State Wage Case 2001 [2001] NSWIRComm 119

HEARING DATES: 05/21/2001; 05/22/2001 DATE OF JUDGMENT: 05/31/2001

Mr C Christodoulou with Mr P Howes for Labor Council of New South Wales Mr J V Murphy of counsel for the Minister for Industrial Relations and the Public Employment Office Mr R Tripodi for The Australian Workers' Union, New South Wales LEGAL REPRESENTATIVES: Mr T McDonald for Employers First and its affiliated organisations Mr P Ronfeldt for Australian Business Industrial Mr D Ritchie for the Australian Retailers Association, New South Wales Division Mr R Davies for The Australian Industry Group New South Wales Branch, New South Wales Road Transport Association Inc, Motor Traders' Association of New South Wales, Local Government Association of New South Wales, Shires Association of New South Wales, Catholic Commission for Employment Relations and State Chamber of Commerce and Industry (Industrial Relations) Association

DECISION OF THE FULL BENCH OF THE INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

table of contents Introduction 1 The Australian Industrial Relations Commission's Decision 4 Pre-Hearing Conference 14 The Position of the Parties at the Hearing 14 The Evidence 16 The Submissions 19 Labor Council of New South Wales 19 The Australian Workers' Union, New South Wales 24 Employers First and The Australian Retailers' Association, New South Wales Division 26 Australian Business Industrial 30 AiGroup, CCER, SCC, MTA, LGA, SA and RTA 32 The Minister for Industrial Relations and PEO 32

Submissions In Reply 35 The Labor Council of New South Wales 35

The Commission's Decision 37 The Wage Increase 37 Award Review Classification Rate 44 Anti-Discrimination Clause 44 The Principles 47 Agreed Matters 47 Access to State Wage Case Decisions and Lagging Awards 49 Consent Awards 58 Terms of the Principles 61

Orders 61 Annexure A - Appearances at the Hearing 64 Annexure B - Wage Fixing Principles 65 1 Preamble 65 2 When an Award may be Varied or Another Award Made Without the Claim Requiring Consideration as a Special Case 66 3 Previous State Wage Case Increases 67 4 Test Case Standards 67 5 Adjustment of Allowances and Service Increments 67 6 Work Value Changes 68 7 Standard Hours 70 8 State Wage Case Adjustments 70 9 Award Review Classification Rate 72 10 Special Case 74 11 Enterprise Arrangements 74 12 Superannuation 77 13 First Award and Extension to an Existing Award 81 14 Equal Remuneration and Other Conditions 82 15 Economic Incapacity 84 16 Duration 85 - 28 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH

CORAM: Wright J, President Walton J, Vice-President Hungerford J Sams DP Boland J McKenna C Thursday 31 May 2001

STATE WAGE CASE 2001 Summons to Show Cause - Commission on its own initiative pursuant to Part 3 of Chapter 2 of the Industrial Relations Act 1996.

DECISION OF THE COMMISSION [2001] NSWIRComm 119

Introduction 1 On 2 May 2001, the Commission issued a summons to show cause to industrial parties to appear before it to show cause why, after considering the decision of the Australian Industrial Relations Commission ("the AIRC") in the Safety Net Review - Wages, May 2001 Case, 2 May 2001 (Print PR002001), the Commission should not take such action pursuant to Pt3 of Ch2 of the Industrial Relations Act 1996 ("the Act") as it may deem proper. 2 By leave, on 16 May 2001, the Labor Council of New South Wales ("Labor Council") filed an application pursuant to s52 of the Act. In that application the Labor Council applied: 1. To vary the standard Anti-Discrimination clause as determined in the State Wage Case June 1999 , and;

2. To amend Principle 1.5 in Re Review of the Principles of the Approval of Enterprise Agreements 2000 with respect to "responsibilities as a carer." 3 The grounds and reasons for the application were stated as follows: 1. To achieve object 3(f) of the Industrial Relations Act 1996

2. To take account of the Anti-Discrimination Amendment (Carers' Responsibilities) Act 2000

3. To meet the requirements of Section 169 of the Industrial Relations Act 1996

5. To reflect the views of the Commission in Re Review of the Principles for Approval of Enterprise Agreements 2000 .

4 Part 3 of Ch 2 of the Act includes ss50 and 52 which provide: 50 Adoption of National decisions (1) As soon as practicable after the making of a National decision, a Full Bench of the Commission must give consideration to the decision and, unless satisfied that it is not consistent with the objects of this Act or that there are other good reasons for not doing so, must adopt the principles or provisions of the National decision for the purposes of awards and other matters under this Act.

(2) A Full Bench of the Commission is to give consideration to the National decision either on application or on its own initiative.

(3) The principles or provisions of a National decision may be adopted: (a) wholly or partly and with or without modification, and (b) generally for all awards or other matters under this Act or only for particular awards or other matters under this Act.

(4) The principles or provisions of a National decision so adopted may be varied by a Full Bench of the Commission, whether or not another National decision is made.

52 Variation of awards and other orders on adoption of National decisions or making of State decisions A Full Bench of the Commission may, when adopting the principles or provisions of a National decision or making a State decision, make or vary awards, or make other orders, to the extent necessary to give effect to its decision.

5 A "National decision" is defined in s48 of the Act as: 48 What is a National decision? A National decision is a decision of a Full Bench of the Australian Industrial Relations Commission that generally affects, or is likely to generally affect, the conditions of employment of employees in New South Wales who are subject to its jurisdiction.

The Australian Industrial Relations Commission's decision

6 In its Safety Net Review - Wages, May 2001 decision ("the National decision"), the AIRC considered a claim brought by the Australian Council of Trade Unions ("the ACTU"). The claim was entitled the "2001 Living Wage Claim". The ACTU's claim sought the following: · a $28 per week increase in award rates of pay up to and including the equivalent of skill level classification C10 in the Metal, Engineering and Associated Industries Award 1998 - Part 1 (the Metal Industry Award) [[Print Q2527 [AW789529]], and a 5.7% increase in award rates of pay above that level; and · an appropriate adjustment in allowances consistent with past safety net decisions and the Furnishing and Glass Industries Allowances decision [Print M9675, 21 March 1996]. 7 In considering Australia's current economic outlook, the AIRC commented that the positives must be weighed against the negatives. In this respect, the AIRC stated: Positive features of the current economic context are found in the continuing strength of economic fundamentals, with the absence of imbalances in profit shares and unit labour costs, a benign outlook for wages and prices inflation, supportive monetary and fiscal policy settings, a low Australian dollar supporting the traded goods sector, low interest rates supporting investment and the expected passing of the transitional effects of the GST on both prices and output. Against these factors must be considered the decline in activity in the December quarter, the consequent weakening in the labour market, the poor productivity outcomes in the final part of 2000, weakness in the key building and manufacturing sectors, weakness in the international economy, particularly in the US economy, and

continuing uncertainty and effects on business confidence resulting from the December quarter decline in growth and the GST. 8 Overall, the AIRC stated that a degree of caution must be exercised: Economic conditions remained strong through to the middle of 2000, when growth moderated, and GDP contracted in the December quarter, with a consequent weakening in the labour market conditions. The December fall in GDP substantially, but not entirely, reflected transitional factors and was concentrated in particular sectors of the economy. Treasury and the RBA anticipate the prompt passing of the transitional effects on the December quarter outcomes. They expect a resumption of reasonable non-inflationary growth, reflecting a view that Australia's economic fundamentals remain sound and that fiscal and monetary policy settings are supportive of growth. Nonetheless, the weak overall growth and employment outcomes in the last half of 2000, together with other considerations such as recent weak productivity performance and the weaker labour market performance in late 2000 and into 2001, warrant a degree of caution in assessing the immediate economic outlook.

In our view, a degree of caution is required in light of the uncertainty arising from the most recent National Accounts data. Although Treasury and the RBA expect a timely recovery from the December quarter stalling in growth, and although transitional influences were significant contributors to the slowdown, there is some evidence of an underlying slowdown in growth. Further, there are risks to future activity from negative sentiment and slowing world growth. The recent weakening in labour market performance reinforces the need for caution, particularly in light of the requirement to have regard to the desirability of attaining a high level of employment. Notwithstanding the need for some caution we think that some further adjustment of the minimum wages safety net is appropriate and sustainable.

9 In relation to the economic effects of a safety net adjustment the AIRC considered two likely effects of the ACTU claim, being:

· The effects in aggregate terms on wages growth, inflation, employment and productivity; and · The effects at the sectoral or enterprise level, recognising that the application of safety net adjustments will vary, as a result of the different incidence of enterprise bargaining and over award payments, between and within sectors of the economy and the impact on the employment prospects of those employees benefiting from safety net adjustments.

10 The AIRC noted that the aggregate effects of any safety net adjustment will vary depending on the amount awarded, any conditions attaching to the adjustment and the general economic context. It was noted that although economic activity declined in the December quarter of 2000, and with it came a weakness in employment, aggregate wages growth has remained moderate and inflation has remained low. 11 Cost estimates were provided to the AIRC by the Joint Coalition governments of the impact on aggregate wages growth of a range of safety net increases for all sectors, with a separate set of estimates for the private sector. The AIRC noted that although such estimates are of assistance in making a decision, they are not without controversy. The AIRC said: They do not, however, provide a direct and uncontroversial measure. The position remains that there exists no completely reliable and accepted cost estimate, with each of the different methodologies being subject to criticism. 12 The AIRC considered that nothing had been put which would warrant a departure from the conclusion reached on the issue of economic effects in the Safety Net Review - Wages, May 2000 (2000) 95 IR 64. Of the current application the AIRC stated: We consider that the safety net adjustment we have decided upon will have a very limited impact on aggregate wages growth. The impact of the increases we have decided will not materially affect the aggregate net rate of wages growth over the next 12 months, given the 'pipeline' effect of the May 2000 increases. Unlike the May 2000 decision, safety net increases arising out of our present decision will not coincide with an increase in the minimum employer superannuation contribution required by the Superannuation Guarantee Charge Act 1992 and the Superannuation Guarantee (Administration) Act 1992 .

