Health Secretary, Ministry of Health v Australian Salaried Medical Officers'... [2025] NSWIRComm 27 | Case summary

Health Secretary, Ministry of Health v Australian Salaried Medical Officers'... [2025] NSWIRComm 27 | Case summary | Zoe

[34]

The Australian Salaried Medical Officers' Federation (New South Wales) (ASMOF) seeks an interim award with a term of 12 months, the centrepiece of which is the payment of a temporary 25% allowance over the 12 month term, for the express purpose of attracting and retaining psychiatry staff specialists.
The claim is based on an asserted shortage of psychiatry staff specialists in New South Wales and is advanced within principle 13 of the Commission's Award Making Principles (AMPs): the Special Case Principle.[1]
The application for interim relief also extends to several additional conditions which attracted little or no attention during the hearing of this matter. For example, the claim includes the imposition of a requirement on the employer to employ additional psychiatry staff specialists on a permanent and ongoing basis within a two year period. However, ASMOF never specified the precise number of additional staff to be so employed. The case advanced by ASMOF at the hearing was overwhelmingly focussed on its claim for an attraction and retention allowance. For these non-monetary aspects of the claim to be properly considered, the Full Bench would require a more substantial examination of their merits than was able to be provided by the parties in the context of this interim hearing, For this reason, save for the temporary allowance, we do not propose to grant any of ASMOF's other claims set out in its proposed interim award.
For the reasons set out below we have decided to grant interim relief in the form of a temporary allowance of 10% on base salary, together with the Special Allowance and Level 1 Private Practice Allowance. This allowance will supplement the 10% so-called "abnormal duties allowance" which, by operation of a Determination made under the Health Services Act 1997, the Health Secretary has re-purposed to be payable to all psychiatry staff specialists from 3 February 2025 on an unconditional basis with the aim of retaining those staff specialists in their current employment (the Health Secretary's retention allowance).
In combination with the Health Secretary's retention allowance, the supplementary allowance that we propose to grant would effectively result in a combined interim uplift on the base salary of psychiatry staff specialists (together with the Special Allowance and Level 1 Private Practice Allowance) of 20% for a period of 12 months. Of this amount, 10% comprising the Health Secretary's retention allowance will continue to be paid for two years or until a new Staff Specialists (State) Award is made pending the broader arbitration involving all doctors referred to below. The supplementary 10% allowance to be prescribed by the interim award will apply for a period of 12 months from the date of this decision_._
The interim award is to be expressly qualified to ensure that payment of the temporary allowance is to be absorbed into any subsequent increase to the salary rates of psychiatry staff specialists that is attributable to attraction and retention to be determined by the Commission.
We observe that this is an application for an interim award and a large number of psychiatry staff specialists have tendered their resignations but delayed acting on them pending the outcome of this case. Notwithstanding the interim nature of the case, the volume of material before the Commission is extensive. There has been approximately 10,000 pages of documents tendered, some 10 days of hearing time involving approximately 500 pages of transcript and extensive written submissions. Were this an application for a final award that material would warrant more extensive explicit review in these reasons. However, the case as noted at [18 ] below, has already been delayed and the parties, as detailed at [25 ]-[28 ] below, will soon be involved in the presentation of a general case of wider and final dimension. Our reasons have therefore been somewhat truncated to provide our decision as quickly as possible.

[35]

