Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (No 3), Re [2004] NSWIRComm 134

APPLICANT Mr S Crawshaw SC with Mr A Hatcher of counsel New South Wales Teachers' Federation

RESPONDENTS Mr P Ginters of counsel Director General - Department of Education Managing Director - TAFE NSW LEGAL REPRESENTATIVES: Mr G Boyd (Crown Solicitors' Office)

INTERVENORS Mr S E Prince of counsel Minister for Industrial Relations Ms J Burton (Crown Solicitors' Office)

Mr A Searle of counsel Labor Council of New South Wales

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: WRIGHT J, President WALTON J, Vice-President BOLAND J GRAYSON DP MCLEAY C

Matter No IRC 3749 of 2003 CROWN EMPLOYEES (TEACHERS IN SCHOOLS AND TAFE AND RELATED EMPLOYEES) SALARIES AND CONDITIONS AWARD - APPLICATION BY NSW TEACHERS' FEDERATION FOR A NEW AWARD

DECISION OF THE COMMISSION [2004] NSWIRComm 134 1 On 19 December 2003 the Full Bench made a new award known as the Crown Employees' (Teachers in Schools and TAFE and Related Employees) Salaries Interim Award 2004: See Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award [2003] NSWIRComm 479. The Interim Award was made following lengthy proceedings arising out of an application by the New South Wales Teachers' Federation ("the Federation") for an increase in salaries of 25 per cent and other matters.

2 The Interim Award provided for an increase of 5.5 per cent in all salary rates under the Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award. The increase applied from the beginning of the first pay period to commence on or after 1 January 2004. The Interim Award was made for a period of six months. In granting the increase the Full Bench said: 30 We have given particular consideration to the submissions of the respondents regarding the implications of any salary adjustments that have been made in the past and the basis of those increases. We have not reached any concluded view on the full extent to which those past adjustments have compensated for increases in work value. We are, however, of the view that the increases in rates of pay for teachers since 1991 have not compensated them to the extent submitted by the respondents and in that respect, on the basis of the evidence and submissions in these proceedings, we are satisfied beyond any doubt that there has been a significant net addition to the work requirements of teachers since the datum point in 1991 such that it would warrant an increase in salaries.

31 On the basis of the material presented to us we consider the change in teaching work has been profound and that there are features of this matter that warrant the finding that a special case has been made out. Consequently, we consider there is greater scope for ultimately awarding more than the six per cent increase over two years as proposed by the respondents.

32 In arriving at this interim view we have also taken into consideration the Minister's submissions regarding the economic impact of the claim. We have not formed any concluded view on the ultimate increase to be awarded. However, the interim increase we have decided upon would not on the economic evidence, in our opinion, have adverse implications for the economy. In this regard, we note the New South Wales economy is in good shape at the present time and the outlook is favourable. In these circumstances we consider it to be unnecessary at this interim stage to address in any more detail the issues arising from the Minister's submissions except to note that in answer to a question from the Full Bench Mr Kite indicated that it was not the Government's position that because it had budgeted for wage increases in the public sector of 3 per cent per annum over the next two years the Commission should not award more than those amounts. Mr Kite said that his client's role in the proceedings was to put economic information before the Commission to allow the Full Bench to exercise its statutory functions having regard to the requirements of s 146 of the Act. 33 As we have already noted and as the Full Bench observed in Re Public Hospital Nurses' (State) Award (No 3) (2002) 121 IR 28 at [124], any interim increase must be approached cautiously so as not to embarrass the final result. Moreover, the applicant for an interim increase must show there are special circumstances existing that would justify granting such an increase, apart from the fact that the wage fixing tribunal has accepted that in any final decision wage increases will be granted: See s 16(4) of the Industrial Relations Act . 34 Bearing in mind those limitations, we nonetheless consider that an interim increase is warranted essentially upon the grounds put for interim relief by Mr Crawshaw SC for the Federation. We take particular note in that regard of the undertakings provided by the Federation in its written submissions on interim relief and the further undertakings made by Mr Crawshaw in his oral submissions. In this latter respect, Mr Crawshaw was questioned by the Full Bench regarding reports that the Federation may have been planning industrial action in the new year. We were informed that no final decision had been made by the Federation in this regard and that, in any event, the Federation undertook that it had no intention of taking any form of industrial action in relation to any decision given by this Full Bench.