The economic effect of any safety net increase on inflation will depend upon a number of factors including any monetary and fiscal policy response and the effect of any productivity improvements made by employers in an attempt to offset the cost of the increase. Given a limited impact on aggregate wages growth, any effect on inflation would be minimal because wages form only part of total costs. Further, measures taken to offset the impact of the increases through productivity improvement would also limit the impact.

13 The AIRC came to the following conclusions as to the economic effects of a safety net adjustment: As we have concluded earlier, the economic outlook as a whole suggests that the economy can accommodate further reasonable improvements in the safety net of minimum wages. The contribution to aggregate wages growth from the safety net adjustment we have decided upon will have a limited effect on economic activity, inflation, employment levels and productivity. In determining both the level and structure of safety net increases, we have had regard to the level of uncertainty about immediate economic prospects and the recent weaker labour market performance. We have also had regard to the differential impact of safety net increases and sought to protect employment by giving weight to the potentially greater employment impact of increases at the level of the lowest skilled classifications.

14 On the needs of low paid workers, the AIRC expressed the following conclusions: As noted in previous decisions the statutory scheme does not give to the Commission a supervening social welfare responsibility either for incomes generally or their distribution. The scheme regulates wages and conditions of employment and requires the adjustment of the minimum wages safety net contained in awards having regard to particular considerations. The information about income levels and distribution provided by the parties is informative of Australian living standards. However, it must be taken into account having regard to the limited nature of our task and statutory responsibilities. In the April 1999 decision the Commission said: "Considering the needs of the low paid requires the exercise of judgment as to varying income levels and the resultant living standards attained in the Australian community. There is clearly a gap between income levels derived from bargaining and those provided by the award system. The evidence and submissions inform the Commission in its task of adjusting the safety net. Central to the adjustment of the safety net consistent with ss.88B(2) is a consideration of the economic factors, the desirability of attaining a high level of employment and the needs of the low paid. In this context we reject the proposition that the low paid include people who are unemployed. The relevant statutory provisions deal separately with the low paid and the unemployed and the expression 'the low paid' in ss.88B(2)(c) is intended to refer to persons who are in employment. However, we are required by ss.88B(2)(b) and 90(b) to take the level of employment into account and we have done so. Many low paid employees are unable to afford what are regarded as necessities by the broader Australian community." The Commission reiterated that conclusion in the May 2000 decision. We again see no reason to depart from it. The evidence presented in this case again revealed that employees on low wages do experience difficulties making ends meet and in affording what are generally considered by the broader community as basic necessities. In this context we note the disagreement between the parties about the size of the group of employees in this position. It is not necessary, even if it were possible, to identify the size of the group in order to reach a decision in this case. We acknowledge that the material does indicate that people on low incomes face particular difficulties and that is one of the factors which we have taken into account.

We were presented with arguments by the Joint Coalition governments about the distribution effects of a minimum rate adjustment. In the May 2000 decision the Commission considered similar arguments and concluded: "The Joint Coalition governments submitted that limiting safety net increases to at or below the C10 classification rate would better target those in need. We are not convinced on the material before us that providing a cut-off at C10 would prevent spillage of some of the benefit of safety net adjustments to those not in need. Indeed we are not sure where any such cut-off could be set in order to better target the benefit of safety net adjustments. As a result of societal change it is often the case that there are two wage earners (sometimes more) within a family unit. It is not surprising that it is no longer as simple as it once may have been to view the income of an employee as an indicator of household income. It may be that safety net wage increases intended to assist the low paid will supplement the income of some households of relatively high means. We accept that safety net adjustments are not perfectly targeted to meeting the needs of the low paid. They do, however, assist in meeting those needs." Nothing in the material presented on this occasion by the Joint Coalition governments leads us to alter the view there expressed.

15 A significant issue in the proceedings before the AIRC was that of wage relativities. The AIRC noted that on a number of previous occasions it had drawn attention to the erosion of relativities between award classifications where a uniform dollar adjustment occurs. The AIRC referred to its May 2000 decision where it had indicated that on the next occasion it expected to be addressed on this issue and whether a percentage adjustment is appropriate "to ensure that the award system provides fair wages for employees paid at the middle and upper award classification levels." Consequently, all major parties made submissions on this issue. The ACTU sought a flat adjustment up to the level of C10 classification in the Metal Industry Award and a percentage increase above C10 to ensure fairness for middle and upper classification levels. State Labor governments supported the ACTU, submitting that the adoption of the ACTU's proposal would provide a fair safety net for middle and upper classifications while still emphasising the needs of the lower paid through a flat money increase. 16 The Joint Coalition governments supported a flat increase capped at the C10 level. They argued, inter alia, that safety net adjustments should continue to target the low paid, with the role of relativities being confined to those between awards. It was submitted that the labour market no longer requires the structural efficiency principle because workplace relations are now focussed at the enterprise level, thereby the continuance of historical relativities is no longer relevant. 17 The ACCI argued that relativities are a matter for the market and will be set by the market. The AiGroup argued that there is a fundamental tension between protection of the low paid and protection of skills based classifications. However, it did not consider that flat increases had reached the point where they threatened the integrity of the relativity structure. The AiGroup agreed with the State Labor governments that this point had not been reached. 18 In dealing with the submission of the Joint Coalition governments that the legislative scheme no longer supports higher award classification increases under safety net adjustments, the AIRC reaffirmed its previous rejection of that submission: It is true that s88B(2)(c) of the Act provides that when adjusting the safety net the Commission must pay regard to the needs of the low paid. However we do not think that this object can be elevated in such a way as to displace the obligation on the Commission to maintain a safety net of fair minimum wages for all employees. In this respect we do not see how the use of the plural term " wages " can be ignored. We are fortified in this conclusion by two additional factors. First, s89A of the Act provides that classifications of employees and skill based career paths are allowable award matters. We think it follows that where classification structures and skill based career paths are included in awards they are a relevant feature of the safety net of fair minimum wages and conditions which the Commission is obliged to maintain. Second, awards play an important role in the operation of the no disadvantage test. Agreements for which certification is sought under other divisions of the Act must be tested against appropriate safety net awards. In this context it would be incongruous if the Commission was not obliged to maintain fair minimum wages for employees at higher levels of the award structure. While there may be circumstances in which a safety net adjustment may be appropriate only at lower classification levels, we do not accept that such a position is an inevitable consequence of the present legislative scheme. 19 In granting an increase, the AIRC concluded that: … On this occasion we think that it is appropriate to recognise the different impact of flat dollar increases at the different award classification levels by awarding higher amounts at the middle and upper levels. At the same time while the increase at the lower level is substantial it is not so great as to put undue pressure on employment. The amount and form of the increases are an appropriate outcome to the ACTU's claim. The form of adjustment is appropriate for reasons of fairness and as a measure towards avoiding the further compression of relativities between job classifications. Furthermore the result is consistent with the obligations upon us to have regard to economic factors, including the desirability of attaining a high level of employment, and to have regard to the needs of the low paid. The adjustment will be the following: 1. a $13.00 per week increase in award rates up to and including $490.00 per week;

2. a $15.00 per week increase in award rates above $490.00 per week up to and including $590.00 per week; and

3. a $17.00 per week increase in award rates above $590.00 per week. We are confident that the economic impact of the adjustment will be manageable. Whilst the adjustment is greater in dollar terms at the higher levels than the adjustment last year, the majority of employees to benefit are at the middle or lower levels of the award classification structures. At those levels the amount of the adjustment is the same as or less than last year. It is also relevant that the cost impact of the increase is less than a comparison with last year might suggest because this year the increase will apply to a higher base.

In recent years there has been strong growth in real earnings across the economy. In the generally favourable economic conditions which have prevailed the Commission has been able to make significant adjustments in the wages safety net. We mentioned earlier our concern about some adverse developments in the labour market. The December quarter 2000 National Accounts also give cause for concern, particularly the growth statistics. Nevertheless we have given weight to the predominant view among the parties that because of the underlying strength of the economy growth will recover during the course of 2001.

As we indicate later in dealing with amendments to the Statement of Principles we have decided to modify the requirement that safety net adjustments increases not be available within 12 months of the previous safety net adjustment. That modification will only apply to cases in which the parties consent and there is no cost impact arising from the adjustment. Apart from that modification implementation of the adjustment provided for in this decision will be subject to the usual conditions. The conditions are: (a) the increases will be fully absorbable against all above award payments;

(b) except where specifically permitted by the Statement of Principles, the increases will be available from a date no earlier than twelve months after the increases provided for in the May 2000 decision in the award in question;

(c) the commencement of award variations to give effect to this decision will be no earlier than the date on which the award is varied, with phasing-in of increases permissible where circumstances justify it. Any application for phasing-in will be referred to the President for consideration as a special case;

(d) by consent of all parties, and where the minimum rates adjustment has been completed, award rates may be expressed as hourly rates as well as weekly rates; in the absence of consent, a claim that award rates be so expressed may be determined by arbitration; and

(e) allowances which relate to work or conditions which have not changed and service increments are to be varied; the method of adjustment is to be consistent with the Furnishing and Glass Industries Allowances Decision. Consistent with our decision the federal minimum wage will be increased by $13.00 per week to $413.40 per week. Pre-Hearing Conference

20 There were a number of issues in relation to modification to the State wage fixing principles. At the parties' joint request, Wright J, President, convened a conference on 14 May 2001 to canvass those issues. The issues between the parties were considerably narrowed as a result of this conference.

