and 2015, Alcoa of Australia endured turbulent market conditions with significant price declines in alumina and aluminium and exchange rate variations that placed additional challenges on our operations.

PN394

?‑‑‑Yes.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN395

So the CEO of Alcoa was obviously indicating that 2014 and 2015 were challenging years for the business due to external factors, wasn't he?‑‑‑Yes.

PN396

And on page 5, you'll see in the first sentence that he again refers to 2014 and 2015 being challenging years, doesn't he?‑‑‑Yes.

PN397

Can you turn to the last paragraph, the second sentence that reads:

PN398

We have exceptional people and high quality assets. With favourable market conditions forecasted, I am excited about the future and all that we will achieve.

PN399

Do you see that?‑‑‑Yes.

PN400

Do you accept, given the period to which this report relates, then it must have been prepared in 2016?‑‑‑Likely, yes.

PN401

Do you agree that Alcoa has exceptional people and high quality assets?‑‑‑Yes.

PN402

Do you take issue with what the CEO was saying about favourable market conditions being forecasted?‑‑‑Well, we can look back at that now and realise that the favourable conditions that were forecasted didn't immediately occur.

PN403

We'll discuss that shortly. Can you please turn to page 16? Do you see there's a table in the middle of that page?‑‑‑Yes.

PN404

Do you agree in the first row there's reference to Alcoa of Australia's net profits after tax?‑‑‑Yes.

PN405

2013, $259.5 million, do you see that?‑‑‑Yes.

PN406

2014, $215.7 million, do you see that?‑‑‑Yes.

PN407

2015, $645.5 million, do you see that?‑‑‑Yes.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN408

Do you also see in the fourth row, reference to the value of wages and benefits?‑‑‑Yes.

PN409

And do you see that for 2014 the value was $799.8 million?‑‑‑Yes.

PN410

And then in 2015 the figure reduces to $715.5 million, do you see that?‑‑‑Yes.

PN411

So that seems to demonstrate that the value of wages and benefits are reduced from 2014 to 2015 while the 2014 agreement was operating, do you agree?‑‑‑No.

PN412

And you've previously accepted that 2014 and 2015 were challenging years for Alcoa, haven't you?‑‑‑Yes.

PN413

Do you accept that even in challenging years under the 2014 agreement, Alcoa recorded, firstly, a net profit of $215.7 million in 2014?‑‑‑Yes.

PN414

And in 2015, under challenging conditions, under the 2014 agreement, Alcoa recorded a net profit of $645.5 million, is that correct?‑‑‑Correct.

PN415

Can you please turn back to Mr Parker's message at page 4 and 5 of that document? Your Honour, I'd like to, if you would allow me, give the witness a moment to read through page 4 and 5, the full message.

PN416

THE DEPUTY PRESIDENT: Yes.

PN417

MR CRAWFORD: Turning firstly to page 4, do you accept in about the seventh paragraph down, it reads "In Western Australia we also welcome government approval to undertake a bauxite export trial." Do you see that?‑‑‑Yes.

PN418

Is that a positive development for Alcoa?‑‑‑Yes, it is.

PN419

In the next paragraph, "In April 2015 we announced that we had secured a new 12 year gas supply agreement." You see that?‑‑‑Yes.

PN420

Do you accept that was a positive development for Alcoa?‑‑‑Yes.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN421

Having read the message, where in it, given you've already accepted it must have been prepared in 2016, where in it does the chairman and managing director refer to the problems associated with the conditions in the 2014 agreement?‑‑‑They don't.

PN422

There's no reference to that, is there?‑‑‑No.

PN423

Even during challenging years in 2014 and 2015, the chairman and managing director makes no reference in a public statement to problems associated with the 2014 agreement, does he?‑‑‑No.

PN424

Your Honour, I'd like to tender that document.

PN425

THE DEPUTY PRESIDENT: The document will be marked as R1. It will be referred to as Alcoa Australia Sustainability Highlights.

EXHIBIT #R1 ALCOA AUSTRALIA SUSTAINABILITY HIGHLIGHTS

PN426

MR CRAWFORD: Thank you. Your Honour, I'd like to hand the witness a copy of Mr Kamper's second witness statement which I assume the applicant and you have. Do you have that Mr Gleeson?‑‑‑Yes.

PN427

Can you please turn to - well firstly, do you see that appendix B to that witness statement is titled ASIC Financials?‑‑‑No.

PN428

You'll see that there's writing on the first and second page?‑‑‑Gotcha.

PN429

Then appendix A Source Documentation and Comparison?‑‑‑Hm-mm.

PN430

Then a table?‑‑‑Yes.

PN431

Then appendix B, ASIC Financials?‑‑‑Yes.

PN432

Then there's a two page document headed Copy of Financial Statements and Reports?‑‑‑Yes.

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PN433

Then if you turn the next page, there's some more information about the board et cetera. Then can you please turn the page again. Do you see up the top of the page, reference to page 6 of 76?‑‑‑Yes.

PN434

All right, do you have that page, your Honour.

PN435

THE DEPUTY PRESIDENT: Yes.

PN436

MR CRAWFORD: Mr Gleeson, do you see that in terms of results, we see net profit after tax attributable to members of Alcoa of Australia Limited 2016 figure $249.1 million. Do you see that?‑‑‑Yes.

PN437

2017 figure $1.09 billion. Do you see that?‑‑‑Yes.

PN438

In 2017 do you accept that Alcoa of Australia, after paying all its employees, paying all its other expenses and taxes, having to deal with all the manning numbers and the supplementary shifts, labour hire provisions, its result was a net profit of pretty close to $1.1 billion?‑‑‑Correct.

PN439

THE DEPUTY PRESIDENT: Mr Crawford, you may want to inform the other room, that if we're going to have cheering after each time a statement is made, they will all be removed.

PN440

MR CRAWFORD: Do you want me to go do that now?

PN441

THE DEPUTY PRESIDENT: I think someone else is going to.

PN442

MR CRAWFORD: Sorry, your Honour. Should we wait?

PN443

THE DEPUTY PRESIDENT: Yes, I think you should wait in the circumstances, because I think this witness should be afforded civility.

PN444

MR CRAWFORD: I understand that your Honour. I apologise. Sorry, Mr Gleeson.

PN445

THE DEPUTY PRESIDENT: Thank you. Appreciated. Continue Mr Crawford.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN446

MR CRAWFORD: Thank you. The page that I've just taken you to Mr Gleeson, do you see it's got number three down the bottom?‑‑‑Page 3?

PN447

It's got page 3 down the bottom of the page?‑‑‑Yes. Can you please move forward in terms of the page numbering at the bottom to page 18? Do you have that?‑‑‑Does it up the top refer to other income and expense items continued?‑‑‑It does.

PN448

Can you see in section (c) expenses there's employee benefit figures? Do you see those?‑‑‑Hm-mm.

PN449

Do you see for 2016 the figure of $638 million?‑‑‑Yes.

PN450

For 2017 the figure is $654.4 million?‑‑‑Yes.

PN451

Do you accept that those figures are lower than the wage and benefit figures for 2014 and 2015 that I took you to just recently?‑‑‑I'd have to go back and take another look at it.

PN452

Can you please do that. Page 16 of the exhibit R1?‑‑‑The figures are lower.

PN453

The figures are lower. So, the figures are lower for 2016 and 2017 than for 2014, 2015?‑‑‑I'm not clear that they're actually measuring the same thing, but the numbers are lower, I accept that.

PN454

I've done the calculation myself and calculate that the movement from the 2016 to 2017 figure of $638 million to $654.4 million equates to an increase of about 2.6 per cent. Does that look roughly right for you?‑‑‑It looks about right.

PN455

Can you please turn now to page 53, that being the number at the bottom of the page for that document? Do you have that? Is that at the top of that page number 16 Related Party Transactions? Do you see that?‑‑‑Yes.

PN456

Do you see down towards the bottom of that page there's reference to figures for Key Management Personnel Compensation?‑‑‑Yes.

PN457

Do you see the figure for 2016 is $10,385?‑‑‑Yes.

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PN458

Then for 2017 the figure is $11,973?‑‑‑Yes.

PN459

I've done the calculations, you can check them if you wish, but would you accept that looks like roughly around a 15 per cent increase?‑‑‑Roughly.

PN460

Are you able to explain why key management personnel compensation increased by around 15 per cent from 2016 to 2017?‑‑‑No.

PN461

Do you accept that key management personnel - well, can you please explain your understanding of what type of payment would be included within key management personnel compensation?‑‑‑Well, they might be base salary. There might be some type of bonus and there might be share package.

PN462

Are you aware of whether bonuses were paid to key management personnel in 2016 and 2017?‑‑‑I'm not aware of that.

PN463

Are you able to explain why Alcoa's total bill for employee expenses only increased by about 2.6 per cent from 16 to 17, but key management personnel compensation increased by around 15 per cent?‑‑‑No.

PN464

You're not sure why?‑‑‑No.

PN465

And are you aware of when Alcoa would have become aware of its net profit figure of nearly 1.1 billion for 2017?‑‑‑We would have been consolidating the books earlier in the year.

PN466

And is your understand that by 12 March 2018 when Alcoa applied to terminate the 2014 Agreement it would have been aware of its net profit figure?‑‑‑Yes.

PN467

So shortly after recording a net profit of nearly 1.1 billion for 2017, Alcoa responds by applying to terminate the agreement covering the AWU members, is that correct?‑‑‑No.

PN468

Is that what happened, or isn't it?‑‑‑What happened, we didn't respond to our profit announcements by applying to terminate the AWU agreement.

PN469

Okay but Alcoa was aware of the profit figure by the time it applied, wasn't it?‑‑‑Yes.

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PN470

Can you now please in that same document, the second statement of Mr Kamper, turn to Appendix C? Unfortunately the document is not paginated but it's three or four pages from the back of the fourth statement. Do you have that?‑‑‑Yes.

PN471

So do you see Appendix C, "Moody's Credit Rating", and that's the only writing on that page, and then the next page is headed, "Moody's Investors Service", do you see that?‑‑‑Yes.

PN472

And then it reads, "Rating Action. Moody's upgrades Alcoa of Australia's rating to be aa2, outlook stable, do you see that?‑‑‑Say that again?

PN473

I was just reading the reference to "Rating Action � Moody's upgrades Alcoa of Australia's rating to be aa2, outlook stable", do you see that?‑‑‑Yes.

PN474

And do you see a date below, "16 May 2018"?‑‑‑Yes.

PN475

Can you go down a few paragraphs to the heading in capitals, "Ratings Rationale" � and that reads, "The upgrade reflects the material improvement in Alcoa of Australia's earnings and credit quality resulting from its strong operating platform, low costs and high margins, substantive earnings and cash flow generation before dividends and limited balance sheet debt, says Matthew Mora(?), Moodys' Vice President Senior Credit Officer", do you see that?‑‑‑Yes.

PN476

And do you agree the next paragraph reads, "Alcoa of Australia's large low cost and fully integrated aluminate refineries should allow it to continue to generate strong margins and cash flow under Moody's current aluminium/alumina price sensitivities. This combined with very conservative financial policies will support its ability to maintain strong credit metrics", do you see that?‑‑‑I see it.

PN477

Do you accept that the two paragraphs I've just read to you are largely inconsistent with the evidence in paragraph 46 of your witness statement?‑‑‑No, I don't.

PN478

Do you agreement that the paragraphs refer to Alcoa of Australia � refer twice to Alcoa of Australia being a low cost operation?‑‑‑In the Moody's paragraph?

PN479

Yes?‑‑‑On the paragraph that you've highlighted for me?

PN480

Yes?‑‑‑It does refer to "large, low cost integrated aluminium refineries."

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PN481

And the reference to Alcoa of Australia being a low cost operation, but certainly there's no reference to that in your witness statement, is there?‑‑‑I don't believe so.

PN482

And you say that the 2014 agreement imposes restrictions, inefficiencies and unnecessary and unreasonable costs on Alcoa's operations, is that right?‑‑‑Yes.

PN483

Moody's actually think that in May 2018 with the 2014 agreement obviously still in existence Alcoa's operations are low cost. That's what they say, isn't it?‑‑‑That's what Moodys is saying.

PN484

Yes, so your view differs significantly from theirs, doesn't it?‑‑‑My view is that the Alcoa AWU 2014 agreement imposes unnecessary and no longer acceptable costs on our business.

PN485

But whilst that is your personal view, the view of Moodys, obviously a large operation, is that Alcoa of Australia is a low cost operation. That's their view, isn't it?‑‑‑That's the view they're putting.

