Australian Medical Association, NSW Branch v Minister for Health

Australian Medical Association, NSW Branch v Minister for Health - [2006] NSWIRComm 124 - NSWIRComm 2005 case summary — Zoe

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Increase in admissions (especially acute admissions); reduction in the number of beds and in the length of stay; and the increase in day of surgery admission and day only procedures 85 The HAC accepted that the Commission's findings in Public Hospital Nurses' Case (No. 4) with respect to these matters, applied with equal force in this case: See Public Hospital Nurses' Case (No. 4) at [42], [44], [58], [59], [60], [6], [67], [68] and [239]. However, it was submitted the Commission would need to make due allowance for the numerous initiatives taken by HAC in the period since the Nurses' Case was decided that have lessened, and will increasingly lessen, the adverse impact of these changes on the work and working conditions of Staff Specialists. The initiatives were referred to in the agreed facts and we consider it is appropriate to identify the more significant of them, which included [references to witness statements and to other evidence from which agreed facts were drawn is not included]: 9 Preliminary Department of Health data indicates that approximately 800 beds have opened since June 2004. 10 On average 60% of all overnight patients admitted to an inpatient bed do so via the Emergency Department. New South Wales Health's expenditure on programs such as same day surgery and outpatients, which reduce the need for admission to overnight beds, has increased significantly. Expenditure on early intervention programs such as primary and community based services and population health programs has also increased. ... 14 Department of Health Access Block data shows that for the period June 2004 to June 2005 access block improved in most major hospitals as a result of the implementation of a range of strategies including opening new beds and clinical redesign projects. [Table not reproduced] 15 This data as at July 2005, average access block for NSW was 29% and only one hospital in the state was above 50% and only eight hospitals were above 40%. ... 32 Another initiative is the fast tracking of treatment for patients with semi-urgent illness or injury by teams of senior emergency staff. These are referred to as "Rapid Emergency Assessment Teams" (REATs). The major hospitals across Sydney, the Central Coast and Newcastle with high activity levels and poor waiting time performance were targeted for the initiative. These teams assess patients and commence treatment prior to the usual full assessment. This intervention also improves waiting time performance. REATs are also considered a success. 33 Clinical Initiatives Nurses (CINs) are trained and qualified to commence emergency treatment more quickly and without the direct supervision of a doctor. 34 Aged Care Services Emergency Teams (ASETs) are intended to improve the care of older people who attend Emergency Departments. These multidisciplinary teams are working with Emergency Department staff in improving early identification and management of older people with complex care needs. Such early evaluation minimises the requirement for such older persons to remain in hospital, prevents readmissions once they are discharged and minimises their loss of function and mobility. ... 43 The NSW Government has created eight new specialist training networks for physicians across NSW. In 2005, 297 basic physician trainees were appointed, an increase of 28 compared to 2004. ... 47 New South Wales Health has identified a range of measures that it intends to adopt in 2004-05 to address a number of concerns with the operation of the public hospital system. Those measures include: (a) implementation of the 2004 sustainable access strategy;

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54 The Commonwealth Government announced in its 2004-05 Budget a cost-shared national transitional care program which should yield New South Wales 600 to 700 transitional aged care facility and community based places over the next three yeas. The Transition Care places will be allocated on a state wide basis to provide more appropriate care for older people. ... 66 A number of initiatives have been introduced to address access block including the development of Emergency Medicine Units (EMUs) that have been established in 12 hospitals with high access block. This has led to the development of a new role for emergency physicians, who previously generally focused only on the first few hours of a patients care (similarly so, the development of Rapid Emergency Assessment Teams (REATs) have been introduced to speed up treatment for patients with semi-urgent illness or injury and whilst this improves access for higher acuity patients it also intensifies work for emergency medics and specialists) ... 138 In the 2005/06 Budget, the Government increased funding for mental health services by $71m to $854m. The increases include $22m for the expansion of the Psychiatric Emergency Care Centre program and new community based activities, opening new mental health beds including 15 psychiatric intensive care beds at Hornsby Hospital and 16 acute beds at Dubbo Base Hospital. $8m has been allocated to expand the Housing Accommodation Support Initiative. Nearly $2m has been allocated for workforce development programmes including support for mental health nursing development. ... 151 ... Undergraduate and postgraduate funding has been provided to support the mental health nursing working group and also to all New South Wales colleges and universities providing nursing education in order to develop a range of mental health education modules. ... 154 The government has taken a number of initiatives to improve the provision of mental health services in the State. The final report by the Select Committee on Mental Health gives a snapshot of quality clinical programs and other initiatives in mental health that occurred in 2002: ... Amongst these initiatives were: 300 additional beds and places for supported accommodation released throughout 2002 and into early 2003; the Centre for Mental Health in collaboration with the Office of Chief Nursing Officer allocated approximately $5.35 million of Commonwealth funds to implement a range of mental health nursing education strategies to build and market career paths in mental health nursing with nursing recruitment through this process; the provision of training posts for general practitioners in rural psychiatry with a curriculum being developed by the Institute of Psychiatry in the RANZCP.

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169 The range of services and therefore the workload of the intensive care specialists has also increased as medical science and technology has continued to develop. For instance: ... (b) The introduction of extensive computerization to St George Hospitals ICU and other ICUs such that the St George ICU is now paperless with all record keeping done through computer terminals at the end of each bed. This technology has labour saving aspects, particularly for the nursing staff, and has improved the accuracy and completeness of documentation substantially. However, its introduction did involve major effort on the part of the intensive care specialist as well as other staff as well as additional work involved in the scrutinizing and analysis of the various data produced by the computer system. ... Increase in access block and consequent pressure to discharge patients 86 HAC submitted that this particular difficulty, which impacts on the staff specialists and other health care professionals working in the emergency departments of public hospitals, could not be relied upon to support an overall increase in the rates of pay for staff specialists because overwhelmingly it was an emergency department problem. Only two of the specialties mentioned "access block", namely the emergency physicians and the psychiatrists. 87 It was submitted the applicant did not ask for any "targeted"/separate increase in pay for emergency physicians and, accordingly, to the extent that the Commission was satisfied that there had been a significant net addition to work requirements of some staff specialists (most notably in the emergency department) then this particular change would need to be ignored as not sufficiently representative of work value change amongst staff specialists, or alternatively, an "averaging" approach will need to be adopted. 88 Thirdly, it was contended the Commission would need to pay regard to the fact that a number of initiatives are in place to address "access block" and the evidence before the Commission reveals that those initiatives have already been shown to be effective.

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(a) The shortages with respect to staff specialists, nurses, junior medical and other staff could not be regarded as uniform or across the board as there were significant differences hospital to hospital, Area to Area, specialty to specialty and geographical area to geographical area. (b) That it is not possible, to reach any reliable conclusions as to the extent or impact of such shortages on a specialty to specialty, hospital to hospital, Area to Area, etc., basis but that it is possible to conclude that the shortages are having less impact in the major teaching hospitals and other major metropolitan hospitals of Sydney (and Newcastle) where the bulk of the staff specialists in the system work (namely, approximately 60 per cent) than is the case in the other hospitals within the system (with 40 per cent of staff specialists work). (c) In such circumstances, the balancing/averaging approach will need to be applied by the Commission if any salary increase is to be awarded by reference to the impact of shortage because, otherwise, there is a real prospect that a significant proportion of staff specialists who have not been adversely affected by the shortage will receive a windfall gain. (d) Caution needs to be shown in the awarding of salary increases based on labour "shortages" because there is a real likelihood that the shortages will be addressed by other initiatives and yet there is absolute certainty that salary increases granted on the basis of any such shortages will not then be surrendered. (e) Many specialities seemingly are not affected or at least not greatly affected by the current shortage of staff specialists and/or the shortage of other categories of staff, given that many of the applicant's witnesses did not give evidence of any such adverse impact and given that there is no evidence before the Commission from the other specialities/specialists that make up the other 20 per cent of the staff specialist workforce. That is, there is a prospect of a windfall gain with respect to this substantial proportion of the staff specialist workforce as well in circumstances where there is no evidence whatsoever of any adverse impact on them of the relevant "shortages". (f) That whatever the impact of the "shortage" may have been on staff specialists (or some of them), such impact has not manifested itself either by clear and consistent evidence from the applicant's witnesses that they have had to compensate or allow for the impact of the shortage by working longer hours and/or taking on greater on-call/re-call commitments. 107 As to the use of overseas trained doctors, HAC submitted as follows: (a) Even allowing for the extra information provided to the Commission on the inspections, the evidence still did not support a conclusion that there has been a generalised adverse impact on staff specialists as a consequence of the system's utilisation of overseas trained doctors. If there was an across the board problem for staff specialists associated with the use of overseas trained doctors, then the Commission could expect that this would have been referred to in the evidence of the specialists other than the emergency physicians and the obstetricians, yet this did not occur. (b) The evidence suggests that there may well be (at the highest) 100 overseas-trained doctors holding staff specialists AON positions (on a temporary basis) in New South Wales (i.e. approximately 0.5% of the staff specialists workforce) . (c) There does not appear to be any evidence that overseas trained specialists place any undue or extra burden on other staff specialists in the system, with the applicant's complaint (and its evidence) being directed to the extra workload and burden associated with the supervision and assessment of RMO and Registrars, whether they be trained overseas or otherwise. 108 As to the evidence of the increased workload and burden on staff specialists with respect to the supervision and assessment to what is asserted to be a lower standard of a junior medical staff that evidence, it was submitted, was both limited and of an extremely general nature. 109 In respect of the issue of supervision and assessment, the HAC submitted that the Commission would reach the same conclusion in this case as it reached in Public Hospital Nurses' Case (No. 4) namely, that these responsibilities have always been part of the role and not sufficiently widespread and significant so as to satisfy the strict test. 110 As to the asserted impact on staff specialists of the shortage and casualisation of nurses and the use of locums, the HAC submitted that the evidence was both limited and general and confined to a description of the current facts rather than demonstrating relevant significant change in the responsibilities of Staff Specialists.