35 We would add that we consider the grant of an interim increase would serve two other important purposes: 1. It will give appropriate recognition to the very significant contribution of teachers to the community through the provision of significantly enhanced education services, particularly in recent years; 2. The grant of an interim increase is entirely consistent with the more mature industrial position adopted by the parties in relation to these proceedings whereby they have resorted to the arbitral processes available under the Act to resolve issues in an efficient manner prior to the expiry of the Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award. In that respect, the submissions made during final submissions by Mr Crawshaw as to the avoidance of future industrial action were very significant.

3 Since handing down its decision in December 2003 the Full Bench has been engaged in the task of analysing the enormous amount of evidentiary material presented in the case with a view to handing down a final decision before the Interim Award expired.

4 On 13 May 2004 the Crown Solicitor representing the Minister for Industrial Relations, an intervenor in the proceedings ("the Intervenor"), wrote to the Associate to the President seeking leave to have the Federation's application relisted in order that leave could be sought to provide the Full Bench with additional information that had come into existence after the Interim Award was made.

5 The application to re-open the proceedings came before the Full Bench on 20 May 2004. The additional information sought to be adduced, as identified in the communication of 13 May, was as follows: (1) 2003-2004 Half-Yearly Budget Review released by the Treasurer of New South Wales on 23 December 2003 ("the Half-Yearly Budget Review"); (2) Commonwealth Grants Commission Report on State Revenue Sharing Relativities, 2004 Review, released on 3 March 2004; (3) Meeting of Ministerial Council for Commonwealth-State Financial Relations on 26 March 2004;

(4) The NSW Mini-Budget Speech delivered to the Legislative Assembly by the Treasurer on 6 April 2004 ("the Mini Budget"); (5) Commonwealth of Australia 2004-2005 Budget announced on 11 May 2004 ("the Commonwealth Budget"); and (6) An affidavit in relation to the material set out in 1 - 5 above.

6 When the matter came before us, counsel for the Intervenor, Mr S Prince, amended the documents he sought to tender, essentially reducing the volume of material previously proposed. The application in relation to the affidavit was not pressed.

7 In seeking to have the additional material admitted, counsel for the Intervenor not only advanced submissions as to the re-opening per se but advanced the submissions that the Intervenor would make if the new material was admitted into evidence:

· The Commission should have before it the latest available New South Wales Budget data so that it may be supplied with the latest estimates and data when considering the public interest for the purposes of making its final determination of the Federation's application. · The material put forward to the Commission does not alter the principles upon which the evidence given in the proceedings by Mr Pierce and Dr Guthrie was based, but rather updates some of the budget figures referred to by those witnesses. For example, the updated data does not alter the fact that any increase in teachers' wages may only be dealt with by any one or mixture of spending reductions/cuts; revenue increases; or the incurring of debt. · It was not anticipated that further affidavit evidence or cross examination would be necessary in respect of the evidence which the Intervenor seeks to adduce and it is submitted that the Commission would have regard to the changed data within the same conceptual framework established by the evidence previously provided. · The new information provided to the Commission shows that significant policy changes have been required in order to accommodate the changes in funding to New South Wales as a result of the change of the relativities of the Commonwealth Grants Commission and other impacts. It is submitted that those significant changes have left the net Budget position in a similar position to that which was estimated at the Half-Yearly Budget Review. · Notwithstanding the changes that have been made, the estimate contained in the 2003/04 Half Yearly Budget Review for the Budget Result for 2004/2005 represents a very significant change from the estimate in the 2003-2004 State Budget. · Ultimately, there has been a downward revision of the projected Budget Result (as at the date of the Mini-Budget) of $603 million, from a projected surplus of $303 million to a projected deficit of $300 million. · In these circumstances, the evidence of Mr Pierce about the significance of any increase in recurrent expenditure, as a result of these proceedings, to the New South Wales fiscal position is highlighted. · The Commission would take these new estimates into account when considering the impact on the public interest of a further increase in response to the Federation's claim.

8 It was foreshadowed that, subject to the date of the Commission's decision, the Intervenor may also seek to admit into evidence the NSW Budget Papers after the NSW Budget is delivered on 22 June 2004.