On 17 October 2024 the Health Secretary notified the existence of an industrial dispute about the provision of notices of resignation by a large number of psychiatry staff specialists (the Psychiatrists Dispute). In the course of this dispute a total of about 183 psychiatry staff specialists tendered their resignations. A number of these staff specialists (72) have indicated that they intend to convert from full time employment to working as contractors (Visiting Medical Officers (VMOs)); 32 have rescinded their resignations; and about 105 have since postponed the dates on which their resignations take effect.
Before dealing further with that dispute it is convenient to note a truncated history of developments in certain cognate matters.
On 12 January 2022 ASMOF notified a dispute concerning the normal duties clause in the Staff Specialists (State) Award 2021. Following arbitration, Commissioner Sloan made a Statement in which he suggested that the parties give consideration to an application to vary that award.
The Health Secretary filed her application on 26 June 2023 seeking several variations to the award.
The parties then engaged in mutual gains bargaining for several months during 2024. On 9 December 2024 proceedings relating to the various doctors' awards came before the President for report. Those proceedings included the applications by the Health Secretary to vary the awards covering: staff specialists, medical superintendents, medical officers and career medical officers. A common feature of each application was an intended increase in rates from the first pay period on or after 1 July 2023. At that report there was discussion about the future of the mutual gains bargaining process.
Further, by that time the Psychiatrists Dispute had been before the Commission for conciliation for some time. The President directed that all these proceedings should be listed together for report back before another member of the Commission in the first week of February 2025.
Orders were then made in the Psychiatrists Dispute on 20 December 2024 pursuant to ss 136(1)(c) and 137(1)(a) of the Industrial Relations Act 1996 (IR Act) prohibiting ASMOF from coordinating, organising or facilitating the concerted, mass resignations of psychiatry staff specialists: Health Secretary v Australian Salaried Medical Officers' Federation (New South Wales) [2024] NSWIRComm 1081 (the "Dispute Order Decision").[2] In so ordering, the Commission found that the mass resignations submitted by psychiatry staff specialists in furtherance of their industrial demands, as encouraged, supported and facilitated by ASMOF, constituted industrial action for the purposes of the IR Act: Dispute Order Decision at [42]-[47]. ASMOF's and its member psychiatrists' central industrial demand was for all psychiatrists employed in NSW Health to be remunerated at a "Level 4 Salary with Maximum Drawings (L4 Salary) in accordance with the Staff Specialists (State) Award Salary Increases Bulletin". Assuming each psychiatrist remained on the same incremental level, this claim amounted to a 25% increase in salary for all psychiatry staff specialists.
By 15 January 2025 the Health Secretary had become concerned that the mutual gains bargaining process was not likely to lead to a timely resolution of the disputes between the parties about the conditions of employment of doctors employed in the New South Wales health service.
Then on 21 January 2025 Senior Commissioner Constant heard the parties on whether the Commission should proceed of its own motion to arbitrate the matters that are the subject of the Psychiatrists Dispute. At that time both the Health Secretary and ASMOF made submissions touching upon the intersection of the matter with the foreshadowed broader applications. Nevertheless, both parties submitted that an expeditious resolution of the dispute by arbitration was appropriate. Indeed, the Health Secretary asserted before the Senior Commissioner that "an expeditious pathway for the psychiatry matter is urgently needed". The Senior Commissioner then made directions for the preparation and listing of the arbitration.
On 3 February 2025 Senior Commissioner Constant, pursuant to the President's decision of 9 December 2024, listed the various doctors' proceedings for directions. The Senior Commissioner directed the Health Secretary, ASMOF and the Health Services Union to file and serve any award variation or application they proposed in those matters.
The Commission subsequently commenced the arbitration of the Psychiatrists Dispute at its own initiative, with the cooperation of ASMOF and the Health Secretary. ASMOF filed its amended application for relief - in the form of an interim award − on 3 March 2025 and the Full Bench commenced hearing the application expeditiously on 17 March 2025 which was due to conclude on 11 April 2025. The hearing in this matter was interrupted and necessarily delayed because ASMOF proceeded with industrial action by all Staff Specialists in defiance of the Commission's dispute orders: see Health Secretary, Ministry of Health v Australian Salaried Medical Officers' Federation (New South Wales) [2025] NSWIRComm 5.

[39]

It is important to note the broader context of this arbitration. Pursuant to the Commission's directions of 3 February 2025, ASMOF filed an application for a new comprehensive award on 7 April 2025 covering all doctors employed in NSW Health, including all staff specialists (psychiatry and otherwise). The award would cover interns, residents, registrars, staff specialists, career medical officers and medical superintendents. In doing so, it seeks to bring many matters presently regulated administratively or by Determination into the award. Included amongst these matters are rights of private practice arrangements.
In relation to psychiatry staff specialists, the comprehensive award application seeks a salary increase in the order of 30%. Moreover, it seeks to vary all staff specialists' conditions − from an annual salary with a specification of "normal duties" to be worked over not less than 40 hours per week to one in which the maximum ordinary hours is 40 per week. Effectively the application seeks to regulate the employment on a rate per hour basis rather than by an annual salary. Time worked in excess of 40 hours is to be paid at overtime rates. The application provides for an on-call allowance of 10% and for recall to be compensated at overtime rates with a minimum payment of four hours for each physical recall. Time worked outside the employee's ordinary span of hours is to be subject to a penalty of between 45% and 200%.
The application also includes claims in relation to facilities, equipment, and office space and secretarial and administrative support, accommodation and facilities for recall and secondments. There are changes sought to several leave entitlements and increases in the number and amount of allowances.
The hearing of that application, and the Health Secretary's counter applications identified at [12 ], are presently listed to commence hearing on 24 November 2025. Notwithstanding the Commission's reservations about the capacity of the parties to be ready for such an extensive hearing by the end of the year, 12 days have been set this year. The parties estimate for the length of the hearing is in the order of eight weeks. The Health Secretary has filed her evidence in chief consisting of approximately 2900 pages of documents including 18 affidavits. ASMOF has filed approximately 16,000 pages of documents including affidavits and/or outlines of evidence for approximately 53 witnesses including expert evidence. The Health Secretary is scheduled to complete the filing of her evidence in reply by 16 October 2025.
The complexity of the issues in the general case may be illustrated by the fact that the Commission conciliated for five days in May and June of 2025 on issues the parties identified as being capable of agreement. Not all of the issues identified could be agreed, although good progress was made. That is not a criticism of any party. It simply illustrates the nature of the case the Commission will need to decide.
If the parties can complete the preparations for hearing by 16 October 2025 the Commission will consider listing further dates in the new term in 2026. On the present estimate it will require another 28 hearing days. The Commission's resources are finite and there are other cases competing for hearing time. All of this means that it is unlikely that the case will be determined until well into 2026. For these reasons we consider, contrary to the submission of the Health Secretary, that the need for interim relief has not been diminished by the perceived proximity of the general case.
Although counsel for the respondent, Mr Dixon, in this case disavowed the notion that ASMOF was currently seeking an "attraction or retention payment" per se for doctors generally, he could not say what would ultimately be at issue. Mr Dixon accepted, however, that a major plank of ASMOF's case in the broader doctors' salary dispute is that one of the difficulties facing NSW Health is the loss of staff specialists generally to the private sector and to other jurisdictions by reason of asserted lower pay rates in New South Wales. Part of ASMOF's claim in that case is to bring those pay rates up to remove that perceived difficulty.
It is thus necessary for the Full Bench in this case to proceed on the basis that the Commission is soon to be faced with the task of arbitrating a claim for salary increases for staff specialists generally at least some part of which may be pursued on the basis of attraction and retention. We take up the significance of this broader context when we deal with the question of whether, or to what extent, the Commission's conventional approach to granting interim relief that avoids "embarrassing the final result" applies in this case.