21 The position of the Labor Council was that the wage increases awarded in the National decision should be adopted in New South Wales. However, the Labor Council registered its disappointment at the level of wage increases awarded. The Labor Council foreshadowed its intention to pursue a "Secure Employment Test Case which is designed to assist low paid workers move out of casual and contract work to more regular and secure employment." The Australian Workers' Union, New South Wales ("AWU") appeared in the proceedings to make submissions on problems it had experienced with the operation of Principles 8(b), (g) and (h) of the present State wage fixing principles but otherwise supported the position of the Labor Council. The position of the Minister for Industrial Relations and the Public Employment Office ("the Minister") was that this Commission should adopt in full the increases emanating from the AIRC decision and apply them to New South Wales awards. Employers First, its affiliated organisations and The Australian Retailers' Association, New South Wales Division ("Retailers' Association") submitted that in their view the increases awarded by the National decision were too high having regard to the state of the New South Wales economy and its expected performance. Those employers also noted there were no efficiency gains or offsets in return for the wage increases awarded. Nevertheless, recognising the imperatives of s50 of the Act, those employers did not oppose the adjustment arising out of the National decision. Australian Business Industrial ("ABI") and The Registered Clubs Association of New South Wales ("RCA") took the position that, having regard to s50 of the Act, they did not oppose the increases awarded in the National decision flowing to New South Wales awards. The Australian Industry Group, New South Wales Branch ("AiGroup"), Catholic Commission for Employment Relations ("CCER"), State Chamber of Commerce and Industry (Industrial Relations) Association ("SCC"), Motor Traders' Association of New South Wales ("MTA"), Local Government Association of New South Wales ("LGA"), Shires Association of New South Wales ("SA") and the New South Wales Road Transport Association Inc. ("RTA") (referred to collectively as "the combined employers") expressed support for the position of Employers First and ABI. The Evidence 22 A statement by Janelle Hindmarsh, a single mother with one child residing in Fairfield West, was filed by the Labor Council in the proceedings. Ms Hindmarsh is a qualified childcare worker working 40 hours per week for a gross wage of $536.60 per week ($434.50 after tax). Her statement went to the difficulties of an employee in her position meeting weekly living expenses and, at the same time, attempting to save in order to pay rent on a home. She described in her statement the additional strain caused by unplanned expenses such as car repairs. In her statement Ms Hindmarsh said: I understand that if the State Wage Case follows awards the same amount as the National Wage Case I would get $15 per week extra. With that amount of extra money it will make very little impact on my standard of living or my aspirations to live in a home of my own. 23 Ms Hindmarsh was not required for cross-examination. In relation to her evidence, Mr C Christodoulou, appearing for the Labor Council, said: Janelle Hindmarsh's evidence is intended simply to remind this Commission as it ploughs through the reams of economic data about the state of the economy that there are hundreds of thousands of workers out there who need a real boost in their wages …

24 The submissions of Employers First contained an extensive document entitled "Economic Conditions in New South Wales", prepared by Chris Richardson, Director, and Marnie Griffith, economist, of Access Economics Pty Limited. The document contains an overview of Australian economic conditions and includes a section entitled "Prospects for the Australian Economy." This section discussed economic activity, job growth, prices, wages and disposable incomes. It also contained a section entitled "Prospects for the NSW Economy," which discussed the economy in NSW, including falls in the construction sector and NSW as a share of Australia's output. A comparison of forecasts on the NSW economy to the national economy was also made. The main points arising out of the document may be summarised as follows:

· There remains a small risk that Australia will slip into recession in 2001. However, the fundamentals remain good. This is not a 1991 economy, crushed by 18% interest rates. Nor is it a 1982 economy, crushed by excessive wage rises. This gives hope that late 2001 will bring renewed good growth. · Growth in NSW is likely to lag Australia as a whole in 2001 and 2002. The State's good run has come to an end, and a post-o1ympics hangover has taken hold. NSW might avoid a recession in 2001, but it may be a narrow miss. As for Australia as a whole, recovery is imminent and by 2002-03, both NSW (5.0%) and Australian (4.9%) growth is forecast to be back on track. · The fall-off in demand is even sharper than that in output. As is typically the case in any downswing, the fall in demand currently underway is sharper still than that in output (GDP, or 'supply'). · The outlook for employment is weak. The number of jobs in NSW in 2001 is projected to contract by 0.4%, compared with growth of 0.8% for Australia. Job weakness continues until mid-2002, but is then forecast to grow strongly for the remainder of the year, so that calendar 2002 should see 2.2% jobs growth in NSW (1.7% for Australia). · These developments are not a major surprise. Access Economics' submission to the State Wage Case 2000 noted that "Theory suggests sustainable wage rises based on productivity improvements, and that there is a clear trade off between wage rises and job gains. The trade-off is sharper when conditions are worsening, so slower demand in NSW in 2001 would accentuate the job cost of any non-productivity based wage rises. The implication of the economic slowdown now underway (in Australia in general, and NSW in particular) is therefore that there is greater reason for NSW to reconsider the quantum of the wage rise granted by the IRC on 1 May [2000]." · There is a disaster scenario, though the chance of it is slim. 2001 was always going to bring a post-O1ympic hangover, with the end to a bout of office construction in the CBD adding to the expected downturn in demand. However, the speed and severity of the global downturn threatens to push NSW over the edge into something deeper. At the moment that is just a threat, and the forecasts for are little changed on the last. Certainly, the State government appears to be aware of the risks, moving fast to replace the Parramatta to Chatswood rail link with a raft of other projects - though, as with the rail link, few affect spending in 2001. 25 In the body of the document it was said in respect of the outlook for New South Wales that: So NSW looks set to struggle though 2001 before recovering in a better 2002. Output growth may nudge the zero line, but the downturn may be short, and not unexpected given the surge brought by the Olympics. Short term indicators pointing to a moderate slowdown include retail (where a relatively strong pre-GST spend is being followed by a pause rather than a decline); jobs (where despite recent weakness State unemployment has temporarily fallen below 6%, with Sydney below 5%); and wages (which have risen consistently well in recent years, fuelling the retail boom). But construction could turn out to be NSW's Achilles heel. 26 Mr Richardson also gave supplementary oral evidence and was subject to cross-examination.

The Submissions The Labor Council of New South Wales 27 Mr Christodoulou with Mr P Howes, for the Labor Council, submitted that the Labor Council maintained its view that because of the different legislative schemes in the Commonwealth and New South Wales it was open for the Commission, as a matter of jurisdiction and discretion, to award different Safety Net Adjustments in this case and in future cases and to establish a different set of wage fixing principles than that of the AIRC (see sub-sections 50(3) and 50(4) of the Act). The Commission has accepted this view in the past (State Wage Case - August 1997 (1997) 73 IR 200 at 220 - 221).

28 The Labor Council contended that on this occasion the AIRC had in its decision given more weight to economic considerations than to adequate compensation for the needs of low paid workers with respect to the cost of living and the impact of the G.S.T. Nevertheless, the Labor Council submitted that the Commission should make available the Safety Net Adjustments awarded by the AIRC.

· The State Wage Case Principles should continue an Award Review Classification Rate below which no full time adult employee should be paid; such rate to be adjusted to $413.40. · In accordance with past practice in New South Wales, allowances which relate to work or conditions, including shift allowances and service increments, should be increased to reflect the safety net adjustment; such increase to be 3%. · Pursuant to Section 50(1) of the Act, awarding the Safety Net Adjustments available from the Safety Net Review Wages May 2001 would be consistent with the objects of the Act, in particular objects (a), (b), (e) and (h). · Pursuant to Section 50(1) of the Act, there are no good reasons for not adopting the general tenor of the principles and provisions of the Safety Net Review May 2001 Decision subject to any modifications necessary to reflect:

b) the views of the Labor Council; c) the orders, principles and reasoning in the Judgments of the State Wage Case August 1997, June 1998, June 1999 and the State Wage Case 2000. · The State Wage Case Principles, as determined in the State Wage Case 2000, should be retained with some minor changes being those necessary to apply the wage increases awarded in the National decision and to introduce a modified set of words in Principle 8 to allow for the earlier application of the State Wages Case adjustments either by consent of the parties or by application via the Special Case Principle dealing with awards which are lagging behind.

30 Mr Christodoulou traversed the detailed economic material before the AIRC, which included material relating to the New South Wales economy, and that Commission's analysis of the material. He submitted that the New South Wales economy is performing almost on par with the national economy. Mr Christodoulou contended, therefore, that there was no reason why the New South Wales economy could not sustain moderate safety net increases consistent with the AIRC's conclusions. 31 Mr Christodoulou reiterated that the awarding of the Safety Net Adjustments by the AIRC had on this occasion not adequately addressed the needs of low paid workers, particularly in the context of increasing decentralised bargaining at the enterprise or workplace level, the increased incidence of precarious employment, cost of living and the impact of the G.S.T. He referred to the AIRC's acknowledgment in its decision that many low paid employees are unable to afford necessities of the broader community and that there continues to be a gap in income earnings for those under the award system.

