Australian Workers Union v. BlueScope Steel (AIS) Pty Limited [2008] NSWIRComm 1071

LEGISLATION CITED: Industrial Relations Act 1996 Federal Workplace Relations Amendment (Work Choices) Act 2005

Australian Iron and Steel Pty Limited - Port Kembla Restructured Ironworker Classifications Rates of Pay Award Case - unreported BHP Steel (AIS) Pty Limited - Hot Strip Mill Reconstructured Ironworker Classifications Rates of Pay Award Case - unreported BHP (AIS) Pty Limited - O'Brien's Drift - Restructured Ironworker Classifications Rates of Pay Award - unreported BlueScope Steel Limited Paintline Dispute [2007] NSWIRComm 1022 Crown Employees - Legal Officers - Award Case (1972) AR 376 Crown Employees Scientific Officers Award Case (1962) AR 250 Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254 CASES CITED: Metalliferous Miners State Award Case (1928) AR 466 Mineral Sands (State) Award Case (1980) AR 107 Health Employees Pharmacists Award Case (2003) 132 IR 244 Parramatta City Council v. Health and Building Surveyors Association of New South Wales (1988) 26 IR 398 Public Hospital Nurses (State) Award (No.4) Case (2003) 131 IR 17 Reference by the Minister for Industrial Relations of a Dispute Between BHP Billton and the Australian Workers Union [2002] NSWIRComm 378 Soap and Candle Makers Case (1946) AR 264 State Wage Case 1989 (1989) 30 IR 107 State Wage Case 2008 - unreported

HEARING DATES: 19/05/2008, 20/05/2008, 21/05/2008, 22/05/2008, 05/06/2008, 06/06/2008, 25/06/2008, 26/06/2008, 27/06/2008, 16/07/2008, 22/07/2008, 29/07/2008

LEGAL REPRESENTATIVES: RESPONDENT Ken Brotherson Duncan Cotterill Lawyers

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Australian Workers Union and BlueScope Steel (AIS) Pty Limited

Notification of an industrial dispute under S.130 of the Industrial Relations Act, 1996 by BlueScope Steel (AIS) Pty Limited re claim for increased wages for operators in the Hot Strip Mill in the Port Kembla steelworks

Notification of an industrial dispute under S.130 of the Industrial Relations Act, 1996 by the Australian Workers Union re claim for increased wages for operators in the Hot Strip Mill of BlueScope Steel (AIS) Pty Limited in the Port Kembla steelworks

Referral of an industrial dispute under S.146A of the Industrial Relations Act, 1996 by BlueScope Steel (AIS) Pty Limited and the Australian Workers Union

1 Pursuant to the provisions of S.130 of the 1996 Industrial Relations Act, BlueScope Steel (AIS) Pty Limited has lodged a notification of an industrial dispute with the Australian Workers Union concerning a work value assessment of the work of the operators in the hot strip mill [HSM]. A wages claim by the AWU on behalf of the HSM operators has been the subject of discussions with BlueScope Steel for some considerable time but the claim remains unresolved. The employees concerned are covered by the terms of the BlueScope Steel (AIS) Pty Limited Port Kembla Steelworks Employees Award - which by a 2006 amendment to the State IR Act has been converted into an enterprise agreement and, as such, becomes a "preserved State agreement" - a PSA - under the 2005 Federal Workplace Relations Amendment (Work Choices) Act. (Recently, the BlueScope Steel Award has been confirmed to operate for three more years, with further wage movements to the steelwork employees covered by it over that period.)

2 Clause 5, No Extra Claims, of the BlueScope Steel Award contains a standard clause proscribing wage movements outside certain limitations, viz:

"It is a term of this award that the unions (with whom this award is made) undertake, for the period until the nominal expiry term of the award, not to raise any further claims, award or overaward, including claims arising from national or State wage cases. There will be agreed scope to arbitrate, if necessary, unresolved issues about classification restructuring or work value claims."

The current claim for HSM operators is categorized as a work value claim and, as such, it is specifically preserved by Clause 5.

3 A protocol has been developed for the processing of claims of this nature through BlueScope Steel's operations in Port Kembla before the State Commission, provided that there is compliance with the established comprehensive dispute settlement procedures [DSP]. BlueScope Steel and the AWU have completed a S.146A referral agreement over the matter in the following terms:

"Following extensive consultation, no agreement has been reached to resolve the HSM Operator Level 16 pay claim. The parties request the New South Wales Industrial Relations Commission to apply the work value principles to the HSM Operator Level 16 role within the established Port Kembla steelworks pay level matrix."

4 The pay matrix is not contained in the BlueScope Steel Award but, as I will discuss in more detail later in this decision, wages staff in production positions are ordinarily allocated a position in the matrix between Level 1 to Level 16, which is the top of the range. The S.146A referral agreement brings this claim under the provisions of the State IR Act and, in particular, the Work Value Change principle of the current wage fixation principles applicable in the State Commission which were recently confirmed by the decision of the Full Bench of the Commission (Boland J - President, Walton J - Vice President, Harrison DP, Staff J, Tabbaa C and Murphy C) on Friday, 27 June, 2008 in the 2008 State Wage Case [Matter No.IRC 103 of 2008]. I will also discuss the Work Value Change principle later in this decision.

5 It is important to appreciate from the outset that the conduct of this hearing is entirely dependent upon compliance with the DSP. That is what the protocol demands. As I indicated in my unreported decision of Friday, 22 June, 2007 in the BlueScope Steel Limited Paintline Dispute Case [Matter No.IRC 3417 of 2006 at p.3]:

"...The jurisdiction of the Commission to arbitrate many issues that now come before it in the BlueScope Steel operations in Port Kembla is dependent upon the actual terms of the referral agreement. It is a requirement flowing from the protocol that has been developed that for a referral agreement to be provided for any particular industrial dispute, the parties must comply with the established dispute settling procedure [DSP] for the steelworks. That means that any unauthorised work stoppage, in breach of the DSP, would negate the jurisdiction of the State Commission to arbitrate the issue in dispute...."

Moreover, it would also appear to me that strict compliance with the DSP goes not only to my jurisdiction to deal with this matter but, in fact, has a direct impact on any determination of the merits of the claim the AWU is mounting in these proceedings as well. I note in that respect particularly the comments made by Hungerford J in his unreported decision of Wednesday, 30 June, 1993 in the Australian Iron and Steel Pty Limited - Port Kembla Restructured Ironworker Classifications Rates of Pay Award Case [Matter No.IRC 2639 of 1992 at pp.13 and 14]

"...A recurring theme in the agreements over the years, and something which was emphasised during the evidence and submissions in the present case, was the change in the 'culture' at the steelworks from one of confrontation and conflict to one of consultation and the handling of disputes and grievances in an orderly manner relatively free from direct industrial action... That cultural aspect has been a direct and significant influence in my favourable consideration of the present award restructuring proposals of the parties, supported as they are by a continuation in the proposed award of the now tested dispute settlement procedure..."

6 The S.130 notification by BlueScope Steel was allocated to me and it was the subject of a conference on Tuesday, 23 October, 2007 and Tuesday, 30 October, 2007. Those proceedings, and all subsequent proceedings with this matter, were convened in the Commission's premises at 90 Crown Street, Wollongong. Independently, the AWU has also lodged a S.130 notification concerning this issue and I set it down together with the notification by BlueScope Steel.

7 With the failure of conciliation, I issued the certificates of attempted conciliation required by S.135 for both matters and lodged them in the prescribed manner, programming the two matters for arbitration. I set the matters down for a mention to programme them on Tuesday, 18 February, 2008. The matters were then set down for arbitration on Monday, 19 May, 2008, Tuesday, 20 May, 2008, Wednesday, 21 May, 2008 and Thursday, 22 May, 2008. In those proceedings Mr Hatcher represented the AWU and Mr Brotherson represented BlueScope Steel. The proceedings on Monday, 19 May, 2008 and part of Tuesday, 20 May, 2008 were devoted to an inspection of the HSM operations and other parts of the Port Kembla steelworks.

8 Mr Brotherson had proposed in a memorandum he provided on Wednesday, 7 May, 2008 that the inspection extend not only to the HSM but parts of the plate mill (furnace control area, and stands 1 and 2 control rooms), the slab caster, the No.6 blast furnace control room and the No.2 blower station. The inspection of the HSM, the parts of the plate mill and the slab caster was conducted on Monday, 19 May, 2008. The inspection of the steelworks continued on Tuesday, 20 May, 2008 with the No.6 blast furnace control room and the No.2 blower station. 9 The AWU had, in fact, opposed the inspection of anything other than the HSM operations and had responded in a memorandum dated Thursday, 15 May, 2008 that the inspection should be confined to the HSM alone as the other identified parts of the steelworks:

"...have no relevance to the proceedings which are concerned solely with the work value of Level 3 Operators at the hot strip mill. There is nothing which can be seen in the other locations identified which would be of any assistance. The usual purpose of inspections is to serve as an aid to the understanding of witness evidence given to the Commission. As you have not filed any evidence about the work of employees as these other locations, inspections of these locations serves no practical purpose. It is not appropriate that inspections be used as evidence per se . If the purpose of the inspections (of the other areas) is to establish or identify relativities between the work of the HSM employees and the work performed by employees at other parts of the Port Kembla steelworks, this may create flow-on implications which the AWU understood both parties were anxious to avoid..."

Nevertheless, I did not consider it appropriate to restrict or limit either BlueScope Steel or the AWU in any way on the inspection but to permit them to show me, as part of such case they propose to subsequently advance in the hearing, all that they required. To limit the inspection in any way may prejudice subsequent arguments in the hearing.

10 If information I obtain on parts of the inspection proves not to be relevant to the proceedings before me, I will discount it but questions of relevance are a matter for the hearing itself, not the inspection. Whilst information obtained on inspection may be rejected on the grounds of relevance, that must be an argument made after the material is made available to the member of the Commission. For any rational argument on any issues in dispute, it is, of course, necessary for the party to be able to present all material it needs for its arguments [Parramatta City Council v. Health and Building Surveyors Association of New South Wales (1988) 26 IR 398 at p.404].

11 Moreover, as I outline later in this decision, the wage levels for HSM operators has in the past been assessed under a matrix on which wage levels for operators across the Port Kembla steelworks are determined in relationship to one another. I note, for instance, that in the unreported decision of Hungerford J of Thursday, 21 March, 1996 in BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case [Matter No.2080 of 1995] - the last occasion that the wage levels for the HSM operators were reviewed as part of work value proceedings - his Honour compared and contrasted the work in the other parts of the steelworks. In particular, his Honour commented in that respect (at p.73):

"...I think it is appropriate to give special weight to the agreed margins for the new classifications in the hot strip mill by reference to the margins for the existing (1989) classifications because, in my view, the integrity of that internal structure is of prime importance. At the end of the day, however, one should ensure a reasonable relativity with other comparable classifications in the steelworks ..."

My emphasis. I will deal with this matter in more detail later in this decision but for reasons I will outline later in this decision, I no longer believe that the nexus between senior HSM operators and other employees in the steelworks in Port Kembla should be preserved.

12 The arbitration of the current AWU claim on behalf of the HSM operators did not, in fact, commence immediately after the inspections, however. Notwithstanding the efforts which the parties had already made, unsuccessfully, to resolve the AWU work value claim on behalf of the HSM operators, I still considered that it was productive to further explore conciliation with respect to the matter. The parties agreed to that course of action to attempt to resolve the issue or, at least in the alternative, to clarify the position of the parties over this matter. The proceedings on Tuesday, 20 May, 2008, Wednesday, 21 May, 2008 and Thursday, 22 May, 2008 were therefore devoted to private discussions to resolve this issue in conciliation.

13 Those further discussions were regrettably unsuccessful in resolving the dispute. A proposal advanced on behalf of BlueScope Steel was rejected by the AWU. At one time it was proposed that the more senior HSM operators move to occupy salaried positions in the HSM but that had been strongly resisted by the employees. And at a meeting of the HSM operators on Wednesday, 28 May, 2008 a resolution was, in fact, carried to the following effect:

"1. We support the AWU and our nominated employee representatives in rejecting the company's proposal for settlement.

2. We view with concern the company's position in relation to any advancement of the operator model being linked to operators having to move into the staff structure.

3 We affirm that effective from Monday, 2 June, 2008 all operators, irrespective of where they reside within the classification structure, will no longer provide coverage for all staff roles and duties. In particular but not limited to ATW plant supervisor, isolation co-ordinator, shift operations team leader, shift operations engineer, to name a few. We say that these roles sit outside of an operator's core role and responsibilities and form no part of any agreed formal position description. Operators had previously performed these roles in good faith to assist during staff shortfalls. The performing of such work has not been recognised by the company throughout these work value proceedings and instead has been used as a mechanism to drive other agendas. To that end, the company will desist from approaching operators to cover such staff roles/duties resulting from shortfalls in staff manning numbers.

4. The AWU and our nominated employee representatives continue to participate in the agreed process and remain committed to having our work value claim determined by the New South Wales Industrial Relations Commission and before Commissioner Connor. Nothing contained within this resolution affects that process or proceedings..."

14 From the evidence before me in this hearing, I detect no "agenda" by BlueScope Steel management. I believe that the HSM operators are reading more into the views expressed by BlueScope Steel than is strictly the case. Nor do I believe that it is really in the interests of the HSM operators to restrict their work and refuse to relieve in salaried positions if they are competent to do so and they are offered such work. Relieving in such positions does not make the HSM operators salaried officers when the bulk of their work would otherwise fall at the wages staff level. It is not uncommon throughout industry generally for wages staff employees to act in salaried positions - team leaders or supervisors - from time to time if they are required to do so. The HSM operators should reconsider their position in that respect because whilst, as the evidence in this hearing has revealed, it does not necessarily impact on the appropriate wage level on which they should be paid in performing their ordinary duties, it may still provide a broader base of work experience for them - for both their benefit and the benefit of BlueScope Steel.

15 I programmed further days for hearing - Thursday, 5 June, 2008, Friday, 6 June, 2008, Wednesday, 25 June, 2008, Thursday, 26 June, 2008, Friday, 27 June, 2008, Wednesday, 16 July, 2008 (subsequently vacated at the request of the parties when additional material was produced by Mr Brotherson and Mr Hatcher sought additional time to respond to that material), Tuesday, 22 July, 2008, Tuesday, 29 July, 2008, Thursday, 7 August, 2008 (also vacated at the request of the parties who wished to have the opportunity to have the transcript of the proceedings prior to giving their final submissions) and Wednesday, 13 August, 2008.

16 Mr Hatcher called three HSM operators to give evidence in the hearing: Mr Boris Baraldi, Mr Craig Munn and Mr Neville Potts. Mr Brotherson called four witnesses to give evidence in the hearing: Mr Richard Lorenc, the HSM operations manager, Mr Robert Willetts, the operations improvement engineer, Mr John Ziegelaar, the technology manager, and Mr Peter Corkish, the manager of human resources. Mr Brotherson also provided a witness statement from Mr Greg Smith, the process engineering manager, which was admitted into evidence (as amended) without Mr Hatcher requiring him for cross-examination. Similarly, Mr Hatcher provided a brief witness statement from Mr Ian Jarrett, the former throughput manager for the hot strip mill, which Mr Brotherson was content to be admitted into evidence without the need for his cross-examination.

17 Annexed to this decision is a list of those witnesses. And since much of the evidence of the witnesses in this hearing has been conducted with reference to accepted abbreviations for the work site and the old and new technology in the HSM, I also provide as a guide a list of those abbreviations contained in the body of the decision and, briefly, what each abbreviation means. Otherwise, much of the evidence in this hearing, relying as it does on the jargon of the steelworks and the specific computer systems in place, would be largely unintelligible beyond the steelworks and persons associated with the HSM.

18 Steel slabs from the slab caster plant are converted in the HSM into hot rolled coil. The specifications for the coils is dependent upon the individual requirements of particular customers for the product - and the speed in which the slabs are processed is dictated largely by the specifications for the particular slabs being processed. The coils of steel are used predominantly in the Australian domestic steel industry, including all feed supply for the Springhill works (BlueScope Steel Limited). It has been estimated by Mr Lorenc that 35% of the product is currently exported into the world steel market. It must be appreciated that the HSM, now with two furnaces in operation, is a hazardous work environment and it is anticipated that forthcoming State legislation will declare it to be such. BlueScope Steel is acting on that basis already.

19 Since 2000 the HSM has operated on a continuous 12 hour shift basis as part of the general steel industry wage settlement at that time. There are four shift crews. In each shift crew there are usually 12 production operators. Minimum manning for each shift is 8 operators, 4 mechanical fitters, 4 electricians, 1 service attendant, 1 crane driver, 1 ironworker and 2 team leaders. There are also a number of relief people who predominantly act as holiday relief for trades, service attendants and ironworkers. The 12 operators in each shift crew include leave and roster relief along with training.

20 The HSM process commences with steel slabs being heated in two walking beam furnaces. Initially, there was one walking beam furnace [WBF 1] but in 2004 BlueScope Steel announced its intention to install a second walking beam furnace [WBF 2] and it was installed and became operational in the middle of 2006 - a capital investment of approximately $100,000,000.00. However, the HSM still operates on a single stream with the two walking beam furnaces which reheat the steel slabs to an appropriate rolling temperature - approximately 1250C. The slabs are then processed in a reversing roughing mill, reducing the thickness of the slab from approximately 230mm to nominally 30mm thick and elongating it considerably. The design and technology for WBF 1 and WBF 2 is different.

21 When the slab has left the roughing mill it is called a transfer bar. It is coiled up in a coilbox which has the purpose of ensuring a consistent temperature through the length of the transfer bar before it is rolled through the finishing mill. The coiling operation is then reversed and the bar is fed into the 6 stands of the finishing mill, thinning the bar further and finishing it to the customer's specifications, which is nominally hot rolled coil between 1.48mm and 12mm thickness and a width of between 650mm to 1575mm. The finished transfer bar is cooled on the runout table and coiled up at the downcoilers. The process can be disturbed by cobbles (where the bar is trapped in the system for some reason and does not readily coil in the coil box) or dorots (where there is some delay on the run out table and the bar fails to pick up for some reason).

22 The bar is checked for defects and strapped by a new radial strap machine which was introduced in late 2007. The coil is then moved to a robotic marking machine and marked with a coil identification number. It then moves to a weighing machine which records the weight into the HSM's computer system. Nominal mass of the finished coil is up to 30 tonnes and the majority of coils are close to that mass. The finished coil is then transferred onto a tunnel conveyor and forwarded underground to despatch.

New Technology 23 As Mr Lorenc emphasised in the written statement which accompanied his evidence in this hearing, the HSM is highly automated with most monitoring and control functions being performed from three pulpit areas - one for the walking beam furnace and roughing mill [WBFRM], one for the coilbox and finishing mill [CBFM] and one for the downcoilers [DC]. In each pulpit there is a control desk. At each control desk an assigned Level 3 operator runs and monitors the relevant section of the HSM production process. Much of the AWU case for a wage increase for HSM operators centres around new technology which has been introduced by BlueScope Steel.

24 Initially, a HSM datalogger computer recorded and monitored the strips being rolled, providing trending information and statistical information. It has been updated and those functions have been incorporated into a new datalogger which came on line in 2001. Also in 2001 the existing mill control computer system [MCC] was replaced by a new computer control system - the "Hot Strip Mill Information and Control System" or HSMICS which is a single computer system which has a diverse range of functions accessible for different reasons by all HSM staff - management, operators and maintenance employees. The introduction of HSMICS was to optimise throughput of slabs and ensure strip quality.

25 A new mouse operated keyboard was introduced with HSMICS [QWERTY] which replaced the former touch screen computer system [TOSDIC]. HSMICS is at present being modified and new screens should be introduced shortly. One feature of HSMICS is a "Quality Expert System" [QUEST] which shows how to find defects in strips, to rate their severity and give information concerning particular customer demands. As far as the HSM operators are concerned, they are able to access QUEST to monitor the quality of strips.

26 HSMICS also had a number of other functions which are relevant for the HSM operators. The previous system [VAX] which recorded coil defects was incorporated into HSMICS. There is now the "Event Management System" [EMS] which provides detailed reporting of any shift problems and quality issues relating to the mill as a whole or with respect to a particular coil. EMS is accessible by all HSM personnel - management, operators and maintenance staff - as Mr Potts put it in the written statement which formed the basis of his evidence, "...from the operators to the President of the Flat Products Division...". Formerly, incidents or delays in the HSM operations were recorded on written reports and provided to supervisors. EMS facilitates better communication, transmitting any reports made by the HSM operators by e-mail to all parts of the operation and thereby permitting greater input from other HSM employees than had hitherto been the case. In that manner communications across the plant have been improved substantially and all HSM staff may make relevant comments on particular incidents. It appears to me to be a particularly effective tool for the HSM.

27 HSMICS has another feature relevant to HSM operators - the "Furnace Graphical User Interface System" [Furnace GUI]. GUI has a multi-purpose and many of the functions available from it are not necessarily required for the HSM operators. Nevertheless, it is an effective tool for HSM operators, providing one central interface to track slabs, provide an overview of furnaces, check on the thermal state of the slabs in those furnaces and manually change sequences and schedules. GUI provides data similar to that previously provided by the superseded MCC but it has vastly improved the type of data available and there is a considerable amount of data now available that formerly had not been obtained. A "Heating Optimisation System" [HOS] also was installed to regulate and monitor temperatures in the two furnaces.