[45]

Thus, for example, in Re Public Hospital Nurses (State) Award (No 3) (2002) 121 IR 28; [2002] NSWIRComm 325 ("the Nurses' Case"), a salary increase based on shortages of nurses was determined to serve the public interest in circumstances where:
- the shortage was causing a strain on the public hospital system in New South Wales and a deterioration in the quality of care being delivered;
- the shortage presented a serious problem that needed to be addressed as a matter of priority in the short and long term;
- the employees concerned were experiencing increasing stress and a deterioration in working conditions due to the shortage, with an effect on the value of their work;
- the employee's wages were below the level of all other comparable health professionals and was contributing to the shortage; and
- a failure to grant a wage increase would likely constitute a negative signal and lack of appreciation which risked exacerbating the shortage and the associated problems facing the public health system.[9]
In Re Staff Specialists (State) Award, the Commission awarded a wage increase for staff specialists in public hospitals, finding that there was a serious shortage of staff specialists of the same order found in the Nurses' Case referred to in the preceding paragraph.[10] The labour shortage was found to have caused a deterioration of working conditions impacting work value,[11] which was of particular concern as the public hospital system relied on staff specialists to function effectively.[12] The Commission was therefore satisfied that a special case was made out to justify granting a wage increase on the basis of a shortage of staff specialists.[13] The Commission also considered the potential impact of a wage increase on attraction and retention, reflecting that an increase "will have a positive retention effect."[14] It likewise determined that a failure to grant an increase would not be in the public interest as it would have "a negative effect on their [staff specialists'] perceptions as to the value of working in the public hospital system"... which in turn would "erode the confidence of specialists in that system".[15]
In written submissions the Health Secretary relied on the fact that, where the Commission has in the past awarded increases to address staff shortages under the Special Case Principle, it has invariably done so in circumstances where a change in work value has also been demonstrated, including in Re Staff Specialists (State) Award in which the Full Bench (at [168]) made the statement which is reproduced at [37 ] above.
The Health Secretary points to the absence of any serious attempt by ASMOF to demonstrate any change in work value as disqualifying it from making out a special case as a matter of principle.
We accept that a shortage of staff is not, on its own, sufficient reason to award a salary increase. There is a need for something more and that can be work value.
However, we do not accept that the Special Case Principle is so narrowly constrained as to elevate the work value nexus to the level of a precondition. The principle operates more broadly. The principle permits the Commission to create or vary awards arising from an extraordinary case that otherwise falls outside the AMPs, to ensure that conditions of employment are fair and reasonable.[16] As the Full Bench explained in the Nurses' Case at [91]:

[47]