32 Mr Christodoulou referred to the role of this Commission in addressing the needs of the low paid as follows: The Industrial Commission of New South Wales has identified and focused on the needs of low paid workers in a series of major cases since 1986. Mechanisms to assist low paid workers have included:

a) granting of supplementary payments in 1986, (see State Wage Case 1986 unpublished);

b) the setting of a low paid award rate of $310.00 in 1988, (see State Wage Case - August 1988 27 IR 373);

c) minimum rates adjustments since 1989, (see State Wage Case - August 1989 35 IR 183);

d) safety net adjustments since 1993, (see State Wage Case - December 1993 52 IR 173);

e) Award Review Classification Rate since 1997, (see State Wage Case - August 1997). The Industrial Relations Commission of NSW in considering the needs of the low paid have different objects that need to be considered than those of the Australian Commission. A decision in this case to adopt the increases as awarded in the National decision would in a small part alleviate some of the difficulties faced by low paid workers who solely rely upon the award system.

33 It was further submitted that: To further assist low paid employees the Labor Council intends to file an application pursuant to Section 51 for the making of a State Decision to deal with Secure Employment.

This application will seek to place conditions on employers with respect to their use of part-time and casual employees, the use of labour hire and contracting companies. We will seek to provide opportunities to low paid employees to access proper career structures in a Labour Market which makes it more difficult to find regular and secure employment. 34 Mr Christodoulou referred to the AIRC's decision to give the discretion to members of the Commission to waive the requirement for twelve months to have elapsed between wage adjustments allowable under previous Safety Net decisions provided there was consent between the parties and there was no cost to any employer party to the relevant award. He contended that this waiver principle should also be available in the State principles and, in addition, the principles should explicitly make clear that it would be open to any party to run a "special case" should they wish to bring forward the application of previous or current wage case adjustments. Mr Christodoulou submitted that: … it would be neither fair nor just that an award or awards could indefinitely lag behind in wages or delays because of what may have been oversights in the past in making applications to vary them for previous State Wage Case adjustments. It is therefore proper that we place beyond doubt the ability of the Commission to deal with the issue having regard to each case on it's merits. 35 Reference was made to ACCI's submission in the national proceedings that the AIRC should inquire, when an award is varied to include the safety net adjustment, whether that award has appropriate provisions dealing with part-time employment which are consistent with the Family Leave Test Case and Personal Carer's Leave Test Case (Stage 2). Mr Christodoulou contended that with respect to State awards there are various mechanisms available to the parties to consider part-time arrangements as appropriate to each industry. The review of awards pursuant to s19 of the Act in particular, he said, continued to allow the parties to consider part-time work arrangements as appropriate. It was the Labor Council's submission that no action nor determination on the issue of part-time work was necessary as a consequence of the National decision.

36 Mr Christodoulou also referred to ACCI's submission that the AIRC should endorse majority clauses in awards. On this point he submitted that: No action or determination is necessary as a consequence of the National decision with respect to majority clauses. We submit that the Industrial Relations Act 1996 and various principles established by this Commission provide adequate flexibility and safeguards as follows:

(i) Chapter 2, Part 2 of the Industrial Relations Act 1996 dealing with Enterprise Agreements,

(ii) Enterprise Agreements Principles which were last reviewed in December 2000 (see Review of the Principles for Approval of Enterprise Agreements 2000 ),

(iii) the Enterprise Arrangements principle contained in the May 2000 State Wage Case Principles, and;

(iv) consent awards. 37 Mr Christodoulou also made submissions relating to the Labor Council's application to vary the standard Anti-Discrimination clause as determined in the State Wage Case 1999 (1999) 88 IR 363 and to similarly amend Principle 1.5 of the principles applying to the approval of enterprise agreements. It was said that the need to vary these provisions arises out of the Anti-Discrimination Amendment (Carers' Responsibilities) Act 2000, which came into force on 1 March 2001. That Act makes discrimination in employment on the ground of a person's responsibilities as a carer unlawful. Accordingly, Mr Christodoulou sought to vary Order 5 of the State Wage Case 1999 to add "responsibilities as a carer" to cl1 of the standard Anti-Discrimination clause so that it reads: It is the intention of the parties bound by this award to seek to achieve the object in section 3(f) of the Industrial Relations Act 1996 to prevent and eliminate discrimination in the workplace. This includes discrimination on the grounds of race, sex, marital status, disability, homosexuality, transgender identity, age or responsibilities as a carer. 38 Mr Christodoulou proposed that all awards that contain the Anti-Discrimination clause be varied by way of general order.

39 The Labor Council sought the same variation to the anti-discrimination provision in Principle 5 as set out in Annexure A to the Review of the Principles for Approval of Enterprise Agreements 2000 (2000) 101 IR 332.

The Australian Workers' Union, New South Wales 40 Mr R Tripodi appeared for the AWU to raise and address problems for a number of its awards, including the Pastoral Employees (State) Award, the Coal Superintending Samplers (State) Award and the Nut Food Makers (State) Award arising from the operation of Principle 8(b), (g) and (h) as currently expressed in the State Wage Case 2000 (2000) 97 IR 93. The problems raised by Mr Tripodi may be illustrated by reference to the Pastoral Employees (State) Award. That award was only recently varied to incorporate the wage increase arising out of the State Wage Case 2000 decision and, consequently, any increase arising out of the present proceedings would not, by virtue of the operation of Principle 8(b), be available before April 2002. Mr Tripodi expressed concern that, given this effect of the operation of the principles, low paid workers who had already experienced significant delays in receiving wage increases would be further disadvantaged.

41 Mr Tripodi put forward a number of proposals as to how the AWU considered the problem might be addressed. His ultimate proposal, which involved amendments to Principle 8 of the wage fixing principles, was in the following terms: 8 State Wage Case Adjustments

(b) Subject to paragraph (g), that at least twelve months have elapsed since the rates in the award were increased in accordance with the State Wage Case 2000 judgment. …

(g) Increases arising from the State Wage Case 2001 and/or from previous State Wage Cases may be phased-in upon application and where circumstances justify it. However, applications for increases arising from the State Wage Case 2001 for delayed awards which are made in the year 2001 should be made effective and available to employees under those awards in the year 2001.

(h) In the absence of consent in respect of phasing-in, an application will be determined by the Commission in a manner that is consistent with paragraph (g) above. 42 In the alternative to the foregoing, Mr Tripodi proposed the following amendments which, he submitted, were consistent with what the Labor Council had proposed in respect of this issue: 8 State Wage Case Adjustments

(b) Subject to paragraph (g), that at least twelve months have elapsed since the rates in the award were increased in accordance with the State Wage Case 2000 judgment. Where an application for an increase arising from the State Wage Case 2001 would not be made effective and available to employees under awards in the year 2001 this twelve month delay may be waived. However, an application for waiver of the twelve month delay must be dealt with as a Special case in accordance with Principle 10 - Special Case of these principles. …

Employers First and The Australian Retailers' Association, New South Wales Division

43 Mr T McDonald appeared for Employers First and Mr D Ritchie, for the Retailers Association. Mr McDonald said his organisation took the view that the increases awarded by the National decision were too high, having regard to the state of the New South Wales economy and its expected performance. He also noted there were no efficiency gains or offsets in return for these increases. Nevertheless, he recognised the

imperatives of s50 of the Act as to following National decisions and, therefore, did not oppose the adjustments arising from the present decision.

44 Mr McDonald submitted that the proposed departures from the National decision were consistent with the Act and for good reason, principally flowing from differences between the State and federal legislation or from a desire to continue certain existing State Wage Fixing Principles.

45 He observed that with the exception of the quantum of increases to wages and allowances the federal principles were not changed other than to include a Principle 8(c) as follows: (c) In awards where the variation for a safety net adjustment arising from the April 1999, May 2000 or May 2001 decisions is by consent and does not result in an increase in the wage rates actually paid to employees or increase the wage costs for any employer, any applicable twelve months' delay between variations may be waived.

46 Mr McDonald indicated that this change was reflected in the following new Principle 8(g) as proposed by Employers First: (g) Subject to Principle 11, Special Cases: (i) In awards where the variation for a State Wage Case adjustment arising from the 1999, 2000 or 2001 decisions is by consent and does not result in an increase in the wage rates actually paid to employees or increase the wage costs for any employer, any applicable twelve months' delay between variations may be waived. (ii) Increases arising from the State Wage Case - June 1998 and from previous State Wage Cases may be phased-in upon application and where circumstances justify it. In the absence of consent in respect of phasing-in, an application will be determined by the Commission.

47 Mr McDonald submitted that its position in relation to Principle 8(g) should be adopted due to the agreement to the proposal of all employers, all other unions (through the Labor Council) except for the AWU, and that such an approach was well reasoned. Mr McDonald articulated the grounds in support of his position, relying particularly on the position adopted by the AIRC and the need to avoid the cost pressures placed on employers by more than one State Wage Case adjustment being payable at a time.

48 A further proposed amendment referred to by Mr McDonald was a re-formulation of Principle 13, First Awards and Extension to Existing Awards. Mr McDonald indicated that this change was by agreement and was designed to reflect, in part, changes made to the federal principle in earlier National decisions.

49 A further change to the principles sought be Employers First, which did not arise from the National decision, was to change the enterprise arrangements principle to a consent awards principle and to include a provision as to flow-on. Consequent changes were also proposed to be made to the special case principle. This proposed change was strongly contested by the Labor Council.