PN486

Yes. And they've relied on that to upgrade Alcoa of Australia's rating, haven't they?‑‑‑Amongst many other things.

PN487

Yes. Mr Gleeson, is there any reason why you didn't include any actual economic data in your two witness statements?‑‑‑No.

PN488

There's no reason?‑‑‑No.

PN489

Do you accept that if Alcoa's case to terminate the current agreements is that they � the current agreements, sorry, is that it imposes unrealistic restraints on Alcoa on their ability to operate efficiently, that actual objective economic data might be relevant?‑‑‑No.

PN490

So is your position that your personal evidence about the restrictions in the current agreement is more important for the Commission than actual economic data about Alcoa's performance, audited economic data, is that your position?‑‑‑We're applying to terminate the agreement, so what is in the agreement and its impacts on the operations were obviously very important.

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PN491

Okay, and would its impacts on the operations not be reflected in the financial statements, isn't that how things work?‑‑‑And the financial statements may be greatly improved if we didn't have unnecessary impositions by virtue of the agreement.

PN492

You don't know that, do you?‑‑‑I suspect very strongly that that would be the case.

PN493

Can you answer the question, do you know that?‑‑‑Yes, actually, I do.

PN494

So you, sitting here today, know exactly what Alcoa's financial performance would be if the agreement is terminated, is that your evidence?‑‑‑No, clearly I don't.

PN495

Right?‑‑‑Because it hasn't been terminated so we haven't operated in that environment.

PN496

You don't really know at all, do you?‑‑‑No, I expect that without the cost impositions imposed on our organisation by that 2014 agreement, our cost base would improve.

PN497

But that's just Matthew Gleeson speculation really, isn't it?‑‑‑Yes.

PN498

Yes, it's not backed up by any objective economic data that you've provided in support of your personal view, is it?‑‑‑No, and we haven't yet operated in that environment.

PN499

Right. Mr Gleeson, feel free to turn back to the two documents I've take you to if you need to, but do you accept that Alcoa's net profits during the life of the 2014 agreement have been: 2014, 215.7 million?‑‑‑I believe that's right, yes.

PN500

2015, 645.5 million?

PN501

MR DIXON: The documents speak for themselves. He has been asked these questions before. I don't know what point can possibly be made for them to be repeated, your Honour.

PN502

MR CRAWFORD: All right, I'll move on.

PN503

THE DEPUTY PRESIDENT: Thank you, Mr Crawford.

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PN504

MR CRAWFORD: Because this question hasn't been answered. Do you accept that the net profit figures during the life of the agreement represent a total net profit of 2.2 billion during the life of the 2014 agreement?‑‑‑I don't have it in front of me, sorry.

PN505

Do we want to do the maths? Do you want to return to the figures and add it up?‑‑‑Is it in one of your documents?

PN506

Well, the net profit figures are, yes. I've just taken you to them.

PN507

THE DEPUTY PRESIDENT: Then perhaps you could provide him with the figures and a calculator so he might calculate the amount.

PN508

MR CRAWFORD: Yes.

PN509

THE DEPUTY PRESIDENT: Because it's quite difficult, I would imagine, as a witness to suddenly have to compute figures.

PN510

MR CRAWFORD: Yes, I accept that, your Honour. I'm happy to provide the witness with - - -

PN511

THE DEPUTY PRESIDENT: And then perhaps you can read the figures out to him and he can input them into the calculator.

PN512

MR CRAWFORD: Yes, that's a sensible suggestion, your Honour. Do you have the calculator?‑‑‑I've got it.

PN513

In 2014 in the initial document, the sustainability document, net profit, 215.7 million?‑‑‑What page are you on, sorry?

PN514

Sixteen?‑‑‑So what year?

PN515

2014?‑‑‑So I've got 14 and 15 there.

PN516

Yes, so can you please input into the calculator, 215.7 for 2014, and 645.5 for 2015?‑‑‑Yes.

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PN517

And then it's back to the Kamper statement and the ASIC document, page 6 of 76, up the top?

PN518

THE DEPUTY PRESIDENT: But just to clarify, Mr Crawford, those two figures come from one document. And then are we comparing apples with apples concerning the subsequent document? Were we adding these figures up or do you need to provide the Commission with an instruction concerning that? Am I comparing apples with apples?

PN519

MR CRAWFORD: My understand is you are, your Honour, that these are public audited net profit figures for Alcoa of Australia. If there's any evidence to the contrary I'm happy to hear it but I believe you can proceed with confidence on that. I mean, these are Alcoa documents, they're not our documents.

PN520

THE DEPUTY PRESIDENT: Yes.

PN521

MR CRAWFORD: Do you have that, Mr Gleeson?‑‑‑I do.

PN522

So you see 2016, 249.1 million? So can you please add 249.1 into the calculation?

PN523

MR DIXON: I wonder if my friend could just identify for my benefit, because I've lost which two documents he's now asking the witness to compare.

PN524

MR CRAWFORD: So it's the sustainability � those figures?‑‑‑I think I'd already put the 249.1 in.

PN525

Do we need to go again?‑‑‑No. Because it's your � your question to me was 2.8 billion, wasn't it?

PN526

No, 2.2?‑‑‑Maybe we need to have to do it all again. Sorry.

PN527

All right, 2014, 215.7?‑‑‑Mm-hm.

PN528

Plus 645.5?‑‑‑Yes.

PN529

Plus 249.1; plus 1090?‑‑‑2.2.

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PN530

Yes, 2.2 billion. And then if you press divide by four, for four years?‑‑‑550.

PN531

So do you accept that having done the calculations that Alcoa's average net profits during the life of the 2014 agreement have been 550 million dollars net per year?‑‑‑It's not a precise period. But it's roughly of that order.

PN532

The point you're making is that presumably for 2014 the agreements didn't operate for the entirety of the calendar year?‑‑‑Of course.

PN533

Yes, that's reasonable. May I take the phone.

PN534

THE DEPUTY PRESIDENT: Yes.

PN535

MR CRAWFORD: I want to put a summary to you, Mr Gleeson. Do you accept that again in early 2014 Alcoa voluntarily agreed to the terms of the 2014 agreement?‑‑‑Yes.

PN536

We've worked through the net profit figures during the life of the agreement, haven't we?‑‑‑Yes.

PN537

And then in late 2016 Alcoa tabled claims to reduce the number of the conditions in the agreement, didn't it?‑‑‑Yes.

PN538

Then Alcoa recorded a net profit for 2017 of nearly 1.1 billion?‑‑‑Correct.

PN539

Then it applied to terminate the agreement in March 2018?‑‑‑Correct.

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PN540

Now Mr Gleeson, this is the important question. What actually changed between early 2014 when the 2014 agreement was acceptable to Alcoa, and late 2016 when it had such a fixed view that so many conditions had to go?‑‑‑Well, we saw a change in the market for our product. The alumina price entered an era where it moved in a far more volatile and quicker fashion. So you couldn't easily predict what the price for Alcoa's products would be. So during the period, particularly 2015 and '16, the price for Alcoa's products plummeted and it got to � well, it got below $200 a tonne. And in that environment, as I think I said a little bit earlier, we had grave concerns for the future of our plant and we needed to make significant adjustments to the operating environment to ensure that our plants would be sustainable and be here for as long as we all hope that they're here for. And we found that a very difficult thing to do with the impositions and the restrictions that were imposed on us by the agreement that we made in 2014.

PN541

We also didn't quite frankly get a response from the AWU to that industry crisis that would indicate that they were a group that were prepared to help the company meet those challenges. The level of disputation was in my view outrageous on many trivial, trivial matters with the organisation struggling to find ways to lower its cost base to stay competitive. And we realised that the enterprise agreements were not good enough, were not appropriate for a modern environment, didn't give us the capacity to change our business to meet the challenges on a lower alumina price, and that the AWU as a group didn't seem to want to support the organisation's need for that kind of competitive response to a market crisis.

PN542

MR CRAWFORD: Right, so the market crisis you're referring to is significant drops in alumina prices, is that correct?‑‑‑Correct.

PN543

And that actually occurred during 2014 and 2015, didn't it?‑‑‑It did but it was more strongly emphasised towards the end of 2015, early 2016.

PN544

Right, and if you look back at the sustainability document that Mr Parker was referring to the significant price decline in alumina and aluminium, he's also actually referring to exchange rate variations which you haven't' mentioned, but he certainly identified them in his public message, didn't he?‑‑‑Correct.

PN545

But again he didn't make any reference to the conditions in the 2014 in that message, did he?‑‑‑No, he's trying to give an optimistic message about the highlights of the business.

PN546

Right, but you've already accepted that � I mean, the main reason in answer to my question that you've identified, or correct me if I'm wrong, the main reasons you've identified are volatility in the price of alumina. Is it bauxite too, or just alumina?‑‑‑More specifically alumina but the bauxite price is a little more volatile that it traditionally has been, but the alumina price is the one that's spiking and troughing in a volatile and very quick manner.

PN547

And that's what happened in 2014 and 2015?‑‑‑More in 2015 and early 2016.

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PN548

Okay. So that was one issue, volatility and the price of alumina. The other issue you've identified is all the disputes that the AWU was raising, is that correct?‑‑‑That and � yes, so that is correct, but also generally the AWU's attitude towards supporting the company to make the changes we felt we needed to make to be competitive in a low price environment.

PN549

Right, so in summary, volatility predominantly in the alumina price and issues with the AWU, they're the main reasons, that's your evidence?‑‑‑Yes.

PN550

But even - on accepting that the alumina price could be volatile, even when it declines significantly in 2014 and 2015, with the 2014 agreement operating Alcoa recorded massive net profits?‑‑‑It's a good thing to be profitable, that's how we keep our operations open, recapitalise them, keep our people employed, so we're grateful that we're able to maintain sustainable profitable operations, but it got very very difficult.

PN551

Leaving emotion aside, the point is, Alcoa has apparently got this fear of volatile alumina prices. They actually came to fruition in 2014 and 2015. There were significant declines, but with the 2014 agreement operating, Alcoa still achieved, significantly large net profits, didn't it?‑‑‑We remained profitable.

PN552

Are you able to - I mean I understand you're leading the bargaining process for Alcoa, is that correct, with the new agreement?‑‑‑Yes.

PN553

Are you able to indicate when Alcoa made its decision to apply to terminate the agreement?‑‑‑We started to think about it seriously after we got an appalling enterprise agreement draft response from the AWU in mid-December 2017. We'd been negotiating for a year at that point and the draft we got, I can't recall, as I said until the 14th, it's in my statement but in December 2017 indicated that the AWU bargaining representatives were not taking our process or our claims seriously. At that point we knew that reaching agreement with the bargaining reps was going to be very difficult. We didn't action it, but we started to think about it, what that might look like. We had a little break over the Christmas period and there was a request from the AWU to engage in a more intensive bargaining process through January/February. We agreed to that request. At the end of that process, where we were completely unsuccessful, that's when we decided that we needed to move forward with an application.

PN554

Just turning to an issue that arose a little bit in the examination in chief. Do you accept that all along the way, including very recently ahead of this hearing commencing, the AWU has been reaching out to Alcoa to try and sort the situation out?‑‑‑Look, I don't quite understand your question, sorry.

PN555

Have there been discussions ongoing between the AWU and Alcoa, senior high level representatives right up to the hearing of this matter?‑‑‑Yes, we're trying to remain civil and we're trying to keep our relationship, dispute the industrial action, in a condition that will enable us to eventually resolve this one way or the other.

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PN556

Do you accept that senior AWU officials are also adopting that attitude and they're trying to sort out a new agreement?‑‑‑Well, I accept that they're trying to sort out a new agreement, yes.

PN557

That's continued right up until today, hasn't it?‑‑‑We've not had a bargaining meeting for some time.

PN558

But there's been contact between Alcoa and the AWU, hasn't there?‑‑‑Yes.

PN559

In relation to the 2014 agreement, do you accept that in your statement, you only identified clauses that apparently restrict Alcoa, but you don't identify any clauses that provide Alcoa with flexibilities?‑‑‑Yes.

PN560

That being the case, your two statements don't provide a very balanced pictures of the full terms of the agreement, do they?‑‑‑Well, I think we tendered the agreement, so it's all there.

PN561

Let's have a look. Your Honour, I'd like to hand the witness a copy of the 2014 agreement.

PN562

THE DEPUTY PRESIDENT: Where are we going with this Mr Crawford?

