Printed with the authority of the Australian Industrial Relations Commission Dec 1254/99 M Print S0239

Workplace Relations Act 1996

s.33 action on Commission's own motion

SENIOR DEPUTY PRESIDENT POLITES SYDNEY, 5 NOVEMBER 1999

[1] This matter comes before the Commission under s.33 of the Workplace Relations Act 1996 (the Act) on the Commission's own motion as a result of the following provision in the Western Power Certified Agreement 1999 (the agreement).

(a) This Agreement and any increases payable under it shall only apply to employees who are employees as from the date of the certification of this Agreement.

(i) 5% from the pay period commencing on 15 August 1999;

(ii) 4.25% from the first pay period commencing on or after 12 months after the date of certification of this Agreement; and

(iii) a further percentage increase from the first pay period commencing on or after 24 months after the date of certification of this Agreement. The quantum of this further increase shall be determined by the Commission, but shall be not less than 3.25% and not more than 4.75%.

(c) The claim for back-payment shall be determined by the Commission, but the quantum of any such back-payment awarded once-only shall be not more than 5% and, if granted, shall have effect from a date not earlier than 1 January 1999 and not later than 31 July 1999. Any such back-payment will only apply to those employees who are employed by Western Power as from the date of certification of this Agreement.

The parties agree that they will accept the decision of the Commission, the outcome of which will be incorporated into this Agreement. The parties will use their best endeavours to complete the arbitration of these claims by no later than 4 weeks after the date of certification.

(d) In the event that no subsequent agreement has been reached between the parties by a date six (6) months after the expiry date of this Agreement, then the prior Safety Net Adjustment arbitrated by the Commission in 2002 will be paid from first pay period commencing on or after that date. This payment will be immediately absorbed in the increases made under any such subsequent agreement."

[2] Pursuant to s.111AA of the Act I now proceed to determine the issues referred to in that clause. The history of the negotiation of the agreement is long and torturous but because it has been referred to in the submissions of both parties in relation to the questions before the Commission it is necessary to set it out briefly. Negotiations for the agreement commenced in June 1997 and the following summary of negotiations was given in Trevor Stanley Harvey's witness statement:

"11 Over the last 2 years (approximately) the parties have explored every avenue to reach an agreement:

* Between June 1997 and December 1998 parties met on some 93 occasions.

* Between January 1999 and August 1999 there have been approximately 26 further meetings, including 2 intensive `lock up' sessions of 2 days each.

* Western Power filed 2 section 99 disputes seeking AIRC assistance to resolve differences in August 1998 and July 1999.

* From September 1998 to December 1998 the parties held a number of confidential meetings chaired by Deputy President Coleman of the AIRC in an endeavour to reach agreement.

* An employee ballot was undertaken in December 1998 - January 1999 on a proposed Certified Agreement. This proposal was recognised as Western Power's best offer. That ballot resulted in a `no' vote in relation to the proposed Certified Agreement.

* Two intensive periods of negotiation occurred in March and June 1999.

* From 26 July 1999 to 9 August 1999 there were meetings before Deputy President Coleman every weekday (except 2 August 1999) to resolve differences resulting from a section 170MW application heard on 23 July 1999 following strike action which led to extensive power restrictions." [exhibit WP2(1) pp. 3-4]

[3] It is also important to note that final agreement was only reached after active conciliation by Coleman DP following "industrial action" by employees of Western Power on 23 July 1999 and an application by Western Power to cancel bargaining periods put in place by both the Australian Municipal, Administrative, Clerical and Services Union (ASU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). There was considerable evidence and material before me about the responsibility for that "industrial action" and its consequences but I do not think it necessary to resolve the conflict between the parties in that regard. It is sufficient to say that shortly thereafter and following recommendations of Coleman DP an agreement was concluded which contained the provision earlier referred to.