28 In 2004 BlueScope Steel introduced new software to HSMICS - the "Profile Crown Flatness Control System" [PCFC] under which HSM operators are required to work. Mr Potts described PCFC in the following manner:

"....The function of PCFC is to control stability in the mill and to optimise the flatness and crown (the centre of the strip) for quality purposes... The system permits product to be produced more consistently within more exact tolerances. Previously, there was no system that permitted precise control over the crown of final product..."

29 One further technological development is the introduction of the "network data acquisition system" [NETDAQ] which has been introduced in late 2001. NETDAQ records all the positions, currents, speeds and forces of the equipment used in the HSM. As I understand the position, NETDAQ is presently used chiefly by engineering staff and, as Mr Munn concedes in his evidence, HSM operators have not currently been exposed to it. But its is apparently the intention of BlueScope Steel management that DC operators will be required to become familiar with the system in the future. The Current Wage Structure

30 There are five broad functions for the HSM operators: floor duties, the WBFRM assistant, the DC operator, the WBFRM operator and the CBFM operator. On a typical shift, the HSM operators are assigned to a particular area of the HSM - three to the WBFRM area, five to the CBFM and the DC areas. The WBFRM pulpit requires a minimum manning of three operators, two of whom must be at Level 3, ie competent to run the control desk in the pulpit area with the third operator as a furnace assistant. Two of the operators assigned to the CBFM and DC areas must also be at Level 3. The control desk in the CBFM pulpit and the control desk in the DC pulpit are always manned and there is a rotation between the appropriately qualified operators in these pulpits on any given day, usually on a two hour basis.

31 HSM operators are presently classified into different levels, based on their skills and competencies and those levels and the wages paid to the HSM operators flow essentially from a restructuring of the HSM operations in 1996 and the subsequent arbitrated work value assessment made by Hungerford J in 1996 in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case which confirmed the new wage structure.

32 There are, in fact, currently four levels of HSM operator - a Learner Operator, Level 1, Level 2 and Level 3 - dependent on the acquisition of the necessary skills and competencies. All HSM operators must be prepared to progress to Level 3 - the highest grade - but the work since 1996 has been highly specialised. The operators are assigned specific work in the HSM and are paid according to the level for that work, viz:

• An operator at Level 1 performs floor duties at assigned areas of the HSM, ie the furnace area, the roughing mill, the finishing mill or the downcoilers, carries out manual functions, such as ensuring that roll changes occur, mill inspections, performs quality checks directly on the product and works on any breakdowns.

• At Level 2 a HSM operator must be competent to perform both floor duties and act as either the position of DC operator or WBFRM assistant.

• At Level 3 a HSM operator must be competent to perform both floor duties and to work in two of the other four functions - WBFRM assistant, DC operator, WBFRM operator or CBFM operator.

At present there are 39 employees classified at Level 3, 7 employees classified at Level 2 and 2 Level 1 operators. Much of the work of the HSM operators at Level 3 involves problem solving with respect to production issues, ie diagnostic work to identify and analyse the root cause of problems which may arise from time to time in the HSM. How much of that the diagnostic work is actually performed by the HSM operators becomes a very significant issue for me to determine in this hearing.

33 As I indicated earlier in this decision, steelwork employees engaged generally in production are covered by the terms of the BlueScope Steel Award and are customarily paid according to the general matrix for the whole steelworks. Production staff in the steelworks have been progressively placed at an appropriate level in the matrix since 1992 - a process which has been achieved chiefly by agreement but occasionally by arbitrated decision. I understood that the process of rationalising production employees into the matrix structure was completed and all production employees found their position in the matrix but Mr Corkish indicated in his evidence in this hearing that there were still some production staff not included in the matrix structure at the present time. The HSM operators have a position under the matrix, however.

34 By comparison, whilst trades employees are also covered by the terms of the BlueScope Steel Award, they are paid according to the Graded Trades Model which has been in existence since 1994. The Graded Trades Model provides a guide and wage structure for the classification of trades staff across the entire steelworks. I understand that the Graded Trades Model is currently under review by BlueScope Steel. All staff employees throughout the steelworks, eg team leaders, are covered by individual contracts with BlueScope Steel and fall outside the coverage of the BlueScope Steel Award.

35 Mr Corkish's evidence in this hearing centres chiefly on the matrix and its application for diverse operator positions within the steelworks. He records in a written statement which formed the basis of his evidence in this hearing that:

"....each restructured operator position is currently aligned with a level of the agreed matrix for restructured ironworker classifications. The matrix is used to align and assign rates of pay to restructured classifications in the BlueScope Steel Award. The matrix was first agreed to by the company and the unions in the early 1990's in an effort to reduce the then 100 marginal rates for positions across the steelworks. Initially, there were 15 agreed levels of pay rates which were applied to restructured positions... The number of agreed levels of pay rates increased to 16 in 1996...

The matrix is utilised by the company to ensure there is parity in pay for restructured ironworker positions across the steelworks... It establishes 16 pay classification levels, ascending from 1 to 16 with associated pay rates... There are approximately 200 restructured ironworker positions at the steelworks which are aligned with one of the 16 classification levels of the matrix..."

36 As part of the general wage settlement flowing from a restructuring of the Port Kembla steelworks in 2000, the HSM operators were placed on 12 hour shifts and annualised salaries, along with other steelworks employees. The annualised salaries combine a base wage with shift loadings, weekend penalties and a component for regular pre-paid overtime - 4 hours per week. The resulting salary is spread evenly over a twelve month period and employees receive the same amount every week, including periods of annual leave or sick leave. 37 The current rates of pay for HSM operators is as follows, with the HSM Operator 3 at the highest level of the matrix - Level 16, viz:

Position Matrix Level Rate Per Week Annualised Salary $ $ Learner Operator 8 915.20 74,557.21 Operator 1 12 1,015.50 82,272.61 Operator 2 14 1,071.20 86,557.23 Operator 3 16 1,135.20 91,480.29

38 In his decision in BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case Hungerford J equated the HSM Operator 3 with the position of Slab Caster Operator 5, which was also at Level 16 of the matrix. His Honour noted that Watson J of the former State Industrial Commission in a previous wage review of the HSM in 1989 [Matter No.693 of 1989] had considered HSM operators to be "...the most skilled of the operator functions at the Port Kembla steelworks..." but Hungerford J went on to comment (at pp.74 and 75) that:

"...the slab caster plant...itself underwent a major restructuring and, in the proceedings for increased margins, the union took the view on the evidence that the Slab Caster 5 position '...is by far and away the most highly skilled operator position in the Port Kembla steelworks...' The effect of the union's submission in the present case would be to restore the supremacy of the operators in the hot strip mill over those operators in the slab caster plant by reason of the changes which have occurred in the last few years in the hot strip mill and notwithstanding the major restructuring in the slab caster plant in 1992/1993. Doing the best I can in comparing the Slab Caster Operator 5 and the new Operator 3 in the hot strip mill, I incline to the view that those two positions should be on the same level of margin, that is Level 16 of the divisional wages structure..."

No doubt a lot of water has passed under the bridge since 1995, let alone 1989, and clearly the HSM has been the subject of further major restructuring much of which, of course, is the subject of this work value review.

39 In any event, at no time was I called upon in this hearing to compare and contrast the position of Slab Caster Operator 5 and the HSM Operator 3. In fact, the position of Slab Caster Operator 5 is presently not substantively occupied at Level 16 since there are no employees currently performing the full range of the duties of that position. A position of rail operations trainer was also previously classified at Level 16 of the matrix but with the recent outsourcing of the rail operations department in late 2007, that position is no longer on the BlueScope Steel establishment. The only current BlueScope Steel employees on Level 16 of the matrix are the HSM Operators 3 positions and two other positions - the classification of Ladle Fleet Co-ordinator in the steel treatment area (12 employees) and Senior Slab Handler in the slab handling area (32 employees). Mr Corkish indicated in his evidence that the classification to both Ladle Fleet Co-ordinator and Senior Slab Handler positions is by appointment only.

40 Later in this decision I will explore in more detail what nexus there may be between the HSM operators and other employees in the Port Kembla steelworks. But at this stage, it is sufficient to say that I do not really believe that any such a nexus actually exists. As Mr Hatcher submitted, I believe that the positions in the HSM must be now considered in isolation and what wage level is set for HSM operators provide no grounds for the work in any other part of the Port Kembla steelworks. At no time was any evidence led in this hearing by either Mr Hatcher or Mr Brotherson concerning the work of the position of Slab Caster Operator 5, Ladle Fleet Co-ordinator, Senior Slab Handler or the former rail operations trainer position. What may flow from these current proceedings will therefore have no bearing on anything outside the HSM.

41 As I indicated earlier in this decision (and as submitted by Mr Hatcher and Mr Brotherson), the jurisdiction on which I rely in determining this matter depends upon the S.146A referral agreement. The terms of that S.146A referral agreement brings this matter under the provisions of the wage fixation principles flowing from the 2008 State Wage Case decision and, in particular, the Work Value Change principle. The hearing of the AWU claim on behalf of the HSM operators must therefore be heard and considered by me in that context. The Work Value Change principle is in the following terms:

"(a) Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification.

In addition to meeting this test a party making a work value application will need to justify any change to wage relativities that might result within the relevant internal award structure but also against external classifications to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative positions.

These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle.

(b) In applying the Work Value Changes principle, the Commission will have regard to the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which work is performed.

(c) Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification, or where it is performed only by some of the persons covered by the classification, such new of changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole.

(d) The time from which work value changes in an award should be measured is the date of operation of the second structural efficiency adjustment under the State Wage Case 1989 (1989) 30 IR 107.

(e) Care should be exercised to ensure that changes which were or should have been taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this principle.

(f) Where the tests specified in (a) are met, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work.

(g) The expression '...the conditions under which the work is performed..." relates to the environment in which the work is done.

(h) The Commission will guard against contrived classifications and over-classification of jobs.

(i) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle of these principles, will not be taken into account under this principle.

(j) In arbitrating an application made under this principle, the Commission is required to determine whether or not future State Wage Case general increases will apply to the award."

42 I accept that the tests in the Work Value Change principle are strict tests. Insofar as the S.146A referral agreement directs me to consider the AWU claim on behalf of the HSM operators within the framework of that Work Value Change principle, I am bound by that Work Value Change principle and the well-established rules for wage fixation which have been accepted in the Commission. In the assessment of wages and salaries generally throughout the community at present, there may be a considerable amount of freedom for employers and employees, provided agreement is achieved. But the arbitration of wage claims in the Commission is another matter entirely. Any decision I make in this matter must be more confined by the current wage fixation principles to which the S.146A referral agreement refers.

43 The AWU is seeking a wage increase for the HSM operators and it originally proposed that the wage matrix be amended to include a new Level 17 for the HSM operators at Level 3. For its part, BlueScope Steel does not agree to any wage increase at all and, in particular, were opposed to any alteration to the current wage matrix. As suggested earlier in this decision, BlueScope Steel had originally suggested that the work of the HSM operators at Level 3 had, in fact, exceeded the BlueScope Steel Award and had, in effect, ceased to be wages positions but had become salaried staff positions. The HSM operators wished to retain their existing status, and entitlements, as wages employees and remain within the BlueScope Steel Award, however. 44 Nevertheless, as I indicated earlier in this decision, BlueScope Steel did not oppose the industrial dispute being determined in the Commission according to current wage fixation principles for work value changes. The wage fixation principles for work value claims have remained unaltered for some considerable time and are presently confirmed in the 2008 State Wage Case. Mr Brotherson does not dispute that there have been changes in the work of the HSM operators since their rates of pay were last reviewed in 1996 but he claims that those changes have been "...evolutionary in nature..." only and did not justify a further wage increase to the HSM operators based on the strict test of the current wage fixation principles. Notwithstanding Mr Hatcher's assurances given in this hearing that the AWU would make no claim to other steelworks employees in the light of my decision in this current matter, Mr Brotherson expressed concerns over the possible erosion of relativities in the Port Kembla steelworks, particularly with respect to maintenance staff, and the flow on of any wage increase to other steelworks employees. Both are matters of relevance for the Work Value Change principle which makes specific reference to "...external classifications... and "...wage leapfrogging...".

45 Mr Hatcher indicated in the hearing on Thursday, 5 June, 2008 that the AWU was no longer pursuing a claim for an amendment to the wage matrix. It was nevertheless seeking to establish two new levels - Level 4 and Level 5 for HSM operators (taking them above the matrix). At the commencement of the proceedings, the AWU advanced the claim that any newly recruited HSM operators would remain at Level 3 for a period of from three to six months, (depending on the speed with which they learnt the necessary competencies, and obtain the necessary accreditation, to progress to the new higher levels). The AWU has now amended its claim in that respect to provide for a twelve month period of training. I will discuss the question of training in more detail shortly. But once the HSM operator became competent to perform the work of a DC operator/WBFRM assistant, he would progress to the new Level 4 and once he obtains the skills and accreditation to work in the positions of either WBFRM operator/assistant, WBFRM operator/DC operator or CBFM operator/DC operator he would progress to the new Level 5. The AWU claim did not contemplate any increase in remuneration to a Learner Operator or Levels 1 and 2 operators but, as I indicated earlier in this decision, the bulk of the existing HSM operators - 39 employees - are already on Level 3.

46 In summary, the AWU claim is now for the HSM operator at the new Levels 4 and 5 to receive respectively a wage increase of $50.00 per week and $100.00 per week to operate on and from Saturday, 1 July, 2006. That would take a Level 4 operator to an annualised salary of $93,531.17 and a Level 5 operator to an annualised salary of $97,377.32. The wage for the positions of Learner Operator, Operator 1, Operator 2 and Operator 3 (the transitional role) remain unaltered. (The S.130 notifications by BlueScope Steel and the AWU which gave rise to these proceedings was on Monday, 22 October, 2007 and Tuesday, 23 October, 2007 respectively and if my decision in this matter were to take the form of a variation to the BlueScope Steel Award, retrospectivity would by confined by S.15(3) to those dates. But I understand the earlier period of retrospectivity sought by the AWU flows from an agreement between BlueScope Steel and the AWU. That represents a very substantial amount of retrospectivity for any wage movement and certainly well beyond what the Commission would be able to contemplate if that was part of the arbitration before me.)

47 Whilst the AWU claim, as amended in the proceedings, involves an entire new classification structure of the HSM operators, its impact applies only at the senior level of HSM operators. That new classification structure for the HSM operators is outlined in a document provided by Mr Hatcher which I set out hereunder:

"1. A new classification structure for the hot strip mill operator functions. The classification structure to consist of:

(c) Operator Level 2: WBFRM assistant or DC operator function;

(d) Operator Level 3: a combination at beginner level of: (i) WBFRM operator function, Operator 1 and one of Operator 2 functions; (ii) CBFM operator function, Operator 1 and one of the Operator 2 functions; and (iii) all Operator 1 and Operator 2 functions in accordance with business needs - a consolidation period of twelve months will apply prior to transition to Operator Level 4. Transitional period employed to further develop all necessary competencies and skill levels;

(e) Operator Level 4: has demonstrated all key competencies and skill sets in the Operator Level 3 (iii) functions as per the relevant role descriptions and task documents; and

(f) Operator Level 5: has demonstrated all key competencies and skill sets in the Operator Level 3 (i) or (ii) function combinations as per the relevant role descriptions and task documents.

2. For the purposes of this claim, the relevant role descriptions and task documents for each function are as identified...(in the evidence of Mr Lorenc in this hearing).

3. Remuneration for each classification shall be as follows:

(a) Learner Operator: as per BlueScope Steel Award;

(b) Operator Level 1: as per BlueScope Steel Award;

(c) Operator Level 2: as per BlueScope Steel Award;

(d) Operator Level 3: as per BlueScope Steel Award at present;

(e) Operator Level 4: $50.00 per week (as from Tuesday, 1 January, 2008 to be adjusted in line with subsequent base rate increases) above the Operator Level 3 rate; and

(f) Operator Level 4: $100.00 per week (as from Tuesday, 1 January, 2008 to be adjusted in line with subsequent base rate increases) above the Operator Level 3 rate.

4. The above classification structure and remuneration rates shall operate on and from Saturday, 1 July, 2006."

48 One inconsistency emerged in the AWU claim concerning the training period of up to six months which the AWU claim proposed. The skills and competencies of the HSM operators arise essentially from a combination of on-the-job training and the completion of training modules together with both theoretical and practical assessments. All HSM operators are obliged to accept training up to Level 3. According to Mr Lorenc, there is currently a need for a review of training for HSM operators as, in his view:

"....the HSM has gone from having what was considered to be industry's best training standard back in the late 1980's to a system which has become ad hoc and not in line with most up to date and modern practices. A training committee has been formed that will address this shortfall..."

49 However Mr Lorenc added in his written statement that:

"...the training, and therefore progression between levels, is self-paced. Nominally, it takes approximately 6 to 8 weeks for a new starter to be competent for floor duties (Operator 1). It might then take approximately 4 to 6 months for a competent floor duties operator to be competent to operate the downcoiler desk and perhaps a further 12 months to 18 months for a competent downcoiler operator to become a competent finishing mill operator. It would be likely to be 6 to 12 months for someone to become competent as a furnace assistant and then 12 to 18 months for a competent furnace assistant to become a competent furnace roughing mill operator. The timeframes I have identified are notional and will be subject to the particular operator involved and other factors such as work requirements. However, every new operator at the HSM would be expected to have achieved Operator 3 status within 4 years. This expectation of progression has been the situation since at least the early 1990's and has not been affected by the introduction of new or replacement technology..."

As far as Mr Lorenc is concerned, the commissioning of WBF 2 has not really changed the training regime for WBFRM operators.

50 Mr Baraldi disputed Mr Lorenc's assessment of times for training for the HSM operators. Mr Baraldi includes in his assessment of the proper training times for the different functions for HSM operators a period of "consolidation", ie on-the-job training, which he likened to flying time for a pilot of an aircraft. Mr Baraldi responded formally to Mr Lorenc's written statement on training as follows:

"...The operator training is actually a combination of on-the-job learning, completion of training modules with a total pass mark of 85% in both theoretical and practical aspects, and a consolidation period upon successful accreditation. The training, and therefore progression between levels, is based on a combination of self-paced and operator assisted learning with a nominal minimum period of one month allocated for completion of each module.

In my experience, it takes a minimum of six months for a new starter to become competent for floor duties (Operator 1) specific to the CBFM/DC area, followed by a period of consolidation usually of three month duration. This provides for an indicative training time of nine months to demonstrate full competency in the role of CBFM/DC operator. In my experience, it takes a minimum of nine months for a competent CBFM/DC Operator 1 to be successfully accredited to operate the DC desk functions (Operator 2), followed by a minimum consolidation period of between three to six months thereafter. This provides for an indicative training time of fifteen months to demonstrate full competency in the role of DC Operator 2. In my experience, it takes a DC Operator 2 a minimum of fourteen months to become successfully accredited to the role of CBFM Operator 3 with a minimum consolidation period of six months thereafter. This provides for an indicative training of twenty months.

In my experience, a new starter at the WBFRM section would expect to take a minimum of twelve months to become successfully accredited as a WBFRM assistant (Operator 2) for a single furnace, followed by a consolidation period consisting of a minimum period of six months. This provides for an indicative training time of eighteen months. In my experience, a WBFRM assistant (Operator 2) can expect to take a minimum of fourteen months to become successfully accredited as a WBFRM Operator 3 for a single furnace with a consolidation period of six months thereafter. This provides for an indicative training time of twenty months for a single furnace operation..." Obviously, some employees may require more time in training than other employees. Consequently, some flexibility should be imported into the training regime to accommodate the standards and capabilities of different employees. But, as I indicated earlier in this decision, all HSM operators are obliged to train up to Level 3.

51 I note that Mr Baraldi's initial assessment appears to accord with the assessment made before Hungerford J in his 1996 review of the work value of HSM operators but, to my mind, it would be inconsistent with the original AWU claim insofar as it would seem logical that the transitional arrangement of up to six months and the period of training for a Level 3 operator to progress to either the new Levels 4 or 5 to equate - and they do not. The transitional arrangements proposed by the AWU would suggest that a Level 3 HSM operator would be fully functional as a DC operator/WBFRM assistant, a WBFRM operator/assistant, CBFM operator/WBFRM assistant, WBFRM operator/DC operator or CBFM operator/DC operator after no more than six months on the job. That is not what Mr Baraldi (or Mr Lorenc) asserted in evidence in this hearing. Consequently, Mr Hatcher amended the AWU claim in the hearing on Wednesday, 25 June, 2008 to provide a "consolidation", ie training period of twelve months for a new HSM operator to learn the necessary skills and obtain the necessary accreditation before he could progress from Level 3 to the new Levels 4 or 5 (in place of the three month to six month training period previously proposed).