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119 The thorough and extensive analysis by the parties of the matters that are relevant to our consideration regarding work value was most helpful. After assessing the evidence and submissions of the parties we have arrived at the conclusion that since the datum point of 1991 there has been a significant net addition to the work requirements of staff specialists such as to warrant a wage increase across the board beyond the 12 per cent that was agreed to by the parties and incorporated in the Memorandum of Agreement in June 2005. 120 We have not come to this conclusion lightly. As Mr Kimber correctly pointed out, the test to be applied in applications for increases based on changes in work value is a strict one; the changes in the nature of work, skill and responsibility required or in the conditions under which work is performed, must be to such an extent that the changes constitute a significant net addition to work requirements so as to warrant the creation of new classification or upgrading to a higher classification. We are satisfied in this case the test has been met. 121 In coming to this conclusion, we have been careful to have regard for, and give proper weight to, the respondent's submissions regarding: (1) The substantial initiatives that have already been taken and will continue to be taken by the HAC to better manage the impact of changes in: acuity; increase in admissions (especially acute admissions); reduction in the number of beds and in the length of stay; and, the increase in day of surgery admission and day only procedures on the work of staff specialists. (2) The introduction of many new and complex interventional techniques, which it was submitted were evolutionary and/or made the staff specialists' work easier in many respects. (3) A number of the changes relied upon by ASMOF as representing increases in work value had previously been compensated for in earlier cases. (4) A number of the changes relied upon by ASMOF (e.g., increase in access block, increasing sub-specialisation) were limited to one or two specialities and did not justify across the board increases. (5) A number of the changes relied upon by ASMOF reflected a reorganisation of work (e.g., introduction of multiple disciplinary clinics and teams) and had not resulted in significant net additions to the work requirements of staff specialists. (6) Not all specialties have been affected to the same extent and even if the Full Bench were minded to increase salaries on work value grounds the Commission would adopt an averaging approach. 122 The foregoing considerations must have a moderating effect on the size of any salary increase we might ultimately award. Nonetheless, on the basis of the evidence in these proceedings we are moved to say that we regard staff specialists as an impressive group of individuals - dedicated and hardworking - and without whose commitment the public hospital system could not function effectively, if at all. As Professor Dwyer observed in his evidence: Staff specialists have played a key role in both the initiation and implementation of policy changes in the delivery of health services since 1991. As noted above, there have been a number of significant changes to the delivery of health services, all of which have at their core the aim of reducing or eliminating the number of days spent in hospital (and therefore the cost of treatment). These initiatives (same-day procedures, day-of-surgery admission, increases in outpatient services) have largely been implemented by staff specialists. As senior employees of the public system, often with positions as heads of units or departments, it is staff specialists who are responsible for implementing the changes in the delivery of services and designing the protocols that will make them work. While it is my view that these changes have not justified the closure of beds that has occurred, it is clear that the pressure on the system would be even greater than it currently is had they not occurred.

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123 The work of staff specialists has changed significantly in the past 15 years. The Full Bench in Public Hospital Nurses (No. 4) observed at [239]: [T]he public hospital system provides a different service in a different way to the one which it provided prior to 1996 and this is exemplified by the emphasis on confining the patients' stay in hospital to the most acute phase and providing for all other phases, including high acuity phases, to be managed in the home or other facilities in the community. This phenomenon has had its own impact on nurses' work through increased levels of acuity and dependency but at the same time the other demands on nurses that we have identified have continued to grow. 124 This change in the public hospital system has also impacted on the work of staff specialists as the HAC, properly and fairly, conceded. As ASMOF submitted the higher levels of acuity amongst patients required more complex investigations of patients and a style of patient management which until recently was not a regular feature of medical practice. ASMOF referred to the example of mental health. It is fair to say that we were disturbed by what we heard and saw regarding the lack of resources being applied to the care of the seriously mentally ill and the heavy burden this was placing not only on psychiatrists but others, including emergency physicians and geriatricians, as they sought to cope with the increasing numbers of mentally ill patients, a high proportion of whom had been affected by drug and alcohol abuse. As Dr Louise Newman stated in her evidence: It cannot be stated strongly enough that staff specialist psychiatrists in NSW are working in a mental health system that is in crisis. This has a significant impact on morale, working conditions, ongoing education, research activities and teaching. ... [P]ressure on beds means that it is not possible to keep patients in hospital long enough to ensure that the illness has stabilised and it is not possible to provide psychological therapies. The lack of rehabilitation and supported accommodation means that people with a mental illness are regularly readmitted into acute care. After discharge, community case management programs are so under-resourced that case managers may have carriage of between 50-60 clients. This effectively means that patients get no treatment or management to speak of and often need to be readmitted. ... [T]here are simply not enough resources to meet the demand for treatment for people with mental illnesses, whether that treatment is community-based or hospital-based. It is now common for a psychiatrist admitting an acutely-ill mental health patient to find that there are no beds available anywhere in the State, much less within any reasonable distance of the patient's family or support network. It is not uncommon for patients to be accommodated on mattresses on the floor. Alternatively, they may remain in the Emergency Department for up to six days, in a heavily sedated state because Emergency Departments are not equipped to manage acutely psychotic patients. ... At the same time that resources have diminished, the number of people with mental illnesses and the severity of those illnesses have been increasing. This is part of a world-wide trend of increasingly-severe psychotic presentations in young people, including "para-suicidal" presentations such as self-harming. This trend is poorly-understood but may relate in part to increasing drug use, particularly amphetamine-type drugs that are more likely to lead to violent behaviour than drugs such as heroin. Ironically, the "heroin-drought" of recent years has led to an increase in violent and psychotic behaviour as drug users have substituted amphetamines for heroin. ... [T]he acuity of mental illness is increasing anyway. In New South Wales, therefore, the resource issues have combined with world-wide trends to magnify the increase in the acuity of patients in the public system. Public sector psychiatrists, whether in the community or in the hospital setting, are therefore dealing with a much greater number of extremely difficult patients than previously, including a greater number of dangerous and violent patients. My experienced colleagues who work in acute wards consistently report that they are now discharging patients with a level of illness that ten years ago would have been cause for admission. This is solely because of the lack of beds. A considerable amount of time is now spent searching for beds and assessing and reassessing inpatients to determine who is well enough to be discharged or sent home on leave. While every attempt is made to maintain clinical standards, there are many public sector psychiatrists who believe they are being forced into decisions to discharge patients who are not well enough to be discharged, simply because there is an even sicker patient waiting to be admitted. 125 Dr Roger Gurr is a qualified specialist psychiatrist with more than twenty years' experience as a staff specialist and Sector Director with the Blacktown/Mt Druitt Mental Health Service. He currently works in the Liverpool Fairfield Mental Health Service for four days a week as a VMO. In his statement of evidence Dr Gurr said: I resigned from my staff specialist position in mid 2001 for a number of reasons, including the lack of resources and the lack of recognition by management and the Government of the need to respond to the crisis in the mental health system. I am aware of a number of my colleagues who have resigned from positions as Clinical Directors for similar reasons ie. it is too difficult to manage a service with the level of resources that are provided. As a result there are a number of mental health services that do not have Clinical Directors. ... Those requiring admission have been more disturbed, more violent and increasingly difficult to manage, causing acute admission wards to be less pleasant places to work due to the aggression and rapid churning of patients to make room for those waiting. Staff spend more time processing admissions and discharges or dealing with challenging behaviours and thus have less time for making a rapport and for psychotherapeutic interactions with patients and families. The use of illicit drugs has increased the risks and reduced our ability to predict outcomes, making staff feel vulnerable to increased community expectations and legal accountability. These factors have affected recruitment and retention of medical and nursing staff. Consequently the inpatient services are going through crises of numbers and skill-mix.

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126 We consider that the work value of psychiatrists and those other specialists working with the mentally ill has increased quite significantly since 1991. We also consider that we should single out emergency physicians, geriatricians, intensivists and radiologists for particular mention. Putting aside the impact of shortages on the work of these specialties, their work has increased in complexity. Associate Professor Skowronski was employed as a senior staff specialist in the Intensive Care Unit (ICU) at St George Hospital. In his evidence he stated: Up to 20% of ICU patients at any given time are young male road accident victims. A substantial further proportion comprises postoperative patients requiring life support or intensive monitoring due to the extent or complexity of their surgery. However, as recently as the early 1990s, the community did not generally expect that an elderly patient with a chronic disease (or diseases) would be treated by means of complex surgery and/or intensive care. Now, patients well in excess of 80 years of age, and occasionally even in their 90s are routinely offered heart bypass or other complex surgical procedures. Such patients will inevitably require post-operative care in the ICU, and this is often more prolonged and more complex than for younger patients. Moreover, where previously it was understood that elderly patients with acute, life-threatening illnesses, should not be offered prolonged or complex life-support in ICU, it is now demanded as a fundamental right, reinforced by the threat of court action. ... These pressures affect other wards in the hospital as well as the ICU. Patients with high dependency levels are moved out to other wards from the ICU sooner than they were in the past. This increases the general level of acuity in other wards and has two significant flow-on effects: (a) the need for staff specialists in other wards to have increased knowledge and skills to deal with these more acute patients; and, (b) an increasing need for intensive care specialists to provide advice and services outside of the ICU. ... Although difficult to quantify, there is general agreement that, as part of the trends identified above, there is much more involvement by intensive care specialists in end-of-life discussion and decision-making than in the past. These discussions are extremely time-consuming, stressful, and occasionally adversarial. Although the overall mortality of ICU patients is only around 20%, numerically more patients die in ICU than any other area of the hospital. ... Our ICU is now paperless, with all record keeping done through computer terminals at the end of each bed. This technology has labour-saving aspects, particularly for the nursing staff, and has improved the accuracy and completeness of our documentation substantially. However, its introduction, configuration and optimisation required a major effort on the part of the intensive care specialists as well as other staff. All case note entries are now typed rather than written, the system demands a range of data validations, and produces a range of statistical reports that need to be scrutinised, analysed and acted upon. As with the introduction of computer technology in other areas of human endeavour, computers may do things better, but not necessarily easier. 127 The South Western Sydney Area Health Service currently employs Dr Susan Ieraci as the Area Director in Emergency Medicine. This role involves clinical work as an emergency medicine specialist as well as policy, planning and coordination work for the Emergency Departments within South Western Sydney. In her statement Dr Ieraci deposed: The trends noted in the AMWAC and Auditor-General's Reports (increases in the age and acuity of patients; increases in the number of mental health patients and patients with substance abuse problems) have combined to ensure that patients presenting to Emergency Departments are more complex and difficult to treat than was the case in the early 1990s. For specialists, this means complex negotiations with families, carers and community practitioners, as well as difficult complex assessments of extremely disabled and often uncommunicative sick patients.

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An example of a complex case might include an elderly patient, who lives alone, presenting on a Friday afternoon because of a history of recurrent falls at home. In the past, this patient would have been admitted to have their physical investigations and discharge planning carried out. In 2005, their care in the Emergency Department would include a very detailed assessment by history and physical examination, a series of blood tests and perhaps multiple X-rays to exclude an acute illness or injury that might need inpatient care. If this is excluded, there is pressure to return the patient home that day. To do this safely requires complex consultation and planning, involving discussion with the patient's family, neighbours, GP and treating specialist, and assessment by social workers, a physiotherapist and an occupational therapist (perhaps including a home visit). The emergency specialist must orchestrate all these discussions and assessments and assimilate all this information in order to bring about a safe and timely discharge (generally trying to achieve discharge within working hours, while the other services are still available). ... In addition to the issues that have arisen because of access block, there are a number of other issues that have impacted on the nature of the work of Emergency Medicine specialists. One of these is increasing medical subspecialisation. In 1991, there were fewer medical and surgical subspecialty teams, with a greater representation of general medicine and general surgery. General medicine and surgery disappeared from NSW teaching hospitals in the early to mid 1990s. The process of referral of a patient in the Emergency Department requiring admission was simpler when there were general physicians and surgeons. In 2005, it is common to negotiate with at least two or three inpatient teams in order to find a team that will accept inpatient care. This means that, beyond the requirement to stabilise and establish the requirement for inpatient admission, the emergency physician now needs to make detailed definitive diagnoses, and exclude a range of possible conditions, so that the patient may be cared for by an inpatient team with a narrow, subspecialty focus. A further important factor that has affected the work of Emergency Medicine specialists is the change in the nature of junior medical staff, especially in outer metropolitan hospitals. The number of overseas trained doctors requiring supervision in public hospitals has increased dramatically. Many are very unfamiliar with Australian hospital medical practice, both theoretically and functionally. This presents a high supervisory load for the staff specialists, both during clinical time and also in formal assessment processes as supervisors. Where written assessments for junior medical staff were previously required at the end of their attachment, they are now required twice per term, with increasing requirements for counselling and support of the staff member. There is evidence that the number of poorly performing junior doctors has risen, adding to the load for supervision and counselling by Emergency Physicians. Because the Emergency Department term is seen as well-supervised and a good educational experience, poorly performing junior staff may be preferentially allocated there for remediation. The last decade has also seen a number of complex treatments become routine in Emergency Department care. These include the use of thrombolytic agents, CPAP and BiPAP (types of non-invasive ventilation), frequent interpretation of CT scans, invasive monitoring and many others. For example, CPAP and BiPAP frequently now replace the need for ventilators and Intensive Care admission for very sick heart or lung failure patients. This means that these patients are stabilised for long periods in the emergency department until ready for ward care, rather than being transferred to ICU early in their care.