[4] In order to expedite the arbitration of the issues, the Commission directed the filing of contentions and of written witness statements. The ASU's contentions were as follows:

The two matters in the Western Power Certified Agreement 1999 to be determined by arbitration are found in Clause 19 PAYMENTS UNDER THIS AGREEMENT as follows:

* First Matter - Maximum of 1.5% Pay Increase

(iii) a further percentage increase from the first pay period commencing on or after 24 months after the date of certification of this Agreement. The quantum of this further increase shall be determined by the Commission, but shall be not less than 3.25% and not more than 4.75%'.

* Second Matter - Maximum of 7 months x 5% retrospective pay increase

`(c) The claim for back-payment shall be determined by the Commission, but the quantum of any such back-payment awarded once-only shall be not more than 5% and, if granted, shall have effect from a date not earlier than 1 January, 1999 and not later than 31 July, 1999. Any such back-payment will only apply to those employees who are employed by Western Power as from the date of certification of this Agreement.'

2. ASU Contentions - Retrospectivity and Pay Increase.

1. The ASU submits Western Power should seriously reconsider it's position of opposition in this arbitration due to the extraordinarily long time gap between nominal expiry of the 1994 Enterprise Agreement and certification of the 1999 Enterprise Agreement. The 1994 agreement nominally expired 30 June 1997 and the 1999 Agreement was not certified until 13 September, 1999 - a 26 month time gap_!_

2. Cost savings made by not paying wage increases over two years has advantaged Western Power to the disadvantage of employees. In the interests of fairness and equity, an adjustment should be made to help redress the imbalance over this two year period.

3. Due to the delay between pay increases, relationships have become strained. Western Power has an opportunity to improve relationships by not opposing the awarding of the maximum of 5% retrospective pay increase from 1 January 1999 and the maximum 4.75% pay increase provided for in the 1999 Certified Agreement.

4. This strained relationship needs to be relieved by a gesture of good faith in the interests of gaining employee respect rather than perpetuating animosity. Western Power has an opportunity to break the `them and us' cycle.

5. If Western Power opposes maximum retrospectivity/ maximum pay increase - any financial gains must be offset against the effects at work of loss of morale and disaffection towards Western Power due to loss of respect and disappointment.

6. Western Power still has the opportunity to recognise the inequity of the situation and its role in Enterprise bargaining rather than relying on the Commission.

7. If Western Power disregards the ASU suggestions towards improving employee relations, the Commission is at large to arbitrate the maximum increases provided by sub - clauses (b) (iii) and (c) of Clause 19 of the Certified Agreement. The grounds in support follow:

8. The ASU contends the Commission should grant the maximum increases provided by sub - clauses (b) (iii) and (c) of Clause 19 of the Certified Agreement to partly redress the loss of the annual average percentage wage increases during the 25 months spent conducting Enterprise Agreement negotiations for the 1999 Certified Agreement without any pay increase.

9. Between 30 June 1997 (when the 1994 agreements expired) until 15 August 1999 (when a 5% pay increase was provided in the 1999 Certified Agreement) negotiations proceeded without any pay increase for that 25.5 month period of time.

10. During this 25 month negotiation period there was a general average around 4% wage increase from Enterprise Agreements in Australian. (refer to attachment 1 CCH/ Agreements Database And Monitor - ADAM Report) [sic]

11. Even with the granting by arbitration of the maximum increases provided by sub -clauses (b) (iii) and (c) of Clause 19 of the Certified Agreement these increases will only partially compensate employees for the 25 months loss of the average 4% wage increase (referred to in attachment 1) in respect of the period of time referred to in paragraph 9 above.

12. The annual percentage pay increase over 5 years between 30 June 1997 (when the 1994 agreements expired) until 13 September 1999 (when the 1999 agreement expires) would be as follows:

From 30 June 1997, to 13 September 2002 = 5 years

Minimum arbitrated wage increase spread over 5 years = 2.5% average

Maximum arbitrated wage increase spread over 5 years = 2.8% average

13. Although the 1999 Certified Agreement is for a 3 year term with a total of 14% pay increases averaging 4.6% per annum, this is misleading. This formula does not take account of losses of annual pay increases for the 2 years period from the nominal expiry date of the former Agreement and the Certification of the new Agreement.