52 Mr Brotherson submitted that the reason for this twelve month transitional period for new employees between Level 3 and the new Levels 4 and 5 was "obscure" and it represents "...a departure from historic progression between levels based on skill acquisition and what would continue to be progression from Level 1 to Level 2 and from Level 2 to Level 3...". He commented in written submissions that:

"....there was no particular evidence of employees in their first twelve months in a role being inadequate in a role, or causing concern to fellow employees. Indeed, there is evidence in respect of the downcoilers of operators without having completed final assessment being '...competent enough to be able to do a relief and be on their own...' (according to Mr Baraldi). Mr Munn expressed vague concern re the experience of (a particular employee) but acknowledges no-one sits with him and he is not concerned about that, although later attempts to claim inexperienced operators may falter when HSM is rolling at higher speeds..."

53 The wage levels for the HSM operators were reviewed in 1989 by Watson J following the installation of new technology into the HSM at that time. They came before Hungerford J seven years later - in 1996. Both Mr Hatcher and Mr Brotherson accept that the 1996 work value review of the rates of pay of the HSM operators in his decision in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case is the starting point for the current view.

54 What the Work Value Change principle of the wage fixation principles required in 1996 in the work value assessments made by Hungerford J in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case (and what is necessary now) is to establish that there has been a change in the work of the HSM operators which would "...constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification...". His Honour's decision appears to have centred chiefly on two issues: the specialised nature of the work and the increased diagnostics role falling on the Level 3 HSM operators. His Honour commented in that respect (at pp.75 and 76) that:

"...I think it undoubted that, on the union's evidence, there have been significant changes to the work of operators; indeed, the company's evidence conceded as much. However, I find as persuasive the evidence of (the company's witnesses) as providing the rationale for the various changes which have occurred and the qualitative features upon which a valuation in money terms may be made. From that evidence I have identified two matters which are highly significant in the valuation process, namely, specialisation and the diagnostician position..."

55 As far as the question of specialisation was concerned, his Honour had this to say (at p.76): "....It is difficult to assess the effect of specialisation where a lesser number of functions are to be performed, but I think the training periods...provide an indication.... It is erroneous to say the training periods themselves are twice as long as they were under the former structure. Built into the present periods, after the formal training when an operator has been accredited as competent in a higher classification, is a time for 'consolidation', but when the operator is re-classified and paid in that next higher classification, to permit settlement in the role before training at the next level. That was not a feature of the 1989 structure. The fact remains that the new structure will comprehend a lesser number of functions the operators will have to perform, although each function to be in more depth. That aspect, in my view, is accommodated by the 'consolidation' period during which the operator will be classified and paid in the position the duties of which are the more consolidated..."

In some respects the question of specialisation is an odd concept for a work value claim. It means that the range of work being performed by particular groups of employees becomes more confining and less duties are imposed on them, not more duties. But that concept has to be considered in the light of the additional responsibilities which would attend such specialisation and the additional training and "consolidation" period which accompanied it. 56 As far as the diagnostic role was concerned, his Honour indicated that the issue before him (as it essentially is before me in 2008) was to determine whether the HSM operators were making higher level decisions than they had formerly done. He commented (at pp.77 and 78):

"...The decision of Watson J (in 1989)...provides some clues to the determination of this question. For instance, the specific duties given to the mill operator in 1989 required '...a thorough understanding of all aspects of the hot strip mill so that he can maintain quality and production targets, whilst ensuring safe plant operation...'; the position description referred to the mill operator being '...responsible for the setting up, operation, monitoring, control and problem solving associated with all hot strip mill equipment...'; each operator was to '...respond promptly to mill problems, or alarms, and co-operate with other personnel (including operational, electrical and mechanical personnel) to solve problems...'; and each operator was to '...liaise with the mill supervisors, diagnostician, mill operators and others as required...'"

57 His Honour was prepared to adopt the view advanced before him in evidence by company witnesses that a new position of process analyst created at that time meant that the diagnostic duties were divided among the new process analyst position [80%], supervisors [5%] and the HSM Operator 3 positions [10% to 15%]. His Honour had this to say (at pp.78 and 79):

"...Although one may not be too precise about percentages of that nature, there was no probative evidence to indicate the contrary. I am prepared to accept the general proposition that process analysts perform the major and substantial part of the former diagnostician duties with the operators performing up to one-fifth of them. The duties so performed by the operators, I would conclude, relate to operational decision-making always intended to be made by them when fully trained and accredited; that approach is supported by the fact that the process analyst on day work retain the substance of the former diagnostician role. The situation, as it has emerged, it seems to me, was accurately summarised (by Mr Baraldi who also provided evidence before Hungerford J) in terms that '...the onus has been slowly, but slowly increasing on an operator to actually have the sole decision making...' in a situation where, as he said, '...I don't have the back up that I used to have, the support base that was there... I go ahead and make the decision...on what I consider to be the right action...then I will contact the mill supervisor and let him know of those actions...'"

"...An overall review of the evidence...I conclude, disclosed continuous and consistent changes of a detailed nature to particular aspects of the operators' duties. I accept that such changes, whilst cumulatively significant, were individually incremental in nature and resulted from what (was described in the evidence) as '...continuous process improvement since 1989 at a pace that is very, very great...bringing about minor changes or new ways of doing the same thing...'. However, the degree of that change must, it seems to me, be modified by the transition to the new classification structure in which operators will specialise in functions at one end of the hot strip mill rather than have general competence in all functions across the whole of the hot strip mill.

I find, in summary, that the restructuring of the hot strip mill has brought about significant net additions to work requirements of the operators concerned by reason of the changes identified earlier in this decision. The principal changes on which the margins for the new classifications should be fixed relate to incremental process improvements since April, 1990, the specialist nature of the new duties and the transfer to the operators of some of the former diagnostician duties, including increased decision-making and accountability in an operational sense and in a confined time-frame..." The Negotiations for the Current Wage Claim

59 The current AWU wage claim for the HSM operators should be considered in the context of the lengthy discussions from which these proceedings were the culmination. Those discussions, which involved Mr Lorenc, Mr Baraldi and Mr Potts along with other representatives of BlueScope Steel management and the employees, commenced in early 2007. Mr Lorenc recorded in his written statement that:

"....the work value process included employees presenting the company with position descriptions which reflected their understanding of their current roles and expectations. The company reviewed the proposed position descriptions and prepared the final version of the current position descriptions... The position descriptions were agreed with the operator representatives to be an accurate reflection of the duties that competent operators are expected to do in each classification.

The work value process also involved the preparation of 'comparison of position' documents. These documents reflect the duties that were expected of operators at relevant points in time - namely, in 1995, 2000 and (currently). 1995 represents the last work value assessment of operator duties at the HSM and in 2000 there was a restructure in the department. These documents were reviewed in detail with the employees and it was agreed with the operator representatives they are a true reflection of the situation over the period of time..."

Mr Lorenc is emphatic that, as he claimed in his written statement, the position descriptions provided were accepted by the HSM operators involved in the discussions. Mr Baraldi and Mr Potts refute that claim, however. They do not believe that the position descriptions were ever agreed documents.

60 In any event, the outcome of those discussions, as far as BlueScope Steel was concerned, was the view that the HSM operators were, for the most part, working at a level consistent with their current position in the matrix. Nevertheless, BlueScope Steel did discuss with the employees the prospect of creating new senior operator positions, by appointment only, with additional duties such as acting as team leader or plant supervisors. Mr Lorenc saw that as an issue separate from the current work value claim for the HSM operators. 61 Mr Lorenc also recorded in his written statement that:

"...the company also considered that another option may be to move certain Level 3 operators into the staff pay banding, where there are processes in place to enable the individual reward and recognition of employees based on their performance. A presentation was given to employees about this possibility... Employees responded with a counter claim, but the employees were still adamant about an across the board wage increase for all Operator 3's..."

62 The presentation (by overhead slides) suggested:

"...As part of our acknowledgement that the value an employee adds to the HSM business through their role in the HSM is based on individual performance , we are able to offer the following:

• new classification HSM technician (staff) as part of A2 band (all current Operator 3)

• Senior HSM technician role as part of A3 band (proposed 16-20 positions - by appointment..."

The words I have emphasised above - "individual performance" - are very significant, in my opinion. The proposal made to the HSM operators by BlueScope Steel was by appointment only and was therefore dependent upon performance standards and the assessment of individual employees, not the employees as a group. But the proposal nevertheless represented an increase in salary of $40.19 per week for all existing Level 3 HSM operators and an increase in salary of $127.42 per week for those existing employees selected as senior HSM technicians. There are 39 HSM operators at Level 3 and Mr Lorenc indicated in his evidence that they would be the entire source for the 16 to 20 positions for the proposed senior HSM technician roles. Therefore, the outcome would be that every existing Level 3 HSM operator would receive a salary increase of at least $40.19 per week and the bulk of them would receive a salary increase of $127.42 per week. A very substantial sum, indeed (and one which I doubt that the Work Value Change principle would be able to match). In his evidence, Mr Lorenc accepted the right of the HSM operators to pursue a general wage claim, rather than accept adjustment to their wages on an individual basis. But it would seem to me that the proposal advanced by BlueScope Steel for the consideration of the HSM operators was, in effect, a general wage claim, since all of the Level 3 HSM operators would benefit from it to varying degrees.

63 But the calculations on which the BlueScope Steel proposal was made involved what Mr Lorenc described in his evidence as "...at risk..." bonus payments, ie discretionary loadings and bonus payments which may not always apply to salaried officers. Also Mr Lorenc's calculations in that respect are based on averages. The result is that the increases in salary for HSM operators who moved to salaried positions may actually turn out to be less than the figures of $40.19 per week and $127.42 per week which he quoted in his presentation (or more, for that matter). Mr Lorenc also emphasised the different staff appraisal regime for salaried and wages staff employees.

64 I have to say that, contrary to what Mr Lorenc has suggested in his evidence, the concepts advanced by BlueScope Steel contained in the presentation went beyond a mere proposal or possible option by it for the consideration of the employees. I believe that fundamentally it was an offer by BlueScope Steel to the HSM operators for a significant increase in the rates of pay for the Level 3 operators (that was nevertheless rejected by them). It appears that the sticking point was the condition that the employees move to staff positions. Nevertheless, that offer was rejected by the employees and it is not proper for me to select one feature of that offer - the possible salary - and use it for my current purposes. In the absence of agreement between the parties, my determination in this hearing must be measured solely against the Work Value Change principle - and what flowed from the unsuccessful negotiations does not in any way bind BlueScope Steel or me in this hearing.

65 That having been said, in my view, the distinction which historically has been drawn in the past between wages staff positions and salaried staff positions - an us-versus-them attitude - in the steelworks should become considerably less relevant in the modern industrial context, which emphasises flexibility in the performance of all work across all positions and trades. It is my experience that those lines between salaried and wages staff across different industries are becoming increasingly blurred - as they should be. Also there really appears to be no consistency over this issue across the different parts of the Port Kembla steelworks. For instance, I note that a comparable position in No. 6 blast furnace control room - the blast furnace system controllers - is a staff position (band A3) and has managerial requirements relating to disciplinary issues and desirable requirements of tertiary engineering, science or process qualifications.

66 But clearly there is still considerable resistance by the HSM operators to move from wages staff positions (and the protection afforded to them by the BlueScope Steel Award) to salaried staff positions (covered by individual employment contracts) and apparent concern on the part of the employees that BlueScope Steel had a hidden "agenda" with such a proposal. That suspicion has clearly coloured the employees' attitude to the proposal advanced by BlueScope Steel. And as far as BlueScope Steel is concerned, there remains a clear distinction drawn between wages staff employees (whose role currently ends at Level 16 of the matrix) and salaried staff positions, promoting a division in the employment which should not exist and which I consider totally unnecessary.

67 The rights of any employee to remain as a wages staff employee should be respected, however. In his evidence, Mr Lorenc accepted that right and acknowledged that the HSM operators preferred to address their claim globally, rather than on an individual basis. As I understand the position, the HSM operators progress through the grades based essentially on their experience in the operations of the HSM operations and the necessary training and accreditation for that particular work. It is open to conclude that the nature of the work they perform, even at the higher grade level, could be classed as either wages staff or salaried staff, at their option.

68 Mr Corkish has worked in the Port Kembla steelworks for over 27 years and has occupied his current position of manager of human resources for over twelve months. He is responsible for the management of human resources in the engineering, technology and environment business unit of BlueScope Steel, focusing on capital projects and the workforce planning arrangements for technical resources. In his current position, and in the previous roles he has occupied, he has been involved in assessing the appropriate rates of pay and classifications throughout the entire steelworks.

69 Mr Corkish's evidence in this hearing therefore is directed towards general issues concerning wage levels throughout the steelworks and, in particular, the matrix and its application for a diverse range of production employee positions within the steelworks. He indicated in a written statement which formed the basis of his evidence in this hearing:

"...In order to determine which of the 16 classification levels of the matrix is appropriate for an operator position, the position must be assessed. An assessment of a position will usually involve a review of the position description and a comparison of the requirements of that position with the requirements of other positions across the steelworks that have already been assessed. For positions that have previously been assessed, a further assessment would be made of any additional responsibilities and accountabilities added to a role and, conversely, any responsibilities and accountabilities which have been removed.

In addition, reference is also made to the relevant Work Value principle arising from State Wage Case decisions. Regard would also be had, in particular for more senior positions, to a document which has been in existence for many years which sets out an overview of the typical requirements of persons in levels 12, 14 and 15. Requirements of a position will usually include duties, training, competencies and accountabilities... By comparing the requirements of the position in question with the requirements of positions that have already been classified, it is often possible to determine a classified position with similar requirements, a classified position with less onerous requirements, and a classified position with more onerous requirements. This helps establish relativity between the position in question and other classification levels of the matrix..."

"...to assign a matrix classification that is not justified by reference to position requirements will affect the integrity of the matrix by destroying the established relativities between classification levels. This will impact on all current and future position classifications under the matrix as consistency in pay rates for equivalent positions will not be able to be guaranteed..."

70 Mr Corkish points out in his evidence that any operator at Level 16 of the matrix, the highest level, would be expected to have a high level of accountability and responsibility for technical operational processes, problem solve with such processes, assume team leadership and/or be responsible for scheduling. He believes that the HSM operators are currently being adequately remunerated when compared with team leaders (staff employees) and trades positions, and points out in his written submissions that:

"...Level 16 of the matrix represents the most senior operator classification at the steelworks. HSM team leaders are paid within what is known as the B1 staff salary band. This band, subject to performance rating, provides for base salaries for team leaders of between $60,139.00 and $92,154.00, with most competent, experienced team leaders falling within the middle part of the range. Should the matrix be expanded as a result of these proceedings to include levels and rates of pay above Level 16 or, an alternative mechanism for additional payment be created, the relativity between the matrix and the staff salary banding structure would be jeopardised. There would be a concern that a situation such as this would not only disrupt relativities with staff, but in doing so limit the ability to secure good quality people to take on the role of team leaders. Team leaders have much more responsibility and accountability than operators, even at Level 16. Staff officers are subject to annual individual performance appraisal, and their actual income will reflect their assessed performance. Staff officers are also expected to, as required, be involved in discipline and performance management tasks, which typically ironworkers will not participate in.

I have reviewed the claim made by the AWU in these proceedings. It seems to me that the AWU is seeking to establish classifications with rates of pay not just beyond Level 16 of the operator matrix but which would place them well in advance of employees at Graded Trades Level 4. Indeed, the proposed rate of pay of Operator 5 in the HSM would equate to in excess of the top of the Graded Trades Model (ie Level 6) for mechanical tradespeople and sit just below the rate of pay for electrical tradespeople at Level 6. Level 6 of the Graded Trades Model is by appointment only and requires the completion of the Advanced Diploma in Engineering. There is nobody at the steelworks currently in Graded Trades Level 6... In my experience, the proposition that production operators should have rates of pay equivalent to Level 6 of the Graded Trades Model is virtually impossible to sustain and would have wide-ranging ramifications for the company, not just in wage relativities, but issues of recruiting and retraining trades people..."

Nevertheless, as I understand the position, there is already some overlap between senior production employees, on the one hand, and supervisory and trades staff, on the other hand.

71 Mr Corkish also has concern at the flow on effect of the AWU claim for increased remuneration for HSM operators, viz:

"...Any decision by the Commission to expand the matrix or create an alternative mechanism for additional payment for the purposes of reclassifying Level 16 operators in the HSM would also have a significant impact on the relativity of pay rates for production and maintenance classifications (both existing and proposed) across the steelworks. It would increase the potential for 'wage creep' or 'leapfrogging' as a result of work value claims to restore relativity between various positions..."

In that respect, Mr Corkish refers to another work value claim being mounted for the new position of operations assistant at the No.7 battery of the coke and energy services department. That claim is already before me [Matter No.IRC 2029 of 2007] by way of a notification of an industrial dispute by BlueScope Steel. I have issued the certificate of attempted conciliation under S.135 with respect to that matter but, at the request of the parties, have delayed issuing directions for the matter to proceed to arbitration to await the outcome of these current proceedings concerning the HSM operators. And no doubt BlueScope Steel would have some concerns that any increase to the wages for HSM operators may impact on the Graded Trades Model for trades based staff in the steelworks, which is presently under review.

"...The 16 Level matrix for ironworkers and the Graded Trades Model for tradespeople have served the steelworks well for many years. They are agreed positions and have minimised disruption around wage relativity. I would be particularly concerned at these models being disrupted as a result of 'tinkering' for one group of production employees. I am aware the company rejects that any work value increase is warranted. However, it seems to me that should the Commission find that some work value amount is warranted it would be better to provide for an allowance to be paid for particular circumstances and on strict conditions, rather than disputing the model..." The Evidence of Mr Baraldi

73 Mr Baraldi commenced work in the Port Kembla steelworks in 1981 (the foundry) as an apprentice moulder. He finished his apprenticeship in 1984 and completed two years of a metallurgical certificate course. He has also taught foundry technology at a technical college at this time. He was transferred to the HSM as an operator in 1987, commencing as a learner operator in the WBFRM. He subsequently learnt the roles of operator for the CBFM. Mr Baraldi has had involvement in occupational health and safety matters. From 1992 to 2000 he was secretary/chairman of the HSM occupational health and safety committee. He is an AWU delegate - what he describes as the senior delegate - for the HSM. He was involved in negotiations for the HSM redesign structures from 1999/2000 and 2004/2005 and has played a part in past and current wage negotiations with BlueScope Steel management, representing the flat products area.

74 Mr Baraldi recorded in a written statement which formed the basis of his evidence in this hearing that:

"...as at 1996 there were three operator positions assigned to the WBFRM area from each shift crew, of which at least two had to be classified as Operators Level 3 (trained in the WBFRM operator and assistant roles), with one Operator Level 2 (trained in the WBFRM assistant role). This meant that the two Level 3 Operators would rotate roles every two hours in the operator's control work station, with the other two hours performing relevant duties, including assisting the Level 2 Operator, undertaking training, reviewing procedures, taking crib breaks, providing relief, and taking a rest break due to the nature of work in this area.

In addition, there was a dedicated depiler operator position on each shift. The depiler is a crane that transports slabs from the transfer car to the depiler table area for entry into the walking beam furnace. The depiler operator's primary functions were to ensure that the slab sequence coming from the slab yard was in the correct order, and to monitor and control the operation of the depiler crane. There were also two shift overhead crane drivers (for the whole mill).

In addition, there was a mill supervisor working on each shift, who was involved in a 'hands on' way with the operation of the mill, and assisted the operators in making major operational decisions. There was also process engineering staff that worked day shifts, Monday to Friday. Parts of their role were to oversee, check off on, and take ultimate responsibility for, all functions which took place in any furnace shut down that required 'blanking' of coke oven gas [COG] and/or nitrogen pipe work. This was known as the Gas Safety Level 2 Supervisor role.

The Level 3 Operator's control workstation was then located in the same place as it is now. However, the physical layout of the control console was significantly different back then. In 1996 there was a TOSDIC computer interface system used for operation of the single furnace. There were two operator console screens that were dedicated to the monitoring and control of the WBF 1. These were located on the right hand side. On the cleft hand side, there were two additional screens. One was dedicated for the operation of the furnace control computer, and the other was used as a spare screen for use in high demand periods.

Because the computer systems back then had more limited functions than now, they were simpler to operate. Most functions could be performed on a touch-screen basis, with limited keyboard use. The keyboards were basic and specific to the TOSDIC system used (not QWERTY keyboards used to operate Windows-based systems, as now). There were also 14 closed circuit television monitors, which displayed the process flow from depiler to the coilbox entry. The 'roughing mill desk' (which is that part of the control work station which is used to operate the RME) was also configured quite differently, with three monitors dedicated to the RME process, an alarm screen monitor, a delay and general purpose screen monitor, an overall mill mimic display screen monitor, a furnace close circuit television camera and the furnace VAX machine screen monitor..."

75 The commissioning of WBF 2 in the middle of 2006 expanded production in the HSM. Mr Baraldi asserted in his written submissions that WBF 2 is "...vastly different in design and control when compared to the existing furnace WBF 1..." and with respect to WBF 2 the HSM operators had to undertake substantial training over a period of 9 months followed by on-the-job training. He highlighted conclusions reached in a comprehensive internal document [HSM3000] provided as part of an assessment of the operations of WBF 2 for what was described in the document as a "typical day" for the WBFRM operators, viz:

"....Since additional equipment will need to be monitored and controlled with additional CCTV's and additional user interfaces in the pulpit, it is likely that the mental demand on operators will increase..."