50 The thrust of Mr McDonald's proposal in this respect was to establish a new consent award principle based on the existing enterprise arrangement principle and thereby remove any distinction - and Mr McDonald submitted, confusion - between the rules applying to consent awards and enterprise arrangements. Mr McDonald put extensive written and oral submissions in support of his position.

51 The essence of Mr McDonald's position may be gleaned from the following submission. After quoting the special case principle, Mr McDonald said: It will be noted that the exception for consent awards provides that they will be dealt with in terms of the Act whereas Enterprise Arrangements have to comply with the Act and Principle 11. Enterprise Arrangements, however, are consent awards, which are restricted to apply to one enterprise. It could be interpreted that consent awards that do not apply to one enterprise, are not subject to any principles. The difference between whether and what principles to apply to consent awards turns solely on their coverage, that is, whether they apply to one enterprise or more than one enterprise.

The exceptions to the special case principle discriminate between enterprise specific and industry arrangements. If a consent award is made for an enterprise the tests contained in the enterprise arrangement principle have to be satisfied. If the consent award applies to more than one enterprise, on one view of it (which we do not share), no tests have to be satisfied. Such an approach is contrary to the Act. Unlike the federal Act, the State Act has no tilt in favour of, or against, enterprise arrangements. It is "… based on "choice" between forms of regulation but without a tilt" in the system towards one form of regulation over another State Wage Case - December 1994 ( 1994 ) 57 IR 1." (at p32)

Consent awards, whether enterprise or multi enterprise based reflected this choice between forms of regulation. They had their genesis in a recognition that a central consideration of the Wage Fixing Principles, structural efficiency, could be enhanced by Enterprise Arrangements and consent awards, and in

encouraging parties to take greater responsibility for their industrial affairs. But for the Enterprise Arrangements principle, they are in concept and execution the same.

Australian Business Industrial 52 Mr P Ronfeldt appeared for ABI and RCA. In relation to economic considerations, Mr Ronfeldt said that since the National decision there have been no new figures released which suggest that the economic picture available to the Commission had substantially changed. Uncertainty, especially arising from the potential of the US economy to dampen the world, and the Australian, economies persisted. He said that data showing the performance and prospects of the NSW economy also suggested uncertainty about the future and indicated some current under-performance by the NSW economy relative to its national contribution.

53 Mr Ronfeldt informed the Commission that the ABI Council met on 9 May to determine its position on the Commission's summons to show cause. It had regard to the operation of s50 of the Act, the National decision and the economic context, including available economic data. It determined that there were not "other good reasons" sufficient for the increases under the National decision not to be adopted. Accordingly, ABI did not oppose adoption of the increases arising under the National decision, including the proposed increase available for allowances, juniors and the Award Review Classification Rate.

54 ABI presented detailed economic submissions. In its concluding statement on economic conditions, ABI submitted: The NSW economy ended 2000 on a low note and has had an inauspicious beginning to 2001. A post-o1ympics slump would appear to have been a significant factor in the performance of the NSW economy in late 2000 - and this was not totally unexpected. However, a significant post-o1ympic effect also seems to have carried over into 2001. The adverse effects of the GST have been significant, particularly on the housing sector, and NSW has not escaped this effect. These GST effects have been more severe and longer lasting than expected. In late 2000 it would have been a reasonable assumption that the NSW economy would improve as 2001 progressed as the adverse effects of the post-Olympics downturn and the GST dissipated. However, the speed and extent of the US economic downturn has cast a pall over the international economy and Australia's economic prospects for the remainder of this year. It is not certain that Australia will record positive GDP growth rates over coming quarters. It does seem clear, however, that the Australian and NSW unemployment rates will rise as the labour force continues to grow at a faster pace than jobs creation. On balance, it cannot be said that the Australian economy has so altered since the National decision to depart from the AIRC's view "In determining both the level and structure of safety net increases, we have had regard to the level of uncertainty about immediate economic prospects and the recent weaker labour market performance" [PR002001 para 99]. Data showing the performance and prospects of the NSW economy also suggest uncertainty about the future and indicate some current under-performance by the NSW economy relative to its national contribution.

55 Mr Ronfeldt supported Employers First as to the form and content of the proposed wage fixing principles as well as the amendments proposed by the Labor Council in respect of the standard Anti-Discrimination clause in awards and enterprise agreements. AiGroup, CCER, SCC, MTA, LGA, SA and RTA (referred to collectively as "the combined employers") 56 The combined employers were represented by Mr R Davies. Mr Davies' position was one of support for the position of Employers First and ABI. The Minister for Industrial Relations and PEO 57 Mr J V Murphy of counsel, who appeared for the Minister, referred to the position of the New South Wales government in the proceedings before the AIRC and the fact that the State of New South Wales supported the AIRC granting the maximum wage increase consistent with the evidence, and doing everything possible to address the needs of the low paid.

58 Mr Murphy submitted that advice received from the Treasury of New South Wales indicated the New South Wales economy exhibited the same strengths and weaknesses as the Australian economy and led to the conclusion that the AIRC's decision should flow on to State awards.

59 In summarising his economic submission, Mr Murphy said: As with the Australian economy, New South Wales economic growth is expected to moderate in 2000-01.

A large fall in dwelling construction is the main contributor to that slow down in 2000-01, although weaker retail sales and vehicle registrations in the first half of the financial year will also make a contribution. Business investment is expected to be neutral.

Employment growth is also likely to be slower in 2000-01, while the unemployment rate may be a little higher. Wage costs in NSW are expected to continue rising at a moderate rate, slightly faster than expected nationally.

In 2001-02 a recovery in dwelling construction, and to a lesser extent some lift in non-dwelling construction, should cause the rate of economic growth to accelerate. Growth is not expected to reach the levels attained in the last few years of the previous decade but should be fast enough to generate an improvement in the labour market.

A risk to that scenario is a continued slowing of the global economy. If that were to occur the outlook for the Australian and NSW economies would be less optimistic.

60 Mr Murphy addressed a number of other issues as follows: Equal remuneration - since the wage fixing principles were set in the State Wage Case 2000 , these principles have been varied by the Commission in Re Equal Remuneration Principle Decision (2000) 97 IR 177 at 216. This decision inserted a new paragraph (h) in Principle 2 and adopted a new Principle 15, 'Equal Remuneration and Other Conditions'. It is appropriate to make explicit the changes by amending the Wage Fixing Principles to reflect these changes.

Lagging awards and Principle 8(b) - It is desirable that there should be a mechanism available whereby lagging awards can be brought to the attention of the Commission and appropriate orders can be made which have regard to the interests of both the employers and employees concerned. In this regard there may be merit in adopting the provision which the AIRC in its National decision introduced into the federal wage fixing principles. It would appear, however, that the new federal provision is of limited effect, applying only in those situations where the wage rates set out in a federal award have fallen behind actual rates. It is submitted that an appropriate approach to deal with this problem would be to amend Principle 8(b) to make it explicit that lagging awards can be dealt with as a special case under Principle 10.

Part-time employment and majority clauses - Employers First has invited the Commission to 'associate itself' with the comments of the AIRC concerning part-time employment and majority clauses. There is adequate flexibility in regard to part-time employment in New South Wales, as provided by the Industrial Relations Act 1996 , the State Part-Time Work Case (1998) 78 IR 172 and relevant provisions in many New South Wales awards. In this regard, it is noted that the s19 review process requires the Commission to take account of part-time work arrangements in awards. The AIRC decision noted that few majority clauses had in fact been inserted into federal awards, but expressed support for them as a means of rationalising conditions of employment in particular enterprises. It is submitted that while there may be value in such clauses, it is primarily a matter for the parties to progress in respect of individual awards.

Enterprise Arrangements Principle - Employers First has proposed changing the current Enterprise Arrangements Principle (Principle 11) to a 'consent awards' principle. This proposal raises some serious issues, particularly in respect of the capacity of the Commission to have regard to conditions of employment set by consent awards in other award proceedings. Accordingly, it is submitted that the questions of reviewing the operation and effect of Principle 11, and of considering the proposals regarding consent awards put forward by Employers First, should be reserved for later consideration by the Commission. Such an approach will enable the parties to prepare appropriate submissions addressing all relevant issues.

Carers' responsibilities - the Minister wishes to indicate his support for the variation of the anti-discrimination clause, inserted into awards by way of a general order as part of the State Wage Case 1999 , to reflect the recent amendment to the Anti-Discrimination Act 1977 to include a person's responsibilities as a carer as a prohibited ground of discrimination.

61 Mr Murphy concluded his submission by saying that this Commission should adopt in full the increases emanating from the AIRC decision and apply them to New South Wales awards. The economic material before the AIRC, and now before this Commission, demonstrated that such an approach was economically responsible. He said that the interests of conformity as between wage outcomes in this jurisdiction and the federal jurisdiction, and the needs of low paid workers as identified in the proceedings before the AIRC, and specifically the needs of low paid female workers which are of special concern to the State government, required that the outcome of the AIRC decision now be applied in the New South Wales jurisdiction.

Submissions In Reply The Labor Council of New South Wales 62 The Labor Council had reserved its position on the Employers First proposal for a new consent award principle until its reply. In that reply, Mr Christodoulou submitted there were no compelling reasons for the Commission to adopt the proposed new principle. It followed, he said, that the Labor Council did not support any consequential changes to the special case principle. He also submitted that the current enterprise arrangements principle should not be amended at this time without a proper examination or inquiry about its use or its relationship to the making of consent awards or enterprise agreements.