14. Employees of Western Power received their last 4% pay increase on 10 November 1996 now to be followed by the next 5% pay increase on 15 August 1999 -- 32 Months later or 2.75 years_. This 4% pay increase averages out at 1.5% pay increase over the 2.75 years._

15. Western Power's profits are at a record level and operating costs will not be significantly effected by the Commission granting a retrospective pay increase and 4.75% (not 3.25%) pay increase.

16. The ASU seeks discovery of the percentage pay increases received during 1997/1998 by the Executive Officers referred to in Western Powers 1997/1998 Annual Reports.

17. The Commission is at large to adjust the final percentage payment to the maximum of 4.75%. The ASU contends the 1999 Certified Agreement is undervalued in respect of the quantum of the percentage pay increases for employees. Employees are not adequately compensated for the real value to Western Power of the trade-offs, concessions and residual benefits which continue through provisions carried forward in other agreements referred to in Clause 7.

18. Industrial action was finally used by ASU as last resort. The ASU notified Western Power of the initiation of a bargaining period on 18 September 1997. Notice of industrial action did not occur until 7 June 1999 - 20 months later. Industrial action commenced 10 June 1999 with low level bans. On 20 July 1999 a 24 hour stoppage occurred which exempted Power Control personnel. Western Power later stood Power Control personnel down.

Jun 1994 First Western Power Enterprise Agreement Certified for 2 year term

Jun 1996 Nominal expiry date for 1994 Western Power Enterprise Agreement.

Jun 1996 1994 Western Power Enterprise Agreement extended to June 1997.

4% from the date of the implementation of an agreed productivity scheme

10 Nov - 1996 The date which the final 4% increase under the X Factor arbitration was paid.

30 Jun 1997 Nominal expiry date of previous (1994) Enterprise Agreements.

18 Sep 1997 ASU notified Western Power of the Initiation of a Bargaining Period s.170MI

Dec 1998 Western Power put a proposed Enterprise Agreement to its employees to vote upon. The proposal was rejected.

7 Jun 1999 Notice of action was given by ASU to Western Power s.170MO.

10 Aug 1999 Coleman SDP Issues Enterprise Bargaining Recommendation

15 Aug 1999 First payment (5%) under 1999 Agreement.

15 Aug 2000 Second payment (4.25%) under 1999 Agreement.

15 Aug 2001 Third payment (3.25%) mim - 4.75% max).

13 Sep 2002 Nominal expiry date of 1999 Agreement" [exhibit ASU2]

[5] In support of those contentions the ASU called the following witnesses - Brendan Cusack and Carlo Genovese.

[6] In addition a witness statement from Matthew Hammond was filed but ultimately not relied upon. Both Mr Cusack and Mr Genovese were cross-examined. I do not propose to set out the details of their evidence here.

[7] Western Power's contentions were as follows:

The Western Power Certified Agreement 1999 was certified by the Commission on 13 September 1999. Certification of the agreement followed an overwhelming acceptance of the agreement by Western Power employees and was the final result of more than two years of negotiations between the parties.

Ultimately the parties were unable to reach agreement over two fundamental matters:

* The percentage increase to apply for the third payment of the agreement to be made 24 months after the date of certification.

* The union claim for back payment to apply from a date prior to certification of the agreement.

These matters are set out in Clause 19 Payments Under This Agreement, of the Certified Agreement.

(a) This Agreement and any increases payable under it shall only apply to employees who are employees as from the date of the certification of this Agreement.

(i) 5% from the pay period commencing on 15 August 1999;

(ii) 4.25% from the first pay period commencing on or after 12 months after the date of certification of this Agreement, and

(iii) a further percentage increase from the first pay period commencing on or after 24 months after the date of certification of this Agreement. The quantum of this further increase shall be determined by the Commission, but shall be not less than 3.25% and not more than 4.75%.

(c) The claim for back-payment shall be determined by the Commission, but the quantum of any such back-payment awarded once-only shall be not more than 5% and, if granted, shall have effect from a date not earlier than 1 January 1999 and not later than 31 July 1999. Any such back-payment will only apply to those employees who are employed by Western Power as from the date of certification of this Agreement.