PN563

MR CRAWFORD: We're exploring the terms of the 2014 agreement.

PN564

THE DEPUTY PRESIDENT: For the purpose of?

PN565

MR CRAWFORD: Testing whether Alcoa's assessment of those terms is fair and accurate.

PN566

THE DEPUTY PRESIDENT: Mr Dixon, do you have anything to say on this point?

PN567

MR DIXON: Your Honour, perhaps I should wait to hear what my learned friend's actual questions are. I have the same concerns that your Honour has. Perhaps I can raise, I think, if he asks the questions that don't make any relevance to the outcome of the proceedings.

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PN568

THE DEPUTY PRESIDENT: Thank you. Mr Crawford.

PN569

MR CRAWFORD: Do you have that Mr Gleeson?‑‑‑I do.

PN570

Can you please to clause 4?‑‑‑Got it.

PN571

Clause 4.1, the parties have made this agreement due to the need (a) for all workplace arrangements to contribute towards the long term viability of Alcoa's Western Australian operations which operates in the highly competitive international marketplace. Do you see that?‑‑‑Yes.

PN572

So, the parties have committed to that, haven't that?‑‑‑Yes.

PN573

In (b) the parties have committed to organising work in a fully flexible manner within each location, haven't they?‑‑‑Well, it says that on the paper, it just doesn't happen in real life, right.

PN574

4.1(b)(i), Employees agree to undertake any jobs or duties in accordance with their job description, subject only to the level of skill, knowledge and competence. You see that?‑‑‑Yes.

PN575

In (ii), No demarcation of work between members of the AWU and other Alcoa work groups. Do you see that?‑‑‑I can see that.

PN576

Those provisions are directed at locking in flexibilities for Alcoa. I accept you might say only on their terms, but just reading their terms, that's what they're intended to do, aren't they?‑‑‑That's what they're intended to do in practice. We have great difficulty actually achieving some of those things.

PN577

I mean I won't go through every provision but for example 4.3(b), the parties undertake to remove all restrictive work practices to ensure total flexibility and the movement of employees across the site. Flexibility in the number of people doing particular jobs and in the arrangement of work between employees in a particular work team or operating area. Do you see that?‑‑‑I can see it.

PN578

Now clause 4.5(b), do you see Alcoa and the AWU have a long history or working together in an endeavour to facilitate the most harmonious industrial relations environment. Do you see that?‑‑‑In an endeavour to, yes I can see that.

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PN579

I mean you put in a statutory declaration in support of this agreement in 2014, so presumably back then you accepted the terms?‑‑‑Back then.

PN580

Right. Then in clause 4.5(c), which you've referred to in your evidence, there is reference to the 2005 arrangements. But do you accept in (c) that there's a link between the elimination of waste associated with employee relations issues and subject to no employees taking any unprotected industrial action. So, do you accept that the provision links the employees not taking unprotected industrial action to the benefits provided to the union. That links there?‑‑‑Yes.

PN581

Clause 6.7, that imposes an obligation on employees to utilise all the skills they have, doesn't it?‑‑‑It does.

PN582

And 6.8 is directed at obligations on employees to attend work during normal rostered hours, work any additional time that is necessary to efficiently and fully undertake their job, thus providing flexibility to Alcoa, isn't it?‑‑‑That was the intention. It didn't happen but that was the intention.

PN583

Right. And clause 6.12 refers to Alcoa engaging employees for a limited term basis, doesn't it?‑‑‑It does.

PN584

Clause 7.1 and clause 7.2, again they're reiterating the need for employees to work flexibly to assist Alcoa, aren't they?‑‑‑Yes.

PN585

Clause 10.1, do you have that?‑‑‑Yes.

PN586

Do you see in clause 10.1, the second half of that clause, "However day workers are expected and required to work additional time as and when necessary to fully and effectively carry out their whole job on a day to day basis. Such additional time will not attract any payment. It is anticipated that additional full hours will not be a separate full shift." That's a pretty reasonable condition for Alcoa, isn't it, people working to finish a job for no payment?‑‑‑It looks good on paper. It doesn't happen in real life.

PN587

Right. Clause 10.3(c), do you accept that in the second half of that clause there's again reference this time to shift workers, to workers finishing a job and not being paid any additional money?‑‑‑That's what it says.

PN588

Clause 10.3(g), "Shift patterns shall be as set by management in consultation with the workforce and its representatives", do you see that?‑‑‑Yes.

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PN589

So although consultation is required, shift patterns are set by management, aren't they?‑‑‑With great difficulty and usually disputed, and many, many months after we try to make a change, we may be able to do that.

PN590

Right but the agreement currently states, "Shift patterns shall be set by management", doesn't it?‑‑‑That's what the words say.

PN591

Yes. So if the agreement isn't being applied according to its words, can't you go to the Commission and achieve that outcome?‑‑‑Well, the � yes, you can but the point that I was trying to make a little earlier is that in an environment that has changed where the price for our product is volatile, where we're competing with global providers who do not have these kind of restrictions, where we cannot guarantee that the price for our product will remain as buoyant as it is today, that these sort of provisions are very simple, very standard, and we should be able to access them without having to rely on the Fair Work Commission disputes procedure which is detailed, it takes a long time to get through a status quo provision that stops us from implementing entirely reasonable managerial decisions merely because the AWU want to raise a dispute in a global marketplace exposed to currency with commodity prices moving up and down. For our product we need to be smarter, sleeker, quicker.

PN592

All right, and where in your two statements is there any reference to economic data about your competitors?‑‑‑I don't believe there is.

PN593

No, so we'll just decide this important case by reference to Matthew Gleeson's summary of Alcoa's competitors, is that the correct approach?‑‑‑No, there's a lot of other evidence in my witness statements.

PN594

Is there any evidence about � you just referred to competitors. Where's the evidence about that?

PN595

MR DIXON: I object. My friend asked the witness to explain what the difficulties were with shift patterns and he gives his reasons based on his experience and statements. In my respectful submission the fact that he hasn't raised that matter before is irrelevant when the witness is responding to a question from my learned friend.

PN596

MR CRAWFORD: I'm happy to move on, your Honour.

PN597

THE DEPUTY PRESIDENT: Thank you, Mr Crawford.

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PN598

MR CRAWFORD: Mr Gleeson, can you please turn to clause 17(e), (vi)?‑‑‑Yes.

PN599

Is it correct that the effect of that provision is that the 2014 agreement does allow forced redundancies in some situations?‑‑‑In the event of major closures or shutdowns.

PN600

And - - -?‑‑‑Sorry?

PN601

And subject to no employees taking industrial action?‑‑‑Correct.

PN602

So the answers to my question is yes, is it, that the 2014 agreement in some situations does allow for forced redundancy?‑‑‑In some circumstances.

PN603

Yes. Clause 22, that's fitness for work?‑‑‑Yes.

PN604

That clause is all about imposing obligations on the employees to attend in a fit state to work, that's correct, isn't it?‑‑‑It's about encouraging employees to attend in a fit state for work and trying to check to make sure that they are, to make sure that they and their colleagues are safe.

PN605

Clause 23 is the labour hire and contractors' clause?‑‑‑Yes.

PN606

And the current provision allows Alcoa to engage labour hire, doesn't it?‑‑‑Yes.

PN607

And the current provision allows Alcoa to pay � allows the businesses that provide labour to Alcoa to pay lower rates than those in the agreement, doesn't it?‑‑‑Can you just ask that again, sorry?

PN608

So do you accept that the effect of clause 23.1(a) is to prescribe minimum rates that labour hire providers must pay their employees if they're performing work for Alcoa?‑‑‑Yes.

PN609

And the effect of that is that the labour hire provider only has to pay a proportion of the applicable rate for Alcoa employees, that's right, isn't it?‑‑‑Not exactly, no, because the prescribed rates there would be the same as you would apply it on Alcoa new starter employer by Alcoa.

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PN610

Right. So when it refers to a percentage of applicable hourly base rate for JG, isn't that referring to a proportion of the rate that would otherwise apply for an Alcoa employee?‑‑‑No. The point I'm making is if an Alcoa employee starts at Alcoa they start at those rates also.

PN611

Right?‑‑‑And they move through the gradients at the same speed.

PN612

All right. Clause 24 is the manning numbers provision. Do you accept that again there's a link in this clause to the, I guess the benefits for employees and not taking industrial action?‑‑‑Yes.

PN613

And do you accept that the lengthy appendices to the 2014 agreement specify quite details provisions for the various sites?‑‑‑No, I'm not sure where you're going for that, sorry.

PN614

Do you accept that the appendices in some instances contain specific provisions that will apply for example to a refinery or to the mine sorts or to ports?‑‑‑There are a few appendices that are specific to particular sites.

PN615

Do you accept that the appendices to this agreement are quite lengthy?‑‑‑Yes.

PN616

And presumably they've been developed relatively carefully over time?‑‑‑No, not necessarily.

PN617

Do you accept that they contain quite detailed provisions?‑‑‑In some cases, yes.

PN618

And they're certainly a lot more specific detailed provisions than the Aluminium Industry Award, do you accept that?‑‑‑Yes.

PN619

Do you recall completing the form F17 in support of the 2014 agreement?‑‑‑I actually don't, but I most likely did do it. I just don't recall it.

PN620

Your Honour, may I hand the witness a copy?

PN621

THE DEPUTY PRESIDENT: Yes.

PN622

MR CRAWFORD: Do you have that, Mr Gleeson?‑‑‑I do.

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PN623

Do you accept now that you did complete the form F17 for the 2014 agreement?‑‑‑Yes.

PN624

MR DIXON: May I just have an opportunity of having a look at my learned friend's copy? Thank you, your Honour.

PN625

MR CRAWFORD: Can you please turn to clause 3.5, Mr Gleeson? That asks whether the agreement contains any terms that are less beneficial than equivalent terms and conditions in the reference instrument, and you've answered yes. Is that correct?‑‑‑Correct.

PN626

Below you've stated:

PN627

The following terms and conditions of the agreement are more beneficial than or are not conferred by the reference instrument.

PN628

Do you see that?‑‑‑No, sorry, where are you?

PN629

I'm still in 3.5, the last portion of that clause, just above the dot points?‑‑‑Sure.

PN630

Yes. So, "The following terms and conditions of the agreement are more beneficial than or are not conferred by the reference instrument." But I put it to you that what you're actually intending to indicate or list were clauses of the agreement that are less beneficial than the award, do you accept that?‑‑‑I think that's right, yes.

PN631

So you have listed a number of clauses that appear in the 2014 agreement that are inferior to the Aluminium Industry Award, haven't you?‑‑‑No.

PN632

Well you've listed eight?‑‑‑It says, "more beneficial and, or not conferred by."

PN633

MR CRAWFORD: All right. I'm trying to - I mean, it's your evidence. You need to be clear. I - and this is no criticism intended - think you may have incorrectly recorded the wording at the start before the dot points?‑‑‑No, I understand that, but your question was that these are all things that are below the award and that's not what the question asks. It says, "or are not conferred by."

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PN634

Okay. So there might be a condition in the award and it doesn't appear in the agreement?‑‑‑Or vice versa.

PN635

I accept that. Nevertheless, you've indicated in the list that maximum hours on any shift, so either the award is better or - - -?‑‑‑Or it's silent.

PN636

Or the agreement is silent, presumably, yes. Same thing for change of roster?‑‑‑Yes.

PN637

And same thing for overtime and penalty rates?‑‑‑Correct.

PN638

And we know that there are overtime and penalty rates that appear in both the award and the 2000 agreement. So presumably you're indicating you thought the terms of the award were superior?‑‑‑No.

PN639

Well, what are you indicating?‑‑‑Well, potentially not conferred by.

PN640

Mr Gleeson, I now want to turn to the concessions that the AWU has made in bargaining for the new agreement. Your Honour, I'd like to hand the witness Mr Stuart Lawrence Allen's statement as a reference point.

PN641

THE DEPUTY PRESIDENT: Yes. Thank you, Mr Crawford.

PN642

MR CRAWFORD: Do you have that document, Mr Gleeson?‑‑‑I do.

PN643

Is that a statement with 88 paragraphs that Mr Allen signed on 18 July this year?‑‑‑Yes.

PN644

In paragraph 10 - can you please turn to that - do you see Mr Allen's evidence, and I don't think it's controversial that the evidence of Mr Price and Mr King is the same, is that the AWU's position is now that the concessions identified below are final and the AWU will not be walking away from them, unless a decision is made for the current agreement to be terminated. Do you see that?‑‑‑I can see it.