9 The respondents to the proceedings, the Director General of the Department of Education and the Managing Director, TAFE New South Wales, simply noted that the Government was seeking to "update the economic evidence in these proceedings" but that the respondents had no further submissions to make.

10 The application by the Intervenor was, however, strenuously opposed by the Federation and the Labor Council of New South Wales, which intervened in the proceedings in its capacity as a peak council pursuant to s 167 of the Industrial Relations Act 1996.

11 In opposing the application Mr S Crawshaw SC submitted:

· The application to re-open was "unusual and unprecedented"; the evidence in the case closed six months ago and final submissions were made in December last year;

· No special circumstances had been demonstrated that would warrant re-opening; nothing was put as to the state of the economy; · The application to re-open was being made by an intervener, not a party to the proceedings and the application should, therefore face a stricter test; · It was not only foreseeable but also known to the intervener that fresh material of the nature sought to be adduced would come into existence during the period of an interim award. However, no application was made that this material should be considered before any final decision was handed down; · The new material will inevitably lead to delay because of the volume of it and the time it would take for the applicant to respond; the applicant is entitled to procedural fairness and must be given the opportunity to respond to the extent it considers necessary; · The applicant would be prejudiced by the delay and the additional cost it would incur; · Re-opening the case would set a precedent for further re-opening following the handing down of the next State Budget on 22 June 2004 if no decision is handed down beforehand.

12 Mr Crawshaw also submitted that in considering whether the material ought be admitted, the Full Bench should have regard to what he described as a strategy of intimidation of the Commission by the Government and, particularly, the Premier of the State. In this respect, reference was made to a News Release dated 11 May 2004 issued by the Premier where he referred to the comparative rates of pay between certain states for teachers, nurses and police, seeking to make the point that the employees in New South Wales are amongst the highest paid in the country. The Premier also referred to recent increases awarded by the Commission to nurses in public hospitals. The News Release went on to say: Mr Carr warned, however, that the Industrial Relations Commission simply cannot continue to hand-out unaffordable wage increases. "The Commission must understand that Government does not have an endless supply of money," Mr Carr said. "Because [of] the Commonwealth Government's $2.9 billion tax transfer to other states we can no longer afford large pay rises. We need time to absorb the recent increases - totalling a massive $394 million in the 2004/2005 budget."

13 The Labor Council submitted it was inappropriate to re-open the evidence at such a late stage and when a decision was imminent. Further, that re-opening would create a "dangerous precedent" especially when there was no suggestion by the Government that there had been any change to the fundamentals of the economy.

14 Mr A Searle of counsel for the Labor Council expressed concern about the News Release referred to by Mr Crawshaw and indicated that the Council had written to the Premier "about any suggestion that the Commission has acted in any way contrary to its legislative warrant".

15 We have decided to admit the additional material proposed by the Minister. The decision to do so, however, was very finely balanced. There are four compelling reasons that support a decision not to re-open and admit the further material: 1. The application by the Government was plainly made very late given that the Interim Award expires on 30 June 2004 and a legitimate expectation exists amongst teachers that a final decision on their claim would be handed down before the Interim Award expires. The Government could have sought to have much of the additional evidence adduced earlier. Alternatively, in light of the Federation's application for an interim increase and in the knowledge that further budgetary information was to be released, it was open to the Government, before the close of proceedings in December 2003, to reserve the Government's position in order that additional material might be tendered before any final decision was made by the Commission on the Federation's claim. This would have avoided any potential adverse consequences of a late re-opening application. 2. Despite Mr Prince 's strenuous efforts, the material tendered relates only to the fact that government revenue is projected to decline. The material does little to assist the Commission in understanding the implications of the decline in revenue for the economy. Indeed, the Intervenor has, in fact, provided us with very little assistance in interpreting the new data with it being submitted that we should make of it that which we will. 3. Because of the late tendering of the material and the need to provide the applicant with a proper opportunity to respond, the legitimate expectations of teachers that a final decision on their claims would be handed down before 30 June 2004 may be placed in jeopardy. 4. We have a real apprehension about an application to re-open at such a late stage because of our concern about setting a precedent that a party to proceedings might apply to re-open at any time up to judgment.

16 However, we have decided to admit the material because: 1. The Intervenor's case and much of the respondents' case (upon proper analysis) rests on contentions based on the economic impact of the claim; 2. The material has been led merely to update existing evidence (and contentions relating thereto).