"...Although the analysis...was able to separate the operators' overall monitoring and control responsibility into discrete steps, the reality is that these steps are all occurring simultaneously. As a result, the demand from the process can present multiple tasks to the operator at one time. With additional facilities to monitor and control [WBF 2], the number of user interfaces [CCTV's Citec, HSMICS, visual observation] also increases and consequently there will be increased throughput that will add to mental demand..."

76 Mr Baraldi went on to record in his written statement that:

"...because there was only one furnace operating in 1996, the throughput of slabs through the WBFRM area was significantly less than what is now. I cannot currently locate statistics for HSM production dating back to 1996. I am aware that from 2001/2002 to 2006/2007 the hourly rate of production increased from 356.67 tonnes to 446.1 tonnes, an increase of 25%. (These figures are taken from BlueScope Steel's own annual reports, published on-line and BlueScope Steel's information systems.) The projected hourly tonnage for 2007/2008 is 471.55 tonnes, a further increase of 7.1% on 2006/2007 figures. I would be confident that the 1996 figure hourly tonnage figure would have been less than the 2001/2002 figures.

Greater throughput is achieved primarily by pushing slabs through the system at a faster rate. My estimate is that in 1996, a slab went through the WBFRM area, on average, about once every 3 to 4 minutes. Currently, the average would be about 2 to 3 minutes. The rate at which slabs pass through the WBFRM area has a direct consequence for the work performed by Level 3 Operators. The rates at which work functions need to be performed increases, and the time available for decision-making reduces proportional to the rate of slab throughput. Consequently, I am able to say that in 1996 work functions were performed at a significantly slower rate, and there was more time for decision-making than now..."

77 Mr Baraldi further commented in his written statement that:

"...Prior to the WBF 2 being commissioned, my fellow operators and I were involved in a series of desktop audits...that were designed to evaluate the impact of WBF 2 upon the role of both the Level 2 assistant on the floor and the Level 3 operator at the control work station... The WBFRM control workstation was revamped and upgraded to accommodate the additional computer interface screens and close circuit cameras necessary to operate WBF 1, WBF 2 and the RME simultaneously. The second furnace was integrated into the existing computer interface systems. This approach reflected the results of the desktop audit...

In doing so, the company rejected the request (made by the delegates on behalf of the employees) for an additional operator to assist in controlling and monitoring three different processes simultaneously. This request was made because the employees generally felt that the mental demands and capability required to operate WBF 1, WBF 2 and the RME were at the high end and that a better approach would be to separate the RME and slab identification functions and assign them to a dedicated operator... Mr Jarrett...explained (in a meeting in early 2006 with HSM delegates, including myself) that the company's assessment was that one operator was capable of monitoring the three processes simultaneously. However, he indicated that he would be prepared to sit down and progress a work value review in lieu of employing an additional operator for that section of the HSM.

Consequently, my fellow operators and I had to undergo further extensive on-the-job training to learn how to operate the new integrated Citec HMI software interface systems. The training occurred in two phases: the first, which was theoretical in nature, occurred whilst WBF 2 was being constructed and the second, which was practical training, occurred after WBF 2 was commissioned.

(a) The overhead board housing the 14 CCTV cameras was removed and replaced with 5 LCD monitors displaying quad views, thus providing for a maximum of 20 CCTV real images to be displayed at any one time. There are a total of 28 images that an operator can select from.

(b) The console was remodelled to allow for two additional Citec HMI interface screens to be inserted for the dual operation of WBF 1 and WBF 2.

(c) Two additional monitors were added: one for monitoring stack emissions from either furnace as part of the environmental control measures and the other for the slab vision system.

(d) New and reconfigured displays within the RME console were added to accommodate one HSMICS monitor and the datalogger live quality trends monitor..."

78 Mr Baraldi estimates that the share of the diagnostic work now performed by the WBFRM operators at Level 3 has increased over time to now be 60% (instead of the 10% to 15% accepted by Hungerford J in the 1996 BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case). According to Mr Baraldi, after the introduction of WBF 2:

"...the average interventions...increased significantly. For the period January, 2005 to June 2006 inclusive, it can be calculated that the average number of interventions per hour was 2.1083. For the period July, 2006 to June, 2008 inclusive (after the second furnace came on line), it can be calculated that the average number of interventions per hour increased to 2.754. This represents an increase of 30.63%..."

That claim by Mr Baraldi is rejected by Mr Ziegelaar (whose perception is that the amount of interventions has remained stable over the period of review) and Mr Willetts (who undervalues the actual interventions by the HSM operators, claiming that in many instances the interventions were little more than fact finding exercises and not root cause analysis).

79 Mr Baraldi has identified a number of changes to the work of the HSM operators over the last eleven years. For example, Mr Baraldi indicated in his evidence that in 1997 the function of the Gas Safety Level 2 Supervisor, an employee with gas safety level [GSL] accreditation, was transferred from process engineering staff to the Level 3 Operators. GSL 2 accreditation enables an operator to safely shut down and light up the furnaces, as well as purge sections of the gas system for maintenance work. The requirement for GSL 2 accreditation across the steelworks for tasks involving gas work was introduced in 1997 as part of the drive by BlueScope Steel to streamline and improve systems relating to occupational health and safety throughout the steelworks. According to Mr Lorenc and Mr Smith, however, it is far from uncommon for senior operators throughout the steelworks to have GSL 2 accreditation and use it in the performance of their duties. The HSM operators required to now perform that function are only doing so consistent with comparable staff in other parts of the steelworks.

80 Mr Baraldi also spoke in his evidence of the major restructuring of the HSM from 1999 and 2001 which had as its aim improved efficiency, the reduction in manning levels and the redesign of some work functions for the Level 3 Operators. In his evidence, Mr Baraldi also highlighted the upgrade that had occurred in the furnace and mill computers over the 1999/2001 period. The TOSDIC furnace computer interface systems was replaced with Citec HMI, a windows-based server interface system, leading to the retraining of the WBFRM operators - two half-day sessions and on-the-job training. There were different methods of controlling specific functions of Citec HMI to which the WBFRM operators had to become accustomed.

81 Also during 2001 HSMICS was introduced to replace the MCC, which was decommissioned. According to Mr Baraldi, additional functions now also fell on the WBFRM operators as a result of the introduction of HSMICS. For instance, the WBFRM operators performed RME data and function editing which was formerly performed by the shift electricians. They were also required to provide feedback on operations and report on events. 82 Mr Baraldi conceded in his written submissions that the "...skills knowledge and nature of work involved for control and interface with the Citec HMI computer systems is essentially the same as when the upgrade was undertaken in 1999...", but he added:

"... However, it now must be operated simultaneously with WBF 2 which is something entirely new. The operator interface control for WBF 2 is significantly different compared to WBF 1 so that it is not just a case of performing the same functions in additional quantity. The operator must be able to adapt to each of the furnaces and be able to employ varying control interface techniques consistently in order to manage both furnace processes simultaneously.

In terms of the RME, the inclusion of the HSMICS and datalogger PC monitors provides the operators with the necessary feedback and functionality to monitor and control quality aspects of bars rolled through the RME. The introduction of WBF 2 has added a different dimension to the quality control aspects at the RME. The WBFRM operator must now closely observe shape and temperature of transfer bars from two furnaces and take corrective action if the difference between bars begins to impact on the coilbox-finishing mill process downstream. In terms of shape control, added functionality was implemented to allow for shape interventions to take effect that are specific to slabs extracted from one furnace without impacting on slabs extracted from the other furnace. In terms of temperature control, the WBFRM operator now relies on two live temperature feedback systems for each transfer bar to determine if differences between furnaces exist and whether corrective action needs to be taken. Other aspects of the RME process are consistent with duties undertaken pre 1996..."

83 Therefore in summary, Mr Baraldi claimed that the procedures for the WBFRM area had increased significantly because the scope of work now being performed had expanded to include other work formerly not performed by the operators, the commissioning of an additional, and different, walking beam blast furnace and general improvements in technology. Mr Baraldi emphasised in his evidence the principal changes which he believed have affected the HSM operator positions in the WBFRM, ie the commissioning of WBF 2 and the new computer-based technology - HSMICS, Citec HMI and GUI. Mr Baraldi regards the new technology as producing new functions for the WBFRM and making those functions considerably more complex. The Evidence of Mr Potts

84 Mr Potts has worked in the Port Kembla steelworks since 1978, initially in the slab mill (5 years) and the soaking pits (4 years). He has worked in the HSM since 1987 when the soaking pits were closed down. Since 1995 Mr Potts has primarily worked in the coilbox finishing mill as a CBFM operator/assistant with his second operating function being on the walking beam furnace as a WBFRM assistant. He described his role in the following terms in the written statement which formed the basis of his evidence:

"...My basic function as a CBFM operator is to roll a transfer bar (ie a slab which has been thinned and edged in the roughing mill to a finished coil produced in accordance with customer requirements. To do this, it is necessary to monitor and control the process throughout the entirety of the transfer bar, which is about 100 metres long when it comes out of the RM. The transfer bar is first fed into the coilbox and coiled into a temporary coil so that the uniformity of temperature is maintained. Then the coil is uncoiled and fed into the cropshear, which crops off the head end of the transfer bar. The transfer bar is then fed into a dual descaler to remove scale (which is a layer of oxidized metal on the surface of the transfer bar). The transfer bar then goes into the six stands of the finishing mill to reduce the transfer strip further to customer requirements, and finally the transfer bar is fed into the coilers for final coiling up..."

85 Mr Potts further records in his written statement that:

"...in 1996 each shift was led by two mill supervisors: one mill supervisor was known as the operations supervisor and the other was the maintenance supervisor. In 1996 the mill supervisors performed a much more active role in the operation of the CBFM. Most decision-making as to quality and mill issues was then the responsibility of the operations supervisor. For example, if a 'chew up' occurred (ie if the transfer bar went erratically through the finishing mill) the mill supervisor would be called down to make a decision as to whether to continue or to stop production and what action should be taken to rectify the problem. This type of decision-making is critical to quality control. Other decisions the mill supervisor usually made included when in the production schedule a stop should be made for any necessary repairs and maintenance to the mill equipment, and when work rolls should be changed due to any strip defects.

In 1996 the CBFM area also had a process analyst working on day shift. His duty was to make most of the quality control decisions...during day shift. He also performed the bulk of the diagnostic duties, which involved analysis of what had caused any problems that had occurred and what was necessary by way of follow-up to ensure that they were rectified. They also were responsible for liaison with other departments on repair and maintenance issues.

In 1996 the control station was in the same location as it is now. The operator sat at a control desk, as he does now. However, the layout was significantly different. There were 12 overhead closed circuit screens. They gave live vision of various stages in the rolling process. The desk had three additional closed circuit screens which also gave live vision of the rolling process. There were nine visual display screens - five were controlled by touch keypads and the others with a QWERTY keyboard. One touch keypad was for two coilbox data screens and allowed the operator to manually input changes to the coilbox setup. The other performed a similar function for the three finishing mill screens. Both allowed the operator to make manual inputs to the mill control computer. Of the other screens, one was a tracking screen for the whole HSM and there was a profile screen, a data log screen and a quality screen. The last three screens were operated from a single QWERTY keyboard.

In 1995 the pace of work in the control room was significantly slower because there was less throughput. At that time approximately 15 to 18 coils were rolled by hour. Now, with the introduction of the second walking beam furnace [WBF 2] about 20 to 25 coils are rolled per hour (depending upon product). The work was less mentally demanding then because we had more time to make decisions (including time to contact the mill supervisor for him to make a decision if necessary)..."

86 In his evidence Mr Potts also referred to the 1999/2000 staff restructure of the HSM, recording in his written statement that, as far as the CBFM was concerned:

"...the number of mill supervisors per shift was reduced from two to one, with the maintenance supervisor's position being abolished. The loss of experienced personnel involved in this change meant that a large degree of expertise was also lost. Two former operations supervisors left and were replaced by former maintenance supervisors who did not have any experience in the operations area. Thus, although there was not officially any transfer of responsibilities to the CBFM operators, in reality the CBFM operators took on a greater role in quality decision-making because of the inexperience of two of the four supervisors (from then called shift team leaders).

The position of process analyst was abolished. Part of his duties were integrated into the newly created role of day shift operations engineer. However, the operations engineer, unlike the former process analyst, is not involved in day-to-day operational decision-making. His focus is upon resolving any issues that cannot be resolved on shift. Accordingly, the operational decision-making aspect of the former process analyst position in relation to quality control and diagnostics largely became the responsibility of the CBFM operators. This was never officially announced or properly incorporated into position descriptions; it was simply the way things developed in practice after the restructure..."

87 Mr Potts' evidence also described the new technology introduced in the HSM - HSMICS and EMS. He asserted in his written statement that:

"...the EMS has significantly altered the manner in which CBFM operators conduct tasks of delay and problem reporting. Prior to the introduction of HSMICS the operator recorded delays and problems in handwriting on paper. This would be sent to the mill supervisor for him to sort out. The EMS feature of HSMICS requires a much enhanced form of electronic reporting. The level of reporting delays and problems in terms of content, follow-up, feedback and diagnostic input has increased dramatically with EMS.... This level of reporting is both more time-consuming and requires a more comprehensive analysis of the problem. It also requires more advanced knowledge to operate HSMICS itself..."

Mr Potts considers that the team leaders now have only a limited input into any EMS reports. Mr Lorenc, Mr Zieglaar and Mr Willetts reject that assertion.

"...The HSMICS also involved the introduction of a more sophisticated data logging system. The data logger prior to the upgrade in 2001 was primarily used by the mill supervisor to monitor transfer bar profiles (ie measures of the thickness of the transfer bar at various intervals) several times a shift and to check crash logs in the event of a problem. The new data logger can do 'live trending', ie give live readings of variable data measured in the whole HSM, including the roller speed, hydraulic pressures, power currents, finishing mill motor temperatures and positions of rolling equipment - as well as recording historical data. The CBFM operator uses this information for trouble-shooting and diagnostic purposes...

In 2004 the company introduced new software to the computer system called the profile crown flatness system [PCFC]. This is a computer model which utilises several other pieces of equipment in the HMS to operate, including the crown [CVC] work rolls. PCFC initially operated only in conjunction with the flatness gauge and was progressively integrated with other pre-existing pieces of equipment over the course of a number of trial periods.

The function of the PCFC is to control stability in the mill and to optimise the flatness and crown (the centre of the strip) for quality purposes. BlueScope Steel explained at the time that the introduction of this system was in direct response to increased customer quality requirements and the need for more stringent control parameters within the rolling process. The system permits product to be produced more consistently within more exact tolerances. Previously, there was no system that permitted precise control over the crown of the final product..."

89 Mr Potts indicated in his evidence that with the introduction of HSMICS, the layout of the desk in the CBFM control station was changed significantly. The desk now contains eleven different GUI's showing data captured live from the system, allowing any data on the HSMICS to be accessed by the CBFM operator. Mr Potts claims in his written statement that, in his experience:

"...although HSMICS itself, as a computer system is no more difficult to use (although additional training was necessary to be able to use it), the introduction of HSMICS made the work of the CBFM operator more mentally demanding. This is for two reasons: firstly, the far greater amount of data available, together with the introduction of EMS, has made reporting more complex and difficult and, secondly, more analysis and decision-making on the basis of this data is now required (particularly when taken together with the abolition of the process analyst position)..."

90 Mr Potts indicated in his written statement that the staff restructure in 2005 had an "...indirect but significant effect..." on CBFM operators, viz:

"...The position of shift team leader was changed to one of a shift mill manager/supervisor... The then throughput manager told me at the time that the new position had no requirement for experience or knowledge as to the operational side of the HSM. This was subsequently confirmed when it became apparent that only two of the four persons actually appointed to the new positions had no such experience or knowledge. For this reason, the practical outcome was that the CBFM operators assumed an even greater proportion of the responsibility for decision making on a shift by shift basis for quality issues, diagnostic troubleshooting and follow-up of issues and problems associated with the rolling process (although the extent of this varied from shift crew to shift crew, dependent upon the extent of experience or otherwise of the particular shift mill manager/supervisor..."

91 Then there was the introduction of WBF 2 in 2006. Mr Potts commented in his written statement that:

"...in an overall sense, the introduction of WBF 2 has significantly increased the production and pacing rate of the rolling process because throughput has significantly increased. This has had a major impact on workload..."

In that respect, Mr Potts speaks in his evidence in the same terms as Mr Baraldi, ie of the increased mental demands placed on the CBFM operator (due to the time available for critical decision-making being reduced), increased manual intervention in the production process (because WBF 1 and WBF 2 operate in different ways with different temperatures), frequency of roll changes having increased and increased liaison with WBFRM operators. Mr Potts also shares Mr Baraldi's view of a substantial increase in diagnostic responsibilities on the HSM operators and rejects the views of Mr Ziegelaar and Mr Willetts that, in real terms, the number of interventions by the HSM operators have not really increased over the relevant period of time.

92 Mr Munn commenced work in the Port Kembla steelworks in 1985 as an apprentice pattern maker (Steel Haven). He completed his apprenticeship in 1989 and worked as a tradesman for four years before he was transferred to the HSM. From 1995 he has rotated between the positions of DC operator and the CBFM roles. He is at Level 3. He also operates the overhead cranes and forklifts in the HSM as required. His evidence in this hearing essentially concerns the work as a DC operator, comparing and contrasting that role over the last twelve years. He commented in a written statement which formed the basis of his evidence that the DC control pulpit was different in 1996 to 2008, viz:

"...There was an alarm screen, a process data screen, the mill mimic screen, a set-and-measured bar graph and a single CCTV screen (on which you could select from various cameras in the DC area). The basic functions of the DC operator were to start the DC, monitor the entry of the bar into the DC and then once the tail of the strip entered the DC and the DC had automatically gone on hold, to 'tailspot' the coil (ie rotate it by manually pressing a control so that the tail of the coil is underneath). The DC operator then released the DC hold manually and the system then removed the coil from the DC. The DC operator then placed the DC back into run so that it was ready for the next bar. The coil then went through the strapping and marking process automatically.

The DC operator used the process data screen to monitor coil shape and to track coil numbers as they passed through the system. If the DC operator identified a problem with the coil shape from the process screen, he was required to make manual interventions to adjust the wrapper roll gaps, pinch roll gaps and side guard gaps in order to remedy the problem. This was done by use of a keypad. The DC's then were of an earlier type.

The type of adjustments which could be made by the DC operator was confined to modifications of the gaps... The only information which had to be recorded then was a one-page shift report. On this I had to record the number of coils which had been subject to a wrap inspection and report any problems than had been encountered. If there were any defects in the coils, they would be entered on the VAX system (which was a very basic computer system).

In terms of quality control, the DC operator checked for defects by performing a wrap inspection. This involved oxy-cutting the outer wrap of the coil and lifting it onto the floor by use of the overhead crane. This was done every 20 coils, before and after every roll change or otherwise when requested. If a defect was identified, the DC operator simply contacted the mill supervisor. The mill supervisor would then come down and inspect the wrap and then do whatever was necessary to resolve the problem.

The DC section had a staffing level of three DC operators (or two DC operators and an assistant) for each shift. This remains the case today. One DC operator is stationed in the control pulpit, one goes onto the floor to undertake wrap checks and resolve any problems that arise and the third assists in the finishing mill and DC area as required, performing diagnostic work, doing relief, and generally assisting on the floor, and is required to take his breaks. The three DC operators rotate between each function every two hours.

In 1996 there were two overhead crane drivers for each shift (although these covered the whole mill). Additionally, there was a team of day shift employees (consisting of about fifteen labourers and known as the 'labour gang') who had a number of functions in the HSM. One of those functions in the DC area was to cut back (ie remove the damaged outer wraps or fold marks) or badly shaped coils that had been removed from the system by use of the overhead crane and placed on the floor. Once they had done this, the coils would be placed back into the system by use of the crane..."

93 Mr Munn also indicated in his written statement that:

"...in about 1997 the existing DC's and sideguards were replaced by two new DC's and sideguards. These were more advanced and complex than the previous equipment. With new equipment, there are an increased number of adjustments which need to be made in order to maintain coil shape. They include adjustments to the tension of the strip, tail tension, pinch roll force control, wrapper roll force control and tailspot offset. The DC operator, from direct visual or from CCTV observation, was now required to make a judgment about which of these adjustments (as well as the previous gap adjustment) might be necessary from time to time in order to maintain coil shape. This is done through the keypad.

About a year or two after the new DC's were introduced, a bottom pinch roll polisher was added to each DC. This equipment polishes defects off the bottom pinch roll. This added a function to the workload of the DC operator. The polisher is operated by the DC operator in the control pulpit. A new control feature was added to the desk in the control pulpit to allow the polisher to be activated. Additionally, it is necessary for the DC operator on the floor to drive a winch cable, which drags the polishing stone across the pinch role..."

94 Mr Munn also referred in his written statement to the 1999/2000 restructuring of the HSM, viz:

"...There were three major changes which affected the work of DC operators. Firstly, the labour gang was completely abolished, Their function of cutting back defective coils which had been taken off the line was then transferred to the DC operators. This new duty required the use of an oxy-torch to remove the wrapping. Whichever DC operators are available (usually the DC operator on the floor) will assist in carrying out this function. Wherever possible, this function is performed with the coil still on line at the wrap cutting station. However, there are times when on account of the increased tonnes/extraction rates we now roll at, it is not always possible to do it this way, so some coils are lifted onto the floor for cutting back at a later date during the shift and then reinserted.