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128 Dr Gideon Caplan is employed as a senior staff specialist in the Department of Geriatric Medicine at the Prince of Wales Hospital. He stated in his evidence: The major change in the work of geriatricians since the early 1990s is the dramatic increase in the acuity of the patients. This increase is the result of a number of contributing factors, some of which relate to a change in the patients and others of which relate to changes in the way that services are provided. ... A second contributing factor to increased acuity, related to changes in the patients, is the ageing of the population. Age in itself is not a factor; rather, age is associated with a number of diseases, eg. the proportion of people aged 80 or more with dementia is approximately 40%. The average age of patients is higher than it was 10 years ago. The number of co-morbidities therefore tends to be greater. Geriatricians are responsible for the management of these co-morbidities, eg. chest pain, hypertension, diabetes. Generally, to ensure consistent treatment, it is considered better for these conditions to be managed by the geriatrician rather than each condition being referred to a different sub-specialist. In this way, geriatricians are gradually evolving into "hospitalists", as are cardiologists and intensivists. On the other hand, other specialists (the so-called "single organ" doctors) are becoming outpatient specialists. Therefore, the change over the course of the 1990s has been from a specialty focused largely on non-acute care to one now largely responsible for the management of acute in-hospital patients with multiple co-morbidities. A related trend is for geriatricians to also see patients who would not normally be classified as "elderly". This trend arises from geriatricians developing expertise in managing patients with multiple co-morbidities and therefore having such patients referred to them even if they are not strictly geriatric patients. 129 Dr Derek Glenn is the Director of the Department of Radiology at St George Hospital. After referring to a range of changes affecting the work of radiologists (general radiology, computerised tomography (CT), ultrasound and magnetic resonance imaging (MRI), Dr Glenn stated in his evidence: The consequences for radiologists of these changes in the nature of the work are many. Perhaps the most obvious is that radiologists have developed new skills. This is reflected in the introduction into the training program of logbook requirements where trainees must be able to demonstrate that they have satisfactorily completed a certain number of interventional procedures. Another consequence is that as the quality of the information provided by medical imaging has improved the demand for radiology services from other departments of the hospital has increased. For example, there is an increasing reliance by the hospital on interventional radiology for the management of surgical complications such as abscesses arising from surgery. There is also an increasing reliance on imaging as the basis for making triage decisions. The direct result of this is that the radiology department is now staffed (at junior doctor level) 24 hours a day, seven days a week so that these services can be provided. From a staff specialist point of view, this means that there is increased out of hours consultation with junior doctors and an increased amount of call-back for interventional work. This increase in interventional work has taken place at the same time as an increase in the number of images being reviewed, which in itself is a result of the improvements in technology. By increasing the number of images available for review, the technology has made it necessary for radiologists to view a greater number of images per day. In 1991 the College identified 12,000 cases per annum per radiologist as being a feasible workload. At St George, the per annum workload per radiologist is now in the order of 15,000 to 18,000, ie. an increase of up to 50%. Taken together with the increase in interventional work, this reflects a substantial increase in the workload of radiologists. In 1991 the majority of images were viewed on film. Now, viewing is workstation-based on PACS (Picture Archiving Communication System). Presentation of the images on a PACS introduces another new set of skills for the Radiologists to learn, as electronic review allows electronic manipulation of the images, with resultant increase in time taken to consider a case, and increased availability of relevant previous exams, with improved standard of diagnoses, but again at increased time cost to the Radiologists. These costs are partially off-set by the increased speed of accessing the images in a properly designed electronic environment, where the time taken to pull images out of a packet, hang them on a viewbox, and then at the end of the reading, pull them down and put them back, in order, in correct orientation, in the packet is replaced by the PACS and its automatic hanging protocols. 130 It is undoubtedly the case that whilst all specialties have been affected by change over the past 15 years, the effect of changes to the work of staff specialists will vary from specialty to specialty and the nature and impact of the changes will vary according to whether the specialist is employed in a rural or regional hospital or a major city teaching hospital. This requires us to take an averaging approach in measuring what is the significant net addition to work requirements and how that is to be translated into the appropriate salary increase for those employed under the award. 131 We are also aware of the need to avoid any double counting in arriving at an appropriate increase for staff specialists by taking into account increases in the managerial allowances dealt with later in this decision.

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· The Workforce Development and Leadership Branch in the NSW Department of Health established. · AusHealth International represented NSW public health system at BMJ Careers Fair in November 2004 with over 300 potential doctors registering interest to work in NSW. · 195 extra childcare places for staff established in 2004/05. · Three new medical schools created in NSW leading to an increase of up to 250 new under-graduate medical places. · Reviews undertaken of specialist training arrangements for emergency medicine, psychiatry and surgery. · Appointment of Directors of Workforce in each of the eight new Area Health Services. · Surgical Services Taskforce established with surgical services workforce sub-committees. · 54 general practitioner proceduralists upskilled. 136 ASMOF submitted, "even a cursory analysis of Ms Hyland's statement reveals that little if anything is being done by the HAC to address shortages in the staff specialist workforce." 137 Reference was made to the Agreed Statement of Facts on Workforce Shortages and to the Action Plan developed by the Premier's Medical Workforce Round Table which was to "Develop a package of support measures for general practitioners and specialists, including social, infrastructure, financial and family, to enhance recruitment and retention in areas of workforce shortage." The Round Table, it was noted, was held in April 2004 but there is no evidence that any such package of support measures for staff specialists had been developed or even considered. 138 One of the tests propounded for work value is the conditions under which work is performed. ASMOF submitted the conditions under which the work of staff specialists is performed have become increasingly oppressive, as the staff shortages have had their impact upon public hospitals. It was submitted that there could be no doubt that as shortages become more acute the impact upon those who remain worsens. Further, that the inspections demonstrated beyond any doubt that the direct impact upon staff specialists was severe and enduring. ASMOF observed that the demanding nature of the supervision requirements relating to the large number of overseas trained doctors and locums was mentioned repeatedly during the inspections. 139 It was submitted for ASMOF: The indirect impact is that the pressures inevitably mean that time ordinarily allocated to non clinical duties, including teaching and research, has been steadily eroded at the further cost of morale and retention and recruitment. To the extent that these features of staff specialist employment hold out attractions to trainees - potential trainees can now only see career opportunities as a staff specialist diminished. In the context of opportunities in private practice, engagement as a Visiting Medical Officer and both national and international markets for medical specialists, this will have a devastating effect on the staff specialist workforce. 140 ASMOF contended the main points to be drawn from the agreed facts regarding shortages were as follows: · The NSW Government has identified medical workforce shortages as one of the most important issues facing the health system. · Around 10% of staff specialist positions have been declared "Area of Need", meaning that the Australian labour market has been extensively tested and there are no suitable applicants, or no suitable applicants willing to take the position. · The actual number of vacancies must be significantly greater than 10% given that not all vacancies are declared Area of Need. · Area of Need and other available information suggests that the shortages are across the board, but greatest in psychiatry, anaesthetics, emergency medicine, geriatrics, obstetrics and radiology. Together, these specialties make up almost 40% of the staff specialist workforce. However, the AMWAC material also indicates that in some cases (eg. psychiatry, anaesthetics, radiology) there are no overall shortages but there are significant shortages in the public system. · In the worst affected of these specialties, eg. psychiatry and emergency medicine, vacancy rates appear to be in the order of 20% to 30% of the workforce. · The vacancy rate in the trainee specialist workforce indicates that the shortages are not short-term. · The substitution of staff specialist appointments with VMO appointments and the existence of vacancies (even Area of Need vacancies) in major Sydney teaching hospitals is further evidence of shortages. 141 ASMOF noted that information on the overall vacancy rate for staff specialists' positions was not available but the parties agreed that the actual number of vacancies must be significantly greater than 10 per cent given that not all vacancies are declared Area of Need. By way of contrast, it was submitted, the evidence in the Nurses' case indicated that there were approximately 2,000 positions being actively recruited in May 2002 out of a workforce of approximately 35,000 (see [47] and [120] of Public Hospital Nurses (No. 3)). This suggested a vacancy rate in the nursing workforce at that stage of just under 6 per cent. It was accepted in that case, by both the Department of Health and the Commission, that this was a serious problem. The evidence for staff specialists, it was submitted, suggests that the problem is almost twice as bad, on numbers alone. 142 ASMOF disputed suggestions by the HAC that the Colleges were significant impediments to solving workplace shortages. It was submitted the Colleges had overwhelmingly contributed to measures to address workforce shortages. Moreover, it was submitted in this regard the HAC's contention was inconsistent with information that Colleges have been unable to establish the required number of training positions because NSW Health has refused to fund the positions. For example, since 2003 AMWAC has been pressing for the creation of an additional 100 pathology training positions across Australia each year for five years in order to address the shortfall of pathologists. An additional 28 positions have been provided but not one of those 28 has been provided by NSW, according to ASMOF. 143 The applicant addressed the question of whether wage increases would make a contribution to correcting workforce shortages. It was submitted that if the Commission were to accept what the HAC appeared to be putting, namely, that the Commission cannot hope to match the levels of private sector remuneration in some specialties and, therefore, pay increases would be futile, this would be a recipe for lower and lower levels of morale, a downward spiral in the profession and an inevitable, increasing, exodus from staff specialist ranks. 144 ASMOF argued that the strategy of replacing staff specialists with VMOs was not the answer to the shortage crisis. The applicant noted the parties agreed that to resort to paying substantially higher VMO pay rates to some staff specialists for example, in emergency medicine, was another indicator of a shortage of specialists. It was further noted that in recent years there has been a move to pay VMO rates to emergency medicine specialists in some rural base hospitals and some peripheral metropolitan hospitals. Unlike most VMOs, staff specialists performed a wide range of non-clinical duties that were necessary to support a contemporary, public health system. Where a staff specialist position was replaced by VMO sessions there might not be any loss of clinical services. However, it was contended it was certainly the case that the non-clinical services would be lost. 145 Reference was made to the information that was provided during the inspections at St George and Prince of Wales Hospitals about the non-clinical work undertaken by staff specialists. The witness statements also made extensive reference to the contribution of staff specialists in non-clinical areas including quality and safety; the co-ordination of multi-disciplinary clinics; undergraduate teaching; writing software for databases; written protocols; and, quality assurance and risk management. This work, it was submitted, was not undertaken by VMOs (unless it is explicitly identified as part of their contracted hours). It was a matter of public interest, ASMOF contended, that staff specialists be employed to undertake this work. HAC's case