PN645

Under the heading, "Minimum manning", in paragraph - there's paragraphs 12 and 13 - in paragraph 13 it records:

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PN646

The AWU has agreed, subject to a decision to terminate the current agreement, that minimum manning numbers will not appear in the new agreement.

PN647

Do you see that?‑‑‑I can see it.

PN648

There's nothing ambiguous about the statement, "Minimum manning numbers will not appear in the new agreement", is there?‑‑‑There's nothing ambiguous when you read it here in this statement, but that's not what they had been bargaining for.

PN649

All right, but I'm only asking you about this statement here. There's nothing actually ambiguous in the statement that minimum manning numbers will not appear in the new agreement, is there?‑‑‑They've never put that position to us at any point in any of the negotiating meetings, right up until this. This was the first I saw of it.

PN650

Nevertheless, it's filed in the Fair Work Commission; we're on transcript here, in the public arena, when it's clearly stating that the AWU has agreed, subject to a decision to terminate the current agreement, that minimum manning numbers will not appear in the new agreement. That's clearly stated, isn't it?‑‑‑Well, we're not clear - I'm not clear what these concessions are. That's why we wrote to the AWU, to say after all this bargaining many of the concessions in these statements have never been made and never been proffered and never even be hinted at; we want to know if that's your true position, and we never received a response.

PN651

Are you trying not to accept these concessions? I mean, it's there clearly in writing. New agreement, no minimum manning numbers?‑‑‑No, what I'm saying is that I'm not sure those concessions are real. I'm confused as to the nature of whether these concessions are genuine.

PN652

I'm a lawyer here today representing the AWU and I can clearly indicate for your benefit the concession is real. The AWU has agreed, subject to a decision to terminate the current agreement, that minimum manning numbers will not appear in the new agreement. Do you accept that?‑‑‑I can read it.

PN653

So that being the case that I have clearly clarified the AWU's position, assuming that is correct and there will be no minimum manning numbers in the new agreement, that's a significant concession from the AWU, isn't it?

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PN654

MR DIXON: I object. My learned friend left out of that question an essential issue, namely, that this is a conditional concession that may not survive any decision of the Commission.

PN655

MR CRAWFORD: I accept that. That's a reasonable point.

PN656

MR DIXON: And therefore it may never appear in an agreement, which is what the question he put.

PN657

MR CRAWFORD: I'm not trying to be - certainly not trying to be tricky. That was inadvertent. The concession is certainly subject to the current agreement being terminated, but on behalf of the AWU I can confirm it is as recorded here, that the new agreement, subject to a decision being made to terminate the agreement, minimum manning numbers will not appear in the new agreement. So that's a significant concession, isn't it?‑‑‑I think that it's appropriate for an employer to be able to choose how many people it employs.

PN658

Do you accept that a lot of your evidence includes complaints about the minimum manning numbers in the current agreement?‑‑‑It certainly has some reference to it, yes.

PN659

Well I think it's fair to say there's quite a number of references?‑‑‑There probably is.

PN660

So it has certainly been identified as a major problem for our cull to the current agreement, hasn't it?‑‑‑It has been.

PN661

So that concession, subject to the condition, would certainly benefit our cull, wouldn't it, assuming it came into effect?‑‑‑It would, and it's an appropriate thing for an employer to be able to choose how many people it employs.

PN662

Supplementary shift requirements, paragraph 15, "The AWU has agreed subject to a decision to terminate the current agreement that Alcoa can offer supplementary shifts at its discretion subject to operational needs under the new agreement." Again don't refer to other elements of bargaining. I'm telling you that is the AWU's position there. Do you accept that that concession, although it's got a condition on it, would resolve the major complaints Alcoa has about the current supplementary shift conditions?‑‑‑Partially.

PN663

I mean, is it correct that Alcoa complains about the minimum 5000 it has to offer per year?‑‑‑Yes.

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PN664

So that issue would be resolved by that concession, wouldn't it?‑‑‑I wasn't clear on that, reading paragraph 15.

PN665

Well, Alcoa can offer supplementary shifts at its discretion. I mean, that clearly is not mandating a minimum, is it?‑‑‑Well, I assumed that what it meant was that Alcoa could offer them to the person it chose.

PN666

That is correct. That's one element of it that the rosters � I understand the rosters are currently administered by the AWU convenors but - - -?‑‑‑No, that's not correct.

PN667

Are there rosters at the moment?‑‑‑Yes.

PN668

All right, so the concession, the effect of the concession is there wouldn't be rosters. Alcoa can offer the supplementary shifts at its discretion. So no rosters, no minimum number per year, that would resolve the major portion of Alcoa's concerns, wouldn't it?‑‑‑If that concession was sustained.

PN669

Yes, it would, wouldn't it?‑‑‑Yes.

PN670

Yes?‑‑‑Although let it be said we're also talking about the rates that we pay the supplementary shifts.

PN671

All right. But in terms of the minimum number of 5000, and being able to pick which employees work the supplementary shifts, that concession resolves those concerns, doesn't it?‑‑‑If we didn't have a minimum of 5000 and we didn't have to abide by a roster that would be useful for Alcoa.

PN672

I can confirm that that is the intended effect of that concession, so that's quite beneficial to Alcoa, isn't it? It would be?‑‑‑It would have been nice to have had that confirmation before we got to this point.

PN673

Well, you got the statement - - -?‑‑‑I'm referring to the bargaining.

PN674

Right. But rates for labour hire personnel � now in paragraph 18, "The AWU has agreed subject to a decision to terminate the current agreement to the following changes to the current labour hire provisions: Alcoa does not have a mandatory obligation to advise the AWU about the use of labour hire but must provide details to the AWU upon request. In addition", and this is the one I want to focus on, a reduction in starting rates for labour hire to market rates for the first six months." Do you see that?‑‑‑Yes.

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PN675

So again the concession is conditional, but do you accept that if implemented, conceding that market rates can be paid for the first six months, would constitute a significant concession?‑‑‑Well, unlike the previous concessions that we discussed, this is one that the AWU have proffered during the bargaining and it is something that would benefit Alcoa.

PN676

All right, well that's a pretty reasonable position the AWU's even previously adopted in bargaining then, isn't it?‑‑‑Yes.

PN677

So it's not all bad from the AWU during bargaining, is it?‑‑‑Mostly. Mostly bad.

PN678

But agreeing to lower rates for labour hire is a pretty significant concession to an employer that's just recorded a net profit of 1.1 billion, isn't it?‑‑‑I wouldn't have thought it's a particularly significant concession.

PN679

It would deliver cost savings, most likely, wouldn't it?‑‑‑It would deliver some cost savings?

PN680

Yes. Moving to early retirement and redundancy, "The AWU has agreed subject to a decision to terminate the current agreement, to various changes to the current redundancy provisions to appease Alcoa's concerns. These are: Alcoa can offer voluntary redundancies at their discretion subject to consultation." That's a significant improvement for Alcoa compared to the current agreement, isn't it?‑‑‑If that's truly what the AWU propose, that would be an improvement. But I've not heard that at any point through the bargaining.

PN681

Improvement, or significant improvement?‑‑‑It's an improvement.

PN682

And there's reference to a cap in redundancy pay of 80 weeks to apply to VR payments if the employee who has volunteered was not directly affected by the relevant organisational change. Now importantly Alcoa can implement forced redundancies subject to first seeking volunteers, and subject to contractors not being used to perform the work of the forcibly redundant employees. Now again assuming that concession is correct, that would be a significant improvement for Alcoa compared to the current agreement, wouldn't it?‑‑‑Well, I'm confused because that has not been the AWU's position and their position was that every contractor, every contractor performing any role inside an AWU job description has to be stood down and vacate the site before anyone could be made forcibly redundant. So I'm confused as to what the true position is.

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PN683

I feel like you're more intent on debating what's been conceded than just, you know, embracing them and working with them, sorting out a new agreement. Is that a fair comment?‑‑‑No, it's not a fair comment.

PN684

MR DIXON: If my friend can identify whether the concession that he now is interpreting is a concession that disavows the position that was previously put according to Mr Gleeson's evidence, and it's got to be made very clear that there's a disavow of that very clear position which is dealt with in Mr Gleeson's evidence, as well.

PN685

MR CRAWFORD: I mean, I did indicate previously that I am the lawyer representing the AWU. We are here on transcript. I have already indicated that the content of this statement represents the position of the AWU. There might be negotiations about words or whatever, going on the side but the clear concession which is subject to a condition, I can assure you that that reflects the AWU's position. Does that help you?

PN686

MR DIXON: Well, it does not with respect. The witness said that the position that had previously been put by the AWU bargaining representatives was that every contractor has to be stood down and leave the site in order for this quote, "concession", unquote, to have any benefit. Now the witness said that's his understanding. The questioner is declining to clarify that position and is declining to disavow the clear position according to the evidence that was previously put by the AWU. Redundancy is an important part of this case and Alcoa's inability to make people forcibly redundant as a last resort is an important part of its case. We should not be playing around now with a concession that's not a concession that's not made clear.

PN687

MR CRAWFORD: I mean, I take offence to the suggestion I'm playing around. I've made it clear the position of the AWU is as reflected in this document.

PN688

THE DEPUTY PRESIDENT: Can I just inquire, so the document was signed in July, was it not?

PN689

MR CRAWFORD: I think that is � 18 July.

PN690

THE DEPUTY PRESIDENT: Was it correct that Alcoa then responded to the document to ask about the concessions or have I mistaken that?

PN691

MR CRAWFORD: There is a letter which I was obviously going to - - -

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PN692

THE DEPUTY PRESIDENT: And was there a response to that letter from the AWU because I'm just confused as to why the concessions are now being raised as part of a witness statement and not part of the bargaining process and I'm hoping that you might perhaps have the opportunity to respond to that in your submissions perhaps in closing as to why these concessions now are produced in a witness statement in proceedings for the termination of an agreement, but weren't during the course of bargaining. Perhaps I can leave you with that. I'm happy to take your response now but I'm slightly confused as to why this is now occurring.

PN693

MR CRAWFORD: I am happy to deal with it now and I can only reiterate that the position articulated in this statement the concessions that are subject to the current agreement being terminated reflect the position of the AWU. There is no trickery here. That is the position of the AWU. Now the response we received to these concessions was a letter, saying, all right, well, this is Alcoa's proposed clause, "Confirm that you unconditionally agree to this." Now that was not a very helpful response. Now there was no written response from the AWU. There were verbal conversations. I think Mr Gleeson could confirm?‑‑‑No.

PN694

You deny that?‑‑‑No, there wasn't.

PN695

And you deny there were discussions whereby it was suggested to the AWU that that letter from your lawyers may be withdrawn?‑‑‑Absolutely not.

PN696

Okay. My understanding was different but - - -

PN697

THE DEPUTY PRESIDENT: And then I probably distracted from the issue that counsel has raised about the disavow. So perhaps we could turn to that?

PN698

MR CRAWFORD: Yes, so I can again confirm that the position is subject to the agreement being terminated Alcoa can implement forced redundancies subject to first seeking volunteers and subject to contractors not being used to perform the work of the forcibly redundant employees. Now that quite clearly, I would say, on its terms is not referring to contractors anywhere on any site. It is talking about contractors not being used to perform the work of the forcibly redundant employees. Does that clarification assist, Mr Gleeson?‑‑‑Not particularly.

PN699

Do you understand what is being conveyed in that?‑‑‑I do.

PN700

Assume both you want to do this but assume that concession is valid would that assist Alcoa a lot, wouldn't it?‑‑‑Not particularly.

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PN701

Would it constitute a significant improvement on the terms of the current agreement?‑‑‑It would be an improvement on the terms of the current agreement but it's not what we're seeking.

PN702

Well, I'll put it to you that we've already discussed - there is a condition on these concessions. No minimum manning numbers, lower labour hire rates, increased capacity for voluntary redundancies, even more capacity for forced redundancies. They are comprehensive far-reaching concessions from the AWU assuming that they will be implemented, aren't they?‑‑‑There's some concessions there. There's a lot of assumptions being made.

PN703

Is that fair, Mr Gleeson? Assuming again that the concessions are as represented here as we are stating publicly on the record they are far reaching substantial improvements for Alcoa are they not?‑‑‑They are improvements for Alcoa but I'm not so sure that calling them "far reaching" and those sorts of things is accurate.