63 Mr Christodoulou contended that the proposals by Employers First were first raised with the Labor Council only in the week commencing 7 May 2001 and a formal proposal was not forthcoming until 11 May 2001. He said that if it was the intention of Employers First to seek what the Labor Council regarded as substantial changes to the State Wage Case principles and the operation of consent awards then these should have been foreshadowed much earlier to allow the Labor Council to properly consult its affiliates and enter into proper negotiations.

64 Mr Christodoulou made detailed submissions opposing Employers First's proposal. Significantly, he said: It is highly unlikely that simply renaming a Principle which was introduced in 1991 for enterprise level arrangements could or should be renamed "Consent Awards" and be extended to apply across whole of industry awards without a proper examination of the implications. 65 Mr Christodoulou also made the following points:

· The Labor Council does not believe, given the circumstances surrounding the introduction of the principle back in 1991, that the application of the current Enterprise Arrangements principle "turns solely on whether it applies to one enterprise or more than one enterprise".

· The major difference between the use of Principle 11 to make an Award or Principle 2, is that Principle 11 contemplates arrangements which may have no union representation and accordingly certain safeguards are required to ensure no disadvantage to employees as against the award.

· There is no evidence before the Commission that existing consent awards have avoided safeguards or scrutiny of the Commission.

· There is no evidence which leads to a conclusion that there is a "flow on" effect taking place because of the making of consent awards.

· It is well established that the Commission will in most circumstances discount to some degree the relevance of the use of consent awards as precedent value.

· The Labor Council believes that there is some merit in examining the current Enterprise Arrangements Principle in light of some of the issues raised by Employers First but more particularly the interface between the current Principle 11 and the Enterprise Arrangement Principles.

· In our view the Commission should not make the changes to the Principles sought in the absence of sufficient material and facts which would demonstrate that the operation of the current Principles are not assisting the Commission in meeting the objects of the Act.

The Commission's Decision 66 We are satisfied that the AIRC's Safety Net Review-Wages May 2001 is a "National decision" as defined by s48 of the Act which the Commission is required to consider in accordance with the provisions of s50. The Wage Increase 67 The AIRC determined to grant adjustments in the weekly rate of pay in all awards made under the terms of the Workplace Relations Act 1996 on a tiered basis. The rates of wage were increased by $13.00 per week in the case of award rates up to and including $490.00 per week; $15.00 per week in the case of award rates above $490.00 per week and up to and including $590.00 per week; and $17.00 per week in the case of award rates above $590.00 per week.

68 Section 50(1) of the Act requires us to adopt the National decision unless we are satisfied that it is inconsistent with the objects of this Act or that there are other good reasons for not doing so. It is important

to note in this respect, as observed in the State Wage Case 2000, that differences exist in the legislative frameworks which underlie the federal and New South Wales systems.

69 A Full Bench of this Commission has recently stated that the differences that now exist between the two legislative schemes, so far as the respective award making powers of the AIRC and this Commission are concerned, are stark: Re Pastoral Industry (State) Award [2000] NSWIRComm 27 at [28]. In that decision, the Full Bench was required to consider the statutory schemes where an application had been made to vary an award which had hitherto been treated as a counterpart award. In relation to safety net adjustments, the Full Bench stated (at [25]): Thus, it will be seen that the WR Act places a particular emphasis on the concept of a 'safety net' in the context of awards made by the AIRC. That term is not defined in the WR Act, but was considered by a Full Bench of the AIRC in Safety Net Review - Wages - April 1997 (1997) 71 IR 1 at 16-17. That decision was considered in the State Wage Case - August 1997 earlier referred to, the State Wage Bench there noting the consequent divergent paths which the two systems of industrial relations appeared to be following (at 208). By way of contrast, the Act does not contemplate any limitation in the making of awards to a safety net basis.

70 On this occasion, we have decided to adopt the decision of the AIRC as to the quantum of the wage adjustment. The divergent approaches of the legislative schemes do not manifest themselves in the decision of the AIRC to such an extent as would warrant any departure from that decision.

71 Having regard to the quantum of and reasons for the AIRC decision, the adjustment in wages arising from the National decision is not inconsistent with the objects of the Act. Further, we are mindful that no party to the proceedings opposed the adoption of the quantum of the wage adjustment arising from the National decision, although some parties, as we have earlier mentioned, expressed reservations as to the quantum awarded.

72 Accordingly, we adopt the decision of the AIRC as to the quantum of the wage adjustment. In doing so, however, it is appropriate to make some observations as to the critical factors underpinning that decision.

73 There were two factors which were paramount in the decision reached by the AIRC. Firstly, the AIRC had regard to economic conditions and, in particular, the state of the Australian economy and the economic effects of any safety net adjustment. Secondly, the AIRC considered the position of low paid workers.

74 The AIRC concluded that there were positive features of the "current economic context". This positive outlook was found essentially in the continuing strength of the economic fundamentals of the Australian economy. The counterbalancing consideration was the slow down in the Australian economy. The AIRC referred to the moderation of the growth of the Australian economy from the middle of the year 2000. It was observed that Gross Domestic Product contracted in the December quarter with a consequent weakening of labour market conditions. This fall was, it was concluded, substantially, but not entirely, reflective of transitional factors and was concentrated in particular sectors of the economy.

75 In the result, the AIRC concluded that a degree of caution was required, particularly in the light of the uncertainty arising from recent National Accounts data. This cautionary approach was adopted, notwithstanding the projected resumption of reasonable non-inflationary growth (reflecting the sound state of Australia's economic fundamentals and the position of fiscal and monetary policy settings) estimated by the Australian Treasury and the Reserve Bank of Australia. The AIRC's conclusion was based on evidence of some underlying slow down in growth in Australia, the risk to future activity from negative sentiment and slowing world growth.

76 On balance, the AIRC concluded that notwithstanding the cautious approach warranted on the economic evidence, a further adjustment of the minimum wages safety net was "appropriate and sustainable". The AIRC considered the contribution to aggregate wages growth from the safety net adjustment would have limited effect on economic activity, inflation, employment levels and productivity.

77 The evidence before us confirms that the economic fundamentals in Australia remain sound. Thus, although there has been a decline in the Australian economy, on the evidence of Mr Richardson, the Australian economy will recover rapidly towards the end of the year 2001 and continue recovery into 2002. This projection was supported on the bases of the existence of relatively low interest rates, a projected increase in public spending, the competitiveness of the Australian dollar and the artificially weak nature of housing activity (which is expected to recover substantially).

78 Upon the basis of estimates by Access Economics, the Australian economy is expected to return to 4.9% growth by 2002-2003. Similarly, whilst employment growth was expected to be weak until mid 2002, it was forecast that employment would grow strongly for the remainder of that year.

79 The evidence before us demonstrated that the downturn in the New South Wales economy is presently greater that that of the Australian economy. This was largely associated with the decline in investment in New South Wales which had risen sharply through the year 2000 due to a variety of investment factors (not the least of which was the Olympics). Employment growth contracted in New South Wales in 2001, compared with the slight growth in Australia.

80 This decline in the New South Wales economy would seem, however, to derive largely from transitional factors. On the evidence of Mr Richardson, it is expected that the present weakness in the New South Wales economy will be corrected by mid-2002 so that the New South Wales economy should improve proportionally better than the Australian economy after that time. For example, it is expected that for the financial year 2002-2003, growth in New South Wales will be 5% as compared to the Australian economy at 4.9%. Employment growth is expected to be 2.2% in New South Wales for the calendar year 2000 compared to 1.7% in Australia. Indeed, Mr Richardson expressed a concern in his evidence that the Australian and New South Wales economies might bounce back too dramatically and result in other difficulties arsing from the consequent adjustment in monetary policy.

81 We see no reason in this case to depart from the conclusion reached by the Full Bench in the State Wage Case 2000 (at [79]) that the New South Wales economy in the long term is expected to continue to function at about the average of the Australian economy and that the New South Wales economy should continue to demonstrate a relatively consistent position by comparison to the Australian economy. We do not consider that the present circumstances affecting the New South Wales economy warrant a different safety net adjustment outcome to that awarded by the AIRC in the National decision.

82 As to the second factor, namely the needs of the low paid, we have earlier set out (in para 14 of this decision) the conclusions reached by the AIRC. 83 We reiterate the view expressed in the State Wage Case 1999 and State Wage Case 2000 that, having regard to the objects of the Act, there is a need to make adjustments in wages in order to protect lower paid employees under State awards. In this respect, the evidence given by Janelle Hindmarsh, earlier referred to in this decision, gives a compelling basis for the award of a safety net adjustment to such employees.

84 In his submissions, Mr Murphy referred to contentions made by the New South Wales government to the AIRC. Those submissions were as follows: The State Labor governments submitted that research suggests that earnings mobility at the bottom of the labour market is quite limited and that with the growth of part time, casual and contract work, low paid workers are more likely to be entrenched into a future of low paid work. They submitted that research by Mitchell reveals that a larger proportion of the workforce now face lower real wages due, in part, to deregulation of the labour market.

85 Further, Mr Christodoulou foreshadowed that the Labor Council would bring an application under s51 of the Act with respect to "secure employment".

86 As to these matters, we observe that the situation of employees in low paid work remains an important consideration in State Wage Case proceedings, particularly in circumstances where the awards of this Commission may prescribe actual rates of pay.