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(v) The very recent views expressed by the Australian Government's Productivity Commission, which highlight the fact that Australia generally needs to find "new ways to meet core health workforce objectives" and it is clear that the "new ways" currently under consideration do not involve paying more money to the existing medical workforce. (d) Whilst the evidence does establish that the shortage of staff specialists has contributed to increased workload for staff specialists (or at least for some staff specialists), especially via the extra supervision requirements associated with the use of overseas trained doctors and locum staff specialists, this evidence does not support a separate "special case" increase in the salary rates of staff specialists. This is more properly to be taken into account in the Commission's consideration of the applicant's work value change case given the general acceptance of the proposition that an increase in workload can, at least in certain exceptional circumstances, demonstrate a relevant change in work value or in the conditions under which any workforce group is called upon to perform. 147 Contrary to the applicant's submission, the HAC contended that in conjunction with other government departments and agencies and numerous professional bodies, they developed and implemented an array of initiatives designed to address the "medical workforce" shortages generally and the shortage of staff specialists, in particular. It was submitted that unchallenged and uncontradicted evidence demonstrated that much has already been achieved and suggested that many of the causes of the existing Staff Specialist shortage can and will be addressed in the short to medium term. 148 The respondent submitted that the New South Wales Government's revenue would be "better spent" on workforce planning initiatives rather than on paying for "special case" increases to staff specialists: See Public Hospital Nurses' (No. 4) at [196], [204]-[211] and especially 327 - (3). 149 HAC submitted that the approach and conclusions reached by the Commission in Re Crown Employees (Teachers in School and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254 at [73]-[78] applied here with equal force such that there should be no special case increase for staff specialists based on "shortage". In that case the Commission said: 73 We do not consider the evidence supports the contention that there is currently a general shortage of teachers to the extent that such a shortage could support a special case for across the board salary increases in order to attract and retain teachers. By no means could it be said that shortages of teachers exist of the nature found to have been the case in Re Public Hospital Nurses (State) Award (No. 3) (2002) 121 IR 28 or Health Employees Pharmacists (State) Award . The evidence reveals there are shortages of teachers, but these are limited to certain subjects such as mathematics, science, technology and applied studies, and certain geographic areas or locations in the State. There was no suggestion by any party that salary increases should be targeted at the specific areas of shortage. Further, an across the board salary increase on the basis of certain areas of shortage, be that subject or geographically based, is simply not justifiable on the evidence before us. We agree with respondents that what is required to address the current problem is for resources to be directed to the development and implementation of targeted initiatives designed to attract and retain teachers in government schools in NSW … rather than a general wage increase.

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150 ASMOF referred to what it regarded as the HAC's attempt to suggest that the medical colleges were responsible for the shortages. On the contrary, it was submitted, the evidence from the colleges established that many positions, which are approved training positions by the colleges, remain unfilled. Particular reference was made to the "dire" position in respect of pathologists. ASMOF noted that the medical profession had expressed a strong view that the States have failed to provide sufficient funds to support the necessary positions. 151 As to the shortages created by the contraction of medical school places in Australian universities some years ago, ASMOF asserted that it needed to be emphasised these shortages are yet to have an impact on the specialist workforce. This was because of the long lead times involved in the training and graduating of medical specialists. If anything, it was submitted, the indications were that shortages of staff specialists would become more acute in the short term as the impact of past shortages in medical school places works its way through the system. The shortages arising in consequence of the earlier decision to reduce the number of medical school places would continue to be felt for at least a decade, the applicant submitted. 152 The applicant rejected the submissions by the HAC that it had produced insufficient, or no recruitment/retention evidence such as was called in the Nurses' and Teachers' cases. It was submitted the ASMOF witness statements broadly dealt with attraction and retention issues. In particular, there was substantial evidence about the use of VMO rates to attract specialists to work at other hospitals and the attractiveness of VMO rates which had led to the departure from the public health system of many staff specialists. The Agreed Statement of Facts acknowledged the substitution of staff specialist positions by VMOs, a measure that the Health Department had been forced to adopt by reason of the severe shortage of staff specialists. 153 ASMOF submitted the inspections powerfully underscored the general picture of shortages. Mr Nolan submitted: No more stark example was provided than was the position described at Hornsby Hospital Psychiatry Department. It had become almost impossible to recruit staff specialists in psychiatry. In this connection it is wrong simply to concentrate as the HAC has, upon the position with respect to emergency medicine and psychiatry. It is a broader more widespread pattern of shortages and the attached recent advertisements for "VMO/staff specialist" positions bear this out ... Positions advertised in this way include obstetrics, rehabilitation medicine and anaesthetics, as well as emergency medicine and psychiatry. These advertisements are not limited to rural hospitals but include Gosford Hospital and the Newcastle region. Mental health services prefer to appoint staff specialists because of the continuity issues that are particularly important in mental health. However, the recruitment difficulties in the public sector have become so severe that Sydney hospitals such as Nepean and Sutherland have given up advertising for staff specialists and instead are offering VMO positions. Central Coast has offered a guaranteed private practice Level 4 staff package in an attempt to recruit a staff specialist. In emergency medicine, Fairfield Hospital is offering VMO appointments in an attempt to attract specialists and Mt Druitt is offering the option of staff specialist or VMO rates. The AMWAC reports also confirm that the public sector is uncompetitive and afflicted by general shortages. Its conclusions suggest that the public sector-specific shortages can only be addressed adequately by substantial wage increases for staff specialists. The extensive evidence on the varieties of expedients used, including variations to normal duties to keep key specialists in the public system, is further testament to the need for substantial pay increases. Note that the evidence of leakage from the public system to VMO positions is widespread, and in particular note the evidence of Drs Newman and Gurr in this connection.

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(c) The actual number of vacancies must be significantly greater than 10% given that not all vacancies are declared Area of Need. 159 Whilst the HAC was not prepared to agree that there was a crisis in the public health system because of the shortage of staff specialists, it seems to us, based on the evidence and inspections, there in fact is a crisis in some specialties. In emergency medicine, geriatrics, pathology and psychiatry the burden of shortages is almost overwhelming staff specialists in the public hospital system. 160 We refer, for instance, to the evidence of Dr Ieraci: The vacancy level within the emergency medicine specialist workforce in NSW is obviously a concern. As noted above, in South Western Sydney Area Health Service there are currently 14 vacancies in an establishment of 22. I am aware that there is a serious shortage of emergency physicians in other area health services. I am not aware of any steps that have been taken by NSW Health to address this shortage. In fact, on the contrary, the Department of Health has often raised questions about the working arrangements of emergency physicians that have been agreed at a local level, with the implication that such arrangements would be withdrawn. There is anecdotal evidence that some rural base hospitals are paying emergency physicians at Visiting Medical Officer (VMO) hourly rates in order to attract specialists. Even in Sydney, some of the district hospitals are offering VMO rates. In other Sydney hospitals, emergency physicians are guaranteed Level 4 remuneration levels even though it is highly unlikely that sufficient private practice income will be generated to meet such levels. A Level 4 senior staff specialist is able to earn up to $226,925 (including private practice), compared to the Level 1 maximum of $181,540. 161 Dr Graham in her statement referred to the serious shortage of psychiatrists: The Report [of the Australian Medical Workforce Advisory Committee (AMWAC)] notes that psychiatry is a large specialty, representing 12.2% of all medical specialists. One of the major findings of the Report is a serious shortage of psychiatrists in the public sector. The proportion of the workforce employed in the public sector has dropped over the last two decades from approximately 50% to 38%. This appears to be a result of increasing dissatisfaction with the working conditions in the public sector. A survey of psychiatrists undertaken by AMWAC and the RANZCP identifies dissatisfaction with remuneration and conditions as one of the major reasons given for leaving the public sector, especially among younger psychiatrists. The Report identifies 20.3 vacancies in public sector psychiatry in NSW and eight Area of Need positions in July 1999. This situation has become substantially worse in the five years since the Report. I understand from NSW Health sources that the number of vacancies has now almost quadrupled to 76.1 FTE. I am personally aware of a number of experienced and respected staff specialist psychiatrists who have resigned in recent months after years of failing to persuade management that more resources are desperately needed. I am extremely concerned that such resignations and the number of vacancies reflect an increasing tendency amongst psychiatrists to abandon the public sector because of the inability of NSW Health to recognise and address the crisis in mental health services. 162 Dr Caplan in his evidence observed: AMWAC predicted that there will be an increase in the requirement for geriatricians, reflecting the steady growth in the aged population. However, it also noted other factors creating a demand for geriatricians: - the continuing pressure to shorten acute care hospital lengths of stay and the desire of older people to avoid long term residential care and maintain some kind of independent life at home for as long as possible. To the best of my knowledge, the AMWAC has not updated its report since 1997. Anecdotal evidence suggests that the demand for geriatricians is steadily increasing and the number of public hospital vacancies is growing. In my department, one out of five positions are vacant. I estimate that in NSW there are now 39 vacancies. 163 Dr Gurr in his statement referred to the shortages of psychiatrists: I believe that a key issue in making public sector psychiatry more tolerable is the need to address the shortage of staff in mental health, both nursing and medical. In terms of staff specialists, this will not occur unless there is a significant reduction in the gap between public sector remuneration and the level of income available in the private sector. Of course, the other key factor is that that acutely-ill, often violent and aggressive patients are not generally found in private sector work. The private sector, therefore, has both higher remuneration and easier work. However, I believe that there are a large number of psychiatrists who would prefer to work in the public sector because of their commitment to the patients if the working conditions were more tolerable. At the moment the system is in a downward spiral - specialists are leaving because the working conditions are intolerable, which makes the work more difficult for those who remain. It is a matter of great concern that this is also flowing through to trainee psychiatrists. Their training exposes them to very unattractive working conditions, making it less likely that they will seek public hospital appointments when they qualify. The number of vacancies in the trainee workforce in turn makes the work of the specialists more difficult. 164 In relation to pathologists, in its official newsletter published in September 2005 The Royal College of Pathologists of Australia considered the profession was in crisis. It stated: Since 2003, the Australian Medical Workforce Advisory Committee (AMWAC) has been urging the creation of an additional 100 training positions each year for five years in order to address the current shortfall of pathologists. Yet to date funding for only an extra 28 have been provided from State Territory and Federal Governments.