Secondly, the number of shift overhead crane drivers was reduced from two to one. It thereupon became the responsibility of the DC operators to cover the shift crane driver when he is on a crib break or shower break or to operate a crane when the volume of work exceeds a one-crane operation. At about this time the company installed a jib floor crane for use when cutting light to medium wraps in order to free up the single shift overhead crane driver for other work. This crane is required to be operated by the DC operator, which was a new duty. Despite this, in my experience the DC operators have still had to perform work operating the overhead crane to a significantly greater degree than previously. The jib crane is also utilised to recondition coils when the overhead crane is unavailable, thereby ensuring that the coil continues along the process and gets to the customer on time. During these times, the operator in the chair must regulate pacing to ensure that the mill continues to run whilst the assistant is reconditioning the defect coil...

Thirdly, the number of mill supervisors was reduced from two to one per shift. This caused a change in my duties as a DC operator. Previously, when a defect was identified in the strip, I would contact the mill supervisor responsible for operations and he would come down to identify the cause of the defect and decide what action was to be taken. After the restructure had taken place, the single supervisor who remained became far less available to become involved in quality issues which arose. As a result, the DC operators from then on took a much greater degree of responsibility for the identification of defects and their causes, and for making decisions as to what should be done to rectify the problem. This might include pulling out rolls, calling out maintenance to make repairs and determining whether the line should stop or whether it should continue running whilst booking and holding the affected coils. Additionally, DC operators became responsible for co-ordination and safe removal of cobbles, dorots and coils that stuck in and around equipment. This had previously primarily been done by the mill supervisor prior to the restructuring..."

"...These new or enlarged responsibilities were not imposed by any directive of the company; they were simply the practical result of the company's decision to reduce the number of mill supervisors..."

96 Mr Munn's evidence, like that of Mr Baraldi and Mr Potts, also highlighted much new computer technology installed in the HSM. He referred to the HSMICS computer system which came into operation in 2001, allowing the DC operators to assume and conduct real time analysis of strip and coil related issues and generally assume responsibility and control of coils. With the HSMICS came a "surface inspection system" [SIS] which takes a recording of the top and bottom surface of the strip, highlighting any defects on a separate screen in the DC control pulpit, and a new video surveillance system known as NESS which records every CCTV camera in the DC area to assist in fault finding with video footage of the operations.

97 Mr Munn indicated in his written statement that:

"...the DC operator is now required to do a SIS check every 20 bars, when a wrap is taken or when required via consultation with the CBFM operator in order to monitor the strip quality. If a defect is identified, the DC operator must 'book' that coil through the tracking screen and put a hold on it progressing through the system. This is an entirely new work function. A number of classroom training sessions were conducted in conjunction with on-the-job training and assistance in using the new technology..."

And as far as NESS is concerned, Mr Munn indicated in his written statement that the video footage:

"...can be attached to an EMS report concerning any such fault. Essentially, it involves rewinding the footage and watching it to detect the problem. The footage may be a few minutes old, or may be a week old - depending upon what is necessary to identify the fault. For example, in examining why a particular coil turned out to be defective, it may be possible by viewing the footage captured by NESS to identify a fault in the equipment in the DC area which caused the effect. In that case, the DC operator would then have to take the necessary steps to have maintenance repair the fault. The use of NESS in this way is an entirely new work function; it has no previous equivalent..."

98 Mr Munn also referred in his written statement of NETDAQ which was introduced in 2001 and which is software which records data concerning the operations of the plant. Mr Munn conceded that at present NETDAQ was primarily a tool of the shift engineers and that he had not been exposed to it. However, he described it as a very complex system and he understands that DC operators will be required to become familiar with the system in future.

99 Finally, Mr Munn referred in his evidence to a new radial strap machine which was introduced in late 2007. That machine is used to strap the coils and, whilst the DC operators have not been given the responsibility to operate the machine, according to Mr Munn, they have been allocated the responsibility to "...co-ordinate its maintenance..." - another new function for the DC operators to perform, according to Mr Munn. The Evidence of Mr Lorenc

100 Mr Lorenc commenced employment in the Port Kembla steelworks in early 1981 as a cadet. He has a diploma in mechanical engineering and a masters in maintenance management. From 1985 to 1995 he worked in various roles in the HSM and from 1995 to 2003 he worked in both transport and operations management roles for BlueScope Steel. He returned to work in the HSM in various roles from the middle of 2003 to early in 2006 at which time he worked as maintenance manager for the pickle line and cold mill for Illawarra Coated Products [ICP]. Early in 2007 he assumed his current position of operations manager for the HSM. He has responsibility for all operational and shift maintenance activities of the HSM and he is in charge of a team of 127 employees - 8 team leaders, 7 engineering support staff and the shift crews, including the production operators. From early in 2007 Mr Lorenc became involved in discussions over the work value claim mounted by the AWU over the HSM operators which has culminated in the current proceedings before me.

101 Mr Lorenc outlined the nature of work in the hot strip mill in a written statement which formed the basis of his evidence, viz:

"...The process starts with slabs being heated in two walking beam furnaces. The slabs are heated to approximately 1250C. They are then processed in a 4 high reversing roughing mill. This reduces the thickness of the slab from approximately 230mm to nominally 30mm thick and elongates it considerably (transfer bar). The slab, which is now called a transfer bar, is then coiled up in a coil box which has the purpose of giving consistent temperature through the length of the transfer bar before it is rolled through the finishing mill. The bar is further reduced in thickness through the 6 stand finishing mill where it is finished to the end user's specification, which is nominally hot rolled coil between 1.48mm and 12mm thickness and a width of between 650mm to 1575mm wide. The finished transfer bar is then cooled on the runout table and coiled up at the downcoilers. It is then strapped and marked. Nominal mass of the finished coil is up to 30 tonnes and the majority of coils are close to this mass. The finished coil is then transferred on a conveyor system to hot strip coil processing and despatch [HCPD] which is another department.

The HSM is highly automated with most monitoring and control functions being performed from three pulpit areas - one for the walking beam furnace and roughing mill [WBFFM], one for the coil box and finishing mill [CBFM] and one for the downcoilers [DC]. In each pulpit there is a control desk. At each control desk an assigned Level 3 operator operates and monitors the relevant section of the HSM production process...

The HSM is operated on a continuous 12 hour shift basis. In each shift crew there are 12 production operators, to whom the current work value claim relates. On each shift crew there are five fitters, five electricians, one ironworkers, one service attendant, one crane driver and two team leaders. There are four shift crews. Minimum manning for each shift is eight operators, four fitters, four electricians, one service attendant, one crane driver, one ironworker and two team leaders. There are also a number of relief people who predominantly act as holiday relief for trades, service attendants and ironworkers. The 12 operators in each shift crew include leave and roster relief along with training..."

102 Mr Lorenc referred in his written statement to the 2000 restructure, viz:

"...The 2000 restructure arose in accordance with the steel industry wage settlements that departments should look to working as efficiently as possible to achieve business plans, and in turn be able to provide employment security. Departments across the steelworks were encouraged to look at the introduction of things such as 12 hour shifts, annualised salaries and the concept of manufacturing teams. In essence, this is what the 2000 restructure of the HSM involved. To the extent this restructure impacted on operator duties, eg the removal of labour gangs, this really only required operators to more fully utilise their available time whilst working within their capacities and the requirements of their position descriptions. The position descriptions of operators did not change as a result of the 2000 restructure..."

103 Mr Lorenc also indicated in his written statement that:

"...the basic layout of the HSM and the production process has not changed since the last work value case for the HSM in 1995/1996. Aside from the depiler position, there are still the same minimum numbers of operators on each shift, still assigned to the same work areas... The introduction of the second walking beam furnace in 2006 was significant in terms of throughput for the HSM but did not change the type or nature of work operators.

The mill is still a single stream operation, ie only one bar or coil is progressing through any point in the mill at any point in time. However, due to the increased number of coils processed, faster decisions in the moment need to be made by operators who directly operate the mill, ie the operator in the desk at any point in time in the three pulpits, and also the operators performing floor duties, for example, in the finishing mill area, which involves removing scraps from between bars.

It is important to remember that the nameplate speed of the finishing mill is the same, ie the bar travels through the stands at the same speed. It is the time between bars that is shorter. The need to monitor processes more often has occurred. That being said, I have not seen an increase in steel losses per tonne that can be attributed to errors being made due to more information to process or an increase in mill pacing. Nor in the past year have I heard any concerns about people being overworked on shift. Meal breaks and other rest periods are being taken as would be expected..."

104 As far as GSL 2 accreditation is concerned, Mr Lorenc acknowledges that it is now included in the position descriptions of the HSM operators at Level 3 but does not believe that it represents in any way a significant net addition to the responsibilities of the HSM Operator 3 position. Mr Lorenc points out that senior operators in other parts of the steelworks hold GSL 2 accreditation.

105 Also Mr Lorenc claimed in his evidence that the new technology that has been introduced in the HSM has not changed the essential nature of the work of the HSM operators or the functions they have performed. In fact, he claimed that it has made life easier for the HSM operators. As far as the new computer systems that have been installed, Mr Lorenc recorded in his written statement that his view, having used the systems himself and spoken to other staff concerning them, was:

"...that they were user-friendly systems and have, in fact, made it easier for all of HSM personnel to make decisions. The ability of the operators to make judgement calls in respect to their responsibilities is enhanced by these relatively easy to use systems which provide the required information.

The computer systems to which I refer are generally available to all employees of the HSM. For example, the HSMICS system is the general electronic information system for the HSM and accessed by all personnel. The operators have prime responsibility for monitoring these systems as they relate to mill operations in the pulpit areas. But other employees, as relevant, be they staff or trades, will also access and use them as necessary in the performance of their duties. The level of expertise which employees utilise in these computer systems depends on their assigned tasks. The highest level of expertise in these computer systems would be held by the staff operations engineers, electrical engineering staff and electrical trades..."

106 And as far as the commissioning of WBF 2 is concerned, Mr Lorenc conceded that:

"...since January, 2007 we have had a number of issues with WBF 2 and I do not consider this equipment to be functioning in an optimum way. It has caused problems we should not normally have, eg too much scale generation and as a result uneven heating. This has placed more than what would be considered usual levels of intervention for our operators. Plans are in place to address this. I have seen no impact of these issues on operators. Over time, these conditions will reduce as we fine tune the furnace and improve overall knowledge. I have seen no issues other than some dayshift support people working longer than expected hours to solve issues..."

"...It appears to me that the AWU operators are making much of what they say is increased responsibility in the area of diagnostics and analysis. However, the data and systems which are now available to assist with diagnosis and rectification of problems on shift has greatly assisted operators at this level. Further...this requirement has always been part of the expectations of the Operator 3 role and the 1996 work value case confirmed the increased level of specialisation that was expected. This has been applied in varying degrees over the years but, in essence, the expectation has stayed the same..."

"...in the time I have spent in the pulpits my observation of bar by bar monitoring...appears to be more intense in the finishing mill than in the roughing mill. To my knowledge this has always been the case. I acknowledge that WBF 2 will have increased the level of monitoring and control... The Level 16 position was created with this kind of environment in mind..."

108 Mr Lorenc rejects any suggestion that the HSM operators are overloaded and that there are grounds for further compensation to them due to increased stress levels. He points out, accurately enough, that in any event it would be inappropriate to compensate employees for increased stress levels with increased remuneration. Stress at work should be addressed in other ways and, ultimately removed from the workplace. (Neither Mr Baraldi, Mr Potts nor Mr Munns have indicated that they are not coping with the work allocated to them, however, and the AWU has not argued a claim on behalf of the HSM operators based on increased stress in the performance of the work. The HSM operators accept that work but simply seek additional remuneration for it based on work value grounds.)

109 In his written statement Mr Lorenc has acknowledged improvements in HSM performance, viz:

"...In the past 12 months we have seen a stepped improvement in HSM performance. There are a number of reasons for this but one of the major ones is we have embarked on a path of improving what is known as 'operational discipline'. Broadly, this involves getting shift teams more active in helping solve problems, listening to their issues and improving communication.

110 The EMS system now in place facilitates such interaction by employees in the HSM. But Mr Lorenc further states:

"...having reviewed the position descriptions for Operator 3's, my view is that what people are delivering on now is what they have always been expected to do... It seems to me that to-day we are working in the same overall manner as we were in 1995 with respect to operator skill and responsibilities. The similarities of the current position descriptions and those from 1995 demonstrate this. The nature of the work has not changed, nor the conditions in which it is undertaken.

In respect to the current Operator 3 position, there is no doubt that a competent operator is performing a very responsible and complex function. However..., employees are actually working within the expectations of the current level. That is to say that, in my opinion, even with the changes that have occurred with the introduction of the second furnace, increased throughput and changed computer systems, the role is within the range of the 16 Level matrix. There was recognition in both 1995 and 2000 to the level of training and decision-making that was required of the operator positions in the HSM. Whilst certain aspects of that have changed, I do not see that the level of skill or responsibility of the operator has changed..."

111 And Mr Lorenc comments further in his written statement, viz:

"...It seems to me that today we are working in the same overall manner as we were in 1995 with respect to operator skill and responsibilities. The similarities of the current position descriptions and those from 1995 demonstrate this. The nature of the work has not changed, nor the conditions in which it is undertaken.

In respect to the current Operator 3 position, there is no doubt that a competent operator is performing a very responsible and complex function. However, when you have regard to the comparison documents, employees are actually working within the expectations of the current level, ie in my opinion, even with the changes that have occurred with the introduction of the second furnace, increased throughput and changed computer systems, the role is within the range of the 16 Level matrix. There was recognition in both 1995 and 2000 to the level of training and decision making that was required of the operator positions in the HSM. Whilst certain aspects of that have changed, I do not see that the level of skill or responsibility of the operator has changed..."

Therefore, Mr Lorenc does not accept that any wage increases are justified for operators in the HSM on work value grounds.

112 Mr Smith commenced employment in the Port Kembla steelworks in 1975 as a process engineer and later as a senior process engineer. He has worked in that capacity in various parts of the plant. He holds a degree in chemical engineering. His current position of technical services process engineering manager in the HSM involves him in implementing improvement projects, contributing to the development and implementation of the business plan, anticipating issues and obstacles in the HSM from the assessment of relevant data. He is also responsible for environmental issues and has been a member of the gas safety committee for the steelworks.

113 Mr Hatcher was content for Mr Smith's evidence to be admitted (as modified during the proceedings with the concurrence of Mr Brotherson) without the need for him to be cross-examined. Mr Smith's evidence centres on technical issues concerning the operation of WBF 2. He points out in his written statement that:

"....the technology in WBF 2 is 20 years more advanced than WBF 1. However, it is a simplified operation. Notwithstanding it is new, therefore different and takes some familiarisation, most of the operation is automated and, as such, is computer controlled. Although WBF 2 uses the latest technology, everything than can be the same in both furnaces is the same. The pumps and cooling system in WBF 2 are identical in both furrnaces.

The biggest difference between the furnaces is the combustion system. The WBF 2 combustion system works on pulse firing (either on or off) and the WBF 1 combustion system works on modulating control (infinite variability between open and closed). Both combustion systems are designed to operate on computer control..."

114 Mr Smith's view, contained in his written statement is:

"...Since WBF 2 commenced operations, the work of the WBFM operator operating the desk is of higher intensity, ie the pace of work is faster. Each operator usually only operates the desk for 4 hours per 12 hour shift (sometimes 6 hours per 12 hour shift). Operators now need to understand both furnaces and the way they work. Both WBF's are primarily computer controlled. The operator monitors the WBF's and, as required, may need to make offset adjustments to keep the furnaces at optimum operation....During a 12 hour shift, a WBFM operator Level 3 will spend between 4 and 6 hours operating the desk..."

Mr Smith asserted in his written statement that the throughput rates for the WBFM have increased and, consequently the times to make decisions have decreased but at a proportional rate to the increase in throughput.

115 Mr Smith also recorded in the written statement that he regarded the title of "supervisor" which Mr Baraldi gave to the position of Gas Safety Level 2 Supervisor position as somewhat misleading and he claimed that it was no longer used across the steelworks when referring to an employee with GSL 2 accreditation. That function has now been absorbed by the HSM Operator 3 positions. Mr Smith indicated that, like Mr Lorenc, he was aware of operators in other departments in the steelworks at various classification levels with that GSL 2 accreditation.

116 Mr Ziegelaar commenced employment in the Port Kembla steelworks in 1980 as a mechanical engineering cadet. He worked in the HSM from 1985 to 1994 in various capacities. From 1994 to 2000 he worked on a strip casting project [Project M], returning to the HSM as technical product manager for packaging products from the middle of 2000 to the middle of 2007. He has occupied his current position of technology manager in the HSM since the middle of 2007 and in that capacity is responsible for managing the capital budget for the HSM and plate mill, data extraction, analysis and reporting, cost models for the HSM and plate mill, benchmarking of HSM performance, research and development. He holds a mechanical engineering degree.

117 Mr Ziegelaar asserts in the written statement that accompanied his evidence in the hearing that:

"...the HSM operators have always been required to report on the performance of the equipment and process in their area. Originally, the reports were on paper (carbonless triplicate) templates. This had many inefficiencies and required more effort. Information was duplicated in different reports by different people, time wasted in copying information from one computer or system onto their report, information having to be re-typed back into other computer systems and data being lost. All this was fixed with the introduction of the EM function of the HSMICS.

Information is now automatically transferred from the MCC system to the report system (eg delay start times and durations). Operators only need to add their part of the information, not repeat the whole story about what others (eg electricians) have already written. The system is web based and extremely easy to use. The system allows easy assigning of follow-ups and determination if issues raised are being addressed. Information can be easily linked to other similar issues, or other data, which minimises the amount of data entry required by the user. Information is now readily searchable and available, so problem solving and information sharing amongst operators is much easier than it ever was before. The system is extremely widely used and accepted within the HSM area.

Since 1996 the HSM datalogger computer has been updated. The old datalogger monitored the quality of the strip being rolled, provided trending functions, statistical analysis, crash logs and various other functions. All of these functions were incorporated into the new datalogger which came on line in 2001. The major difference being the information is now a lot easier to access and understand, eg the old difficult to interpret crash logs have been replaced by simple graphs of data.

Since 1996 the MCC has been updated. The operators interact with the old MCC for mill setups, entering delays and various other functions. These functions have been simplified by HSMICS and the event system for managing delays. The mill setups are still basically the same as they were previously. HSMICS has provided significant improvements, such as automatic data entry of roll diameters for roll changes (previously a manual operation by the operators), implementation of PCFC which automatically controls crown and flatness (previously required significant manual control by the operator), simple adding of information (mouse clicks, drop down selection bars) and easy to access information via web pages, such as coils rolled, etc..."

118 Mr Ziegelaar claimed that HSM operators always had the responsibility to make decisions on booking coils and what was necessary to solve problems which arise, including stopping the mill if that was considered necessary. He conceded that historically the mill supervisor would often take the lead in making such decisions but it still always remained the responsibility of the operators. In the past they were generally expected to make such decisions and often did so.

119 In his evidence in this hearing Mr Ziegelaar challenged the claim made by the AWU on behalf of the HSM operators that, particularly since the commissioning of WBF 2, there are a greater number of interventions by HSM operators in the rolling of the slabs. Mr Ziegelaar asserted that the number of interventions over the period of the review were essentially the same and to buttress his argument he chose two separate 24 hour periods - at random, he claimed - for comparison - Friday, 18 March, 2005 (prior to the commissioning of WBF 2) and Monday, 9 June, 2008 (after WBF 2 was operational) where the amount of product being processed was, in his opinion, similar. On both days the number of interventions were also comparable.

120 I believe that Mr Ziegelaar acted bona fide when he provided those two days for comparison (although Mr Baraldi and Mr Potts apparently hold some suspicions concerning the actual dates which Mr Zieglaar chose to use in his models). But Mr Ziegelaar chose those particular days because they were days with a similar output in terms of tonnage. It would hardly be surprising therefore that with equal tonnage on the two days, the interventions may actually come out roughly the same on both days: that would be anticipated, I would have thought. Setting out to prove a level of interventions were unchanged by comparing two identical days of output would only establish the obvious - that the amount of interventions would likely be the same. Mr Hatcher regarded that type of evidence as fairly meaningless, in any event, and I am inclined to agree with him.

121 Furthermore, as Mr Baraldi commented in one of his written statements:

"....I do not understand the basis upon which the particular dates were selected, but as a general proposition it is impossible to draw a valid comparison based on two single days. The work is too variable for that. There is no basis for a like-with-like comparison on the two selected days, because the mix of work on the two selected days is completely different... On Friday, 18 March, 2005 there was a mix of different products, including tin plate feed, A06 material, AU01 export. On Monday, 9 June, 2008 nearly all of the product was A06, with some light gauge. The frequency of interventions is predicated on the type of product being rolled... "

122 Also Mr Potts described the comparisons on the two separate 24 hour periods as comparing "...apples and oranges...". The number of interventions is dependent, among other things, upon the actual mixture of the product being rolled and its width and gauge. Mr Potts records in his written statement that:

"...because the number and type of required interventions change, depending upon the product, the two days are not comparable. Even allowing for this, the number of interventions increased from 157 to 167. It should be noted that the documents only show changes carried out using the FM setup screen. It does not show interventions made through the PLC or interventions made using the manual intervention buttons on the desk (eg interstand water and F5 and F6 bending control..."