PN704

Well, I query that because you're obviously experienced in industrial relations. Having an agreement that has a minimum manning numbers and limited scope for redundancies compared to an agreement that takes away manning numbers entirely and it has increased scope for redundancies. That is far reaching change is it not? Is that not fair?‑‑‑I would think that a pretty standard shape of an agreement for the AWU and for most employees of our nature around the country who have agreements. I don't think there's anything unusual about any of the things that you put at all.

PN705

Well, that's not answering my question is it? You're turning it into whether those concessions would mean the conditions are different to other ones around the country. My question is do you accept that moving from the current situation of manning numbers, significant restrictions on redundancies compared to new agreement, no manning numbers, increased scope for redundancies that's far-reaching significant improvement for Alcoa is it not?‑‑‑I think it's improvement should those things be sustained in real life.

PN706

Right. I'll move on, your Honour.

PN707

THE DEPUTY PRESIDENT: Thank you, Mr Crawford.

PN708

MR CRAWFORD: Hours of work and rostering. Mr Gleeson, do you accept that in the current 2014 agreement there are some flexibilities for Alcoa in terms of how hours of work are arranged?‑‑‑There are some, yes. Excuse me.

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PN709

And do you see in paragraph 22 of the statement there's five dot points with additional changes that - and they're again concessions subject to a decision being made to terminate the current agreement but those six - five, sorry - dot points would provide additional flexibilities to Alcoa, wouldn't they?‑‑‑No, I don't necessarily accept that.

PN710

All right. Well, let's work through them. The first one - "Additional hours can be worked where a major plant failure or safety issue has arisen without additional remuneration. For example, during power failures or uncontrollable events where the plant cannot be left without an incoming shift taking control." Do you see that?‑‑‑Yes.

PN711

Is that an improvement for Alcoa?‑‑‑No.

PN712

Is that in the current agreement?‑‑‑No, it's in the Mine Safety Act. So employees are required to do it anyway and additional hours are not meant to be something that's bartered for emergency events. Additional hours were meant to be a reflection of a culture where people would stay back to support the business to put equipment on line or make it safe in the normal event, not in an emergency event.

PN713

Right. So does the Mine Safety Act refer to employees doing the additional work without additional remuneration?‑‑‑Well, I'm not sure but I'm relatively sure. I'm relatively sure that it does refer to a requirement for employees to make sure that the plant is left safe before they leave.

PN714

That's pretty unlikely it would refer to the remuneration table but isn't it?‑‑‑It's a safety act so it probably doesn't talk about remuneration.

PN715

Probably doesn't. No, so it's not - just the same as the Mine Safety Act is it?‑‑‑Sorry?

PN716

So that concession in the first dot point is not the same as what's reflected in the Mine Safety Act, is it?‑‑‑It's not exactly the same but I don't regard it as much of a concession.

PN717

Right. So why did you try and indicate it was the same as the Mine Safety Act?‑‑‑No, I didn't. If I didn't say that at all. I said the Mine Safety Act imposes a requirement on people to make sure that the plant is safe before they leave.

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PN718

Right. Moving to the second dot point. "Start and finish times can be altered within a two-hour bandwidth of normal start and finish times." Do you see that?‑‑‑Yes.

PN719

Would that constitute an improvement for Alcoa?‑‑‑Could be. Could be - not necessarily.

PN720

Is that querying whether the concession is genuine or querying the effect of this provision?‑‑‑Well, it's tied to and this is the problem with a lot of the hours of the work provision of the current agreement. It's tied to where you end up with the dispute settling procedure because you can write a bunch of things in the hours worked provision but if you have a dispute settling procedure that says that the union can dispute anything and the status quo is a situation that exists before the dispute and must be maintained then some of those things are just of no value to us.

PN721

Right. But in terms of what you just said and the dispute resolution procedures there's no way in the new agreement that the AWU can be stopped from disputing elements of the new agreement can they? It's a mandatory requirement of the agreement?‑‑‑No, no. But how the status quo is designed.

PN722

Yes. So status quo - yes?‑‑‑It could be different.

PN723

But your initial point was just about the AWU disputing changes. But you cannot possibly eliminate the scope of the AWU disputing the actual agreement can you?‑‑‑Well, they've got no desire to eliminate the scope for the AWU to actually put things in dispute but where we're making reasonable management decisions we need the capacity to implement them which we don't have at the moment.

PN724

So what about if the AWU lodges a dispute and then wins and then the change would have to be reversed?‑‑‑Yes.

PN725

That would be problematic wouldn't it?‑‑‑In this condition, yes it would be but we would know that we could not do it again.

PN726

Right. Third dot point. "Temporary shift transfers can occur between panels for a period of between one day and three months on up to two occasions per year. This is subject to volunteers first being sought by Alcoa." Do you see that?‑‑‑Yes.

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PN727

Would that be an operational benefit for Alcoa?‑‑‑It can be helpful to us. That's a start.

PN728

Okay. Fourth dot point, "Shift workers can be permanently transferred between rosters and/or panels including from shift work to day work with 10 days of notice subject to an agreed shift allowance protection system." Do you see that?‑‑‑Yes.

PN729

Would that be of value to Alcoa?‑‑‑Well, we have got that now. We've got the capacity to move people on to different panels - et cetera - now. So it's not new and we don't have a shift allowance protection system now. So that would just add cost.

PN730

All right. So you don't accept that one is actually a - - -?‑‑‑No, I don't.

PN731

Okay. And lastly a new clause will be inserted for emergency situations "Subject to the completion of inductions and training employees may be required to assist at other locations where an emergency event has occurred which has the potential to cause significant damage to Alcoa's operations at that location." Do you see that?‑‑‑Yes.

PN732

Benefit in that for Alcoa?‑‑‑I would hope that our employees and I know employees well enough to know that they don't need that in the agreement to provide that support.

PN733

Thought the employees would do that anyway?‑‑‑Yes.

PN734

Including the AWU members?‑‑‑Many of them, yes.

PN735

Many of them or all of them?‑‑‑Many of them.

PN736

All right. So if it's only many of them then the clause would help Alcoa wouldn't it? Because it would lock in the other ones?‑‑‑Yes.

PN737

Thank you. All right. Dispute settlement procedures, paragraph 24, reducing the disputes procedure from five stages to four stages. Does that assist Alcoa?‑‑‑Not in most disputes, but it would expedite the top end disputes around termination and final warnings, suspensions without pay.

PN738

Second dot point, the removal of the status quo requirement at the point that the matter is referred to the Fair Work Commission, plus the AWU has agreed to carve out location changes, scope of work, hours of work and lawful instructions from the status quo provision. Do you see that?‑‑‑Yes.

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PN739

Didn't you just refer to the problem about the status quo provision applying for changes of hours of work?‑‑‑I did.

PN740

So, wouldn't that dot point resolve that issue?‑‑‑Again, if this was put to us in bargaining, we would have been very happy and this was the first time I saw it. This is a condition that if it was sustained, and is meant, would be helpful to Alcoa. Although, I don't know - I withdraw that. Some of those things around location, change of scope of work hour, hours of work, lawful instructions, things that need to be accessed immediately to be of benefit. So, if they are carved out of the status quo and we cut access to those things, then it does become a benefit to Alcoa.

PN741

You keep referring to these things being put in bargaining, but I mean, these statements have been filed with the Fair Work Commission, haven't they?‑‑‑Yes.

PN742

So if the AWU in the future was not abiding by them, you could presumably look at good faith bargaining issues, couldn't you?‑‑‑Yes, we could.

PN743

So, why do you - I mean, it almost sounds like you haven't even properly read these concessions. Have you ever properly had a look at these concessions?‑‑‑I most certainly have.

PN744

Finally, an interspaced model approach to the disputes procedure to try and encourage the resolution of matters without assistance from the Fair Work Commission. Is that helpful or not?‑‑‑I would imagine it to be so.

PN745

Disciplinary action requirements. Paragraph 26, the AWU has agreed subject to a decision to terminate the current agreement to increase the maximum length of suspension without pay from two weeks to four weeks. Do that help Alcoa?‑‑‑No, not particularly.

PN746

Would it allow Alcoa to suspend someone without pay for four weeks whereas it can only currently be two?‑‑‑Yes, but the reason that that's there is to encourage us not to terminate.

PN747

I don't entirely understand that point, but nevertheless, subject to a decision being made to terminate the current agreement, the concession is there, isn't it?‑‑‑Yes. Although, I'm not sure I would call it a concession. That's the point I was making.

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PN748

I'll try again. So at the moment, presumably under the current agreement you can only suspend without pay for two weeks?‑‑‑Correct.

PN749

Based on the concession, you could suspend without pay for four weeks?‑‑‑Yes, if that's sustained, you could.

PN750

That would save potentially, I mean, let's hope everyone behaves themselves, but assuming they didn't, that would save Alcoa money, would it not?‑‑‑Two weeks' pay every time that we actioned it.

PN751

That's a cost saving?‑‑‑Potentially.

PN752

Cost savings are good?‑‑‑They are good.

PN753

Does Alcoa like cost saving?‑‑‑We do.

PN754

Why do you keep arguing with me about these concessions? Why don't you just embrace them?‑‑‑Because I'm talking to you about the nature of the concession. The concession was made to provide a broader window for suspension to encourage Alcoa to take that path, rather than terminate.

PN755

Right, second dot point, remove the current requirement to notify the AWU senior site representatives and convenors about disciplinary action. Alcoa will only have to notify the affected employee. Seems like a relatively minor issue, but is it of some significance? I mean, presumably Alcoa raise it?‑‑‑I can't recall who raised it. It's of minor significance.

PN756

I doubt the AWU would have raised it. Is that fair?‑‑‑I don't know.

PN757

Third dot point, employees facing dismissal will receive a maximum of 18 weeks of salary payments while contesting the proposed decision. Is it correct that under the current agreement the period can be longer than 18 weeks?‑‑‑Yes.

PN758

So that concession could deliver a cost saving to Alcoa?‑‑‑It could.

PN759

Cost savings are good for Alcoa?‑‑‑They are good.

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PN760

I should have read on. Employees will also be required to access any accrued annual and long service leave during the 18 week period. That could deliver a cost saving?‑‑‑It could, yes.

PN761

Then there's additional content about the AWU not supporting an unfair dismissal. The fourth dot point, reduce the AWU's ability to dispute matters arising from consultation processes, unless Alcoa raises a major change which will have a significant effect on employees. Does that help?‑‑‑No, I don't quite understand that one, frankly.

PN762

Extended paid sick leave, paragraph 28. The AWU has agreed, subject to a decision to terminate the current agreement to a longer qualifying period for extended sick leave. Does a longer qualifying period potentially save Alcoa money?‑‑‑No, not necessarily.

PN763

For payments to be capped at 85 per cent of base remuneration, not including shift penalties. That must save Alcoa money?‑‑‑It depends, what we're hoping it does is encourage people back to work quicker in which case they're getting 100 per cent of their full remuneration including shift penalties, even if they're working limited hours. So, it may save us money. It may not. What we're really hoping to do in addition to saving money if that happens, is to provide the best possible opportunity for people to recover and we know that being at work assists in that process.

PN764

Is it correct that Alcoa raised the current extended sick leave provisions as a claim it wanted to reduce?‑‑‑Yes it is.

PN765

That concession in paragraph 28 does help Alcoa to some extent, doesn't it?‑‑‑I haven't seen it in bargaining at any point, but if you're telling me that it's now other than for potentially the outcome of this process, irrefutably part of the AWU's claims, then that would be useful.

PN766

That would be useful; improvement for Alcoa?‑‑‑Yes.

PN767

Union structure and arrangements, paragraph 30. The AWU has agreed, subject to a decision to terminate the current agreement to move away from the contentious 2005 arrangement. That's something Alcoa wanted, isn't it?‑‑‑I'd need more details about what the AWU thinks that means.

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PN768

Right, a more prescribed approach to paid meetings and for the meetings to be subject to operational requirements. Also, a significant reduction in union meeting hours. Is that - - -?‑‑‑It could be, but that's not what I understand the proposal to be.

PN769

Right, but just try and proceed on the basis of what is written here, which I have repeatedly confirmed is the genuine position of the AWU. That concession would be of assistance to Alcoa wouldn't it?‑‑‑I'm not actually sure what the union meeting hours that the AWU propose is.

PN770

Right, and the third dot point. Not claiming expenses for interstate travel, does that assist?‑‑‑A little bit, yes.

PN771

Cost saving?‑‑‑Yes.