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The newsletter noted that the New South Wales Government had not committed to any additional training places. 165 We would add that a particular feature of the inspections was the consistent concern expressed by specialists regarding the problems they faced as a consequence of shortages. 166 Whilst acknowledging the existence of a shortage of staff specialists, the thrust of the HAC's opposition to any salary increases on the grounds of shortages was that: (a) The Commission does not award salary increases for shortages per se and has emphasised that any applicant seeking to rely on shortages to support wage increases would need to demonstrate, by appropriate evidence, that the shortages have had a serious and sustained adverse impact on the workforce seeking the wage increases such that their work value has increased and/or that the public interest dictated that pay increases should be awarded as one of the tools to address such shortages. (b) The applicant was unable to produce any, or at least any probative, evidence to suggest that an increase in salary levels of staff specialists will serve to alleviate the shortage of staff specialists in the system. (c) The New South Wales Government's revenue would be "better spent" on workforce planning initiatives rather than on paying for "special case" increases to staff specialists. 167 We have not been convinced that the crisis of shortages in emergency medicine, pathology, geriatrics and psychiatry exists in all the other specialties, although we acknowledge the evidence of shortages in those other areas. However, assessing the issue of shortages across the board the conclusion is irresistible that in respect of staff specialists covered by the Award there exists a shortage; the shortage is more serious and significant than that found to have been the case in the 2004 Teachers case; and, is of the same order found to have existed in Public Hospital Nurses (No. 3) and Health Employees Pharmacists (State) Award and other Awards (2003) 132 IR 244. 168 We consider, however, that a shortage of staff specialists is not, on its own, sufficient reason to award a salary increase. If the fact is that there is no public interest to be served by granting a salary increase based on shortages, or the shortages have not contributed to an increase in work value, or that a salary increase will not also address an imbalance in comparative pay rates as was the case in Public Hospital Nurses (No 3), or will do nothing to improve the shortage, or the Commission is convinced that there are better alternatives to addressing the shortage than salary increases, then the basis for granting a salary increase would be unconvincing. 169 There is no doubt the relevant authorities are taking a commendable range of initiatives to address the shortage of staff specialists and these have been set out earlier in the decision. The Full Bench must be careful not to detract from these initiatives by granting salary increases that would divert resources away from the initiatives that are in place or are planned. 170 Further, there is no pool of staff specialists who have left the profession for family and other reasons (as there was in Public Hospital Nurses (No 3)) and who might be attracted back into the public hospital system on the basis of improved salary rates. Nor will a salary increase provide an instant solution for the mistakes of the past where, for instance, the Commonwealth Government's decision in the early 1990s to cut the number of university places for trainee medical practitioners is one of the principal reasons for the current shortage of medical practitioners and, in turn, staff specialists. 171 We consider, nevertheless, that there are grounds for increasing salaries on the basis of a shortage of staff specialists. In our opinion, the shortages have had a significant effect on the conditions under which staff specialists work thus affecting their work value, including, in particular, the need to supervise more closely overseas trained doctors and other health professionals that to some extent have been used to fill the gap caused by the shortage and the increased workload and stress caused by having too few specialists. Moreover, we consider there is force in ASMOF's submission that: The indirect impact is that the pressures inevitably mean that time ordinarily allocated to non clinical duties, including teaching and research, has been steadily eroded at the further cost of morale and retention and recruitment. To the extent that these features of staff specialist employment hold out attractions to trainees - potential trainees can now only see career opportunities as a staff specialist diminished. 172 We also consider that an increase based on shortages will have a positive retention effect. The evidence suggests that for many specialists the option of becoming a VMO can become attractive, especially given the pressures brought about by staff specialist shortages. There will be those staff specialist who will opt to become a VMO regardless of any salary increase because that style of practice suits them. However, other specialists find the work in the public health system rewarding and will stay there if they perceive it is worthwhile. At the present time they are concerned their salary rates are too low given the value of their work and they are under considerable pressure in a number of specialties because of shortages. A rejection of their case for salary increases based on the shortages would have a negative effect on their perceptions as to the value of working in the public hospital system and at this time of severe shortages in a number of the specialties it is clearly not in the public interest to erode the confidence of specialists in that system.

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174 On 25 March 1993 Hungerford J, acting as an arbitrator appointed pursuant to s 29L(1) of the Public Hospitals Act 1929, issued his Reasons for Determination as to the terms and conditions for the performance of work by VMOs under sessional contracts in providing medical services to public patients in the public hospital system. In the course of his Determination Hungerford J considered the relationship between the VMO hourly rate and the staff specialist hourly rate. His Honour decided that the best comparison was between a Scheme D (i.e., half-time) staff specialist and a VMO, thereby excluding private practice earnings for both groups of professionals. 175 Hungerford J calculated the hourly rate for a senior Scheme D staff specialist as $71.41 (including the special allowance and based on 14 weeks' leave/38 working weeks per year and 19 hours per week) and determined that the base hourly rate for a senior specialist VMO should be $72.00 (a loading of 36.83 per cent was then applied to this base rate to determine the ordinary hourly rate). 176 On appeal, the Full Bench increased the base hourly rate for a senior specialist VMO to $84.00 per hour and amended the loading to 40 per cent (12 weeks' leave/40 working weeks) but did not revisit his Honour's comparison with staff specialists. ASMOF submitted that whereas the Full Bench quashed Hungerford J's decision, it did not repudiate the calculations which he made and, in particular, the comparison with staff specialists' rates. 177 ASMOF accepted the validity of the comparison between a Scheme D staff specialist and a VMO but contended that there were two errors in Hungerford J's analysis. The first was that he compared the staff specialist base rate including the component for on call/recall with the VMO base rate excluding the component for on call/recall. The second was that his Honour based his calculations on a 38-hour week. It was submitted that given that staff specialists do not receive ADOs, this is clearly not correct. ASMOF submitted that although there is no hours' clause in the Award and it is probably at the lower end of the actual hours worked, it would be better to use a 40-hour week. An additional minor point was that the Full Bench varied the VMO loading on the basis of a working year of forty weeks. On this basis it was submitted the forty-week year should also be used in the calculation rather than the 38-week year used by Hungerford J. 178 Using these assumptions, ASMOF calculated the difference between the base rate for a staff specialist and the base rate for a VMO in 2005. The base award rate for a senior staff specialist, excluding the on call/recall component, is currently $128,861 per annum. Based on 40 working weeks and a 40-hour week, this is an hourly rate of $80.54. A 40 per cent loading increases this rate to $112.76. The current hourly rate for a senior specialist VMO (excluding the background practice cost component and remuneration for on call/call back) is $159.05. ASMOF relied on this calculation to show that the VMO rate is 41 per cent higher than the staff specialist rate. On this basis ASMOF claimed an increase of 41 per cent to achieve parity between the two classifications. 179 ASMOF submitted that the fact VMOs and staff specialists have equivalent skills and experience and should be valued equally, has not been disputed at any point in the history of the employment of staff specialists since the first Award was made in 1966. It was submitted that: There is no strict and accepted comparator as was accepted in the nurses' case where a relationship was acknowledged between nurse's rates and those for physiotherapists. However, the absence of a hard and fast historical nexus is not to the point. It is useful to compare staff specialists rates with other rates such as CMOs. In particular, however, the rates for VMOs are a valid and proper basis for comparison because of the identical nature of the work and qualifications and the readily available means by which the VMO rate may be "unpacked" to produce a proper reliable basis for comparison. 180 In the context of comparisons, ASMOF also made reference to senior registrars, nurses and career medical officers. ASMOF acknowledged there is no formal relativity between staff specialists and registrars, although Kelleher J noted in 1975 that the senior registrar rate was "of some significance". Fisher P in 1990 compared staff specialist and senior registrar rates using 1978 as a datum point. His Honour concluded that the 15 per cent increase that he awarded would put staff specialists ahead of senior registrars but, given that the increase was a consent position, he noted that the rates represented the assessment by the employer of the appropriate salary levels.

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181 ASMOF submitted that if 1991 were taken as a datum point for comparison between staff specialists and senior registrars, by July 2007 the senior registrar rate would have moved ahead of the staff specialists by approximately 10 per cent. 182 It was also submitted that whilst there had been no comparison made with nurses' rates in previous cases, rates for nurses have increased significantly more than rates for staff specialists since 1991. In addition, it was submitted, new senior classifications have been introduced into the Nurses' Award resulting in a significant narrowing of the difference in pay between the two professions. 183 The parties were able to reach an agreed statement in respect of the award history for Career Medical Officers (CMOs) and movements in their rates of pay. It was agreed that between 1991 and 2007 CMOs would receive an effective pay increase of 73.5 per cent whereas staff specialists would receive 53.5 per cent. It was further agreed that: The 20% difference in overall increases received between 1991 and 2007 by staff specialists and CMOs can be traced to three causes: (i) the 2005 restructuring (10%); (ii) the general increases over the course of the 1990s awarded to PSA groups being 6% more than the general increases being awarded to staff specialists; and, (iii) a difference of 4% in the current MOUs. The current MOU for CMOs providing for increases of 16%, compared to the current MOU for staff specialists providing for increases of 12%. The staff specialists MOU allows the claim currently in the Commission to proceed and does not extinguish any work value or special case considerations. Therefore the 20% difference relates to a 10% pay rise difference and funding equivalent to a 10% pay rise used for restructuring of the CMO salary scale. 184 ASMOF submitted that CMOs were an appropriate comparator, being (apart from VMOs) the next closest medical practitioner classification to staff specialists in terms of responsibilities and seniority. There has not been a previous comparison between staff specialists and CMOs because the CMO Award was not created until around the same time as the most recent staff specialist arbitration case (the CMO Award was made on 19 October 1989). 185 Whilst the agreed statement on CMO indicated a 20 per cent differential between CMO increases and those applying to staff specialists, ASMOF conceded that the claim for increases in managerial allowances might need to be considered in any comparison with CMOs. If the allowance claim were granted, the cost was estimated by ASMOF to be an amount equivalent to a 2.5 per cent pay increase for staff specialists (assuming little or no change to the number of specialists receiving the managerial allowances). If this cost factor were taken into account, the necessary adjustment to the staff specialist rate would be, according to ASMOF, 17.5 per cent. HAC's case

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186 The HAC contended ASMOF's comparison between staff specialists and VMOs was neither adequate nor appropriate as it failed to take into account significant differences between the medical practices of VMOs and of staff specialists and of the terms and conditions under which those two groups provide their services to the system. In this respect reference was made to the evidence of Mr Farley, as follows: (a) VMOs are engaged on a contract basis for a set period of time with a contract lasting no more than five years whilst Staff Specialists are usually engaged on an ongoing basis i.e. they are permanent employees; (b) Staff Specialists are entitled to a rate of paid leave including annual leave (five weeks per annum), sick leave (10 days per annum), training, education and study leave (25 days per annum), maternity leave, paternity leave, personal leave and long service leave whereas VMOs do not have access to any paid leave; (c) Staff Specialists have access to funding (to a maximum of approximately $23,000 per annum) to cover travel and associated costs of training, education and study activities, whereas VMOs are required to fund such activities for themselves; (d) VMOs usually operate a private practice and hence must maintain an office, employ staff, purchase stores and equipment, purchase appropriate insurances such as public liability, workers' compensation, medical indemnity, business insurance, contents insurance etc. for their private practice premises. Staff Specialists, on the other hand, have all of these costs covered by the employer although it must be acknowledged that Staff Specialists on private practice levels 2-5 do have a facility fee deducted by their employer to cover administrative costs and a majority of that group (i.e. the level 2-5 Staff Specialists) are also required to pay for their own medical indemnity costs (although these costs can be met from their private practice drawings). 187 Additionally, it was submitted, staff specialists, unlike VMOs, had the benefit of the unfair dismissal provisions of the Industrial Relations Act and also had their superannuation loaded by the on-call/recall/special allowance of 17.4 per cent, whereas VMOs did not have this benefit, as they did not get that allowance. 188 Mr Kimber referred to comments by the Commission in the past about the significant differences that existed between staff specialists and VMOs: see, in particular, Re Medical Officers - Hospital Specialists (State) Award [1966] AR (NSW) 144 at 163 and 166-167. The HAC submitted the applicant had, over many years, accepted that the differences referred to by the Commission between staff specialists and VMOs prevented any useful comparison to be made between the two groups in the context of fixing appropriate base salary rates because this was the first occasion upon which the applicant had sought to rely on such a comparison.