123 It seems to me that the number of interventions that an HSM operator would be required to make on any particular shift would largely be dependent upon the type of product being processed at the time and the state of the equipment on that particular day. Clearly some standard product would be processed more easily, with less likelihood of intervention by the HSM operators, than other relatively more problematic product. A random sample involving only two days is hardly convincing evidence. Whilst, as Mr Brotherson submitted, there may also be difficulties in averaging out the interventions, I am satisfied that the most appropriate way to determine whether or not there has been an increase in interventions by HSM operators over the period of review is on the basis of such averaging. That is what Mr Baraldi has done and his calculations suggest a 30.63% increase in interventions by HSM operators.

124 Mr Willetts has occupied his position of operations improvement engineer in the HSM since 2007. He is responsible for the day-to-day running of the HSM, co-ordinating operations, working on capital improvement projects and assisting in maintenance activities. He commenced employment in the Port Kembla steelworks in 1973 as an apprentice electrician and from 1976 to 1978 was employed as an electrician in the HSM, initially on day work but subsequently on shift. Chiefly his expertise has centred on two areas of the HSM - the CBFM and the DC. He holds an electrical fitter mechanical trades certificate and an electronics and communication engineering certificate.

125 Mr Willetts claimed in his evidence in this hearing that since 1996, as he saw the position, the CBFM and DC operations have not changed significantly and, like Mr Lorenc, he claimed that the computer technology that has been installed in the HSM is straightforward and "user friendly", requiring no additional skills of the HSM operators. He records in his written statement:

"....The main change has been some of the desk interface but this does not greatly increase the operator workload. The CBFM operator desk in the CBFM pulpit was installed in 1987. In about 2000, the original QWERTY keyboards were replaced by newer QWERTY keyboards compatible with the HSMICS system. The physical structure and buttons on the desk have not changed since installation. Further, the cathode ray tube [CRT] screens set into the desk were updated to LCD screens in about 2003. The overhead CCTV screens were replaced by large LCD television screens in about 2006. Instead of being located above the front window, the new screens were hung slightly lower, along the top of the window. The number of overhead closed circuit screens has been reduced as a number of unnecessary screens were removed. None of these changes impact in any significant way on the work performed by the operator. In fact, the screens are easier to view as they are non-reflective.

Changes have also taken place in the DC area since 1996. The operator desk layout in the DC pulpit now has an interface with a new keyboard and mouse to access HSMICS and tracking. In addition to this, the operation of coiler pinch rolls now includes levelling and calibration functions via the desk. This requires the DC desk operator to read figures on a screen and make adjustments by pushing buttons. This latest pinch roll function has replaced manual measurements that were taken at the roll assembly by the floor duties operator.

In both the DC and CBFM the datalogger was upgraded and HSMICS was introduced post 2000. This means there are more diagnostics facilities available to the operator to assist with problem solving and the monitoring of strip quality. The SIS was introduced in 2004. This requires an additional screen to be monitored by a DC operator. It is located at the rear of the DC pulpit. However, the Level 3 operator at the desk does not perform this function. The Level 3 operator not operating the DC desk checks this screen approximately every ten coils (about every 30 minutes) or as required. There is no time pressure associated with this task..."

"...operators on the floor of the DC area are now required to undertake coil reconditioning work. This is work that was previously done by the labour gang until about 2003. However, due to the 2001 coiler upgrade there are now far less coils that require reconditioning. On average, approximately two to three coils require reconditioning per 12 hour shift. This would be less than half of that required prior to the upgrade. This task involves the operator informing the overhead crane driver that a particular coil requires reconditioning. The overhead crane driver then unwraps the coil back to the damaged area and the floor operator uses an oxy-cutting torch to remove this section of the coil. After this, the operator applies a manual strap to the coil and the overhead crane driver places the coil back on the coil handling system. This task is very similar to wrap checks, which operators have long been required to perform and requires no additional skills to be learnt.

Operator work in the CBFM and DC areas has increased over time, based on higher production rates, ie the number of coils per hour has increased. The operators in the CBFM and DC pulpits are working faster due to more bars passing through their area per hour. The bars pass through the CBFM and the DC at the same pace: it is the time between coils that is shorter. The operators undertaking floor duties are performing physical functions more often due to the increased number of coils per hour (eg wrap checks). However, for both pulpit operators and those on floor duties the underlying nature of the work and the extent of their responsibilities has not changed..."

127 Mr Willetts highlighted in his written statement that the speed of the rolling process is dictated by the product itself and not necessarily the role of the HSM operators (or for that matter the new technology that has been introduced). He asserted that the HSM is now rolling particular product at a pace of 21 to 25 coils per hour more frequently - an increase of from 8% to 25% of time - and a pace of 11 to 15 coils per hour for other product less frequently - a decrease from 27.7% to 15.3%. According to Mr Willetts, with that information, higher output must naturally occur. Mr Willetts indicates in his written statement that the product at the 11 to 15 coils per hour rate:

"....is generally more surface quality critical and requires more attention, and at times intervention, from the operator per bar rolled. This also means that the operator is required to monitor HSMICS screens more closely with regard to strip quality when the bars are being processed at a slower pace..."

Mr Willetts sees this change in the type of product being rolled as more-or-less permanent. Tin plate, formerly a product which was apparently difficult to roll is no longer passing through the HSM after the closure of the tin mill.

128 Mr Willetts also casts doubts that the diagnostic role of the HSM operators has increased to the extent that the AWU claims in this hearing. He has examined the events recorded in the EMS reports provided into evidence in this hearing with respect to cobbles and dorots and asserted that, in fact, there were actually few occasions where the HSM operators actually exercised any diagnostic role, categorising many of the activities of the HSM operators as no more than providing a record of the facts of the particular incident or, at best, only partially resolving the issue. Mr Willetts disputes that there has been any increase in the diagnostic role of the HSM operators.

129 Mr Baraldi disputes Mr Willetts' assessments on the actual diagnostic role of the HSM operators in a supplementary written statement which I admitted into evidence. Mr Baraldi claims that assessments made by Mr Willetts are based on EMS which do not record all of the interventions by HSM operators. Mr Baraldi indicated in one of his written statements which was tendered into evidence:

"....The analysis performed by Mr Willetts appears to suggest that the diagnostic work performed by operators is minimal and has not changed since 1996. This is inconsistent with the position adopted by BlueScope Steel in 2006 during the work value negotiations. The then HSM throughput manager (Mr Jarrett) stated that it was the expectation of BlueScope Steel to have operators performing at least 50% of diagnostic work..."

In his written statement Mr Jarrett confirmed the document he provided as part of those work value negotiations.

130 No doubt, it is a question of interpretation of the degree of diagnostic responsibility falling on the HSM operators - where the role of the HSM operators ends and the role of engineering staff begins. Largely, it depends upon how to categorise the actual diagnostic tasks performed by the HSM operators, assisted in that respect by HSMICS. Often it becomes no more than a personal and subjective view in each case under review. The assessments made by Mr Willetts are, in my opinion, open to challenge on the basis that it is only his view - and Mr Baraldi and Mr Potts do challenge them. Mr Baraldi claimed that the documents on which Mr Willetts has relied:

"....do not record the extent to which operators engage in diagnostics which is not recorded because it is not the subject of an event report. Problems may be solved by operators in the course of their duties without the need for an event report to be generated..."

And Mr Potts indicates in one of his written statements that:

"....Mr Willetts' analysis is based upon his own restricted idea of 'root cause analysis'. He does not take into account the broader concepts of problem solving and diagnostics. Thus, where an operator has dealt with a problem that has arisen or has taken steps to diagnose why a problem has occurred, Mr Willetts has not counted it if the operator has not identified what Mr Willetts in his opinion considers to be the 'root cause'. The prompts from the system for the operator are '... provide description of loss including any changes made prior to loss ...', '... corrective actions taken for next bar ...' and '... attach video, datalogger and NETDAQ traces ...'. This is what constitutes diagnostics. There is a separate prompt for '... commence problem solving form with cause tree ...' but this refers to a paper form which has nothing to do with the EMS. Operators are not privy to this.

Mr Willetts has, in any event, overstated and improperly denigrated what the operator has done in many instances. He has also overstated what other persons such as operations engineers have done by counting as 'root cause analysis' entries which do not identify the root cause at all or do no more than what operators have done in other entries which Mr Willetts has not counted as 'root cause analysis'..."

131 In other words, there can never be agreement on this issue if the parties remain apart on what is actually to be encompassed by the diagnostic task of the HSM operators or, indeed, what is meant by the word "diagnostic" in that context. As I understand the position, the diagnostic tasks performed by the HSM operators really concern problem solving, following the course now set out for them in that respect by HSMICS. Inevitably, the rectification of a particular problem may ultimately fall within the province of engineering staff but, to my mind, HSM operators are still often performing the diagnostic role required of them in the necessary functions up to that time.

132 In any event, Mr Willetts did concede that the HSM operators now are engaged in more problem solving than had formerly been the case, commenting:

"...Operators are now able to do more problem solving and decision making than prior to 1996. However, this is largely the result of the introduction of technology which has provided the operators with more diagnostic tools. HSMICS provides operators with more detailed and visual screen information for strip quality. Further, the alarm system has more alarms with meaningful text that point to cause to assist with problem solving. This current technology is easier to use and understand than its predecessors. It is also more efficient for problem solving and decision-making. Operators are, and have always been, expected to make decisions. However, the team leader is ultimately responsible for these decisions.

Operators now require more computer skills than were required in the past. For example, now some desk interfaces use a keyboard and mouse for simple functions such as completing reports and accessing other HSMICS functions. Previously, there were keyboards that were connected to the older MCC that had no mouse or Windows functions. In my experience, the change in computer skills for operators is consistent with that now generally expected of tradespeople and staff employees..."

"...In terms of the nature of work and responsibilities, I do not believe there have been any major changes to the operator positions in the CBFM and the DC areas. What has changed is the fact that the majority of operators have started to step up and perform as they should have been performing in the past. However, I do not believe the operators are fully loaded in their roles..."

133 Mr Hatcher has highlighted in his submissions in this hearing the changes in the work of the HSM operators since the last review of their wages by Hungerford J in 1966 in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case which he claims justifies increased remuneration for them: the transfer of the gas safety functions; the transfer of slab identification and sequencing functions; the upgrading of the furnace computer interface system; the replacement of the previous HSM control computer with HSMICS; the upgrading of event recording with EMS; the commissioning of WBF 2; the introduction of the machine slab vision system for slab identification; the changes due to the introduction of GUI; the identification of the HSM as a high risk facility; the increased diagnostic activities of the HSM operators; the introduction of the PCFC; the upgrading of the downcoilers; the abolition of the previous labour gangs (with that work being transferred to the DC operators); the reduction of the number of overhead crane drivers on shift (placing more work on DC operators who are accredited to drive those cranes); the introduction of a new gib crane; the operations of the new SIS to give live recordings of the top and bottom of strips to highlight defects in strips; the introduction of the NESS video surveillance system and NETDAQ.

134 In written submissions, Mr Hatcher summarised the AWU claim on behalf of HSM operators, separating the changes to the HSM on which he relies into matters of general application across the HSM and matters specific to the WBFRM, the CBFM and the DC operators. Generally, he speaks of the commissioning of WBF 2, HSMICS and the associated introduction of GUI, the EMS system for reporting incidents in the HSM, the transfer of operational decision-making, diagnostics and quality control from supervisors to the operators and the transfer of the gas safety Level 2 supervisor role to the Level 3 operators. More specifically, as far as the WBFRM operators are concerned, Mr Hatcher refers to the slab identification and sequencing functions that arose from the depiler operator position and the introduction of the machine slab vision system. As far as the CBFM operator is concerned, Mr Hatcher raised the new PCFC system. And as far as the DC operator is concerned, Mr Hatcher also makes reference to the upgrading of the downcoilers, the introduction of SIS, NESS and NETDAQ, the transfer of functions from the abolished labour gang and the crane operators to DC operators and the co-ordination of the maintenance of the radial strapping machine.

135 Mr Hatcher commented in his written submissions that:

"....the fact of the occurrence of these changes is not in issue... Further, the comparison documents annexed to Mr Lorenc's statement of evidence...render uncontroversial the identification of much of the detail of the changes to the operators' work functions... These documents, prepared by BlueScope, compare duties under the 1995 and 2000 agreements respectively with those proposed by employees. Mr Lorenc's evidence was that he accepted that the description of current tasks and duties...in each case (which was taken from updated positions descriptions prepared by the operators in connection with the work value negotiations) was accurate, so that the comparison documents allowed for an historical comparison of work duties which, from BlueScope's perspective, was accurate..."

"...Additionally, WBFRM operators may shortly take over from the process engineering staff the responsibilities of coke oven gas pressure testing with respect to both furnaces once the relevant training and procedures have been developed and implemented... It is appropriate that this change be taken into account in this work value assessment rather than be left to be the subject of a possible future claim..."

136 I am satisfied that Mr Hatcher is correct in his assertion that unquestionably there have been very many changes in the work of the HSM operators since 1996 when Hungerford J reviewed their rates of pay in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case. And I believe there is an acknowledgement of change for the HSM operators by BlueScope Steel management. Nevertheless, the contest between Mr Hatcher and Mr Brotherson in this hearing remains essentially whether such change justifies increased remuneration to the HSM operators on work value change grounds and in accordance with the strict test of the Work Value Change principle of current wage fixation principles. I will now refer specifically to those issues on which I consider Mr Hatcher's submissions chiefly rely to justify the AWU claim made on behalf of the HSM operators.

137 With respect to the commissioning of WBF 2 and its effect on the WBFRM, Mr Hatcher had this to say in his written statement:

"...In terms of the direct operation of WBF 2, the essential point is that it is being operated by the same WBFRM workforce that has always operated WBF 1. The question of the manning that would be required with respect to WBF 2 was the subject of an analysis carried out in 2005 by way of a 'desk-top audit'... This analysis included an extensive study of the additional functions that would be required. The analysis concluded that the existing workforce was capable of safely operating the new equipment (an issue not in dispute) but, in the report's analysis of a 'typical day', there was a clear conclusion that mental demands on operators would increase... The conclusion from that analysis caused BlueScope to reject a request from the WBFRM operators for an additional dedicated operator to be assigned to handle the roughing mill and slab identification tasks separately.

The outcome is that WBFRM operators are now required to perform three functions [WBF 1, WBF 2 and RM] simultaneously...instead of two as previously, as well as the slab identification function. This is by comparison to employees at the plate rolling mill who handle only two functions (one furnace and roughing mill) but have been appointed to staff (presumably with higher incomes than can earned under the matrix). This additional function represents a significant change to work value. It places higher mental demands upon WBFRM operators in that:

• intense and high level processing of information is required to allow the individual process functions, temperature control and burner management firing on WBF 2 to be operated simultaneously with WBF 1;

• intense and high-level decision-making is required;

• multi-tasking is required of control/interface functions for the slab reheating and tracking processes;

• there is a higher frequency of alarm recognition and response required;

• frequent intervention in respect of HOS pacing and use of extraction hold buttons to correct the pacing of the mill when problems or issues arise; and

• a new dimension has been added to the quality control aspects of the roughing mill edger [RME] in that the operator must now closely observe shape and temperature of transfer bars from two differently operating furnaces instead of just one and must take corrective action if differences between bars coming from the two furnaces begins to affect the operation of the CBFM: for this purpose, the operator now has two live temperature feedback systems to monitor and new functionalities to permit shape interventions to be made on bars from one furnace without affecting bars from the other furnace..."

138 And with respect to the CBFM, Mr Hatcher asserted in his written submissions that:

"...The consequences for the CBFM operators as a result of the introduction of WBF 2 have, in fact, been significant:

• an increase in the mental demands upon operators, because the time for critical decision-making has been reduced and the frequency in which decisions are required and problems required to be solved has increased;

• there has been an increase in the amount of manual interventions required, particularly as a result of temperature variations arising from the use of two furnaces: this was conceded by Mr Lorenc;

• the frequency of roll changes has increased due to the fact that production schedules are pushed through the mill more quickly: Mr Ziegelaar conceded that, in fact, both roll changes and chew-ups have increased in frequency;

• increased liaison with the WBFRM operators is required because the greater pace of production requires a more rapid upstream response if the mill is to be kept rolling; and

• the CBFM operator now has sole responsibility for monitoring and taking correct preventative action with respect to mill motor and ambient and complex temperatures: prior to WBF 2 this was dealt with by the operator simply notifying the shift electrician if an alarm signalled a potential problem: this is a critical function to prevent a mill trip on thermal overload or damage to the mill motors.

The number of interventions required on the HSMICS system has significantly increased since and as a result of the introduction of WBF 2. The records produced by BlueScope (albeit limited to certain types of interventions), once reduced to monthly figures and analysed, show an increase in the number of interventions (comparing before and after introduction of the second furnace) of over 30% in the roughing mill and 16% in the finishing mill. Mr Ziegelaar took no issue with the mathematics of (that) analysis. These objective measures are signifiers of the increase in work value which has occurred.

On the question of the number of interventions before and after WBF 2, BlueScope initially tried to rely upon comparison of two single days before and after in the roughing and finishing mill. However, given the day-to-day variability of the work and the different product mixes, this provided no proper basis for comparison. In any event, Mr Ziegelaar in cross-examination disowned these documents as providing any such comparison, saying they were only created to show how the data in the graphs provided were generated, that the days selected were not intended to be representative of the years in which they fell and further that the days selected before and after WBF 2 were selected because they showed about the same number of interventions. Accordingly they do not take questions of the trends in the number of interventions any further..."

"...The introduction of WBF 2 has had significant downstream effects on work in the HSM in that throughput has dramatically increased. Tonnes per hour has increased from between 350 and 400 per hour before WBF 2 to between 450 and 500 tonnes per hour now; coils per hour has increased from 17 to 20 per hour before WBF 2 to 22 to 24 now... These represent productivity increases in the order of 25% which Mr Lorenc accepted was a '...big increase...". This has occurred primarily because WBF 2 has permitted the gaps between bars passing through the mill to be reduced; the mean gap time between bars has been reduced from between about 80 and 100 seconds in 1996 and between 60 and 80 seconds immediately before the introduction of WBF 2 to under 40 seconds now. Mr Lorenc described the reduction from 2006 alone as about 40% and from 1996 more than 50%.

However, a second factor has been at work: an increase in the rolling speed of the mill. This factor was identified by the operator witnesses but then flat-out denied by BlueScope witnesses. The BlueScope witnesses turned out to be quite wrong. BlueScope's own statistics demonstrated that the mill rolling speed has increased (averaged across all products) by about 10% since 1998, which is significant. It would be counter-intuitive to suggest that the work of employees had no role to play in this, and Mr Lorenc accepted that the work of employees was a factor... Mr Lorenc accepted that the increase in the speed of the mill and the reduction of the time between bars would have a cumulative effect on the mental demands upon the operators..."

140 Mr Hatcher also referred in his written submissions to HSMICS and other associated changes in technology in the HSM - Citec HMI, EMS, a new datalogger providing for "live trending", RME data and function editing, QUEST, a coil tracking screen for DC operators, etc. In his written submissions, Mr Hatcher countered Mr Brotherson's argument that that new technology made work easier for the HSM operators with the following claim:

"...BlueScope in its case has responded to the evidence in relation to HSMICS in two ways. Firstly, it has focussed upon the manual operation of HSMICS in an attempt to demonstrate that operation of the system is easier, or at least not more difficult, when compared to the systems which preceded it. This approach is facile, and also (deliberately or otherwise) avoids the substance of the AWU's case. The issue does not have much to do with whether a QWERTY keyboard is more difficult to operate than the type of keyboard which preceded it, or about the number of mouse clicks which might be required to perform a certain function (although, significantly, Mr Willetts conceded that '...operators now require more computer skills than were required in the past...'). It is rather about the demands upon intellect, skill, experience and knowledge placed upon the operator in using HSMICS to operate the mill. Mr Lorenc conceded that it was not a question of pressing a button, but about the intellectual process behind making the decision to press the button and that it was facile to approach the matter by simply looking at what was physically involved in operating the computer system...

For example, it is not to the point that the QUEST feature of HSMICS might be relatively simple to operate manually. What is of significance is that, because of its introduction, DC operators are now required to take into account a large amount of additional information, mentally process that information, and make decisions on the basis of it (as Mr Lorenc conceded). That constitutes a work responsibility, and a work skill, that was simply not part of the DC operator's role in 1996.

Mr Lorenc conceded that when new sources of information are added which operators are required to absorb into their decision-making processes, that adds to the mental demands upon operators. He further accepted that when he made comments in his statement about the ease of using HSMICS he was talking about the task of physically navigating the system, not the process of decision making. Those concessions exposed the misconception underlying this part of BlueScope's case.

Secondly, BlueScope has contended that HSMICS, in a number of respects, has made the operators' job easier . For example, Mr Ziegelaar said....:'...the greater improved usability and simplicity of HSMICS means the operators can more quickly and easily resolve issues: they are also able to find information from previous occurrences or entered by their colleagues on how to easily solve problems: this has made the operator's job easier...'. However, this type of statement is misconceived because it confuses work outcomes and work processes (ie the nature of the work, skills and responsibilities required to produce the outcome).