We agree with ASMOF's submission that the Full Bench in Re Staff Specialists (State) Award at [168] which we have set out at [37 ] above, recognised that any one or more of the circumstances listed therein could, if established, justify a pay increase which is also directed at alleviating a staff shortage. The critical requirement is that the public interest is served by granting a salary increase based on staff shortages. The public interest element may be fulfilled by considerations that include any one or more of the grounds identified by the Full Bench in Re Staff Specialists (State) Award at [168]. Such a combination of factors constitutes the necessary "special attribute" and gives the matter the quality of being "out of the ordinary" in a manner accommodated by the Special Case Principle.
This does not detract, however, from the need for the Commission to craft any relief that is warranted in these circumstances so as to avoid or minimise the prospect of any "circular self perpetuating process of wage enhancement".[17]
In addition to the Commission's established approach to wage fixing, the 2024 amendments to the IR Act included the introduction of a new object at s (3)(i) "to encourage strategies to attract and retain skilled staff where there are skill shortages so as to ensure effective and efficient delivery of services". This object explicitly directs the Commission's focus to attraction and retention in the context of skill shortages when considering wage claims.
In the 2024 State Wage Case a Full Bench of this Commission observed that this object "is at least directed to encouraging targeted measures, for example, measures to encourage workers into entry level training programs, or an allowance to attract targeted professionals to work in regional areas"; but did not otherwise determine the question whether, and if so to what extent, the new object requires any departure from the longstanding authority outlined above.[18]
The Health Secretary contends that the new object does not call for a departure from what he contended was a longstanding principle. Given the interim nature of the relief sought in these proceedings and the associated need for the Commission to act quickly in this matter, we do not consider that this is the appropriate vehicle in which to make comprehensive and definitive pronouncements on the effect of the new object. However, if the Health Secretary's position is no more than that the new object does not operate to alter the Commission's established reluctance to award a salary increases on the basis of a shortage of staff alone, we are inclined to agree. Our view is different if, on the other hand, the Health Secretary intends to assert that the new object is compatible with a rigid principle that pay increases may only be awarded to address staff shortages if those shortages have resulted in a change in work value. For the reasons we have given earlier, we reject this as a matter of principle.
We do not purport to state definitively the effect of the new object, which is a task that is neither necessary nor appropriate for this Full Bench to undertake in the context of determining interim relief by this expedited arbitration. But it seems to us that the new object at least reinforces the need for the Commission to consider issues of attraction and retention where there are labour shortages when making and varying awards, including by determining fair and reasonable remuneration in accordance with the AMPs.

[51]

Having regard to the application of s 16(1) of the IR Act, we understand this to mean that ASMOF accepts that the Commission would rescind its proposed interim award at the end of its 12-month term, subject to the resolution of any application ASMOF may wish to make at that time to maintain the operation of the award.
An issue between the parties arises in the context of the Commission's approach to making interim awards. This approach stipulates that an important consideration in deciding whether to make an interim award is whether it will "embarrass the final result" of the final award which might be made.[19] "The final result" in relation to an interim award in this context refers to the increase in rates of remuneration that is to be fixed ultimately at a final hearing. The appropriately conservative or cautious approach to granting − on an interim basis − part of the increase in rates sought at the final hearing is to ensure that the Commission's discretion is not unduly constrained in circumstances where the whole of the case has not been heard: Industrial Secretary & Ors v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales & Ors (No 2) [2024] NSWIRComm 21 at [31].
The Health Secretary contends that "the Commission is not in a position to evaluate whether the terms and conditions of the proposed interim award would be fair and reasonable if applied outside that one cohort. That is, the Commission could not be satisfied that any increase in remuneration (or other conditions) awarded to psychiatry staff specialist in this case represents an appropriate baseline or starting point for an increase in remuneration for staff specialists or salaried doctors more broadly". This is said to be "an insuperable obstacle to making the proposed interim award" because "the Commission cannot be satisfied that making the proposed interim award will not 'embarrass the final result'". The "final result" referred to by the Health Secretary in this context is the outcome of the arbitration in the comprehensive doctors' awards dispute referred to at [25 ] above.
Part of ASMOF's answer is to undertake not to "double-dip" in respect of attraction and retention payments. Mr Dixon explained:

[53]