PN772

Additional matters, job descriptions to not be contained in the new agreement, so that they can be amended by agreement without the need for a variation to the agreement. Also, the ability for Alcoa to introduce new job descriptions. The ability to introduce new job descriptions helps Alcoa, doesn't it?‑‑‑Just let me read through that again. I guess how that relates to dispute settlement procedures and the like, but I'm a bit confused about what the point of that job description point is.

PN773

Can Alcoa introduce new job descriptions under the current agreement?‑‑‑Yes.

PN774

Third dot point, an ability for Alcoa to direct employees with excessive leave balances to find as a balance of 11 or 12 weeks to take annual leave. Does that help Alcoa?‑‑‑Yes.

PN775

Cost saving potentially?‑‑‑Potentially.

PN776

Mr Gleeson, assuming those concessions we've just gone through are actually the position of the AWU, would Alcoa agree to those concessions and modest increases to wages. Would that satisfy Alcoa?‑‑‑Well, there's a lot of assumptions being made there. But I don't think that the redundancy position would be accepted by Alcoa.

PN777

All right, so even the AWU would be moving on minimum manning, moving on labour hire, increased scope for redundancies, all the other concessions, that still wouldn't be enough for Alcoa, just recorded a net profit of 1.1 million, still not enough? Is that right?‑‑‑I would need to see a consolidated agreement and be able to make a judgment before I could answer that question fairly.

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PN778

Well, obviously there's details but assuming the concessions are as written. The current agreement concessions, modest increase to wages. Could Alcoa live with that?

PN779

MR DIXON: I object. The witness has for example in relation to paragraph 30, he says "What does it mean to move away from contentious 2005 arrangements?" He's now being asked to answer a question as to whether this was acceptable to Alcoa, and one assumes that this question by my learned friend must incorporate the condition about the threat of withdrawal of these concessions in the question.

PN780

THE DEPUTY PRESIDENT: Mr Crawford?

PN781

MR CRAWFORD: I'm just trying to sort this situation out, get people back to work, get a new agreement locked in. I don't understand the hostility.

PN782

THE DEPUTY PRESIDENT: I suppose I'm interested in determining this matter.

PN783

Mr Dixon?

PN784

MR DIXON: I'm sorry, I didn't mean to interrupt your Honour.

PN785

THE DEPUTY PRESIDENT: No, it's okay. It's just, you know, the purpose of the hearing today is - and the hearing for the rest of the week, is we've got an application on foot under 225 and I'm charged with determining that. So I appreciate where you're coming from but that's my primary purpose here, Mr Dixon.

PN786

MR DIXON: No, no, I hadn't intended to raise anything.

PN787

THE DEPUTY PRESIDENT: Okay.

PN788

MR DIXON: I apologise if I interrupted your Honour.

PN789

THE DEPUTY PRESIDENT: No problems at all.

PN790

Mr Crawford?

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PN791

MR CRAWFORD: Thank you, your Honour.

PN792

Mr Gleeson, are you aware of an article that Mr Parker wrote for the Financial Review last week?

PN793

MR DIXON: I object on the same basis I objected this morning.

PN794

THE DEPUTY PRESIDENT: Yes.

PN795

MR DIXON: Relevance.

PN796

THE DEPUTY PRESIDENT: Mr Crawford?

PN797

MR CRAWFORD: It is - I mean I'm only asking if he's aware of it. It is potentially public comment from Alcoa about their current - - -

PN798

THE DEPUTY PRESIDENT: No, but the question is relevance? So it might be in the public but does that mean it's relevant?

PN799

MR CRAWFORD: Well, if it's putting forward an inaccurate picture of the current situation it could be relevant I would say. All right, I'm prepared to move on.

PN800

Mr Gleeson, can you please turn to your first statement. Can you please, sorry, turn to paragraph 54A.

PN801

THE DEPUTY PRESIDENT: Sorry, before you proceed, Mr Crawford. Were you intending to tender the statutory declaration into evidence or have I missed it?

PN802

MR CRAWFORD: No, I think that was my error. Yes, I would like to tender that, your Honour.

PN803

THE DEPUTY PRESIDENT: So we'll mark that R2.

EXHIBIT #R2 FORM 17 STATUTORY DECLARATION - MATTHEW GLEESON DATED 28/01/2014

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PN804

THE DEPUTY PRESIDENT: Sorry, proceed.

PN805

MR CRAWFORD: Thank you, your Honour.

PN806

Do you have paragraph 54 there, Mr Gleeson?‑‑‑Yes.

PN807

You refer to the cell principle in there, is that right?‑‑‑Correct.

PN808

There are already references in the current agreement to the cell principle aren't there?‑‑‑I believe so.

PN809

And I'm also aware there's references to the cell principle back in the 2003 agreement. Are you aware of that?‑‑‑I don't know.

PN810

Do you accept the cell principle is nothing new, is it?‑‑‑It's not new.

PN811

Just quickly at paragraph 79, just in that last sentence of that paragraph you refer to the prohibition on compulsory redundancies. Is that right?‑‑‑Yes.

PN812

But that's not actually correct, is it? There can be compulsory redundancies in some instances under the 2014 agreement?‑‑‑If we're in the unfortunate position of a major closure or a shutdown there can be.

PN813

And there's also reference to industrial action isn't there?‑‑‑Correct.

PN814

So it's not actually correct that there's a blanket prohibition, is it?‑‑‑Not a complete prohibition. It's very, very difficult and we would be in a very unfortunate situation if we ever got to access it.

PN815

Okay, so you're correcting essentially what's in that paragraph, are you?‑‑‑No, I'm just clarifying that in the event of a major closure or a shutdown we do have the right to use involuntary redundancies.

PN816

All right, and in relation to - I mean your paragraph talks a lot about the bargaining process and how long it has taken. It reads as if you're a bit frustrated with the process. Is that correct?

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PN817

MR DIXON: Which paragraph (indistinct).

PN818

MR CRAWFORD: No, I said that generally. I can - I'll re‑word that question.

PN819

I mean bargaining has been protracted?‑‑‑Yes.

PN820

Do you accept that the length of bargaining has been generated because of the claims Alcoa is making, not claims by the AWU?‑‑‑No.

PN821

Do you accept that Alcoa is seeking to reduce a number of conditions as part of this bargaining process?‑‑‑I accept what I would say is that Alcoa has put more issues on the table, I guess, than we have done in previous bargaining rounds given what we discussed earlier about the volatility of our markets, the volatility of our pricing and the industry crisis of 2015, 2016 which caused us great, great difficulty.

PN822

Mr Gleeson, can you please turn to paragraph 231 and 232. In those paragraphs you're talking about the undertaking offered by Alcoa?‑‑‑Yes.

PN823

And in paragraph 232 you say, presumably referring to the six month period, that:

PN824

In my view that will allow employees following termination of the 2014 AWU agreement sufficient time to make adjustments to their personal financial arrangements.

PN825

Is that correct?‑‑‑Correct.

PN826

Have you ever had your income reduced by around 60 per cent, Mr Gleeson?‑‑‑No, I don't believe so.

PN827

So how have you come to give evidence that around six months is a reasonable period to deal with a 60 per cent reduction in your income?‑‑‑Well, we're hoping of course to have an agreement approved by that stage and make it unnecessary. Six months is a long time for people to make adjustments.

PN828

But there's no guarantee a new agreement would be struck if the agreement was terminated, is there?‑‑‑No.

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PN829

And if it isn't, the undertaking falls away and employees potentially could be paid award conditions?‑‑‑Just potentially. Correct.

PN830

All right, but you're still comfortable that your Alcoa employees after six months could adequately deal with a 60 per cent reduction to their wages?‑‑‑I'm not comfortable with it and I hope it doesn't happen but it's a prospect if we can't reach a reasonable agreement.

PN831

Well, the only reason it would happen is because of Alcoa's application in these proceedings. It's entirely within Alcoa's control. It didn't have to happen?‑‑‑No, I don't accept that at all.

PN832

Do you accept that the only reason that wages would drop potentially by about 60 per cent after a period of six months after the - when the undertaking basically lapses would be because of Alcoa's application in these proceedings?‑‑‑No.

PN833

What would be the cause of the 60 per cent reduction?‑‑‑Of the AWU remain uninterested in reaching a reasonable agreement.

PN834

So it would actually be the AWU members who are responsible for their own 60 per cent reduction in wages. Is that correct?‑‑‑No I didn't say that.

PN835

Well, what are you saying? Whose actions would have reduced wages by 60 per cent?‑‑‑I'm saying we have a mutual obligation to try to reach a reasonable agreement.

PN836

But Alcoa has applied to terminate the current agreement, hasn't it?‑‑‑Yes we have.

PN837

And isn't it correct that an effect of that could be employees' wages dropping by 60 per cent six months after the agreement is terminated?‑‑‑That is a potential effect.

PN838

And that effect would be caused by Alcoa wouldn't it?‑‑‑No. We have that period of time to reach an agreement and if we reach an agreement it won't happen.

PN839

Is that seriously your evidence?‑‑‑Well, it's an obvious fact.

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PN840

So you're not going to accept that that 60 per cent reduction would be caused by Alcoa?‑‑‑You're saying that it is caused by Alcoa. I'm saying it is caused by a mutual inability to resolve a reasonable agreement.

PN841

The cause of that mutual inability to reach a new agreement is a new agreement has not been struck. It's not the current agreement being terminated, is it?‑‑‑I didn't follow your question.

PN842

The outcome of the parties not being able to reach a new agreement, that outcome in itself doesn't reduce wages by 60 per cent, does it?‑‑‑So I'm still not following what you're getting at.

PN843

If the agreement is not terminated, the current agreement continues operating doesn't it?‑‑‑Correct.

PN844

So if the parties mutually are not able to reach a new agreement the current agreement continues operating, no one's pay gets reduced by 60 per cent does it?‑‑‑Correct.

PN845

The trigger, the action that causes the reduction is Alcoa's application in these proceedings isn't it?‑‑‑No. No, I've made this point multiple times. What causes the reduction is an inability to resolve a reasonable agreement. A mutual obligation of the parties is to try to work together to make sure that doesn't happen.

PN846

But I repeat - - -

PN847

MR DIXON: The witness has answered the question. I don't think repeating the question is going to take the matter any further, with respect, your Honour.

PN848

THE DEPUTY PRESIDENT: Mr Crawford, unless you've got some sort of other bend which you're going with concerning this question, I don't see it necessary to repeat the same question.

PN849

MR CRAWFORD: I accept that, your Honour. I'll move on.

PN850

Can you please turn to your reply statement, Mr Gleeson. Can you please turn to paragraph 11. Do you have that?‑‑‑Sorry?

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PN851

Do you have paragraph 11?‑‑‑Yes.

PN852

You state there that on 20 July 2018 you sent the AWU bargaining representatives a proposed agreement under cover of an email and you state "This is Alcoa's best offer". Is that correct?‑‑‑Yes.

PN853

And was that its best offer as of that date or best offer in general?‑‑‑It was a best offer on the 20th of July.

PN854

Okay, and did Alcoa shortly after agree to make some changes following requests from the AWU?‑‑‑Yes we did.

PN855

So its best offer improved shortly afterwards. Is that correct?‑‑‑After we gave the AWU that document we received a request from the AWU to consider a bunch of things that they thought would improve it and we accepted many of those things.

PN856

And the offer I guess improved as a result?‑‑‑Well, it seems to have for the AWU. It was them that proposed most of those changes - all of those changes, sorry.

PN857

Can you please turn to paragraph 38. Now it's important that we understand what you're saying here. You say:

PN858

In addition to the undertaking, Alcoa will continue to try and persuade its employees and bargaining representatives to make a new enterprise agreement in the terms of the 20 July Alcoa proposed agreement subject to Alcoa also including the additional matters that are agreed to by it in Alcoa's 26 July response. That proposed agreement will remain open for approval.

PN859

So is Alcoa's position that even if the current agreement is terminated the offer it recently put will indefinitely remain open for approval?‑‑‑Well, it's there if people want it but we'll bargain in good faith.

PN860

Right, but does that mean that unless in the unlikely event that people actually ask for it, Alcoa would not propose to reduce its offer below that indefinitely?‑‑‑Well, no, the offer might change depending on the progress of those talks.

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PN861

Could it change in a way that would bring about a negative effect for employees?‑‑‑It could change in a way that would bring about a negative effect for some employees and a positive effect for others that balances it together. It could change in a way that's positive for all or negative for all. I don't know. That remains to be seen in the future when we sit down and bargain.

PN862

All right, well I may have misunderstood your evidence. I understand that:

PN863

That proposed agreement will remain open for approval.