It is undoubtedly the case that the various features of HSMICS has provided information to the operators that was previously not provided at all or to a far lesser degree. Thus, the operators are now required to mentally process a significant amount of new or additional information for the purpose of solving problems and making decisions. That is a new, or enhanced, work responsibility. The mental demands upon the operator have increased, meaning that the nature of the work has changed...

HSMICS provides the operators far greater access to information and...the information is expected to be and is used to support problem solving and decision-making to a significantly greater degree than before. Those facts alone support a finding of an increase in work value. They are not diminished by Mr Ziegelaar's opinion, based on negligible experience as an operator and expressed from the perspective of BlueScope management, that it has made the job easier . Similar statements from him and other BlueScope witnesses suffer from the same misconception and ought be rejected for the same reason..."

"...The introduction of the EMS feature of HSMICS has led to a very significant change in the quantity and quality of delay and problem reporting. Under the previous system which operated in 1996, operators filled out a paper report only if there had been a 'major problem' (based on a delay of over 20 minutes) or a dorot; other matters might briefly be mentioned in a shift report completed at the end of shift. Problem reports were sent to the mill supervisor for him to sort out; they were not seen again by operators.

• reports entered into EMS are accessible by anyone in the HSM: this allows interaction between operators, shift engineers and other staff (including, but only to a very limited extent, team leaders): operators can give feedback on events initiated by other operators, and thus the system allows for interaction between staff at all levels and a collective approach to problem solving;

• operators are prompted by the system as the diagnostic tasks that are needed to be performed, ie '...ensure actions to remove safety loss are considered...', '...provide description of loss including any changes...'. '...relevant alarms...', '...corrective actions taken next bar...', '...attach video, datalogger and NETDAQ traces...' and '...have you rezeroed AGC magnascales..?' (noting that not every one of these will be relevant to every situation);

• operators may attach (as the prompt suggests) relevant video of a problem or loss, datalogger records and NETDAQ traces to a report: this will involve operators having to identify what may be useful in resolving the problem;

• operators themselves can identify persons who should take action upon a report and identify action needing to be taken; and

• reports are not filled in simply because there is a delay: operators can anticipate problems and report them (including identifying causes and solutions): they can even propose better ways to operate the HSM which may and have been adopted.

There are numerous copies of EMS reports prepared by operators which demonstrate the degree of detail and analysis which now goes into event reporting. They may be compared to the limited number of reports under the old paper-based system which were put into evidence. The difference in the standard and extent of reporting is obvious..."

142 In his written submissions Mr Hatcher also highlighted the AWU claim of increased decision-making, diagnostics and quality control by HSM operators, viz:

"...Separately from the introduction of EMS, there has been a significant expansion in the extent to which operators engage in decision-making as to the operation of the HSM, diagnostics and quality control. Although this has been a continuing process, the event which has contributed most to this was the staff restructure of 2000. There were two relevant changes:

(i) the number of mill supervisors (now known as team leaders) per shift was reduced from two to one;

(ii) the position of process analyst (which featured heavily in the discussions of the diagnostic role in the 1996 decision of Hungerford J) was abolished; although some of the duties of the position were integrated into the new position of day shift operations engineer, the new position had a different focus on resolving issues that could not be resolved on shift rather than day-to-day operational decision-making.

The result of these changes in combination was, in practice, a shift towards the operators in the amount and proportion of decision-making, diagnostics and quality control work performed by them. The previous situation whereby mill supervisors would be called when a defect was identified in the strip to find the problem and determine what action should be taken largely - ie what Mr Ziegelaar described as them '...taking the lead...' on making decisions - came to an end, principally because of the unavailability of the now single mill supervisor. Although in 2005 there was a restoration of the second shift team leader position, this did not result in return of these duties to the team leaders. This was because the new team leader positions had a greater managerial /supervisory focus and less of an operational focus than before, with the result that the persons were recruited in these roles usually had no operational experience in the HSM..."

143 Mr Hatcher also raised the upgrading of the downcoiler in his written submissions, viz:

"...In 1997 the downcoiler equipment was fundamentally upgraded: the sideguards were totally replaced, the pinch rolls were replaced together with their framework, including the thoat guide and diverter gate, and a new hydraulic system to run it all was installed. The new equipment was more advanced and complex to operate than the old equipment. It required an increased number of adjustments to be made in order to maintain coil shape, including to the tension of the strip, tail tension, pinch roll force control, wrapper roll force control and tailspot offset. The DC operator was now required, using direct visual or CCTV observation, to make a judgement about which of these adjustments (in addition to the gap adjustment which had always been required) might be necessary to maintain coil shape. About a year or two later, a bottom pinch roll polisher was added to each downcoiler. As a result, two new functions were added to the work of the DC operator: firstly, a requirement to operate the polisher from the control pulpit and, secondly, a requirement for the DC operator when on the floor to drive the winch cable which drags the polishing stone across the pinch roll..." Submissions for BlueScope Steel

144 BlueScope Steel opposed any wage increase to the HSM operators. In written submissions which Mr Brotherson provided, the strict obligations flowing from the Work Value Change principle of the current wage fixation principles was emphasised, viz:

• the test to apply is a strict test with a high onus resting on the AWU in this hearing;

• any changes taken into account in previous work value assessments or, as part of structural efficiency measures, should not be included;

• any alteration in rates of remuneration can only apply to employees whose work has changed in accordance with the Work Value Change principle;

• there must be no likelihood of wage leapfrogging; and

• the AWU claim must be considered in the context of the "...internal award structure...", ie the wage structure of the Port Kembla steelworks as a whole.

145 Alternatively, Mr Brotherson submitted that, were I to conclude that an increase in the rates of pay for HSM operators was justified, it should be a minimal amount and be determined having regard to internal relativities within the steelworks. He maintained that there would be no justification for an across-the-board increase to all Level 3 HSM operators.

146 Mr Brotherson accepted that the datum point for consideration of the AWU claim was the 1966 decision of Hungerford J in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case and Mr Brotherson asserted in his written submissions that, aside from the introduction of a second walking beam furnace, there has been no real change in the purpose and operation of the HSM since 1996. In 1996 in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case, Hungerford J accepted that the Level 3 operators in the HSM occupied positions with a considerable level of accountabilities and responsibilities - and that has not changed. Mr Brotherson pointed out in his written submissions that HSM operators at Level 3:

"....are already classified at Level 16 of the matrix, ie the highest production operator level currently available at the Port Kembla steelworks (and) such positions have '...considerable accountabilities and responsibilities, and are generally considered to have a component of supervising or technical skills that would have historically been performed by staff employees... Aside from the introduction of a second walking beam furnace, the description (of the HSM) by Hungerford J is still valid, ie the essential purpose and operation of the HSM has not changed..."

147 In his written submissions Mr Brotherson placed emphasis on the structural improvements to the BlueScope Steel operations in Port Kembla flowing initially from the Steel Industry Plan which operated as far back as 1984, viz:

"....Successive agreements between the parties and applicable industrial instruments highlight the emphasis given by the parties to workplace change and business improvement. In return, employees have enjoyed various benefits including wage increases, lump sum payments [LSPS] and employment security..."

148 The comments made by Walton J - Vice President of the Commission in his recommendation of Monday, 13 May, 2002 in the Reference by the Minister for Industrial Relations of a Dispute Between BHP Billiton and the Australian Workers Union [Matter No.IRC 8095 of 2001 at pp.5 and 6] are particularly relevant in that respect, outlining in some detail the recent history of agreements affecting operations of the Port Kembla steelworks, viz:

"...The Steel Industry Plan had, as its primary aim, the provision of assistance to the steel industry to '...regain international competitiveness and provide job security for the workforce...'. That plan arose in circumstances where, according to the Steel Industry Advisory Council Report of 1983, there existed a marked decline in steel demand, excess world steel capacity and declining productivity in the local industry, together with upward labour cost pressures. BHP (referring in this sense to the then national corporate entity), at the time of the council report, saw its major problem as being the loss of competitiveness, resulting in a need to upgrade and modernise facilities and reverse the productivity decline.

The Steel Industry Plan required contributions by the Federal Government, BHP and the unions (at a national and State level). For present purposes, it is relevant to note that, in addition to the plan requiring a substantial investment from BHP, it would provide job security (on the proviso that the plan was successful). The unions were required to provide wage restraint, assist in the re-establishment of productivity levels (to the extent that it fell within their province) and strictly adhere to dispute settlement procedures.

The Steel Industry Plan operated in the period 1984 to 1988. At the end of the year 1988, the parties to the plan introduced alternative arrangements to ensure that '...the success achieved during the five year life of the plan would be maintained and built upon...'. In the result, there was developed a 'National Steel Industry Development Programme Agreement' between BHP Steel and steel industry unions. That agreement had as its aim '...achieving the inter-related objectives of the business goals of BHP Steel, the continued viability of its operations into the 1990's and the satisfaction of the aspirations of employees...'. Those objectives were particularised as constituting, for employees, inter alia , security of employment and improvements in conditions of employment and remuneration and, for BHP and investors, '...confidence in investments in a highly productive industry offering attractive returns in a stable industrial relations environment...'. Customers were to receive a reliable delivery of high quality steel products at a competitive price.

The 'National Steel Industry Development Programme Agreement' had within it a number of clauses which were similar to those later found in the steel industry agreements. In particular, the agreement provided a security of employment clause, a consultation clause and a resolution of disputes provision. It is noted that the resolution of disputes provision identified that during the five years of the Steel Industry Plan industrial relations had improved and that this was essential for the achievement of the objectives of the agreement. The agreement required strict observance to the dispute settling procedures which were agreed at a divisional level. The agreement operated with respect to the BHP Steel Group which included operations at Port Kembla, Whyalla and Western Port. It operated for three years.

The National Steel Industry Development Programme Agreement was proceeded by a series of agreements of a similar character, some of which were directed specifically to the Port Kembla steelworks. One such agreement came into operation in 1989. There were similar agreements made throughout the 1990's until the most recent Steel Industry Agreement applying at the Port Kembla steelworks which operated for the period 1998 to 2001...

There are a number of features of the terms of the Steel Industry Plan and subsequent steel industry agreements which are significant in the current context:

1. The agreements were designed to make the steelmaking operations in Port Kembla efficient, internationally competitive and give a good business return to investors.

2. In order to achieve this outcome, the plans and agreements sought to bring about a number of important changes, including improvements in labour productivity, reductions in the costs of operations (matched with a process of managed wage and conditions changes for employees) and a stable and benign industrial environment. The agreements provided for a continuous process of change, subject to requirements for consultation and dispute resolution mechanisms.

3. For their commitment to these arrangements, the unions and their members received a number of benefits. Paramount amongst these benefits was the provision of security of employment.

4. Employment security was provided in the plan and the subsequent steel industry agreements in various forms. In substance, these arrangements had two main elements:

(i) subject to various conditions, an employee displaced as a result of changes in the companies' operations and workplace would be retained in employment by the companies, unless that employee elected to leave employment voluntarily; and

(ii) employment security was linked to the fulfilment of certain objectives: in the plan, job security was granted provided the plan was successful: in the most recent agreement, employment security was made subject to the particular provisions of the employment security clause...and '...the implementation of actions and undertakings outlined in (the) agreement...':

Neither the plan nor the agreements, specified how a failure to meet a term attached to the provision of employment security would be remedied. It is not clear whether such a failure would give rise to the right to terminate the agreement or the plan.

It would appear that the plan and the agreements were broadly successful in meeting their stated objectives. This is not merely ascertained by reference to the desire of the parties to continue the plan in the form of various agreements and the renewal and improvement of the agreements over a substantial period of time. The material before the Commission would suggest that significant improvements for both the companies and their employees were afforded by the operation of those agreements (and the collateral processes of award making with the Commission).

The companies are now one of the world's most efficient producers of steel and have experienced substantial improvements in labour productivity during the period of the operation of the plan and the agreements. There has been a 72% reduction in the employees of the company. Production levels have steadily increased from 1988 and by the 1990's reached levels commensurate with any earlier production levels since 1977 (although it should be noted that many different factors have contributed to this trend). Further, BHP is at the low end of the international steel industry comparative cost curve as a result of the restructuring of its operations..."

149 Mr Brotherson expressed concern in his submissions over the possibility of upsetting the relativities between HSM operators and other employees in the Port Kembla steelworks. In particular, his written submissions highlighted the current relationship between Level 16 of the matrix for production staff and graded trades positions, viz:

Per Week $ Level 16 of the matrix 1,135.20 Level 4 Graded Trades - Mechanical 1,136.90 Level 4 Graded Trades - Electrical 1,161.40

Any increase in rates of pay to the HSM operators at Level 3 would, in Mr Brotherson's view, disturb existing relativities with trades staff. (Positions at Levels 5 and 6 of the Graded Trades Model are by appointment only.)

150 As far as staff positions in the Port Kembla steelworks are concerned, Mr Brotherson indicated in his written submissions:

"...For remuneration purposes, BlueScope staff are not subject to an industrial instrument. The remuneration of staff is determined by a relevant salary band and includes components of base salary and short term incentives (or 'at risk' components). In respect to the staff salary bands team leaders are in band B1 and blast furnace system controllers are band A3. The position of staff officers within a salary band is subject to performance. Staff officers are appointed to their positions. The blast furnace system controllers have managerial requirements relating to disciplinary issues and desirable requirements of tertiary engineering, science or process qualifications..."

151 Whilst Mr Brotherson acknowledges that the AWU is confined to Level 3 HSM operators and there is no changes contemplated for the Learner Operator, Operator 1 (floor duties) and Operator 2 (WBFRM assistant and DC operator), the vast majority of existing HSM operators would be assigned to the new Operator Level 5 and receive a very substantial wage increase - $104.02 per week (9.16%) with the other existing Level 3 operators receiving a wage increase of $52.00 per week (4.58%). Mr Brotherson commented in his written submissions that:

"...the result of such a structure and increases would include:

• proposed HSM Operator Levels 4 and 5 sitting outside the matrix and being the highest paid production operators at the Port Kembla steelworks;

• the margins between Level 3 and proposed Level 4 and between proposed Level 4 and proposed Level 5 are significantly greater than the margins between any two levels of the matrix;

• proposed HSM Operator Level 4 sitting above Graded Trades Level 5;

• proposed HSM Operator Level 5 sitting above Graded Traded Level 6 for both mechanical and electrical tradespersons;

• proposed HSM Operators 4 and 5 would be paid in excess of tradespersons on their crew, by in the case of electricians [Graded Trades 4], currently the highest paid wages position on the shift crew, by margins of $25.80 per week (for proposed HSM Operator Level 4) or $77.82 per week (for proposed HSM Operator Level 5); and

• in respect to staff officers, proposed HSM Operator 5 would be sitting $80.78 per week below the mid point of salary band B1 (team leader) and $116.22 above the mid point for salary band A3..."

152 Mr Brotherson argued in his written submissions that:

"...the AWU offers little reasoned explanation for the new structure it proposes. Mr Baraldi emphasises the length of service of many operators and also refers to the need to provide an '...incentive for people to stay within their specialised areas...'. It can be speculated that the proposal is designed to create an image to maximise the monetary claim made, rather than meet proper work value grounds, or have any operational merit. The company has not argued that the matrix is an impediment to the AWU claim. But the company does say that in a disputed situation such as this, very cautious consideration must be had to anything outside the matrix or the other issues of relativity referred to..."

153 It is Mr Brotherson's view that the AWU claim is, in effect, an attempt to establish a "...service payment...", ie a further salary level depending on length of service. He indicated in his written submissions that:

"...for example, Mr Baraldi states that WBFRM operators have an average 15 to 20 years experience. He refers to '...senior level...' and elsewhere '...senior operator...'. Experience arising from service is common in all jobs - it is not in itself a basis for work value. To the extent the AWU may say this experience contributes to an employee's contribution to issues such as decision-making, problem solving or involvement in diagnostic work, that should be rejected. The evidence in terms of existing operators does not support that all operators across the board step up to any particular additional level. That is an issue of individual performance in a role..."

154 Mr Brotherson describes the proposed new Operator 4 position (DC operator/WBFRM assistant) to which a Level 3 operator would progress after a transitional period of twelve months, as a "fallacy". He pointed out in his written submissions that the two functions - DC operator and WBFRM assistant - are not used at the same time and he asserted that:

"...there is no claim, let alone evidence justifying work value increases to either the DC operator role or the WBFRM assistant role. In the circumstances, to suggest the combined role could warrant an increase in remuneration is not sustainable. In the case of the WBFRM assistant, those skills are a pre-requisite for, and contained in the role of the WBFRM operator. It is a position that would apply to few existing employees - currently two..."

155 The proposed new Operator 5 position was described by Mr Brotherson as the "...centrepiece of the AWU claim..." and "...it confirms that the focus of the AWU claim is for the WBFRM operator and the CBFM operator...". Under the AWU claim, the vast majority of the current Level 3 operators would go directly to the new Level 5. Mr Brotherson commented in his written submissions that, according to the AWU proposal:

"...there is no limit proposed to the number of HSM operators who would go into this role - it is subject only to obtaining the current Level 3 skills and the vaguely defined transitional period. Employees in other positions at the Port Kembla steelworks (including the HSM) on comparable base rates of pay (staff or wages) would:

• in the case of tradespersons, have completed an Advanced Diploma in Engineering: no formal qualifications are pre-requisites for proposed Operator 5; and

• in the case of staff, be subject to annual performance review and determination of base income on that basis..."

156 In summary, Mr Brotherson rejected the changes identified by Mr Hatcher as grounds for a wage increase on the basis of a proper work value assessment. He indicated in his written submissions that:

"...BlueScope's position is that the changes identified by the AWU can be categorised as:

(a) being contemplated by the 1996 work value and the position descriptions from that time;

(b) consistent with the structural efficiency principal and/or the requirements for change envisaged by the industrial arrangements between the parties;

(d) otherwise not constituting such a significant net addition to work requirements to warrant the creation of a new classification or upgrading to a higher one.

The focus on specialisation provided for in the 1996 work value means that it is inherent that coming to terms with new methods and new technology is part of the evolutionary process of change. Re-training is part of that process. Further, there is no evidence that the training periods for operators will be extended by anything that has occurred since 1996. Indeed, training requirements are still within those identified by Hungerford J in 1996.

It is also pertinent that new operators coming from other processes like the HSM (eg the tin mill and CRM) are likely to pick up work quicker than fresh starters, ie there is a transferability of skill within BlueScope... Aside from the removal of the depiler position (a Level 1 role) from the WBFRM area in 2001, manning levels are unchanged since 1996.

Tonnages through the HSM have increased over time. However, the product now going through the HSM faster is typically product which is easier to roll and requiring fewer interventions by operators. There is no evidence of any significant change in loss events (eg cobbles and dorots) as a result of increased tonnage or increased need for operators to report events in EMS since WBF 2. There has been, if anything, a reduction in coilbox held events since WBF 2..."

157 Mr Brotherson commented further in his written submissions as follows:

"....A particular issue for the company, and which will trouble the Commission, is the across-the-board nature of the AWU claim, ie claims for effectively all operators to receive wage increases in circumstances where there is a limited range of evidence and dispute about what it means in important aspects such as diagnostics and decision-making..."

It is Mr Brotherson's perception that, in fact, the AWU has "...dumbed down..." what the HSM operators actually did to justify the wage increase in 1996 which was granted to them by Hungerford J in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case and that much of what the AWU now alleges was new work by the HSM operators was, in fact, performed by them in 1996. Mr Brotherson referred in that respect to the evidence given (by a witness called on behalf of BHP) in the 1996 proceedings and which Hungerford J recorded in his decision (at p.63) to the effect that the HSM operators had "...the sole decision-making responsibility...concerning the operation of the equipment..." and that the operators had "...become truly competent and I would say that it was always the intention that the operators would be competent and carry out those decisions...". Later in his decision (at p.64) his Honour recorded the evidence that the responsibilities of the HSM operators extended to stopping the process and that "...decision-making responsibility has extended as the operators have become truly competent and these days, in general, I would consider a large percentage of our operators are truly competent in the areas that they are operating...so they are seeing a large degree of autonomy in that regard...".

158 In my opinion, as Mr Corkish suggested in his evidence, it is not appropriate to tamper with the existing matrix by establishing a new Level 17. The current matrix is outside the BlueScope Steel Award. It is an internal mechanism applying throughout the entire Port Kembla steelworks for the assessment of wages generally for production staff. To create a new Level 17 in the matrix would no doubt have implications for the rest of the steelworks and take my decision in this matter far beyond what has been set by the S.146A referral agreement from which I now derive my entire jurisdiction. And, in fact, the evidence which has actually been adduced in these proceedings does not lead me in that direction: it was confined to the HSM alone. To alter the matrix in any respect would no doubt promote claims for other wage movements for certain other classes of steelworks employees which would be contrary to the Work Value Change principle of the current wage fixation principles on which the AWU claim in these proceedings ultimately depends.