To give effect to this position, ASMOF undertook to "support an urgent application if the interim award is on foot when the comprehensive award is handed down and consent to any variations to the terms of the interim award that the parties agree or the Commission determines give rise to any double-dipping. ASMOF will also support the inclusion of any clause in the interim award that is designed to avoid such double-dipping".
We consider that the nature of the interim award sought by ASMOF in this case differs somewhat from the usual circumstances in which the Commission applies the conventional approach of avoiding any "embarrassment to the final result". It seems clear that, at least at this stage, as part of the broader arbitration of the doctors' awards ASMOF makes no claim for an "attraction and retention allowance" for doctors generally or for any other cohort of staff specialists (nor indeed for psychiatry staff specialists beyond the interim 12-month period). The present claim for a temporary "attraction and retention allowance" for psychiatry staff specialists is not therefore in the nature of a claim to apply a portion of precisely the same relief that will be sought at a later final hearing. This means that in determining this claim for an interim award, the Commission's flexibility to determine a claim for salary increases for all other cohorts of staff specialists is not unduly constrained in the sense that the interim relief is a discrete measure applicable only to one cohort of staff specialists and is able to be determined separately from the making of the broader award.
The Health Secretary's contention that the Commission cannot be satisfied that the temporary allowance claimed for psychiatry staff specialists is an appropriate baseline or starting point for an increase in remuneration for staff specialists or salaried doctors more broadly assumes that the nature of the relief to be sought for doctors generally is coextensive with that interim relief.
This assumption is incorrect. The temporary allowance is not claimed as a "baked in" ongoing component of the salary rates for psychiatry staff specialists. Instead, it is in the nature of an emergency stop-gap measure designed to address a labour shortage crisis. Different considerations are likely to apply in determining whether or to what extent salary rates should be adjusted for doctors more broadly.
Accordingly, we do not consider that our determination in this case necessarily constrains the Commission's flexibility when it comes to determining the adjustment of doctors' salary rates generally.
We recognise, however, that the Commission is likely to be faced with the task of arbitrating a claim for salary increases for staff specialists generally at least some part of which may be pursued on the basis of attraction and retention. We acknowledge that there may be potential overlap between our determination in this case and the considerations around adjusting remuneration for psychiatry staff specialists in particular on the basis of attraction and retention, at least for the 12-month period during which a temporary allowance may apply. On this basis, a degree of restraint and caution is nevertheless warranted, and the result we have determined for the interim award reflects this consideration.
On this question, we are satisfied that the arbitration for ASMOF's claim for the interim award was sufficiently detailed, extensive and rigorous in terms of the scope of evidence and the overall cases advanced by the parties to enable us to determine the matter conclusively. In other words, in all the circumstances including the urgent need to ameliorate the effects of the recent mass resignations of psychiatrists, we consider that the minimum amount likely to be awarded to psychiatry staff specialists on the basis of attraction and retention for the 12 months from the making of the interim award would be an uplift in remuneration of 10%.
In addition, we consider that ASMOF's proposal to guard against double counting any increases for this cohort of doctors is appropriate. To this end we propose to grant relief in a manner that is expressly qualified to ensure that payment of the temporary allowance we grant is to be absorbed into any subsequent increase to the salary rates of psychiatry staff specialists that is attributable to attraction and retention to be determined by the Commission.
Furthermore, we are satisfied that the factors making this claim a "special case", which we explain below, also constitute the "special circumstances" justifying the grant of interim relief.
Finally, the Health Secretary's invocation of a strict presumption that the relevant award already sets fair and reasonable conditions for staff specialists (which ASMOF is required to displace) is misconceived and not sustainable in light of the recent determination in State Wage Case 2024 (No 3) at [70]-[79]. This does not detract from the operation of the longstanding principle that, as the applicant for the making of an interim award, ASMOF bears the persuasive onus to establish a case for making the award.

[62]

There is ample evidence before the Commission that the demand for mental health services, particularly public mental health services, has been growing rapidly over at least the past 10 years. There are not only direct observations by witnesses working in the field but several reports by national and state bodies including the NSW Ministry of Health attesting to that growth.
In 2014 the Mental Health Commission of New South Wales published a document entitled "Living Well: A Strategic Plan for Mental Health in NSW 2014-2024". The document identified that 17% of the NSW population had mild to severe mental illness and a further 23% were estimated to have an underlying or undiagnosed mental problem. It laid out a plan for improved mental health services in the state.
Then in 2018 the Mental Health Commission published the "NSW Strategic Framework and Workforce Plan for Mental Health 2018-2022" as a response to the Living Well Report. While this plan identified anticipated population growth of 14% from 2017/2018 to 2027/2028 as a source of increased demand for mental health services, it also identified sections of the community as probable areas of increased demand. Persons over 65, with population growth of 33%, and adolescents, with increased rates of major depressive disorders, were examples.
Among the "Workforce priorities" identified was the need for action to support retention of the relatively small but critical psychiatry workforce.
A further report published in 2021 was the "NSW Health Psychiatry Workforce Plan 2020-2025". The report described psychiatrists as a "critical component of the mental health workforce, making up about 10%" of it. Among the strategies outlined was a strategy to attract and support the future psychiatry workforce by developing processes to support recruitment of trainees in psychiatry.
That report was, in turn, followed by another entitled "NSW Community Mental Health Services Priority Issues Paper" published in December 2023 by the NSW Ministry of Health. The second priority identified in the paper was "Workforce and Training". The report identified significant shortages across the mental health workforce as a "crucial gap impacting effective service delivery".
Specifically in relation to the consultant psychiatry workforce, including staff specialists, trainees, VMOs and locums the report noted that, while there had been improvement in registrar numbers, consultant psychiatrist vacancies continued to rise statewide. Further, the Ministry's report found:

[66]