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189 In relation to the Determination of Hungerford J, the HAC submitted that a proper reading of the decision did not support the conclusion that his Honour arrived at the base hourly rate for a senior specialist VMO (namely $72.00) because the hourly rate for a senior scheme D staff Specialist was $71.41 at that time. It was submitted that whilst the Full Bench acknowledged VMOs and staff specialists generally performed the same work and are of equal capacity and standing as their VMO counterparts and, at least in the context of its ruling as to superannuation, referred to the fact that VMOs "perform work interchangeable with staff specialists" and being "work which would otherwise, given a different system, be performed by staff specialists", it did not set the sessional VMOs' base rates by reference to any comparison to the base rates paid to staff specialists. 190 Furthermore, it was submitted, the applicant paid no regard to the fact that the Determination of Hungerford J was the subject to an appeal to the Full Commission (see Australian Medical Association, NSW Branch v Minister for Health (No. 3) (1993) 54 IR 139) that resulted in higher rates of pay than that set by his Honour and determined those rates by reference to the Full Commission's own "assessment in contemporary terms without particular reliance upon the history of the development of sessional rates …" It was contended the Full Bench also made it clear that the ultimate level of those rates depended in large part on the nature and extent of the structural changes that were ultimately agreed upon between the parties and the "value" of those changes to the system. 191 It was also submitted that the mathematical exercise now advanced by the applicant was flawed as it failed to make due allowance for the substantial amounts of paid leave received by staff specialists but not by VMOs. 192 We should refer here to ASMOF's Reply where it strongly defended its reliance on Hungerford J's comparison of staff specialists and VMOs. It was submitted his Honour's 'unpacking' of the VMO rate took into account background practice costs and leave issues, etc. Hungerford J determined that the base hourly rate for a senior specialist should be $72.00 and then applied a loading of 36.83 per cent for all forms of leave, to give an hourly rate of $98.50. His Honour also determined that an hourly rate of $9.00 (for non-surgeons) or $15.00 (for surgeons) should be paid for background practice costs. 193 Likewise, it was submitted, it was erroneous to say that there was no direct comparison of the relevant rates by Hungerford J. His Honour concluded that the most relevant senior staff specialist hourly rate was $71.41. There could be no possibility that this figure was not directly related to the $72.00 rate for senior specialist VMOs determined by Hungerford J. It was submitted nothing that the Full Bench did on appeal, gainsaid the basis of that exercise. What the Full Bench did, in effect, was to make a pragmatic decision to adjust the base hourly rate (from $72.00 to $84.00) in the light of a result that flowed from Hungerford J's decision that, it was submitted, was industrially unpalatable to all parties concerned. 194 The applicant contended that the Full Bench accepted the basis of Hungerford J's approach, including the amounts that formed part of the loaded rate, taking into account leave, leave loading and other conditions factors. It was to be noted, ASMOF submitted, that the Full Bench increased the loading for long service leave from one week to two weeks so that the total loading was increased from the 36.83 per cent set by Hungerford J, to 40 per cent. The Full Bench also increased the background practice cost component from $9/$15 to $15/$25 per hour.

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195 ASMOF contended that the establishment of a comparison between the staff specialist rate and the VMO rate according to the Determination of Hungerford J had the additional attraction of precluding any logical argument for a flow-on to the VMO rate. Mr Nolan for ASMOF submitted that it was, in effect, an exercise in catch-up for staff specialists and would logically preclude any suggestion of flow-on resulting in further VMO increases. 196 Returning to the HAC's case on comparable professional rates, Mr Kimber referred to ASMOF's comparison with the rates of pay of RMOs and Registrars as providing a foundation for a "special case" increase in the staff specialists' salary rates. HAC submitted that the applicant has not made out a special case on this ground for the following reasons (emphasis in original): (a) The Applicant, quite properly, conceded that there never has been a fixed relativity between RMO/Registrar rates and Staff Specialists' rates. The above analysis of the earlier Staff Specialists' decisions confirms this fact: ... It seems that the closest the Commission ever came to relying on Registrar rates in fixing Staff Specialists' rates was in the 1975 decision wherein the Commission noted that the Senior Registrar rate of $15,850.00, that had been fixed by agreement between the parties , was of "some significance in determining the commencement point for the scale of salaries for Staff Specialists" ... (b) The Applicant has called no evidence as to the range of duties and responsibilities of RMOs and Registrars, or more pertinently, evidence as to the differences between those classifications and the Staff Specialist classifications. Nor has it called any evidence that throws light on how the RMO/Registrar rates were initially fixed. (c) A comparison of the RMO and Registrar rates with the Staff Specialist rates in the period between 1991 and the present time, ... reveals that there is currently a 6.4% difference between the rate paid to a Senior Registrar and the rate paid to a first year Staff Specialist (with the latter rate being the higher of the two) and there is no evidence to suggest that that relativity is inappropriate. Nor is there evidence to suggest that the 15.2% differential that existed between the same two rates as at September 1991 was a differential deliberately set following a detailed comparison of the two classifications. That is, there is no evidence to suggest that the 1991 relativity should to be restored. Indeed, given the limited material that is before the Commission as to the role of Senior Registrars (for instance), it is not surprising that there should only be a small difference between the salary rates paid to that classification and the salary rate paid to first year Staff Specialists. (d) There is also the substantial difficulty in making such a comparison that is created by the fact that the rates paid to Staff Specialists have always been "all up" rates of pay that make due allowance for the fact that Staff Specialists traditionally work more than 40 hours per week, regularly work in the evening hours and at weekends and do not receive separate payments for overtime or for on-call/recall responsibilities. This special feature of Staff Specialist rates (which does not apply to RMO/Registrar rates) has been referred to regularly by the Commission in the earlier Staff Specialist decisions ... (e) In other words, Kelleher J was correct in the 1975 decision when His Honour said that, "to attempt to quantify the monetary amounts which should be included in the salaries to compensate for these factors is quite impracticable": ... Accordingly, it is in turn quite impracticable to now try to distil the true base rate component/portion of the all up rate paid to Staff Specialists so as to then enable a true like with like comparison with the base rates paid to RMOs and Registrars. That is, the difficulty will still remain in seeking to make a true like with like comparison even after the on-call/recall/special allowance of 17.4% is taken out of the base rates of Staff Specialists. 197 The respondent made further submissions regarding the relevance of VMO rates after undertaking further research as to the history of the Determination by Hungerford J. 198 In these further submissions the respondent noted ASMOF's "special case" insofar as it rested upon a comparison with VMOs rates, involved two central propositions, namely: (a) VMOs and Staff Specialists have the same qualifications and perform the same work and therefore should have the same base rates of pay; and (b) VMO base rates have been set (over the years or at least since 1993) on the basis of the rates paid to Staff Specialists. 199 The HAC submitted, however, that the applicant had not answered its submission that involved the following propositions: (a) Assume, as the applicant would have it, that Hungerford J did set the base rate for a Senior Specialist VMO at $72.00 by reference to the Senior Staff Specialist rate of $71.42; (b) Given this assumption, can it be suggested that the Full Bench in the appeal from the Hungerford J Determination took that 'Senior Staff Specialist based' VMO rate and then simply "built upon it" by reference to structural efficiency type factors? (c) If this was the approach adopted by the Full Bench then it followed that it deliberately set a significant differential between Staff Specialist and VMO base rates; OR (as submitted by the respondent); (d) The Full Bench was unable to adopt/endorse the approach adopted by Hungerford J because it did not reflect "industrial reality" and hence the Full Bench had to make its "own assessment" as to appropriate increases to the existing VMO rates by reference to work value change and structural efficiency factors of relevance since 1985 and to the fresh evidence that was before the Commission in the appeal; (e) That is, the Full Bench then awarded increases of 10-12% to VMOs but such increases were not based at all on any comparison with rates paid to Staff Specialists. 200 The findings of the Full Bench that, the HAC submitted, rendered untenable the applicant's submission that the Full Bench, in effect, simply "built upon" rates established by Hungerford J in the first instance Determination, were as follows: The effect of the 1985 adjustment provision is unsupportable in industrial terms. The VMOs have had the benefit of a provision which we cannot support; nor do we think Macken J could have intended that effect. It follows necessarily that, as Hungerford J found, the rates require a discount by the inflated amount. We propose therefore to make our assessment in contemporary terms without particular reliance upon the history of the development of sessional rates but having made the discount to which we have just referred. In our view, this requires a reduction in the hourly rate of $14.00 in the case of the Senior Specialist, with a proportional effect on the other classification rates. This approach then requires us to consider the application of the increases, against which there is no appeal, in relation to work value changes occurring since the last work value assessment… The course we have followed diverges dramatically from that urged from the Minister and from the three exercises advanced by the AMA. The AMA's exercises were never designed as precise answers to its claim. Rather, they were designed to assist the Arbitrator in the process of assessment. ... We are in a position different to that in which Hungerford J found himself in assessing new rates. The agreement between the parties arrived at subsequent to His Honour's decision is a matter we consider of importance in making a final assessment of the sessional rates to be applicable. The parties took a judgment which introduced significant and far reaching changes and sat down to settle between them how the changes involved in the judgment should be introduced. They have agreed to submit the residual difference between them as to rates to the appeal process. In the context of the application of the judgment of the Full Commission the parties will operate in a new form of contractual relationship which involves a substantially different culture. The VMOs have accepted that in the provision of medical services they will now be subjected to administrative and budgetary restraints. These changes are of enormous financial value to the administration. We accept the reasons for decision went forward on the basis that these matters would occur but in a context where the sessional rates were to be reduced substantially, their necessary co-operation to implement those procedures was not to be forthcoming. We think the application of the framework established by Hungerford J now becoming a reality (as the fresh and undisputed evidence called in these proceedings indicated) is a feature which should be brought into account in the assessment of rates. 201 The respondent submitted that the further evidence that was before the Full Bench (and not before Hungerford J) demonstrated why the Full Bench regarded it as appropriate for it to make its "own assessment" as to appropriate rates for VMOs going forward. Consistent with this approach, it was submitted, there was nothing to be found in the Full Bench decision that supported the applicant's contention that the rates set for VMOs in 1993 were based upon Staff Specialists' rates of pay. 202 In any event, it was submitted, it was simply incorrect even to suggest that Hungerford J set the VMO base rates at the levels that he did because his Honour was of the view that VMO base rates should be the equivalent of Staff Specialists' rates. Mr Kimber submitted there was nothing in Hungerford J's extensive "Reasons for Determination" that supported this submission by the applicant. Indeed, it was submitted, Hungerford J took into account a significant number of factors when assessing base rates for VMOs and, whilst that list of factors included reference to a "comparison with Staff Specialists' rates", the HAC submitted that on any proper reading of his Honour's consideration of all of the listed factors that, at best, it could only be said that Hungerford J "had regard to" the rates paid to Staff Specialists and that on no account could it be said that his Honour set VMO rates on the basis of the then prevailing Staff Specialists' rates.