159 In any event, I note in that respect that from the outset Mr Hatcher made his position clear in the proceedings concerning the effect of the AWU claim on behalf of the HSM operators with respect to the matrix, viz:

"....Let me make this clear at this point, we're not asking the Commission to do anything to the matrix. We're asking in our claim that the Commission award new classifications specific to the hot strip mill. That is, we're not seeking to do anything which has any consequences or implications for anybody outside the hot strip mill. And to the extent that we seek new classifications, we've deliberately confined them to their descriptions as they appear in the award, with the addition of two new levels. So we make it clear that these are new classifications in the hot strip mill only and not leading to the creation of some general matrix level which could have application in any place but the hot strip mill..."

160 Mr Hatcher confirmed that position again in his written submissions at the conclusion of the hearing when he wrote:

"...The AWU does not seek any variation to the 16 level matrix which BlueScope applies internally to its operational workforce at Port Kembla. The AWU has expressly disowned any suggestion that what is sought is a 17th level in the matrix (which in any event is not and never has been the subject of any award provision). Accordingly, there is no basis for the concern, expressed in BlueScopes' evidentiary case, that the grant of the AWU's claim would in some way compromise the integrity of the matrix. In the alternative, if there is any concern on the part of the Commission about ordering the establishment of new classifications for the HSM, the Commission may instead provide for the increases claimed, or any increases found to be appropriate, to be awarded by way of new allowances. As was made clear in the evidence of Mr Corkish, the matrix is exclusive rather inclusive of allowances, so that there are already employees who are receiving the Level 16 rate plus an additional allowance..."

161 Mr Hatcher referred to the requirement in the Work Value Change principle of the current wage fixation principles to protect against leapfrogging as "...somewhat anachronistic, being referable to a different era of industrial relations...". In speaking of "leapfrogging", I think Mr Hatcher is referring also to wage relativity issues. I am not so convinced that "leapfrogging" and wage relativity issues are the dead letter that Mr Hatcher is suggesting however, particularly in large, complex organisations such as BlueScope Steel where wage movements have usually flowed generally to all staff at the one time and where employees tend to look over their shoulder at the wage levels of their fellow employees. 162 Nevertheless, Mr Hatcher added in his written submissions that in this case:

"....there is no basis for leapfrogging to occur. The general wage movements of employees at the steelworks are now settled for some years to come. All unions are parties to a strict 'no extra claims' commitment. BlueScope has very strong sanctions available to it under Work Choices against any industrial action which occurs whilst the current PSA is in force. Whilst unions may run work value arguments during the currency of the agreement, they fall to be considered pursuant to referral agreements by this Commission, provided the disputes procedure is adhered to (ie there cannot be industrial action in support of the claim). The Commission will, of course, decide such cases strictly on their merits under the Work Value Change principle, not by any reference to any notion of flow on or leapfrogging. There is no claim by any union '...in the pipeline...' which bears any relationship with the AWU's HSM claim. In respect of staff employees, their remuneration is decided in direct negotiations between BlueScope and individual employees, making leapfrogging or flow-ons there impossible..."

163 As Mr Brotherson has suggested in his submissions, the AWU claim for HSM operators must be considered having regard to the structural efficiency measures which goes as far back as the 1984 Steel Industry Plan and the obligations generally for all steelworks employees flowing from their acceptance of the structural changes which BlueScope Steel is continuing to implement in the Port Kembla steelworks. From those structural improvements to steelwork operations, BlueScope Steel has certain benefits but the employees have received certain benefits as well - wage increases, lump sum payments and, most importantly, a level of job security which they might otherwise have lost in the current uncertain economic climate. 164 More recently, the AWU claim in this hearing must be considered in the context of the recently concluded negotiations, culminating in the retention of the current BlueScope Steel Award as a PSA with substantial wage movements generally across the Port Kembla steelworks - 5% early in 2009, a further 5% early in 2010 and 4½% early in 2011. It would be anticipated that, in accepting those wage movements, the AWU would generally be acknowledging that no extra claims would be made during its life (outside the limitations of specific work value assessments which are recognised in Clause 5, No Extra Claims of the BlueScope Steel Award). It is, of course, a long established policy of State industrial tribunals that industrial instruments such as the BlueScope Steel Award should not be opened within their nominal term unless there are good and cogent reasons to do so but the parties should remain committed to those instruments and restricted to the benefits which flow from them [the Soap and Candle Makers Case (1946) AR 264]. The ink is not yet dry on that agreement of the parties on the current BlueScope Steel Award and BlueScope Steel is entitled to resist any further wage movements outside the terms of the agreements reached. But the current AWU claim for the HSM operators is contemplated under Clause 5.

165 Historically, the Commission has assessed what it regards as a fair and reasonable wages to employees based essentially on the valuation of the work actually performed by them. In the Crown Employees Scientific Officers Award Case (1962) AR 250, to which Mr Hatcher referred in his written submissions, the Full Bench of the Commission (Cook, McKeon and Beattie JJ) commented in that respect (at p.278):

"....The Commission's wage-fixing function can be regarded as a valuation of work. Insofar as it does involve the valuation of work, the function is not limited to the ascertainment of the market value or of any absolute value discoverable by other means. The function truly understood is to consider all relevant features of the work, to take into account all relevant material, including such as will furnish a guide to fair valuation, to bear in mind the contentions of the parties to the arbitration and, in the light of these things, to fix amounts which the tribunal itself deems to be just and reasonable to meet the circumstances of the case. The amount so fixed will represent the tribunal's view of the value of the work..."

166 More recently, in the Public Hospital Nurses (State) Award (No.4) Case (2003) 131 IR 17 the Full Bench of the Commission (Wright J - President, Boland J and Patterson C) had this to say (at p.27):

"...A tribunal charged with determining whether the tests under the work value principle have been met must carefully sift through the material that has been placed before it and separate out those changes which have occurred to the nature of the work, skill and responsibility of employees or to the environment in which the employees work and which have not previously been the subject of compensation. An objective assessment then has to be made as to whether the changes that have occurred amount to such a significant net addition to work requirements as to warrant the creation of new classification or upgrading to a higher classification. The change is to be measured from the last time wages were increased on the basis of work value or from the date of operation of the second structural efficiency adjustment allowable under the 1989 State Wage Case whichever is the later. An assessment is then to be made as to how that change should be measured in money terms. Such assessments will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work..."

167 In assessing the appropriate rate of pay for one group of employees, the Commission has often had regard to the work performed by similar groups of employees. That is the concept of comparative wage justice. Certainly, when in 1996 in his decision in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case, Hungerford J contrasted the work of the HSM operators at Level 3 with the position of Slab Caster Operator 5, he was giving some attention to the concept of comparative wage justice. But even where similarity of work has been established, it is not enough to look merely at the rates of pay awarded, distinct from other conditions of employment in each case. And the concept of comparative wage justice has also been modified by the current wage fixation principles. 168 As Mr Hatcher pointed out in his written submissions: "....in the Metalliferous Miners Case (1928) AR 466 (at p.471) the Commission established the principle that the rate of pay awarded in one industry is not to be accepted as a guide to the rate to be awarded in another unless the tribunal is satisfied that the work done in each is fairly comparable. This principle was entrenched and indeed extended by the Commission in the Crown Employees Scientific Officers Award Case (at p.283) where the Commission rejected even any comparison between different groups of employees within one employer - there the State public service. Although the Metalliferous Miners principle was modified in the Crown Employees - Legal Officers Award Case (1972) AR 376 (at pp.391 and 392) to allow for work value comparisons to be made with other groups of employees performing dissimilar work, this modification was subject to two strict conditions: firstly, that there had been a '...proved historical relationship...' between the groups of employees being compared and, secondly, the dissimilar work of the comparator group has to be '...shown by documentary or oral evidence to be comparable in value...'. Therefore, attempts by BlueScope to draw comparisons with the dissimilar work of staff employees or trades employees as a basis for determining the matter should be rejected as contrary to the modified Metalliferous Miners principle. There is no evidence of any industrial nexus or established wage relativity between HSM operators and trades or staff groups. Nor is there any evidence to establish comparability in the value of work performed..." I agree with Mr Hatcher's comments with respect to the current claim by the AWU for the HSM operators. The upshot is that, in my opinion, what is currently paid as wages or salaries for other groups of employees in the Port Kembla steelworks no longer provides any effective guide for the rates of pay for the HSM operators. Equally, in this hearing what is paid as wages to HSM operators should provides no real guide to what is paid to any other groups of employees in the steelworks. 169 To satisfy the Work Value Change principle from the current wage fixation principles for any particular group of employees, there must be "...changes in the nature of the work, skill and responsibility required or the conditions under which work is performed..." to the extent that there has been "...a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification...". The fact remains that in the unsuccessful negotiations for the HSM operators, BlueScope Steel management made an offer to them which, whilst it may have lacked some precision, still represented a significant adjustment to their rates of pay (which the employees refused). More significantly, to my mind, that offer constituted a recognition that the Level 3 HSM operators, or at least a substantial number of them, had moved into a new classification, ie as staff positions. Notwithstanding Mr Brotherson's submissions in this hearing to the contrary, that must represent an acknowledgement by BlueScope Steel that the changes to the work of those HSM operators had reached a stage where they had moved into an a new classification, even though the employees themselves had rejected that new classification.

170 Furthermore, the fact that much of the change to the work of the HSM operators was evolutionary in nature, as Mr Brotherson suggested in his submissions, does not, in my opinion, act as any real barrier to a successful wage increase based on work value changes. As Mr Hatcher indicated in his written submissions, Hungerford J in 1996 in the BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award had spoken of the work changes on which he based his wage increase to the HSM operators as "...cumulatively significant..." and "...individually incremental in nature...". Mr Hatcher also referred in that respect to the decision of Liddy J of the former Commission in the Mineral Sands (State) Award Case (1980) AR 107 and, in particular, his Honour's comments (at p.114), viz:

"....'Significant' does not necessarily mean 'major' but '...to a meaningful degree, not insignificant, not immaterial, not trivial...'. To be significant, a factor does not have to be dramatic, sudden or eye-catching. A change, as in this case, may occur subtly, gradually, even covertly, but on examination prove to be significant..."

And as the Full Bench of the Commission (Walton J - Vice President, Grayson DP and McLeay C) indicated in the Health Employees Pharmacists Award Case (2003) 132 IR 244 at p. 282:

"...The test of whether there have been changes in work value such as to satisfy the relevant wage fixing principles is necessarily a global one. It is not amenable to microscopic evaluation of discrete functions of the particular classification or classifications under review..."

171 Then there are the views I expressed in my unreported decision of Monday, 20 December, 1999 in the BHP Steel (AIS) Pty Limited - O'Brien's Drift Restructured Ironworker Classifications Rates of Pay Award [Matter No.IRC 3343 of 1999]. In that case there was an argument that changes to the work of a particular group of steelwork employees be expressed in purely mathematical terms, ie the previous rate of pay plus an amount to represent additional supervisory responsibilities placed on them less a discount for the fact that not all of those supervisory responsibilities were transferred to the employees equals the new rate of pay. I rejected that argument, commenting (at p.19) that:

"...I hold some doubts that an exercise of that nature produces an entirely fair result: sometimes the outcome of such an exercise is greater than the sum of its parts..."

As the Full Bench indicated in the Health Employees Pharmacists Award Case , I should treat the evidence before me in this hearing and any effect that any change may have on the HSM operators globally without examining each particular change in isolation and assessing it separately. 172 Furthermore, as Mr Hatcher submitted, a work value assessment may be both retrospective and prospective in nature and may take into account changes which are yet to be implemented but are already known [the Crown Employees (Teacher in Schools and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254]. Mr Hatcher would argue that the foreshadowed gas safety functions and the forthcoming role for the HSM operators with NETDAQ would fall under that class of work.

173 As I see the position, there still, in fact, remains some confusion over what may genuinely be expected of the HSM operators. Mr Lorenc claimed that the position descriptions he provided as part of the negotiations with the HSM operators was "signed off" by them but that is disputed by Mr Baraldi. I must have some legitimate basis on which this work value assessment for the HSM operators is made, however, and, in the circumstances, my decision is based on the position descriptions provided to me as part of Mr Lorenc's evidence in the hearing [RL2 to RL6]. I would expect the HSM operators at Level 3 to accept the duties and responsibilities outlined in those documents (apart from relief in salaried positions over which there remains some dispute but with respect to which I believe there should be further discussions between the parties).

174 That having been said, the evidence before me in this hearing has convinced me that there has been a substantial change in the work of the Level 3 HSM operators over recent years. There is both an increase in the type and quality of work they perform and the responsibilities which now fall on them. The reduction in the number of supervisors, and the substantial changes to their role, the abolition of the process analyst position and the removal of the labour gang and crane operator positions must inevitably mean that additional work is placed on the HSM operators, in my opinion. 175 There are still many issues raised by Mr Hatcher which I believe that I should immediately discount as relevant for my consideration in this hearing since they are matters which extend across the whole steelworks and, consequently, would have been taken into account in the general movements in salaries and wages which the steelwork employees have already received. Clearly, as Mr Brotherson submitted, much of the restructuring of the HSM either flowed out of the negotiations in 2001 as part of the structural efficiency measures introduced across the Port Kembla steelworks of BlueScope Steel at that time or would (or should) have been considered in the more recent wage negotiations which, after all, has produced a very positive result for the BlueScope Steel employees generally. The wages paid to the employees in 2001 were struck on the basis of acceptance of the structural efficiency measures and to take them into account again as part of the current work value assessment for the HSM operators would clearly be a case of double-counting. I also have in mind the absorption by the HSM operators of the gas safety functions, which on the basis of the uncontested evidence before me is being adopted across the entire steelworks.

176 Nor do I believe that, as a whole, the introduction of new technology arising from HSMICS, EMS, GUI, SIS and associated functions is particularly persuasive, on its own, as a basis to justify a wage increase under the Work Value Change principle. New computer technology is hardly an isolated phenomenon for the HSM. I would expect it to be occurring throughout the entire steelworks to varying degrees - indeed, for any employment situation. And whilst it is obviously true that the computers do provide additional information hitherto not available, I am satisfied that HSMICS is user friendly, as it has been described by Mr Lorenc, Mr Ziegelaar and Mr Willetts in their evidence. In effect, in my opinion, the additional responsibilities falling on the HSM operators flowing from the new computer system and the simplification of that system to a large extent serve to cancel one another out. Whilst additional work flows to the HSM operators from the new computers, they also provide assistance to the HSM operators. 177 But that, as I perceive it, is not the nature of Mr Hatcher's claim on behalf of the HSM operators. He refers in his written submissions to the fact that the Level 3 HSM operators "...are now required to mentally process a significant amount of new or additional information for the purpose of solving problems and making decisions..." which he described as "...a new, or enhanced, work responsibility..." and suggests that "...the mental demands upon the operator have increased, meaning that the nature of the work has changed...". It is not HSMICS, and the new computer systems associated with it, which counts in a work value assessment, but the demands those computers now place on the employees being assessed. I am satisfied that there has been a significant net addition to work requirements flowing from that new technology.

178 Also, notwithstanding the evidence of Mr Ziegelaar and Mr Willetts to the contrary, I am also satisfied that the diagnostic role of the HSM operators, particularly for the WBFRM operator and the CBFM operator, has increased substantially. In 1996 in his BHP Steel (AIS) Pty Limited - Hot Strip Mill Restructured Ironworker Classifications Rates of Pay Award Case Hungerford J was prepared to accept that from 10% to 15% of the diagnostic function fell on the HSM operators. As Hungerford J indicated in his decision (at p.78), "...one may not be too precise about percentages of that nature..." but I hold no doubt that there has been a significant increase in the diagnostic, decision-making and quality control role performed by the HSM operators to the extent that, to my mind, they now perform the lion's share of that work in the HSM. Mr Baraldi's assessment that the HSM operators now performed 60% of the diagnostic work associated with the operation of the HSM appears to me to be a fair assessment, in all the circumstances.

179 Furthermore, I hold no doubt that the commissioning of WBF 2 has had a significant impact, in varying degrees, on the work of all of the Level 3 HSM operators. It was acknowledged by BlueScope Steel in an internal document [HSM3000] that for a "typical day" operating the two walking beam furnaces simultaneously, there would be increased throughput that would "...add to mental demand..." on the HSM operators. And there has been greater throughput from the simultaneous operation of WBF 1 and WBF 2.

180 These are factors which give some substance to the AWU claim on behalf of the HSM operators. But I reject the AWU claim for the two new Levels for HSM operators - Level 4 and Level 5. I am concerned to preserve the integrity of the existing matrix and graded production positions generally in the Port Kembla steelworks. It would therefore appear to me to be appropriate that the existing relationship between a Level 3 HSM operator and Level 16 of the matrix be retained but that additional allowances, calculated for all purposes of the employment, be paid to compensate the existing Level 3 HSM operators for what I have assessed as additional responsibilities falling on them on the basis of a work value change since 1996, viz:

(i) an allowance of $32.00 per week shall be paid to employees who have obtained the necessary skills and accreditation to work in the position of either the WBFRM operator/DC operator or the CBFM operator/DC operator; and

(ii) an allowance of $16.00 per week shall be paid to employees who have obtained the necessary skills and accreditation to work in the position of DC operator/WBFRM assistant.

I appreciate that those allowances may, as Mr Brotherson has emphasised in his submissions, upset existing wage relativities for the HSM operators and some trades staff paid according to the Graded Trades Model to some degree but Mr Corkish conceded in his evidence that already there was some overlap in the rates of pay for production staff and trades based groups in the Port Kembla steelworks. And the wage relativities between the production staff and the trades staff appears to me to have had no established nexus in the past, apart from as some type of rough guide between the two groups. 181 However, I also note that most production employees at Level 16 of the matrix, comparable trades staff and, certainly, staff officers occupy their positions by appointment, ie based on individual performance and meeting proper performance standards. I consider that Level 3 HSM operators have now entered the territory where I would expect that condition to apply to their employment. Therefore, in future HSM operators attracting either allowance should be by appointment. That requirement would apply only to future employees, however. It should not be construed as applying to existing Level 3 HSM operators. But I hasten to add, that should in no way be construed as meaning that BlueScope Steel would lose its right to remove such allowances from any employee who fails to perform to the standard required of the employees to receive those allowances. 182 Mr Baraldi, Mr Potts and Mr Munn impressed me as very experienced and competent operators for the HSM and it is their evidence which provides a yardstick for the rest of the current Level 3 HSM operators. I do not believe that view of those three employees is open to any serious challenge by BlueScope Steel. As I noted earlier in this decision, in the offer made by BlueScope Steel to the HSM operators during the unsuccessful negotiations, BlueScope Steel appears to have recognised the equal status for the existing Level 3 HSM operators when it produced a proposal which, in effect, would have likely led to a general movement in the remuneration to them of in the vicinity of either $40.19 per week or $127.42 per week. 183 But are Mr Baraldi, Mr Potts and Mr Munn atypical HSM operators? That seems to be a view which Mr Brotherson advanced, particularly in his cross-examination of Mr Baraldi. There may no doubt be different capabilities for different HSM operators but my decision can only be based on the evidence that has been produced in this hearing and that means I must rely principally on the evidence of Mr Baraldi, Mr Potts and Mr Munn on the nature of the work. And there is no basis on the evidence available to me to distinguish between those three employees and other existing Level 3 HSM operators - other than the distinction the AWU has itself made with the proposed Grade 4 and Grade 5 (and the different allowances I have awarded for the WBFRM operator/DC operator or the CBFM operator/DC operator, on the one hand, and the DC operator/WBFRM assistant, on the other hand). I accept that, even within the two-tier allowance structure I have adopted, there would be different HSM operators with different standards of work. The allowances I have awarded may therefore involve some fairly rough averaging with some employees possibly having a legitimate claim for a higher remuneration if treated individually but, the AWU claim does not permit me to consider the claim individually but with respect to the employees as a group.

184 I direct the parties into discussions to give effect to this decision and formalise the allowances I have awarded.

Corkish, Peter manager of human resources Baraldi, Boris hot strip mill operator Jarrett, Ian* former throughput manager Lorenc, Richard operations manager Munn, Craig hot strip mill operator Potts, Neville hot strip mill operator Smith, Greg* process engineering manager Willetts, Robert operations improvement engineer Ziegelaar, John technology manager

• Evidence admitted without the need for cross-examination.

CBFM the pulpit for coilbox and finishing mill

Citec HMI windows-based server interface systems for HSMICS

DSP the established dispute settlement procedure for the steelworks [Clause 36 of the BlueScope Steel Award].

EMS the Event Management System for HSMICS

GUI the Furnace Graphical User Interface system

HOS the Heating Optimisation System which regulates the heat of the furnaces

HSMICS the new Hot Strip Mill Information and Control System for the HSM, installed in 2001

LCD current television screens for computers in the HSM

MCC the previous mill control computer system replaced by HSMICS

NETDAQ Network Data Acquisition System - a function of HSMICS

QUEST the Quality Expert System - a function of HSMICS

QWERTY the new mouse operated Window based keyboard system for HSMICS

PSA a preserved State agreement for the purposes of the Work Choices legislation

TOSDIC the former tracking and slab identification computer interface system for the HSM replaced by HSMICS

VAX the previous system to monitor any coil defects

WBF the walking beam furnace area of the HSM

WBF 1 walking beam furnace No.1 - the original furnace

WBF 2 walking beam furnace No.2 - a second furnace commissioned in 2006

WBFRM the pulpit for the walking beam furnace and roughing mill area of the HSM.

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