PN864

Means that the conditions in that agreement would remain available to employees indefinitely into the future. Is that not the case?‑‑‑Well, the employees have rejected that agreement but we still regard it as a worthwhile document and when we sit down with the AWU in a week's time we'll be asking them to tell us what's wrong with it and make some proposals.

PN865

All right, well that's all well and good but will that return to that proposed offer remain available indefinitely if the agreement is terminated?‑‑‑If the employees come to us and say "We want that proposal that you took to the employees for a vote" I would very strongly consider it.

PN866

So that's different. That's not guaranteeing it will be there at all, is it?‑‑‑No, I'm simply telling you we're obligated to bargain in good faith. The union will I presume come up with some proposals for us. The right thing for us to do would be to consider them and if they're good proposals that help our business they may be included in a future proposal. We do, as you said a little earlier, need to get an agreement resolved.

PN867

All right, so admittedly there will be bargaining that could result in improvements to the proposed offer, but Alcoa's intention is that an offer at least in those terms will remain open indefinitely if the agreement is terminated. Is that correct or not?‑‑‑No, I wouldn't quite put it that way.

PN868

What does "That proposed agreement will remain open for approval." mean?‑‑‑If the union came to us for example and says "Look, we've reconsidered that no campaign that we run. That was a bad idea. Would you put that document out again and we would endorse it?" well that would be something we would consider.

PN869

So it would be something you would consider but you're not willing to sit here today and guarantee that that offer would remain available. Is that correct?‑‑‑Well, we're obligated to get back into bargaining. I can't give you guarantees on the outcome of that.

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PN870

This is a very significant issue for the Commission to take into account, Mr Gleeson. You've put in your witness statement that:

PN871

That proposed agreement will remain open for approval.

PN872

Is that the case, subject to it being approved, or that isn't the case?‑‑‑Well, it's been rejected. There's already been a vote on it. As I've said to you, if the union would come to us and say, we've reconsidered our position on that. Can you put that vote back out to us and we'll endorse the thing, that would be something we would very strongly consider.

PN873

But are you willing to go beyond that and say it wouldn't be something that you'd seriously consider? Are you willing to guarantee that that agreement will remain open for approval, or not?‑‑‑I can't make guarantees about the outcome of bargaining that we haven't engaged in.

PN874

So, that proposed agreement may not actually remain open for approval? That's the correct position?‑‑‑It may; it may not. We'll see where we go with bargaining.

PN875

Well, that is not what your statement says that says that proposed agreement will remain open for approval. Are you altering that position today, or are you not?‑‑‑No, I'm simply saying we need to see where we're going with bargaining.

PN876

I'll just ask one final time. Alcoa is not guaranteeing that that proposed agreement will remain open for approval indefinitely if the agreement is terminated?‑‑‑No, I'm not. I'm saying that we are bargaining in good faith and if the union comes up with some proposals, for example, that make that proposal better for their members and for the organisation, why we wouldn't take a good look at that.

PN877

Mr Gleeson, I think - you seem like an intelligent man, I think you know what I'm getting at here. If the agreement is terminated is Alcoa going to try and reduce the offer it's recently put or not?‑‑‑You hadn't asked that question previously.

PN878

I've attempted to, but I'm open to criticism. Now, if I have clarified that, can you confirm Alcoa's position?‑‑‑Again, I would say to you it remains to be seen in bargaining, but if the agreement is terminated, we would put - eventually - a proposal to the employees that I think would be every bit as good as the one that we just put forward. We're not here to take money off our people. We offered them pay rises and really solid conditions that were sensible for the market that we operate in. We want to get a good agreement that's flexible and allows us to operate in all of the market conditions that we face.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN879

If that's Alcoa's intentions, can you please guarantee, like you've said in your statement, that that proposed agreement will remain open for approval?‑‑‑I'm not giving permanent guarantees about the process of bargaining that has not even been undertaken. We need to bargain and we'll see what comes of that.

PN880

Again, it isn't impossible that after the agreement is terminated that Alcoa could offer inferior conditions to those contained in its recent proposal?‑‑‑It's not impossible. That is not our intention.

PN881

Right. Alcoa, given it recently put an agreement out to vote was obviously prepared to agree to those terms, wasn't it?‑‑‑Yes.

PN882

You've just indicated that Alcoa is also prepared, if it succeeds in this application to use that additional leverage to try and lower those proposed conditions. That's what you're saying, isn't it?‑‑‑That's not what I said at all.

PN883

How isn't that the effect of what you just said?‑‑‑That's not what I said at all.

PN884

Well, you've offered recently a proposed agreement. It has its terms in it. They apparently are acceptable to Alcoa at the moment?‑‑‑Yes.

PN885

If the agreement is terminated, you are not willing to guarantee that Alcoa will not make an inferior offer?‑‑‑Your question was is it impossible that Alcoa would make an inferior offer. Well, no, it is not impossible; it is not our intention.

PN886

So it is therefore, if it's not impossible, it is possible that if the agreement is terminated, Alcoa will make an inferior offer?‑‑‑No, it's possible that may happen; it is not our intention.

PN887

I'm getting to the end. Paragraph 51 of your reply statement Mr Gleeson?‑‑‑Yes.

PN888

You refer to Alcoa's business crisis in early 2016, is that correct?‑‑‑Yes.

PN889

Alcoa's business suffered a crisis in early 2016?‑‑‑Correct.

PN890

Alcoa still recorded a net profit of $249.1 million for 2016, didn't it?‑‑‑I think we went through that earlier.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XXN MR CRAWFORD

PN891

Is that a yes?‑‑‑I think that was it, I don't have it in front of me. I can go back to the documents if you'd like me to. Do you want me to?

PN892

If it's handy.

PN893

THE DEPUTY PRESIDENT: Do we have to?

PN894

MR CRAWFORD: No, okay. At paragraph 62, 69 of that reply statement, Mr Gleeson, you refer to the evidence Mr Kamper gave in his first witness statement. Is it fair to say that you were attempting to cast out on the information?‑‑‑No, provide clarity on it, I would say.

PN895

Thank you, Mr Gleeson, no further questions. Your Honour.

PN896

THE DEPUTY PRESIDENT: Thank you Mr Crawford. Mr Dixon.

RE-EXAMINATION BY MR DIXON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [4.09 PM]

PN897

MR DIXON: May it please, your Honour. I am going to be just probably 20 minutes to half an hour. I wonder if Mr Gleeson could have, and the rest of us, have a short break before I do so. Unless - I don't know what time your Honour intended to finish. We got some indications that it might be sitting longer, but if it's going to cause your Honour any difficulty, we'll keep going, subject to - are you?‑‑‑No, I'm fine.

PN898

Fine.

PN899

THE DEPUTY PRESIDENT: So, Mr Dixon, I'll ask you and Mr Crawford, what time would you like to go through to?

PN900

MR DIXON: Well, I thought it might be helpful if I could give your Honour some indication as to how we see the case going, subject of course to your Honour's requirements. My discussions with Mr Crawford and it's consistent with my view that I'm almost - we're reasonably confident of finishing the evidence by Wednesday. Then with a view to making final submissions on Thursday.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN901

That might not require very long sitting hours during the day because my present estimates - I think Mr Crawford will correct me if I'm wrong, but he indicated that his cross-examination of Mr Gleeson will be longer than the other two witnesses that we have. In relation to my cross-examination with tomorrow and Wednesday, the evidence will be faithfully in my present estimate, done.

PN902

So, with that in mind, your Honour can give us some indication of course, as to the hours that your Honour would prefer to sit.

PN903

THE DEPUTY PRESIDENT: Probably not a wise suggestion because we would be doing 12 hour shifts. But notwithstanding - look, I appreciate that a short adjournment might be appropriate in the circumstances to allow people to have a hygiene break and to seek some refreshment, so I would suggest that we will adjourn.

PN904

MR DIXON: But Mr Gleeson confirmed - I'm happy to continue if your Honour - - -

PN905

THE DEPUTY PRESIDENT: Mr Crawford, are you okay to continue?

PN906

MR CRAWFORD: I am, but I meant do we anticipate that after re-examination we may wrap up for the day, or are we pushing on through?

PN907

THE DEPUTY PRESIDENT: Yes, that's what I was anticipating that if we finished with the re-examination, and then we would conclude for the day and restart tomorrow.

PN908

MR CRAWFORD: Yes, that's suitable.

PN909

THE DEPUTY PRESIDENT: I test the water on a 9 o'clock start for tomorrow?

PN910

MR DIXON: If your Honour pleases.

PN911

MR CRAWFORD: We're from Sydney, we wake up early anyway over here, your Honour.

PN912

THE DEPUTY PRESIDENT: All right, we've listed for nine, super.

PN913

MR DIXON: Let him speak for himself. Thank you, your Honour.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN914

May I ask you, Mr Gleeson, to turn back, if you have the copy of the 2014 agreement in front of you. I ask you to turn to clause 4.1 and you will recall you were asked some questions in relation to subparagraph (b)(i). Sorry, first of all clause 4.1(a) and I think you said that that position had not been achieved and why did you say that it does not happen in real life. 4.1(b)?‑‑‑Because that's the practical experience. There have been disputes with the AWU for example at Pinjarra refinery and the life of this agreement. There was a dispute between one AWU delegate who raised a dispute over the loading of a bucket of alumina onto a belt because in his view that was work that belonged to one particular group of AWU workers and not another. It was the other that we had instructed to do the work. We've had disputes over whether or not trades people covered by other agreements can wash down a truck in our mines with the AWU saying no, they're not allowed to do that, that's our work only. So, practically, those things have not been achieved.

PN915

In relation to 4.3(b), to remove restrictive work practices. When you answered that question, you emphasised endeavour - sorry, I'll withdraw that. In relation to 4.3(b), what if your experience in relation to the removal of restrictive work practices?‑‑‑That they're very difficult to remove if those work practices are favoured by the AWU. For example, we've had disputes over people moving from one crew to the other, because - doing the same job getting the same pay, working the same roster, but where we've had to balance skills on a shift people have objected to, for example, having to break their car crew or other such things for people who are driving into work. In disputes that's broke the veils and into the process you go, it takes many months to get it resolved. So simple, simple things like that, do not happen efficiently or quickly.

PN916

6.7, you were asked about. What has your experience been in relation to that provision?‑‑‑We've had issues where - just a recent example. We had some issues at the Kwinana plant, we had a control attendant who wished to take a break at lunch. We asked another employee who had all the skills required of a control attendant to man the board during that lunch break so the employee could take a break and he refused because that wasn't something that he intended to do despite the fact he was trained, approved and signed off to do that work.

PN917

6.8, you were asked about that, the working of additional time and you said it's the intention, it does not happen. Can you explain that?‑‑‑Additional time is meant to be a provision that Alcoa many years ago, paid into the annualised salary of AWU workers to try to drive a car to where people would, if they were getting to the end of a shift or a day, stayed back and tried to make sure that a job that could be reasonably completed in a short period of time, was completed. It doesn't happen and we've tried to trigger it, which we don't do often. That's been put into dispute and then left aside and then of course, there's not much point carrying on with the dispute because we have to get other people to finalise the work.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN918

You were asked questions about clause 10.1 about employees - workers are expected and required to work additional time and you said it does not happen. Can you explain what you meant by that?‑‑‑The same thing that our employees receive a salary that is meant to take into account the prospect that on occasion you may be required to stay back after the official knock-off to get a job complete. When we've tried to trigger that provision which we don't often do, but we have occasionally done, it's disputed. Recently was at the Kwinana refinery, probably only six weeks ago.

PN919

In relation to clause 10.3(g) the shift patterns, you were asked some questions and you said they are disputed. Can you - has Alcoa sought to change shift patterns?‑‑‑We have.

PN920

Can you tell the Commission - give an example of what you've just said?‑‑‑We've tried to change shift patterns in our mining group and implemented a full panel production shift at Huntly. That was disputed and took us three years, four years or similar to actually be resolved.

PN921

In relation to that same issue, you gave an answer when it was put to you that you could go to the Commission and you responded about the environment had changed, you couldn't guarantee an outcome and then you went on, as my notes said, that you should be able to access change without the status quo operating and you make reference to the global market. In that context you were challenged. Can I ask you to turn - that you hadn't mentioned it before? Can I ask you to turn to paragraph 64 of your second statement which is exhibit A7?‑‑‑Sorry, this is the witness statement in reply?

PN922

The witness statement of 1 August 2018 which is exhibit A7 now?‑‑‑What page was it sorry?