As to the Health Secretary's second proposition, we are unable to accept that there is a sufficient functional equivalence between staff specialists and VMOs/locums such that the substantial and escalating vacancy rate among staff specialists does not present significant difficulty in terms of staff shortages. If, as contended by Dr Harris and the Health Secretary, "staff specialist and VMO appointments are used interchangeably within NSW Health as they undertake the same duties" the scale of the shortage would be ameliorated by the ability to fill staff specialist vacancies with VMOs or locums. The evidence, however, does not support this contention.
While Dr Harris stated that staff specialists, VMOs, and locums have the "same qualification and skillset", the work of staff specialists is necessarily coloured by the permanent nature of their employment. As staff specialists are permanent and are paid a salary, they are embedded within the team on a long-term basis and perform clinical, teaching, training, research and leadership functions within the team. The multifaceted nature of the staff specialist role is reflected in the definition of "Normal Duties" in the Staff Specialists (State) Award 2022 as "clinical, teaching, research, administrative, quality improvement or other duties and responsibilities undertaken by the Staff Specialist."
In contrast, VMOs are engaged on a short-term basis predominantly to perform clinical work. We accept the evidence of Dr Gunaratne, Chair of the New South Wales Branch of the RANZCP, that because VMOs are often engaged to meet increased service demand and are more expensive than staff specialists to engage on an hourly basis, local health districts are incentivised to direct VMOs to focus on clinical work. The nature of VMO contracts can also mean that non-clinical work often falls outside the scope of hours for which a VMO is compensated. For example, Dr Choong-Siew Yong, who is employed as a VMO, stated that meetings may take place outside of contracted hours, and are explicitly excluded in the definition of "services" in the Public Hospitals (Visiting Medical Officers - Sessional Contracts) Determination 2014. Dr Yong reported that as a VMO he generally did not perform the following tasks: "supervision of junior medical staff; teaching medical students; participating in clinical governance activities, participating in administrative meetings concerning the operations of the service, liaising with other medical services, health professionals and staff, participating in service planning and service development."
As we have already noted at [81 ] material published by the NSW Ministry of Health itself concedes that, in practice, VMOs have a predominant focus on clinical work as distinct from education work.
Similarly, this distinction was echoed by Mr Minns, the Deputy Secretary of People, Culture and Governance at the NSW Ministry of Health, who stated the following during the Budget Estimates 2024-2025:

[68]

The difference is clearest when it comes to the supervision of trainees. As the number of staff specialists dwindle, VMOs and locums are increasingly relied upon to supervise trainees. However, Dr Drew, Chair of the New South Wales Branch of the RANZCP Training Committee, gave evidence that the temporary nature of their engagement means that trainees will often not have a constant supervisor throughout their six-month rotation, with some psychiatrists reporting that trainees may have up to four or even six supervisors in one rotation. The lack of continuity impacts the quality of training as trainees are less likely to build a relationship with their supervisor and have a consistent standard of care modelled to them throughout a rotation.
These problems are exacerbated where there is a reliance on locum doctors who are employed on short-term contracts for up to three months, typically to cover absences. Dr Gunaratne and Dr Drew explained that locums, even with the same training and skills, are unable to provide continuity of care to patients or supervision to trainees as they are only temporary members of their team. According to Dr Brahmbhatt, who had worked as a Clinical Director and Senior Staff Specialist, it is also not guaranteed that locums will be engaged on the same numerical FTE basis as the absence that they are employed to cover, leaving further shortfalls in service delivery and non-clinical work for staff specialists to absorb. This problem is particularly acute having regard to the significant increase in psychiatry locums in recent years referred to at [71(3)] and highlighted at [95 ].
The Commission heard directly from a trainee, Dr Leeder, who has experienced difficulties in securing vacant registrar positions as these positions cannot be filled because of a shortage in staff specialist supervisors.
On the evidence before the Full Bench, psychiatry staff specialists, VMOs and locums are not perfectly interchangeable positions. The reliance on VMOs and locums to fill staff specialist roles has not adequately compensated for the full scale of work performed by staff specialists, including supervisory education work with trainees.
The increasing reliance on VMOs and locums in substitution for staff specialists itself constitutes a significant bottleneck in the supply of psychiatry staff. Relevantly, the RANZCP Accreditation Panel noted in 2022 that:

[73]