The parties agree that they will accept the decision of the Commission, the outcome of which will be incorporated into this Agreement. The parties will use their best endeavours to complete the arbitration of these claims by no later than 4 weeks after the date of certification.

(d) In the event that no subsequent agreement has been reached between the parties by a date six (6) months after the expiry date of this Agreement, then the prior Safety Net Adjustment arbitrated by the Commission in 2002 will be paid from first pay period commencing on or after that date. This payment will be immediately absorbed in the increases made under any such subsequent agreement.

Western Power Contentions -- Quantum of Third Pay Increase

1. Western Power contends that the third pay increase to be made in September 2001 should not be more than 3.25%.

2. 3.25% is seen as a fair outcome given the higher outcomes of the first and second payments of 5% and 4.25% respectively.

3. The 3 year agreement would then provide increases of 5%, 4.25% and 3.25% for a total outcome of 12.5% paid within two years.

4. A total outcome of 12.5% places Western Power above the Average Annualised Wage Increases for new Federal Certified Agreements registered in the June 1999 quarter.

5. An arbitrated outcome of 3.25% is higher than projected CPI increases.

6. A total outcome of 12.5% places Western Power at the upper end of pay increases being derived from agreements in electricity utilities throughout Australia since 1991. Most of those utilities have undergone significantly greater change through disaggregation than Western Power.

7. An arbitrated outcome of 3.25% would mean that Western Power employees would receive percentage increases totalling 28.5% through enterprise bargaining for the period 1994 to 2002.

8. An arbitrated outcome of 3.25% would mean that since 1996, when employees received increases totalling 10%, that the average pay increase for the 6 years to 2002 would be 3.75% per annum.

9. Deregulation of the power industry in Western Australia will see Western Power exposed to significantly increased competition from January 2000. It is essential that Western Power contain all costs in order to become and remain competitive in the deregulated environment.

10. Labour costs are only one area in which Western Power is concerned with reducing costs in order to remain competitive. Extensive initiatives have also been put in place to reduce costs in the areas of materials, operations, fuel and interest expense.

11. In considering the quantum to be awarded for the third pay increase, the Commission should not take into account the time that it has taken the parties to reach this agreement. The time taken, to reach agreement should only be considered as part of the Commission's deliberations around the other matter to be arbitrated, the back payment of any increase.

12. In determining the third payment the Commission should not take into account Western Power's recent profit. Profits made in 1998/1999 or earlier years are not relevant to a payment to be made in September 2001.

Western Power Contentions - Retrospectivity

1. Western Power contends that the Commission should not award any retrospective payment in regards to the agreement.

2. Western Power acknowledges that the negotiation of the agreement was protracted and far longer than it would have preferred. However, the delay in reaching agreement cannot be attributed to Western Power.

3. Western Power took a responsible and consistent approach to the negotiations and sought to accommodate the concerns of unions wherever possible.

4. Both the ASU and CEPU utilised the processes and protections of the Act in seeking to reach agreement with Western Power. This included the initiation of bargaining periods and the subsequent taking of protected industrial action in pursuit of an agreement.

5. Western Power at all times conducted negotiations in good faith and in compliance with the objects of the Act.

6. The unions should not be rewarded with a retrospective payment when they were unable to come to an agreement with Western Power, despite utilising the processes and protections of the Act.

7. Industrial action taken on 23 July 1999 resulted in severe disruptions of power supplies to the Western Australian community. It would be fundamentally wrong for the Commission to award retrospectivity for a period when the unions and their members were able to, and indeed did, initiate industrial action, protected by the Act, to the severe detriment of Western Power and the wider community.

8. Western Power has been disadvantaged because the parties were unable to reach agreement. Western Power continued to be hamstrung by restrictive minimum manning provisions contained in the previous EBA of the Generation Division. Western Power was denied the benefits of the new agreement particularly in respect to manning provisions, improved dispute settlement procedures, contract of employment provisions and the ability to adjust working patterns to meet the needs of the business and its customers.