87 The Act does not confine the Commission to the establishment of minimum wages and conditions of employment or the establishment of a safety net (whether for the needs of the low paid or otherwise). The objects of the Act reflect the broad discretion conferred upon the Commission for the making of awards. Section 3(a) provides that an object of the Act is: to provide a framework for the conduct of industrial relations that is fair and just;

88 Putting aside reference to the particular conditions of employment referred to in Div 2 of Pt1 of Ch2 of the Act, s10 leaves relatively unfettered the discretion of the Commission in the making of awards - requiring only that the Commission set "fair and reasonable conditions of employment for employees". There is no express provision in or objective of the Act which confines the exercise of discretion of the Commission to the making of awards for minimum entitlements for employees as in the federal system. Section 406 of the Act does refer to minimum entitlements but, in doing so, merely continues provisions found in successive industrial statutes in New South Wales which

proscribe contracting out of awards. The section does not limit the jurisdiction of the Commission to fix wages or conditions of employment.

Award Review Classification Rate 89 It was agreed between the parties to the proceedings that the Award Review Classification Rate should be adjusted by the same amount by which the AIRC increased the federal minimum wage.

90 Employers First submitted that, due to the operation of s19 of the Act and the historical operation of the Award Review Classification Rate, the Award Review Classification Rate might not need to be continued in future wage fixing principles. However, it did not argue against the retention of the rate in these proceedings.

91 We are satisfied that it is appropriate in New South Wales to continue to depart from the National decision in specifying an Award Review Classification Rate, in line with the practice adopted in the State Wage Case - August 1997. We determine that that rate shall be $413.40 per week. Anti-Discrimination Clause 92 In the State Wage Case 1999 decision, it was decided that a new Anti-Discrimination clause should be inserted in awards by general order. Order 5 prescribed the terms of the Anti-Discrimination clause. Order 5(1) was in the following terms: It is the intention of the parties bound by this award to seek to achieve the object in section 3(f) of the Industrial Relations Act 1996 to prevent and eliminate discrimination in the workplace. This includes discrimination on the grounds of race, sex, marital status, disability, homosexuality, transgender identity and age.

93 In Review of the Principles for Approval of Enterprise Agreements 2000, a Full Bench of the Commission determined that the Principles for the Approval of Enterprise Agreements should be varied so as to include a new provision 3.1 in the following terms: The Commission, in accordance with section 169(1) of the Act, must take into account the principles of the Anti-Discrimination Act 1977 when exercising its functions under these Principles.

94 An Anti-Discrimination clause was adopted in that decision which was in relevantly similar terms to that inserted in awards pursuant to the State Wage Case 1999.

95 Furthermore, clause 1.5 of the principle established in Review of Principles for Enterprise Agreements (at [77]) provided: In particular, the terms and conditions of employment in a proposed agreement must not unlawfully discriminate, either directly or indirectly, on the grounds of sex, race, marital status, homosexuality, age, disability or transgender identity.

96 In that respect the Full Bench noted (at [15]): The parties also agreed that, upon any amendment to the Anti-Discrimination Act 1977 making reference to carers' responsibilities, it would be appropriate to amend proposed principle 1.5 to include a reference to carers' responsibilities, upon application by any party.

97 The Anti-Discrimination Amendment (Carers' Responsibilities) Act 2000 amended the Anti-Discrimination Act 1977 by incorporating, as a ground of discrimination under that Act, discrimination against a person on the basis of that person's responsibilities as a carer.

98 In consequence of that legislative amendment it was proposed by the parties to these proceedings that the general order made by the Full Bench of the Commission in the State Wage Case 1999 be amended by adding to the provision a reference to "responsibilities as a carer". It is proposed that the general order so made would thereby vary all awards of the Commission so as to incorporate that additional provision.

99 Furthermore, it was proposed by the parties that this Full Bench vary the Principles for Approval of Enterprise Agreements as established in Review of Principles for the Approval of Enterprise Agreements 2000 by making a similar adjustment to clause 1.5 of the preamble of those principles.

100 We propose to vary the general order and principles as proposed by the parties. In coming to this decision we have taken into account the consent of the parties and the appropriateness of reflecting in awards and agreements made under this Act the provisions of the Anti-Discrimination Act 1977, as recently amended. This approach is entirely consistent with the decisions of Full Benches of the Commission in the State Wage Case 1999 and Review of Principles for the Approval of Enterprise Agreements 2000.

101 Accordingly, we shall order that order 5(1) of the orders made in the State Wage Case 1999 be deleted and in lieu thereof the following words be inserted: It is the intention of the parties bound by this award to seek to achieve the object in section 3(f) of the Industrial Relations Act 1996 to prevent and eliminate discrimination in the workplace. This includes discrimination on the grounds of race, sex, marital status, disability, homosexuality, transgender identity, age and responsibilities as a carer.

102 We shall further vary clause 1.5 of the Principles for Approval of Enterprise Agreements by deleting that clause and inserting in lieu thereof: In particular, the terms and conditions of employment in a proposed agreement must not unlawfully discriminate, either directly or indirectly, on the grounds of sex, race, marital status, homosexuality, age, disability, transgender identity or responsibilities as a carer.

The Principles 103 The parties reached agreement as to the terms of the principles excepting for two matters. Those matters were as follows:

1. The provisions governing the timing of access to State Wage Case increases (both as to increases arising under the State Wage Case 2001 and previous State Wage Case adjustments); 2. The principles governing consent awards and enterprise arrangements.

Agreed Matters 104 It was observed in the State Wage Case 2000 that the principles there adopted differed in a number of respects from those determined by the AIRC. The Full Bench considered that those modifications of the principles adopted by the AIRC were warranted having regard to differences between the two jurisdictions and the appropriateness of giving conformity to principles adopted in earlier State Wage Case decisions.

105 Putting aside the two contested matters, the parties proposed a continuance of the principles adopted in the State Wage Case 2000, save for the principle concerning first awards and extensions to existing awards. It should be noted, however, that the parties proposed the incorporation of the principle arising from Re Equal Remuneration Principle (2000) 97 IR 177 at [158].

106 As to first awards and extensions to existing awards (Principle 13) the parties proposed a substantial alteration to the existing principle. It was contended that the existing principle should be modified so as to give greater conformity with Principle 11 of the National decision. However, it should be noted that the parties considered it inappropriate to fully adopt the principle deriving from the National decision, given differences in the federal and New South Wales jurisdictions.

107 We consider that the principles proposed by consent of the parties are appropriate and that the departures from the National decision are appropriate having regard to the differences presently existing in the wage fixing principles of the two jurisdictions as the result of earlier State Wage Case decisions and the continuing differences between the legislative frameworks.

108 We note that submissions were put by the parties in relation to principles concerning part-time employment and majority clauses. Reference was made to paragraphs [158] to [162] of the AIRC decision. We do not consider that this matter has been fully debated before us and, therefore, it is not a matter with which we intend to deal in any detail in this decision. It is sufficient to note that s19 of the Act specifically deals with the issue of part-time employment. Furthermore, there is ample scope within the jurisdiction of the Commission and within wage fixing principles to deal with those matters which might be otherwise contemplated by majority clauses.

Access to State Wage Case Decisions and Lagging Awards 110 The Wage Fixing Principles were varied in the National decision by the insertion of a new Principle 8(c) in the following terms: In awards where the variation for a safety net adjustment arising from the April 1999, May 2000 or May 2001 decisions is by consent and does not result in an increase in the wage rates actually paid to employees or increase the wage costs for any employer, any applicable 12 months' delay between variations may be waived.

111 Additionally, Principle 8(b) was amended so as to remove reference to the Safety Net Review - Wages - April 1999 decision (1999) 87 IR 190 and inserting a reference to the Safety Net Review - Wages - May 2000 decision (2000) 95 IR 64.

112 The genesis of Principle 8(b) of the federal principles was the decision of the Full Bench of the AIRC in Safety Net Review - Wages - April 1999. The AIRC decided in that decision to provide for a twelve months' gap between increases provided for in its April 1998 decision (Safety Net Review - April 1998 (1998) 97 IR 37) and any increases provided for in that matter. The Commission considered that the provision of a twelve months' gap would ameliorate any adverse economic consequences of its decision. The principle was continued in Re Safety Net Review - Wages - May 2000 (2000) 95 IR 64 at [122] on essentially the same basis, namely, in order to avoid cost pressures which might arise from the safety net adjustment.

113 In the National decision, the AIRC decided to relax the provisions of Principle 8(b) so as to permit more than one safety net adjustment to be awarded at the same time. The basis for that decision was as follows [151-152]:

We have considered whether the Statement of Principles should be amended to allow for more than one safety net adjustment to be awarded at the same time. This issue has arisen in particular in relation to the award simplification process. No party was opposed to such an amendment to the principles however it was submitted that certain conditions should be complied with before any award could be varied.

The justification for the twelve month delay between safety net adjustments has been referred to already. We have decided that a member of the Commission should be able to waive the requirement for 12 months to have elapsed between wage adjustments allowable under previous safety net decisions provided that each party to the award consents to the variation and there is no cost to any employer party to the award. In any other case where a party seeks to vary an award for more than one safety net adjustment that party will need to apply for and justify the variation as a special case.

114 It should also be noted that a Full Bench of the AIRC has reduced the time periods between safety net adjustments (as specified in Principle

8. in special case proceedings: Re Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 (unreported, 21 May 1999, Print R4975).