PN923

Paragraph 64?‑‑‑Yes.

PN924

In the global market earlier, you see that paragraph 64? What did you mean by being competitive against international refineries?‑‑‑Well, this is a global marketplace and we're required to compete, not with just a couple of selected Australian refineries, but with dozens of refineries from all around the world. Those refineries have - generally as the CRU analysis demonstrates, lower and often far lower loaded costs than Alcoa in Australia. So, if you want to compete in a global commodity market with very high labour costs you need to be flexible, you need to be dynamic, you need to be able to organise your business to meet the needs of that market. Because you don't have the low labour cost advantage that other jurisdictions have.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN925

I think you referred to CRU data?‑‑‑That's correct.

PN926

Just so that we're clear about that, is that what you refer to in the balance of paragraph 64? Sorry, balance 66 and following or are you referring to something else?‑‑‑No, that's what I'm referring to.

PN927

Thank you. Turning then back to the 2014 agreement. You were asked some questions in relation to clause 17(e)(vi) with the limitations on compulsory redundancies. Does Alcoa have a need for compulsory redundancies beyond the major closures and shutdowns?‑‑‑Yes.

PN928

Can you explain what that need is?‑‑‑There may be, for example, the capacity to lower our workforce numbers if there's technological advancements or improvements that mean that jobs are not required to be done - that are currently done. We may have the capability to save money and make our operations more sustainable if various activities were done by specialists who might do those activities better than what Alcoa does.

PN929

And then, lastly, on this agreement you were asked questions about manning numbers and that they were linked to unprotected industrial action. Has Alcoa had the benefit of the link being removed or the disadvantage of the link being removed?‑‑‑No.

PN930

May I then ask you please, Mr Gleeson, to return if you may to Exhibit R1, which is the Sustainability Highlights 2014-2015? Do you have that handy? Would you turn to page three, please, Mr Gleeson? And you will see that this of course it appears to be a document that is produced on behalf of Alcoa of Australia, and on page three there's a reference in the third paragraph to other businesses. Can you tell the Commission what Alcoa of Australia World Products Pty Limited's business is?‑‑‑That's the Yennora and the Point Henry roll products plants take aluminium sheet and cut it up into cans et cetera. They have unfortunately since been shut.

PN931

And does that apply to all three of those entities?‑‑‑No. The others are still operating, however, they form part of an organisation called Arconic which is downstream manufacturing that split from Alcoa a few years ago.

PN932

So they're no longer relevant to Alcoa's financial position?‑‑‑They are not relevant to Alcoa's financial position.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN933

And then if you turn to page four and the first paragraph at the top of page four talks about Alcoa having endured turbulent market conditions in 2014 and '15. What is your understanding of what the turbulent market conditions were?‑‑‑Decreases in the price of alumina.

PN934

And then it says that Alcoa placed additional challenges on its operations. What can you tell the Commission about your knowledge about the additional challenges on Alcoa's operations?‑‑‑We were having to look deeply at the portfolio of assets that we run globally because the market was over-supplied for alumina and aluminium ingot. Several of Alcoa of Australia's assets were being closely looked at for potential closure. One of those was certainly the Kwinana Refinery. The price we were getting for our product didn't cover anything like what it cost to make out of that plant which made significant losses through that period and decisions had to be made on whether it would continue to be a part of the Alcoa portfolio going forward. And in order to show the organisation that we could maintain Kwinana as our operating plant we had to make changes that could demonstrate that it had a future so that decisions on asset closure would be based in other countries, not in Australia.

PN935

And were there any - was there any impact on any mining operations or challenges in mining?‑‑‑Well, there always is when the mines supply the refineries and at that point we were not exporting bauxite from Australia to third parties. So if we were unable to continue to run three Western Australian Refineries and had to close one down there would have been significant impacts on particularly the Huntly operation.

PN936

Can I then ask you if you have to hand Alcoa's annual report for the year ended 31 December 2017 which was an attachment to Mr Kamper's statement that you were asked about and I'm referring to the annual return submitted to ASIC and ask you to turn to page 18 where you were asked about employee benefits - if I've got the right page - for 2017 and 2016. Are you with me?‑‑‑Yes.

PN937

Yes. Now earlier today you gave evidence that the total number of employees throughout Australia was approximately 4,270, is that correct?‑‑‑That's correct.

PN938

Now, are these benefits in this statement relate to that number or to some different number?‑‑‑It would be a different number.

PN939

The employee benefits that are referred to in the statement if you go to page two where it describes the principal activities of Alcoa Australia Limited includes the last dot point as the principal activities the aluminium smelter of Portland Victoria. Do you see that?‑‑‑Is that on page - - -

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN940

Page two. Yes, I think it's on page two. If it's the same copy as five of 76 at the top. It's got "directors" on it and then "principal activities"?‑‑‑Okay, yes.

PN941

And you will note that the last dot point on the principal activities includes joint venture with aluminium smelter of Portland, Victoria?‑‑‑Yes.

PN942

So does the two, as you understand it, do the employee benefits which you see on page 18 encompass all of the activities under principal activities on page two?‑‑‑Yes.

PN943

Now, of the total number of employees in Australia 4,270 approximately, what are the number of Alcoa's WA operations in total?‑‑‑I think it's about 3750.

PN944

Of that total, how many are AWU covered employees under this agreement?‑‑‑About 1450, I think.

PN945

You were asked some questions then, Mr Matthews(sic), in relation to Mr Kamper's reliance on material from Moody's and do you have handy the attachment I think which appears behind the statement of Mr Casper, his first statement, annexure C, appendix C. It's the second statement, I beg your pardon. Thank you. It's the Moody's Investor Services?‑‑‑Yes.

PN946

You were asked some questions about this page. If you look at, under the heading Ratings Rationale, the second paragraph, it says "AOA", which we take to be Alcoa Australia's "large low cost and fully integrated alumina refineries should allow it to continue to generate strong margins". How does that, in your view, its low cost strategy, compare with other operators worldwide?‑‑‑Do you mean what is our cost portfolio like, or?

PN947

Are you more or less cost - a low cost producer compared to operators worldwide?‑‑‑Generally, yes, but the Kwinana plant is a much higher cost plant. The Pinjarra and Wagerup plants are lower cost plants and are low cost plants by global standards. Kwinana is not.

PN948

You'll see in the next paragraph it says "These strengths are balanced against company's exposure to essentially a single metal commodity". What's your understanding - do you agree that the company's exposed to what is essentially a single metal commodity?‑‑‑Yes.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN949

What is your exposure?‑‑‑Well, we only operate in the aluminium industry. There's no copper, gold, iron ore or anything else, so it's bauxite mined, alumina refined, aluminium smelted.

PN950

It goes on to say "Its demand for bauxites and alumina is directly correlated to the demand for alumina". Well, how is that what appears to be a negative balancing against the low cost referred to in the previous paragraph?‑‑‑Well, it means that if the demand for aluminium diminishes, then the demand for alumina does also and the demand for bauxite does also and there's no capacity to balance that against potentially better performance in other metals or other commodities that might be being part of our portfolio because they don't exist.

PN951

The 2017 performance, what was the prime reason for the increase in profit from 2016 to 2017?‑‑‑There's a large spike in alumina price and that came about for a number of factors but largely due to confusion over the future of re‑sale to the major aluminium producer that is subject to sanctions from the US and ongoing other - under affiliations that the United States with other trade partners so they may not be able to put their product onto the market for an extensive period of time and due to significant operational errors at the biggest refinery in the world, Alunorte in Brazil, run by Norsk Hydro, which is essentially offline, and makes, I think, about 15,000 tonnes of product a day, substantially bigger than any of our refineries, and should those issues over which we have absolutely no control be corrected, that price is going to correct back downwards very quickly.

PN952

Were there any significant operational changes between 16 financial year and 2017 which contributed in any significant way to that spike in profit?‑‑‑No.

PN953

You were also then asked to express a view that you - you went on to be asked questions about whether your position would improve if the agreement was terminated and you said that you had reasons for expectation that the cost basis will improve if the terms of the present 2014 agreement are removed. What is the basis for your expectation that your cost basis will improve?‑‑‑Well, we'll have the capacity to staff our operations in the manner that we think is appropriate using the sell(?) principle. We'll have the capacity to use labour hire at a market rate to select people to work supplementary shifts who we know will do those jobs in a productive and efficient manner. Use the redundancy provisions appropriately if they are required. We'll have more flexibility to move people across the various departments in our operations effectively and all of those things will contribute to a better cost outcome.

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN954

You were asked then a sort of global question, Mr Gleeson, what actually changed to make you want to consider the removal of these provisions, and part of the answer that you gave, you referred to change in market, the market price plummeting, grave concerns and you said you needed to make adjustments to operations, this is back in 2015-16 as I understood it. What were those adjustments that you were referring to?‑‑‑We, for example, had a arrangement in the 2014 agreement that Huntly mine, in particular, contained a manning provision that went from 292 in 2014 to 270 in 2015 to 292 in 2016. Because at the time that that agreement was negotiated, the mine plant indicated that in 2016 they would revert to moga(?) trucking routes and require those people but, as is often the case, when there's a crisis in the market, people find out how to do things better and when 2016 came along, we had adjusted our ore rates, improved our performance, we did not need those people but we had to put them on. We had to put them on at our expense unnecessarily in the midst of an industry crisis.

PN955

Your Honour just bear with me for a moment.

PN956

THE DEPUTY PRESIDENT: Yes.

PN957

MR DIXON: If your Honour pleases, I have no further questions.

PN958

THE DEPUTY PRESIDENT: Thank you, Mr Dixon.

PN959

MR DIXON: May Mr Gleeson be excused if - - -

PN960

THE DEPUTY PRESIDENT: Yes, we've finished with this witness. Thank you for your evidence today. You're free to step down.

<THE WITNESS WITHDREW牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [4.42 PM]

PN961

THE DEPUTY PRESIDENT: Mr Dixon.

PN962

MR DIXON: May we call our next witness in the morning, if the Commission pleases?

PN963

THE DEPUTY PRESIDENT: Yes.

PN964

MR DIXON: That would be Mr Smith, if your Honour pleases.

PN965

THE DEPUTY PRESIDENT: Yes, and, Mr Crawford, you're not opposed to that course of action, we call the next witness tomorrow morning?

***牋牋牋� MATTHEW CRAIG GLEESON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR DIXON

PN966

MR CRAWFORD: Not at all, your Honour.

PN967

THE DEPUTY PRESIDENT: At 9.00 am?

PN968

MR CRAWFORD: Yes.

PN969

THE DEPUTY PRESIDENT: All right, good. In that case, we're adjourned for today and I will see you all tomorrow. Thank you.

ADJOURNED UNTIL TUESDAY, 18 SEPTEMBER 2018 牋牋牋牋牋牋 [4.43 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 STATUTORY DECLARATION AND UNDERTAKING..... PN29

EXHIBIT #A2 2014 AWU AGREEMENT........................................................ PN252

EXHIBIT #A3 BUNDLE OF NOTIFICATIONS OF PROTECTED INDUSTRIAL ACTION................................................................................................................................. PN256

EXHIBIT #A4 PROPOSED AGREEMENT 2018 (88 PAGES) 06/09/2018... PN261

EXHIBIT #A5 CIVS DECLARATION OF RESULT CIVS DATED 06/09/2018 PN265

MATTHEW CRAIG GLEESON, SWORN....................................................... PN302

EXAMINATION-IN-CHIEF BY MR DIXON.................................................. PN302

EXHIBIT #A6 WITNESS STATEMENT OF MATTHEW GLEESON DATED 19/06/2018................................................................................................................................. PN314

EXHIBIT #A7 WITNESS STATEMENT IN REPLY OF MATTHEW GLEESON DATED 01/08/2018............................................................................................................... PN321

EXHIBIT #A8 EMAIL DATED 03/08/2018 GLEESON TO PRICE.............. PN342

CROSS-EXAMINATION BY MR CRAWFORD............................................ PN364

EXHIBIT #R1 ALCOA AUSTRALIA SUSTAINABILITY HIGHLIGHTS PN425

EXHIBIT #R2 FORM 17 STATUTORY DECLARATION - MATTHEW GLEESON DATED 28/01/2014............................................................................................................... PN803

RE-EXAMINATION BY MR DIXON............................................................... PN896

THE WITNESS WITHDREW............................................................................ PN960

Fair Work Commission Transcripts

AG2018/919, Transcript of Proceedings [2018] FWCTrans 340 (18 September 2018)