9. If the Commission were to reward retrospectivity, an imbalance to Western Power's detriment would result, since Western Power does not derive any retrospective benefits from the agreement.

10. Western Power's profits have not been achieved on the back of labour productivity improvements over the period in question. Western Power's profits have largely been achieved by way of renegotiation of fuel contracts, with resultant reductions in fuel prices, and debt refinancing.

11. In the 1997/1998 financial year, Western Power recognised the measured productivity improvement derived from labour, in two lump sum bonus payments to each employee totalling $1030.

12. The Commission, in this case, is exercising powers under S111AA of the Act. In so doing, Western Power contends that the Commission should be cognisant of S146(2) of the Act, and adopt the well established principles that are used when considering retrospective application of awards.

* Victorian Trades Hall Council and Ors for minimum wage orders. Print P0458.

* Australian Builders Labourers Federation vs Master Builders Association NSW(1941) 45 CAR 719.

* Administrative and Clerical Officers Association, Commonwealth Public Service and Ors - and - Public Service Board and Ors. Print E3007." [exhibit WP1]

[8] In support of those contentions Western Power called John Edward Lillywhite and Trevor Stanley Harvey. Both Mr Lillywhite and Mr Harvey were cross-examined but again I do not propose to set out the details of their evidence or cross-examination.

[9] The CEPU wrote to the Commission indicating that it would rely on the material filed by the ASU.

[10] I now turn to deal with each of the questions and will do so seriatim.

[11] I have found this matter very difficult to resolve, but in the final result I determine that there is no basis to award any retrospectivity. In so doing, I am conscious of the arguments put by Mr O'Brien, appearing for the ASU, and supported by Mr Young, appearing for the CEPU, to the effect that as a result of the delay between the expiration of the 1994 certified agreement (as extended by Laing C) and the first pay increase payable under the 1999 agreement and assuming a 4% pay rise over each year, Western Power achieved a "saving" of wage costs of approximately $12.99 million dollars. I am also conscious of the strong equity argument put by Mr O'Brien, that irrespective of fault, employees were denied a wage increase over a period of approximately two years and that retrospectivity is thus justified on an equity basis. Notwithstanding these powerful submissions, in my view, there is no adequate basis to award retrospectivity.

[12] Western Power argued strongly that I should apply the longstanding Commission principles in relation to retrospective operation of awards to this application. Those principles are set out in The Federated Ship Painters and Dockers Union of Australia v. The Adelaide Steamship Co. Ltd. and Others [(1960) 94 CAR 579 at 619] [Ship Painter and Dockers Case] as follows:

"The principles applicable to retrospective payments are to be gathered from a number of cases of which the following passages are illustrations:-

`The Court does not make awards or variations retrospective unless it is necessary to do so in the interests of justice and fair play' (per Powers J. - Amalgamated Society of Engineers v. Adelaide Steamship Company Limited and others.

`I have always decided that point on the principle that if the fixing of the new rates has been delayed by the respondents, or if the Court has notified during the hearing an intention to raise rates to a specified amount or if the union has offered to accept rates - which the Court later on awards - the respondents will be required to pay rates retrospectively. If not they will not have to do so' (per Powers J. - Amalgamated Engineering Union v. Adams and others).

`There is just ground for the disinclination on the part of the Court to give retroactive force and operations to its orders unless some very special reason exists for doing so' (per Kelly J. - Builders and Traders (Defence Works) N.S.W. Award.

`It is in my opinion a sound principle to avoid retroactivity of awards unless exceptional and strong reasons exist to the contrary and generally speaking such reasons must be based on some action by a party of which the Court does not approve' (per Piper C.J. - Federated Gas Employees v. A.G.L.).

`In view of the extra strain being put on many of the employees and of other circumstances I think some concession from the Court's usual practice should be made in favour of the employees, and therefore determine that the qualifying periods of 12 and 6 months shall commence from 1.7.43' - per Piper, C.J., Saddlery Leather and Canvas Workers.