[73]

203 As to ASMOF's reliance on a comparison of staff specialist and CMO rates, the respondent submitted there was no valid comparison available. The main aspects of the HAC's opposition to the use of CMO rates for comparison purposes are as follows: (a) Apart from the absence of any proper evidentiary material before the Commission in these proceedings that would enable a proper comparison of the work of CMOs with that of Staff Specialists (at any particular level), it was also significant that there was no evidence to suggest that the CMO rates when originally established in the Determination in 1987 or in the first Award in 1989 were ever set on the basis of any agreed or determined relativity with the rates paid to Staff Specialists. Indeed, the Applicant's own submissions to the Commission in the 2005 CMO Award Application matter actively asserted that the CMO rates were originally set by reference to the rates found in the Public Hospitals (Medical Officers) Award. (b) It was incorrect for the Applicant to suggest that the CMO Award was not created until around the same time as the most recent Staff Specialist arbitration case, namely, the decision of Fisher P in March 1990 because it was clear from paragraphs 1 and 6 of the Agreed Statement of Facts re Career Medical Officers and attachments A and B thereto that the CMO classifications/rates were first established in 1987 by Determination and that the Award made on 19 October 1989 "reflected that Determination to a very large extent". (c) In such circumstances, the respondent submitted that if the applicant had thought that a comparison between CMOs and Staff Specialists was an appropriate comparison then such a contention would have been advanced before Fisher P. However, any perusal of that judgment demonstrates the comparison then sought to be relied upon was with the rates paid to Senior Registrars under the Medical Officers' Award (being a comparison that was ultimately rejected by the Commission as not supportive of the applicant's case). (d) The respondent submitted that it was not an appropriate and legitimate approach for the applicant to simply point to the "relativities" between CMO rates and Staff Specialists' rates as at 1991 as a factual matter, i.e. by simply pointing to the percentage difference between those rates at the time and then to suggest that at the very least that this "relativity" should be maintained between those two classifications in 2005. The approach is illegitimate for the following reasons: (i) As indicated above there is no suggestion that the CMO rates were ever set by reference to Staff Specialist rates and there was certainly no agreement as to relativity that is discernible from the materials now before the Commission; (ii) The materials found in the Agreed Statement as to Career Medical Officers and in the Applicant's submissions in the 2005 Career Medical Officer Award case demonstrate that whatever the position may have been in 1991, that there have been substantial changes impacting upon the work levels, responsibilities and training of CMOs since that time which on any view would warrant a revisitation of even "established" relativities. (e) In this latter regard, the following submissions made by ASMOF in the 2005 Career Medical Officer Award case take on particular significance in the present context, namely: (i) The role of CMOs has changed markedly since 1989 and yet there has been no formal recognition of that change; (ii) A new classification structure was warranted in view of the changed circumstances and that under that new scale the rates of pay for senior career medical officers were to be aligned with those payable to level 1 Staff Specialists in the Staff Specialists' (State) Award; (iii) Progression to Senior Career Medical Officer would be determined by a grading committee applying criteria set out in the new part A of the Award; (iv) The role of the CMO is a diverse one and some CMOs have been working in that classification for well over 16 years and have developed considerable expertise in their areas of practice; (v) CMOs now provide a broad range of medical services to both the public and private health systems and many CMOs continue to be required to work in relative isolation and without direct supervision … Staff Specialists and VMOs not infrequently seek specific knowledge or clinical opinion from the CMOs with specialised expertise; (vi) Many CMOs are the most senior and experienced doctors within their area in which they work and, as a consequence, are expected to fulfil leadership roles; (vii) CMOs are frequently the most senior doctors on duty in many hospitals. For example, CMOs are often in charge of many regional hospitals and their emergency departments, especially after hours during evenings, nights, weekends and public holidays; (viii) Many CMOs have acquired significant expertise in one or more areas of medicine and have been regarded as generalists capable of filling the emerging sub-specialty of inpatient physicians that are more commonly known as hospitalists; (ix) Many VMOs are dependent upon CMOs to provide onsite senior assessments in their absence; (x) Some CMOs fill responsible positions such as directors of clinical training, where they supervise the delivery of ongoing clinical education to other medical staff, particularly in regional and small metropolitan hospitals; (xi) "The evidence to be led by the Applicant would show that a substantial number of CMOs have extensive experience, skill and expertise with many possessing the skill and expertise equivalent to or beyond that of junior Staff Specialists. The Applicant proposed a new grade of senior CMO recognised the value of this role"; (xii) The rates of pay for senior career medical officer align with those payable to level 1 Staff Specialists in the Staff Specialists' (State) Award; (xiii) "The Applicant will show that the Award provides an unnavigable ceiling for some CMOs despite their leadership roles". (f) The HAC submitted all of the above factors, when taken together, provided a proper explanation as to why it was now the case that the salary scale for CMOs overlap with the salary scale for Staff Specialists. (g) The difficulty (if not impossibility) of the comparison sought to be relied upon by the applicant was only further emphasised by the fact that "ASMOF concedes that the claim for increases in managerial allowances may need to be considered in any comparison with CMOs". That is, the applicant acknowledged that there were some confounding variables that make a strict comparison very difficult. Another such variable is the fact that Staff Specialists receive TESL of 25 days per year and yet CMOs only receive 7 days study leave as is the possibility that the Commission may make penalty rates available to Staff Specialists. (h) All the above factors demonstrate that Staff Specialists should be treated by the Commission as sui generis as correctly asserted by the applicant in its submissions.

[74]

Consideration regarding comparative professionals' rates 204 For the reasons articulated by the HAC, we do not accept there has ever been a work value based relationship between staff specialists on the one hand and VMOs and/or CMOs on the other that would allow us, with any confidence, to fix salaries for staff specialists on the basis of such a comparison. Accordingly, we do not propose to establish any such relationship arising out of these proceedings. Whilst vague comparisons have been drawn between these groups of medical practitioners in the past, they fall well short of establishing a formal work value relationship - or parity - that we could rely on in 2006 in setting the salaries for staff specialists. Moreover, despite the mass of material that has been presented in this case, there is insufficient for us to draw any reliable conclusions regarding comparative work value of staff specialists to that of CMOs and VMOs and even if there were such material, we would require a much more probing analysis of the reasons for the differentials in salary scales than that we have received. 205 That is not said in any way to be critical of the parties; an exercise involving a comparison of the work of these medical practitioners would be massive and the means may not justify the end. But we are in no position on the evidence to find, for instance, that the work of a CMO and/or VMO is the same as a staff specialist and the salaries should be the same, especially when there are significant differences, no doubt for good reason, in the way the respective salaries are structured to suit the particular needs of the professional calling. 206 That said, we also do not propose to ignore entirely, movements in the salaries paid to VMOs and CMOs. In Nursing Homes &c., Nurses' (State) Award, Re (No 4) (2005) 138 IR 409 the issue of parity between nurses in public hospitals and nurses in nursing homes arose for consideration. At [66]-[70] the Full Bench stated: 66 Putting aside for the present the comparative value of the work of nursing staff in the two sectors, we are not satisfied that, on special case grounds, we should restore parity by re-establishing a wages nexus so that whenever there is an increase in rates of pay for nursing staff in public hospitals it would automatically flow to the relevant classifications in the Award under consideration. Now that the nexus no longer exists we consider the Award should continue to stand alone. 67 We accept that nursing homes are involved in providing more acute levels of care than was the case 15 years ago and there has been some convergence of the nature of nursing work in nursing homes with that performed in the public hospital system. However, we do not consider that is a reason for restoring parity. In our opinion, the nursing home environment and the factors that create that environment are different to that of public hospitals and, in the context of wage fixation, give rise to different considerations. The terms and conditions of employment in the awards covering nursing staff in the two sectors should be determined not primarily by reference of one to the other but by applying the relevant legal and industrial principles to the facts and circumstances of the sector under consideration at the time. 68 That is not to say that the rates of pay for nursing staff in public hospitals is not a relevant consideration in determining rates in the aged care sector. There has been, and we consider there continues to be, a strong relationship between the work value of nurses in the two sectors and RNs are able to move relatively easily between the two sectors. It would be unfair and inconsistent with the requirements of s 10 of the Industrial Relations Act to provide fair and reasonable conditions of employment for employees to allow too big a gap to develop between the award rates of pay for nurses in the two sectors because of the strong work value correlation. 69 Further, if award rates of pay become too much out of kilter it will distort the nursing labour market by disadvantaging one sector against the other in their competition for what continues to be a relatively scarce resource, namely, nurses. The employers recognise this and many favour the parity principle but they face the limitations imposed by the Commonwealth's funding arrangements - a paramount consideration for them given that the Commonwealth substantially funds the sector. It may be noted that Ms Macri, Executive Director of the Australian Nursing Homes and Extended Care Association, described the sector, as "a franchise of the Commonwealth". 70 Whilst we do not propose to restore parity we do propose to increase rates of pay for nurses in the RAC sector beyond the interim increases already granted. In doing so, we are acknowledging the longstanding nexus that has previously existed and although the nexus no longer applies a significant wages gap emerging for the reasons expressed above should be avoided. At the same time, sufficient flexibility and scope to set wages in the Award according to the peculiar circumstances of the aged care industry without the overbearing influence of a formal nexus should be provided. 207 Whilst we have declined to accept any formal nexus between staff specialists and CMOs/VMOs for the purpose of wage fixing, it is a matter of common sense based on the material we have received, that the work of staff specialists and, at least, VMOs is very similar. It is the conditions under which the work is performed, the structure of remuneration and particular demands of the two callings that are dissimilar. 208 The evidence in the proceedings is that staff specialists are critical for the operation of the public health system. Without them we daresay the system would be at risk of collapse. It would not be in the public interest, in our opinion, to allow the salaries of staff specialists to languish to such an extent that the calling of staff specialist became unattractive because earnings as a VMO were so superior. 209 In fixing salary levels for staff specialists we have had regard to movements in the rates applicable to CMOs and VMOs.