17 It follows from the narrow circumstances warranting the introduction of this material that we will admit the material on a strictly limited basis. That is, the material is to be seen as no more than an "update" of budgetary figures already in evidence but the additional information does not alter the substance of the economic case originally put by the Intervenor or the defence put by the applicant in that respect. In other words, it was not put by the Intervenor that there has occurred a fundamental shift in the state of the economy of New South Wales over the past six months or the economic outlook. On the contrary, the Intervenor accepted the economic fundamentals remained sound and that the outlook for the economy was positive.

18 Whilst it was submitted that the State's financial situation has deteriorated in budgetary terms, having regard to the deficit, and that the reduction in the State's revenue will need to be addressed through appropriate policy responses, there was no suggestion that the state of the economy (which is the essential aspect that the Commission is to have regard to pursuant to s146 of the Act) had deteriorated to the extent it precluded any further salary increases for teachers. Counsel for the Intervenor made clear that the new material was not put forward on the basis of "incapacity to pay", as no such case was being put.

19 It has to be acknowledged that there would appear to be a deterioration in the budget and it may not be open to the Commission to simply ignore that development given our obligations under the Act. However, the projected budget decline may not be a basis, of itself, for denying fair and reasonable rates of pay to teachers as required by s10 of the Act (and it was not suggested that was the case by the Intervenor). Nor is the bald claim that the Government cannot afford additional wage increases for teachers. In order to bring public interest considerations into play it must be shown, in convincing fashion, that the economic consequences of any pay increases are, in light of the downward revisions in budget projections, against the public interest because of the economic impact of those increased rates of pay on the State of New South Wales. In presenting the additional material the Government has not provided any assistance to the Commission in this respect, other than in a most general way or by reference to a policy preference, and it is left to the Commission to make its own assessment against the background of what the Government accepts is a sound economy.

20 When seen in this light, whilst we are sympathetic to the submissions put by Mr Crawshaw regarding the potential for prejudice to the Federation by the admission of the additional material, we do not consider that any response the Federation might contemplate should, realistically, be substantial or wide ranging (although we expect that counsel for the Federation will provide us some assistance by way of submissions in reply to those relied on by the Intervenor). Nonetheless, having made these observations, we will afford the Federation a proper opportunity to call evidence and make submissions to the extent it considers necessary. We do not presently perceive any basis exists (given the manner in which the Intervenor sought leave to adduce the new material) for the Intervenor to have leave to put in evidence in reply or make further submissions.

21 We propose to address separately the issue raised by the Federation, that the Intervenor's application should be rejected because it comes to the Commission without "clean hands". This submission was advanced in the light of a News Release issued by the Premier and some observations made by him in the New South Wales Parliament.

22 On one view of it, an unfortunate aspect of the move by the Government to re-open proceedings at this late stage and the suggestion that the Commission is in the business of "handing out unaffordable wage increases" - a comment that is offensive and wrong - is that it could be construed as putting pressure on the Commission by various inappropriate means (a matter strenuously denied by Mr Prince), thereby raising serious issues going to the independence of this Commission. The move also raises the real prospect that the orderly process for resolving the current wage claim of teachers (a process in stark contrast to the industrial turmoil of the past) could be put at risk.

23 We would encourage the Federation to look beyond the apparent manoeuvring and to pay regard to what is in the longer term interests of its members and in the public interest, including an adherence to the rule of law by which disputes may be adjudicated in the courts and tribunals of the country without the State assuming any special or favoured place and with the adjudicating process of the courts and tribunals being free of political interference.

24 We wish to make it as plain as we are able that in the performance of our statutory functions we will not be influenced by external pressures whether they emanate from individuals, governments or organisations. We will determine this case, and any other, only on the evidence and submissions before us in accordance with our statutory obligations.

25 At the time the Intervenor's application was made, the decision of the Full Bench in this matter was imminent. It remains our intention to give our decision within a short period of time. With this consideration in mind, we direct that the Federation indicate by 4.00 pm 26 May 2004 the nature of any submission and/or evidence it intends to rely upon in response to the Intervenor's further evidence and submissions. We will thereafter issue directions in the proceedings as might be required in the circumstances.

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