`The reluctance of Federal industrial tribunals to make retrospective awards is fairly well known . . . But to visit on the officers all effects of the delay would be as unfair as it would be to charge the employer with the whole of them" - per M. M. Steward C. C. - In the W.A. Railways Professional Officers Award.

`The well established and firmly entrenched principle is that retrospective application will not be approved except where there is agreement between the parties; where there is no agreement between the parties the principle is to make the order prospective and not retrospective unless there have been some delays by the Tribunal or the Commissioner dealing with the matter' - per Galvin C.C., Railways Metal Trades Grades Award.

`The rule applied, prima facie, by the Commission (the Industrial Commission of New South Wales), is that awards shall take effect 14 days after gazetted and shall not be given a retrospective effect unless circumstances exist justifying the adoption of that course' - per Cantor J. - In re Crown Employees (Clerical) Award.

After careful consideration of what we accept as `the well established and firmly entrenched principles' accepted and applied by the old Arbitration Court, by former Conciliation Commissioners, and by members of the present Commission, we feel driven to the conclusion that the Commissioner's retrospective order was not justified in the circumstances of this case."

[13] I leave aside from consideration here the question of the operation on those principles of s.146 of the Act.

[14] I accept the submission that I should apply the principles set out in the Ship Painters and Dockers Case on the basis that I can find no other suitable basis to objectively assess the question of the retrospective operation of the agreement. Whilst a large amount of material was put before me as to the negations which took place between the parties in relation to a certified agreement, it is not possible on the basis of any analysis of this material to apportion blame to one side or the other for failure to reach a certified agreement during the period between the expriy date of the last agreement and the acceptance of a new agreement. Indeed, it seems to me from the analysis of the material, which I have been able to make, that the parties for one reason or another were simply not prepared to make sufficient compromises to finalise an agreement. There may have been good reasons for this and it is not my function to pass judgement upon this conduct unless it was clearly not bona fide. What I can say and what is important to the resolution of this issue is that the parties were unable between themselves to reach agreement but most importantly there is certainly no material which allows me to apportion blame to one side or the other or determine that one party or the other was not acting bona fide. I would however observe that it appears from the material that a culture of agreement making is not endemic between Western Power and the unions and this does create difficulties in the operation of the Act with its present focus on agreement making rather than arbitration. However, the responsibility for failure to consummate an agreement rests squarely on the parties and in the absence of blatant obstructionism by one or the other of them, it is impossible to conclude that failure to reach agreement of itself justifies retrospectivity. Put another way there has been no action by one party or by the Commission which gives rise to circumstances justifying the awarding of retrospectivity.

[15] This conclusion is fortified by the fact that employees themselves rejected, in a ballot, Western Power's "best offer" in December-January 1998-99. Thereafter, it is impossible to conclude that there was any delay on the part of either Western Power or the Commission in processing any matters necessary for the finalisation of any agreement. Rather, the Commission acted expeditiously in this matter when it was asked to assume a role in the negotiations and indeed it was its active intervention which facilitated the finalisation of the agreement.

[16] I am not without sympathy in relation to the period employees went without a pay increase between the expiry of the 1994 agreement, as extended, and the negotiation of the 1999 agreement, but the responsibility for consummation of the agreement is on the parties. To the extent that the Commission, albeit by agreement in the present, were now to award retrospectivity, the step could be seen as facilitating a weakening of the obligations of the parties to reach agreement expeditiously, on the basis that retrospective operation could be expected as a result of consent arbitration. To my mind this is inconsistent with the objects of the Act which focus on the parties being responsible for reaching agreement. This is not to say there would never be a case for retrospective increases by consent arbitration. It simply means such a case has not been made out here.

[17] I now turn to the question of the final increase. I have had considerable difficulty in resolving this question but in the final analysis I have determined that an increase of 3.60% is an appropriate outcome for the final increase in the agreement. Before turning to my reasons for arriving at this figure it is necessary to deal with one argument advanced in its final submission by Western Power to the effect that an arbitrated outcome in excess of the 3.25% guaranteed by the agreement for the third installment would reinforce the view that arbitration would always provide a better result than an negotiated outcome.