[87]

· Therese McGee of Sydney West Area Health Service · John Dwyer, formerly of South Eastern Sydney Area Health Service 215 The import of the statements may be stated succinctly by reference to what Professor Dwyer said in his statement, namely, "there has been very significant change in the level of managerial responsibilities undertaken by staff specialists in managerial positions". For example, Dr McGee stated: The requirements imposed on a staff specialist manager by NSW Health have grown enormously in recent years, particularly in the areas of risk management and quality and safety. Written protocols are developed for every clinical procedure undertaken within a department of a hospital. In obstetrics at Westmead Hospital there are more than 100 procedures. Each protocol needs to be updated every two to three years. A single protocol will typically take 30-40 hours to complete and up to 10 need to be completed in a 12 month period. No resources have been provided by the hospital or the Department of Health to assist with these requirements and as a result staff specialist managers often work on the weekends to complete this work. Similarly, the workload associated with adverse incidents has increased enormously, with a requirement for each incident to be thoroughly investigated and avoidable factors identified. While the value of this requirement is not disputed, there have been no increased resources to assist with the increased workload. ASMOF's case 216 ASMOF relied substantially on the statement of agreed facts in respect of managerial allowances but added it was notable that all of the HAC's witnesses who referred to the managerial allowance issue - Dr Christley, Professor Picone and Mr Clout - agreed that substantial increases are appropriate, albeit on certain conditions. 217 In its Reply, ASMOF submitted Nurse Unit Managers (NUMs) receive salaries that are 25.4 per cent (NUM1), 31.4 per cent (NUM2) and 34.9 per cent (NUM3) above the top of the Registered Nurse scale. It was submitted that if these same percentages were to be applied to the top of the staff specialist scale (currently $136,709, excluding allowances), the three levels of managerial allowance would be $34,724, $42,927 and $47,711. ASMOF noted that NUM responsibilities, unlike the criteria for the staff specialist managerial allowances, do not include cost centre management and budget preparation, participation in planning and policy development or membership of senior executive management teams. 218 The Full Bench had requested information about the managerial allowances received by the ASMOF witnesses, including those who were involved in the inspections. Of the 25 staff specialists who were witnesses or who had a role during the inspections, eight received the level 3 allowance, five received level 1, one received level 2 and information regarding the others was not available. HAC's case 219 The HAC accepted that the nature and extent of the changes that have occurred in the managerial responsibilities assigned to some staff specialists in the system over the last five to ten years have been such as to warrant increases in those allowances. This was especially so, it was submitted, in circumstances where the parties have now agreed on new or substantially revised criteria for the level 1, level 2 and level 3 managerial allowances that are available to staff specialists and the fact that the parties have agreed on variations to the existing "performance agreements" clause of the Award such that it makes it clear that staff specialists in receipt of their managerial allowances would henceforth be required to ensure that each staff specialist has an annual "performance agreement" and that the terms of that agreement are properly implemented/honoured. In his submissions Mr Kimber stated: So the object of the exercise has been very much to place on the staff specialists receiving managerial allowance a very real responsibility for ensuring that the process works. That in conjunction with the growth of managerial responsibility together forms the foundation that there should be an increase in the levels. Consideration regarding managerial allowances 220 It may be seen there is a substantial amount of agreement between the parties in respect of managerial allowances, although the agreement falls short of an accord in relation to the amount of increase in the allowances. 221 What is apparent from the material in the proceedings is that the current allowances are entirely inadequate to compensate for the duties and responsibilities required under the agreed criteria for payment of the allowances. 222 In claiming the increases it has in managerial allowances, ASMOF has placed some reliance on the rates paid to nurses who perform a managerial role. It appears that the HAC has not demurred from such comparisons and it has not proposed any alternatives. In his submissions Mr Nolan for ASMOF stated in relation to the managerial allowance claim: The current levels are based on a 1997 negotiated settlement. Thus there was no assessment of the value of the additional responsibilities and no account taken of the change in staff specialist managerial responsibilities between the time that administrative allowances were introduced and 1997. As a result, a staff specialist director of a major multi-specialty multi-facility multi-million dollars business unit is paid a lower amount for managerial responsibilities than the nurse unit manager of a small ward in a small hospital. In other words, not only is there recognition of the skill and scope of responsibilities in an objective sense, but in a comparative sense the nurse manager positions have really overshadowed the doctor specialist manager positions with increases in the salary rates for nurse managers and the introduction of this new nurse manager classification has come into the nurse hierarchy over the years and in particular in recent years. 223 We understand that there are 224 staff specialists currently receiving the level 1 allowance, 120 receiving a level 2 allowance and 56 receiving a level 3 allowance. These numbers may change given the more stringent criteria that has been agreed upon in order to attract the payment of a managerial allowance. 224 We note that it was agreed that certain grades of nurse manager could be approximately equated to the three levels of staff specialist managerial allowances. That would mean substantial increases in the managerial allowances and whilst we recognise payment of the allowances will be in compensation for staff specialists assuming quite significant managerial responsibilities will only be made according to strict criteria, we intend to take a reasonably conservative approach to the fixing of these allowances given what we intend in relation to salaries and to ensure there is no double counting. ECONOMIC IMPACT

[91]

HAC's case 230 The HAC tendered the witness statement of Kenneth Reginald Barker, Chief Financial Officer for the New South Wales Health Department. Mr Barker's statement contained an extensive assessment of the cost of ASMOF's total claim and its impact if granted. However, in respect of salaries, Mr Barker estimated that an increase in the pay of staff specialists generally of one per cent would result in an increase in total salary costs for the staff specialists' workforce of approximately $3.452 million. He said a variation to the Award resulting in a pay increase of 41 per cent applying to all staff specialists would result in an increase in the total salary costs of approximately $156 million. 231 HAC accepted that the Commission would approach the economic impact of the claim in the same manner that it was approached in Public Hospital Nurses' (No. 4) at [233] and [241]-[242] where it was stated: 233 As the HAC contended, the Commission is required, pursuant to s 146(2) of the Act, to take into account the public interest in the exercise of its functions and, for that purpose, must have regard, inter alia, to the state of the economy of New South Wales and the likely effects of its decisions on that economy. Hence, even though wage increases may be justifiable under the work value principle, if to grant them were to have an adverse impact on the economy, a case may exist for restraint. The onus of demonstrating the need for restraint would fall on those opposing the increase because unless it can be convincingly demonstrated that real harm will be done to the economy by the granting of any increase, the employees concerned are entitled to receive remuneration commensurate with the value of their work. ... 241 We find that there has been a significant net addition to the work requirements of registered nurses and ENs over the relevant periods such as to warrant an increase in rates of pay. In assessing the level of pay increase we have concluded that only a moderate increase is justified. Our reasons for arriving at this conclusion are as follows:

Parties

Applicant/Plaintiff:

Australian Medical Association, NSW Branch

Respondent/Defendant:

Minister for Health

Cases Cited (11)

35 Both parties addressed in some detail the history of the Award, although their purpose in doing so was different. It was common ground that the first award for staff specialists was made in 1966: Re Medical Officers - Hospital Specialists (State) Award [1966] AR 144. In 1968, Richards J considered a claim for increased annual leave and a claim for salary increases including a claim for an additional classification of "senior Staff Specialist after five years": Re Medical Officers Hospital Specialists (State) Award [1968] AR (NSW) 469. In 1972 a further work value inquiry was undertaken: Re Medical Officers, Hospital Specialists (State) Award [1972] AR (NSW) 675 and again in 1975: Re Medical Officers - Hospital Specialists (State) Award [1975] AR (NSW) 78. In 1978 staff specialists sought a 20 per cent increase in salaries based on work value change and on the fact that the overtime rate for medical officers had been increased from a time and quarter to time and a half in late 1975: Re Medical Officers - Hospital Specialists' (State) Award [1978] AR 321. In 1990 the Commission approved a consent variation to the Award increasing salaries by 15 per cent: Re Medical Officers - Hospitals' Specialists (State) Award (1990) 33 IR 79. 36 The Commission has not been called upon to review the work value of staff specialists since 1990. All pay increases since then have been included in the Award by consent. There have been three rounds of increases since the 1991 State Wage Case increase: a total of 9 per cent paid under the enterprise agreements; a total of 14 per cent paid under a 1997 central funding agreement; and, a total of 16 per cent paid under a 1999 central Memorandum of Understanding. No work value commitments were made under any of these agreements. Given this, it was agreed the datum point for work value change evaluation in this case is 17 September 1991. 37 In relation to the history of the Award, ASMOF submitted there had been a number of consistent themes in the reviews of the Award by the Commission. One was that the Commission had consistently decided that earnings from rights of private practice should not be taken into account in determining the Award rates. A second consistent theme was that a staff specialist cannot be distinguished from a Visiting Medical Officer (VMO) in terms of either the nature or the value of the work performed by each. 38 Thirdly, it was submitted, there had been a general acceptance that the rates applicable to Senior Registrars were relevant to staff specialists but a fixed relativity had not been established. Fourthly, that in setting rates for staff specialists, the Commission has taken into account that the Award does not contain provisions relating to hours, overtime, or work on weekends and public holidays. The figure of 55 hours per week (on average) has been mentioned on a number of occasions. Fifthly, that the Commission has steadfastly refused to give much weight to inter-State comparisons on the basis that it is too difficult to make valid comparisons. 39 Mr J Nolan of counsel for ASMOF submitted the number of significant changes to the content of the Award since 1966 has been small. For example, the structure of the salary scale was unchanged from the award made in 1966. In 1968 it was noted that Richards J awarded a salary increase but made no other significant changes. In 1972, Cahill J increased the annual leave entitlement from four to five weeks but removed the provision that allowed a day to be added to annual leave when a public holiday was worked. In 1978, Kelleher J awarded a salary increase but made no other significant changes. 40 The applicant noted that in 1985, an on call/recall allowance of 20 per cent of salary was introduced by consent, but not included in the Award (the allowance remains a non-Award allowance although it now forms part of salary for all purposes). In 1987, McCardle C determined that the on call component of this allowance was 6 per cent of salary and the recall component was 14 per cent of salary. In his 1990 decision, Fisher P noted that the introduction of this allowance was contrary to the wage-fixing principles of the time. The allowance was reduced to 17.4 per cent of salary as a consequence of his Honour determining that the 1990 increase of 15 per cent should not be applied to any allowances (this allowance was subsequently replaced by the "special allowance" and there is no reference to on call/recall). No other significant changes were made in the award made by Fisher P. 41 In the 1997 consent Award there were a number of changes one being the introduction of a definition of "normal duties" in Clause 2: "Normal duties" means clinical or other duties and responsibilities undertaken by the Staff Specialist:

(1993) 54 IR 139

(2004) 133 IR 254

(2003) 132 IR 244

(1990) 33 IR 79

(2005) 138 IR 409

(2002) 118 IR 336

(2002) 115 IR 183

(2002) 121 IR 28

(2003) 131 IR 17

[2005] NSWIRComm 53