ASMOF witnesses such as Dr Goodison and Dr Leeder referred to the lack of beds or the potential closure of beds for mental health patients related to the shortage of staff specialists. Dr Oliver, Director of Medical Services for South Western Sydney Local Health District conceded in cross-examination that a planned significant increase in the number of psychiatric beds at Campbelltown Hospital was not able to proceed because of shortages in the number of psychiatry staff specialists.
Emergency physicians and psychiatrists expressed concerns at the reduced number of mental health beds and lack of psychiatry staff specialists causing mental health patients to seek help through the Emergency Department with consequent disadvantages and risks to both the mental health patients and other users of the Emergency Department.
The evidence established that staff shortages lead to "broken therapeutic relationships" between patients and treating psychiatrists. The rapport between a psychiatrist (and other members of the team) and their patient is one of the most important factors in successful treatment of mental health patients. Staff shortages mean that psychiatrists do not have the time to build and maintain the relationship of trust to achieve successful treatment outcomes.
It is no exaggeration to describe the state of mental health care in the New South Wales public system as being in crisis. The evidence relied on by ASMOF includes the unchallenged view expressed by the Clinical Director and Conjoint Professor at the Prince of Wales Hospital, Matthew Large, that "the current state of psychiatrist recruitment poses an existential threat to public psychiatry".
It is telling that, in the face of this evidence, the Health Secretary did not seriously challenge any of ASMOF's witnesses about their evidence on this issue, and her written submissions fail to engage with ASMOF's submissions on this issue. Indeed the documents published by the NSW Ministry of Health and referred to above at [76 ]-[82 ] express similar views.

[82]

There is conflicting evidence as to whether there are a sufficient number of trainees electing to rotate in psychiatry. Material from the RANZCP which was introduced and accepted by Dr Gunaratne indicated that there was "poor take up of training positions" and "low numbers of PGY [postgraduate year] 1 & 2 rotations in psychiatry". The RANZCP has also advocated for a "major increase in PGY 1 & 2 rotations across New South Wales mental health services". However, in cross-examination Dr Gunaratne did not agree that there is a shortage of trainees in the pipeline, but asserted instead that the problem lies with the lack of available supervisors. She stated that the New South Wales public health system had "probably...more trainees than we can handle". Dr Harris similarly conceded that there were sufficient numbers of trainees commencing in psychiatry within NSW Health.
The data from the RANZCP presented by Dr Gunaratne indicates that the total number of trainees commencing psychiatry training in New South Wales has grown by 28.2% from 2020 to 2024. Although this is low compared to a growth of 63.4% in Victoria, it is roughly commensurate with the 29.9% growth in Queensland. However, the number of new trainees in psychiatry from 2020 to 2024 does indicate that New South Wales is growing slower than other states − by 10.8% compared to an increase of 81.3% and 24.4% in Queensland and Victoria respectively. There is no evidence that there are any vacancies in any trainee positions for psychiatry. The problem, as noted in [90 ], is that there are insufficient numbers of supervisors.
On balance the evidence indicates that while there may be sufficient numbers of trainees at the moment, as demand continues to grow for psychiatry in the community, the slowing trend of growth suggests that NSW Health will struggle to attract trainees to meet projected requirements for service delivery. These issues were addressed in NSW Health Psychiatry Workforce Plan 2020-2025 referred to in [79 ] above.
Although there was evidence that remuneration plays a significant role in motivating trainees to consider psychiatry, there is no claim for trainees to receive an allowance and therefore the impact of the allowance will be less direct for trainees. Its impact on the evidence is intended to be threefold. First, it will provide an incentive for successful trainees to apply for staff specialist positions in New South Wales rather than interstate or in private practice.
Second, assuming the numbers of staff specialists in New South Wales increase, and the workloads and levels of job satisfaction improve for psychiatry staff specialists accordingly, the position of staff specialist will be perceived as more attractive.
Third, if the allowance had a positive attraction and/or retention effect on staff specialists who act as supervisors, this would allow for a greater number of trainees to complete a psychiatry rotation.
The allowance is likely to have a more decisive impact on a trainee's decision to become psychiatry staff specialist. Evidence of ASMOF's witnesses established that remuneration plays a significant role in the weighing up between commencing as a VMO in comparison to a Level 1 Staff Specialist or commencing in the private sector. Even setting aside the question of remuneration being competitive with the private sector or VMO/locums, Dr Yong stated that some first year staff specialists may earn less compared to when they were registrars due to the loss of overtime entitlements.
In addition to remuneration, trainees are also highly influenced by working conditions. Psychiatry staff specialists provided evidence that trainees are increasingly uninterested in commencing as a staff specialist in New South Wales due to the perception of poor working conditions, in particular, that the workforce was stretched, that vacancies intensified the workload, and there was a lack of supervision.
Dr Leeder gave evidence of his experience as a psychiatry registrar including the requirements of and limitations on the training program. He said that a staff specialist can only supervise a maximum of two registrars at a time. If the staff specialist is less than full time they may be restricted to one or in some cases (if the FTE is less than 0.3) none. Fewer staff specialists mean fewer trainee positions. The importance of retaining staff specialists is therefore emphasised.
The allowance will likely have the greatest impact on the retention of staff specialists in the public sector. In particular, we consider that it would assist with cost of living pressures faced by early career psychiatrists.
The potential positive impact of the allowance on retention is conceded by Dr Harris whose evidence was relied upon by the Health Secretary. It is also recognised, for the reasons identified at [20 ]-[22 ] by the introduction of the Health Secretary's retention allowance.
We consider that to not grant the allowance would likely constitute a negative signal and lack of appreciation which could have the effect of exacerbating the shortage and the associated problems facing the public health system.
Dr McLean gave evidence that she had delayed her resignation until after the Commission's decision and if ASMOF'S claim were successful she would "likely rescind" her resignation. Dr Lawler said that if ASMOF's claim were successful he would return as a staff specialist. Dr Drew expressed the view that the allowance sought would:

[90]

The amount to be awarded is substantially less than the 25% claimed by ASMOF.
The fiscal impact would be relatively modest: approximately $10-15 million, which is less than half of the $30.5 million of ASMOF's claim for a 25% allowance estimated by Ms Livingstone, the Deputy Secretary for the Policy and Budget Group within the NSW Treasury.
We take into account the evidence that the NSW Health budget is fully allocated, and that the allowance would need to be separately funded by the NSW Government. The quantum of the allowance that we propose is intended in part to accommodate such fiscal considerations. Nevertheless, for the reasons we have explained, in our view the Commission's statutory duty to set fair and reasonable terms and conditions of employment requires a temporary measure that may require the allocation of additional funds − much like the Health Secretary's retention allowance. Ms Collins confirmed that this allowance was centrally funded from the Ministry of Health and the Deputy Secretary, Financial and Corporate Services NSW Ministry of Health and Chief Financial Officer of NSW Health, Mr D'Amato, revealed that the allowance is not provided for in the budget unless it has been paid in the previous financial year. We infer that, because the Health Secretary's retention allowance has not previously been universally payable, the allowance in its present incarnation is also largely unaccounted for in the NSW Health budget.
We are satisfied that the interim award is unlikely to have any significant adverse economic impacts, given the Health Secretary's economic modelling suggests that significant adverse impacts on the economy would arise only if the full 25% increase was awarded on an ongoing basis and this extended or spilled over not only to all staff specialists, nurses and midwives and all other public health staff, but also to New South Wales private sector workers more generally. Although none of the Health Secretary's expert evidence purports to assess the likelihood of the interim increase spilling over to other employees, the risk of such a widespread spill over must be regarded as remote.
In cross-examination, the Executive Director for the Macroeconomy Division, Economic Strategy and Productivity Group within the NSW Treasury, Dr Warlters, sought to qualify his report by saying he thought there would also be "significant" economic impact if the spill over was confined to all public health workers - but the degree of significance in this scenario appears to be limited to his assessment of 0.65% above GDP forecast, 0.53% higher consumer prices and lower unemployment by 0.34%. He described this as "more material" compared to the "no or marginal" impacts of his alternative modelling scenarios, but with a "not especially large" inflationary impact which nonetheless pushes the RBA's inflation forecast further above the target band. However, Dr Warlters conceded in cross-examination that, since his report, inflation has eased and that his economic outlook had been overtaken by data and the RBA's more recent projections, although the RBA continued to be concerned about "upward risks".
In addition, we consider that the risk of any spill over to other public sector health employees is somewhat ameliorated by ASMOF's undertaking that it proffered to the Commission in the course of the hearing, namely, that it would not use any decision to award an attraction and retention allowance to staff specialist psychiatrists in support of future claims from any other category of members.
The lack of flow-on consequences or any industrial discord or discontent from the payment of the Health Secretary's retention allowance also tends to militate against the prospect of any significant spillover effect of a retention allowance for staff specialist psychiatrists in the present circumstances.
Finally, we note the modelling by Professor Buchanan, member of the Business Information Systems Discipline and Co-Director of the Mental Wealth Initiative at the University of Sydney, that is relied upon by ASMOF to support a contention that the overall cost of a 25% allowance is likely to be broadly equivalent to, or may even be less costly than the Health Secretary's offer of a 3.5% pay increase. This modelling rests on an assumption that such an allowance will result in a substantial shift in the mix of staff specialist psychiatrists compared with VMOs and locums. The Health Secretary criticised some of the assumptions underlying this modelling, particularly as to the capacity of an allowance to shift the mix in favour of staff specialists and raised "serious doubts" about its reliability.
It is not necessary for us to resolve the controversy over Professor Buchanan's prognostications in this regard. We consider that the allowance we have determined is justified for the reasons we have given. However, there is no doubt that the recent and sustained trajectory of the composition of the public sector psychiatrist workforce has been to incorporate proportionally more VMOs and locums, who represent a greater cost compared with staff specialists. Having regard to the evidence of the current efforts outlined at [119 ]-[122 ] to address the staff shortage, there is no reason to think that, absent the countervailing monetary incentives represented by the Health Secretary's retention allowance as supplemented by the allowance granted by the Commission, this trajectory of workforce composition will not continue indefinitely.

Health Secretary, Ministry of Health v Australian Salaried Medical Officers' Federation

At a glance

Court

Decision date

Before

Source

Judgment (110 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (8)

Cited By (2)