[18] I do not accept this submission in relation to this aspect of the matter. We are not talking here about arbitration per se but about the parties agreeing to accept arbitration in circumstances where despite genuine negotiations they could not agree on a specific figure but were able to agree about a range. In those limited circumstances having agreed to arbitration it is not appropriate in my view to now say that to depart from the bottom range by arbitration would encourage a view that arbitration rather than agreement making is desirable. The arbitration is taking place as a result of the agreement process itself. Moreover, the process here utilised is one which is facilitated by the Act and in particular s.111AA. In my view this is not a case which would encourage the perception that arbitration will always give a better result than negotiation.

[19] I turn then to the question of any increase above 3.25%. It is difficult to make an estimate of the appropriate level of wage increases which should operate in a period well into the future and in circumstances where there are significant unknowns in relation to both the micro and macro economic climate surrounding Western Power. I am conscious of the data in exhibit ASU 12 and Annexures O, P and Q to Mr Harvey's affidavit which seem to point to a gradual slow down in the magnitude of increases under enterprise agreements. However, these figures are expressed as average annual rates of increase and are designed to allow a comparison over the life of the agreement. I am not satisfied that this approach is appropriate to this arbitration. That is because of the skewed nature of the increases payable under the agreement. I also note that generally speaking the period of operation of some of the agreements reviewed seem to be shorter than the 3 year term of this agreement. In my view and exercising a broad judgement I consider an increase of 3.60% would be a fair outcome in the final 12 month period of the agreement having regard to the projected price and wage movements in Attachment N to Mr Harvey's exhibit.

[20] In arriving at this conclusion I have not overlooked the evidence about the increased competition which will be faced by Western Power as a result of the opening up of sectors of the Western Australian Electricity Market to contest. However, the financial material revealed in the witness statement of Mr Genovese reveals an impressive performance by Western Power in relation to the immediate past. I do not propose to set out all of that material here, however, the following extract from Western Power's annual report for 1999, is in my view indicative of an impressive performance by the Corporation.

Growth in Electricity Sales 2.80% -2.50% 2.50% 2.50%"

[21] Moreover in a news interview dated August 1999, Mr Eiszele the Managing Director of Western Power said:

"Our estimates are that we could lose up to 10% of our customers once they have this choice, and we estimate that that part of that loss will be balanced up by increased growth this year so we will come in with a similar result next year." [exhibit ASU 5 p.25]

[22] I have not ignored evidence especially by Mr Lillywhite that figures for the current year are below budget. Rather I have balanced that evidence against the longer term perspective revealed in the evidence of Mr Genovese and I conclude on that material that Western Power should be able to sustain without adverse consequences an increase of 3.60% during the final year of the agreement.

[23] In all the circumstances I consider that an increase of 3.60% in the final year of the agreement is appropriate.

[24] Accordingly, I determine that the third increase under the agreement shall in lieu of 3.25% be 3.60%. I dismiss the claim for retrospectivity of the first increase.

C Patman with G Heaperman on behalf of Western Power.

B O'Brien with M Kane on behalf of the Australian Municipal, Administrative, Clerical and Services Union.

C Young on behalf of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

Conditions of employment - certified agreement - s111AA Workplace Relations Act 1996 - agreement provided for arbitration by the Commission of two issues - rate of increases - whether payments should be made retrospective in view of length of time between expiry of previous agreement and certification of new - held -principles set out in The Federated Ship Painters and Dockers Union of Australia v The Adelaide Steamship Co Ltd and Others [(1960) 94 CAR 579 at 619] applied - retrospectivity to be awarded only if conduct of either party objectionable or at fault - no action by either party to justify retrospectivity - claim for retrospectivity dismissed - third increase under agreement of 3.60% considered appropriate - submission by employer that arbitrated increase in excess of 3.25% guaranteed by the agreement would reinforce view that arbitration would always provide better result than negotiated outcome rejected - arbitration agreed to by parties in circumstances where they could not agree on specific figure but could agree on range - employer should be able to sustain increase without adverse consequences in view of immediate past performance - 3.60% increase determined.

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