115 Prior to the decision of the AIRC in Safety Net Review - Wages - April 1999 this Commission, in State Wage Case - August 1997, considered a situation where a relatively large number of awards had not received safety net adjustments. The evidence before the Commission in that matter was that in 218 awards sampled, over half had not received the benefit of three $8.00 safety net adjustments (see at 223). In the result, the Commission determined that it would permit applications to have any outstanding $8.00 safety net adjustments dealt with at the same time as the safety net adjustment awarded in the State Wage Case - August 1997. However, the Commission introduced a requirement for phasing-in. Principle 1(d)(vi) provided that: (vi) Increases arising from paragraph (v) above may be phased in upon application and where circumstances is justified. (at 229)

116 In the State Wage Case - June 1998 (1998) 79 IR 416, the Commission determined to adopt agreed departures proposed by the parties from the then federal principles established in Safety Net Review - April 1998 (1998) 79 IR 37. The federal principles had been reconstructed in the Safety Net Review - April 1998. As part of those changes a new Principle 8 was added to the federal principles. In giving effect to the agreement of the parties, the Commission introduced an additional component to Principle 8 which differed from the federal principles. It was in the following terms: (f) increases arising from the State Wage Case June 1998 and from previous State Wage Cases may be phased in upon application and where circumstances justify it. (at 446) This provision was, no doubt, reflective of the phasing-in arrangements introduced in the State Wage Case - August 1997 .

117 Thus, when the Full Bench of the Commission in the State Wage Case 1999 came to consider the introduction of Principle 8(b) arising from the Safety Net Review - Wages - April 1999 decision it did so in this historical context which incorporated management of outstanding safety net adjustments and the existence of a different principle providing for the phasing-in of outstanding safety net adjustments.

118 Those factors resulted in the Full Bench in the State Wage Case 1999 modifying Principle 8(b) of the then federal principles. The Commission introduced a proviso to Principle 8(b) which was reflective of the earlier phasing-in arrangements. The proviso was expressed within Principle 8(g) as follows: Increases arising from the State Wage Case 1999 and from previous State Wage Cases may be phased in upon application and where circumstances justify it.

119 The reason for this decision was contained in the section of the State Wage Case 1999 decision dealing with lagging awards. After outlining the aforementioned history of principles dealing with phasing-in arrangements, the Commission identified that, on the evidence before it, there remained awards which were still lagging behind, that is, not in receipt of a number of State Wage Case adjustments. The Commission expressed great concern over that matter, given past experience had indicated that the awards which had been overlooked particularly affected low paid workers. The Full Bench stated the approach it intended to adopt in relation to lagging awards as follows (at 396): As to such awards the Commission has determined to take two steps. The first is that at all future State Wage Case hearings the parties will be required to identify any awards which have not been varied to give effect to increases available under the previous State Wage Case so that the situation as to such awards can be considered and addressed.

The second is that we have decided that, as was the approach adopted in the State Wage Case August 1997 , outstanding increases available under the State Wage Case June 1998 should be phased-in by agreement or, in the absence of agreement, by decision of a single member of the Commission. The requirement that increases available from this decision not be inserted into an award until 12 months after the 1998 increase has been inserted will not strictly apply to these awards, but will be a matter to be dealt with either by agreement of the parties or by decision of the Commission. The aim is to introduce at the appropriate time wage increases to which employees are entitled, but without affecting employment or business viability.

120 That departure, in Principle 8, from the federal principles was continued in the State Wage Case 2000. The question of lagging awards was addressed at that time as follows (at [90] - [93]): As we have noted, the parties were agreed that any wage adjustment arising from this decision should be inserted in awards only upon application. This approach was urged by the parties on a variety of bases, including that it reflected the agreement of the parties and comity with the approach of the AIRC. Further, we have noted the submission put by Mr Robertson on behalf of the Labor Council which we have earlier extracted in this decision and consider that it is appropriate to act on it in these proceedings. The Full Bench, in the State Wage Case 1999 , stated that: ... at all future State Wage Case hearings the parties will be required to identify any awards which have not been varied to give effect to increases available under the previous State Wage Case so that the situation as to such awards can be considered and addressed. We understand Mr Robertson to be addressing this question in his submission. This issue will be revisited in the next State Wage Case, at which time the outcome of the s19 review process should be clearer. For present purposes, we shall provide that access to the State Wage Case 2000 wage adjustments shall be obtained only by application.

121 It will be observed from the foregoing consideration of Principle 8(g) that the provision has a discrete history and context quite separate from Principle 8 which emerged in the federal arena.

122 In this matter, the Labor Council proposed the continuation of the existing proviso to Principle 8(b) together with the new federal principle (Principle 8(c)). However, the Labor Council also proposed that outstanding safety net adjustments may be obtained without the twelve months' delay occasioned by Principle 8(b) by way of a special case. It was submitted that it was neither fair nor just that an award or awards could indefinitely lag behind in wages because of previous oversights in making applications.

123 The employer parties proposed essentially a similar approach to the Labor Council and relied upon the common position with the Labor Council in support of its approach.

124 The Minister submitted that Principle 8(c) of the federal principles was of limited effect and did not address the problem where there occurred a lag in safety net adjustments for awards containing actual wage rates. The Minister considered that it was appropriate to make explicit that lagging awards can be dealt with as a special case. The Minister proposed that Principle 8(g) be amended by deleting the existing words "the State Wage Case 2000 and from".

125 The AWU contended that Principle 8(g) should be amended so that award increases arising from the State Wage Case 2001 would not be delayed beyond the year 2001 as the result of the operation of Principle 8(b) (in the case of awards which had historically been the subject of late applications by the AWU for State Wage Case adjustments).

126 No party to these proceedings squarely addressed the requirements for information as to lagging awards required by the Commission in the State Wage Case 1999 and State Wage Case 2000. The Labor Council did undertake some limited research which revealed, in its submission, the continued existence of lagging awards. However, it conceded that the research was not exhaustive. Further, the material supplied did not provide relevant information as to why the awards in question had so lagged.

127 The awards identified by the Labor Council were in miscellaneous industries with the greatest concentration lying in the transport industry and in relation to musicians. It would appear that some of the awards are subject to s19 proceedings which are extant. In other cases, s19 proceedings have been completed with respect to the subject awards.

128 It should also be noted that the AWU contended that Principle 8(g) did not effectively remedy the position of lagging awards or the problem of delayed access to safety net adjustments as the provisions of Principle 8(g) had been construed as applying only in circumstances where there was more than one outstanding safety net adjustment in relation to a particular award: Re Pastoral Employees (State) Award (unreported, Grayson DP, 14 December 2000).

129 It is apparent that the principles and procedures put in place by this Commission in successive State Wage Case decisions since 1997 to remedy the non-application of State Wage Case adjustments in awards under this Act have not been fully effective. Whether this situation arises from the failure of parties to make relevant applications or the principle not being given full effect is, to some extent, beside the point. What is important is that the principle was created to ameliorate the difficulties occasioned to low paid workers as a result of the non-adjustment of awards in accordance with State Wage Case decisions. These awards typically provide actual rates of pay.

130 In these circumstances, it is appropriate for the Commission to continue to fashion the provisions of Principle 8 so as to rectify lagging awards in the New South Wales system which by their nature (in not being merely minimum rates awards) require special attention for the low paid.

131 In these circumstances, Principle 8(c) of the federal principles is not appropriate and provides far too restrictive an approach to remedy the problem we have identified, and particularly so when regard is had to the history of the provisions in this jurisdiction. Whilst we can understand that the parties may not have looked to the special case principle as a means of dealing with these difficulties, we consider that, given the history of lagging awards, any requirement being imposed on the parties of this nature might serve only to aggravate rather than remedy the situation.

132 We propose, therefore, to amend Principle 8(g) so as to provide adequate scope to deal with the special class of awards which have lagged with respect to State Wage Case adjustments. We refer in this respect to awards which have more than one outstanding safety net adjustment or awards which, by dint of a delinquent approach to earlier applications, have been unable to access in a reasonable and timely way safety net adjustments, due to the operation of Principle 8(b). We emphasise that the grant of any such application is not automatic and may attract, in the ordinary course, phasing-in principles. Furthermore, we emphasise that the amendment to Principle 8(g) we propose to make is designed to deal with the special circumstances we have identified in this decision and not to provide for any abridgment of the twelve month provision arising in Principle 8(b) in the ordinary course.

133 In order to ensure the effective operation of Principle 8(g) we also intend to adopt a procedure by which applications arising under Principle 8(g) may be dealt with by the Commission. Accordingly, we direct that any application for a safety net adjustment which relies upon Principle 8(g) should be made no later than 1 August 2001. Further, such applications should specify:

1. that the application as pressed in whole or in part upon the basis of the operation of Principle 8(g); and

2. whether the award is or has been the subject of s19 proceedings.

134 Furthermore, the application should be accompanied by correspondence to the Industrial Registrar identifying that the application is made upon this basis.

135 Such applications will be listed before a member of this Full Bench, Walton J, Vice-President, after 1 August 2001. It will be expected that the Commission would then consider the applications in the light of any s19 proceedings (although we envisage that any s19 proceedings which are extant will take into account revised Principle 8(g)). We would expect that the parties before us will appear in the proceedings before his Honour with a view to indicating at that time the outcome of their researches as to whether there remain lagging awards other than those which have been the subject of an application in accordance with the abovementioned procedure. By this means, we expect the parties will provide the information as to lagging awards earlier sought by Full Benches in the State Wage Case 1999 and State Wage Case 2000 at that time.

136 Accordingly, we propose to amend Principle 8(g) as follows: (g) Increases arising from previous State Wage Cases may be phased-in upon application and where circumstances justify it, whether as part of the application of the increases arising from the State Wage Case 2001 or otherwise.

Consent Awards 137 In the State Wage Case - December 1993 (1994) 52 IR 157 at 204, the Full Bench of the Commission established an exception to the special

case principle in relation to awards consented to by the parties and enterprise arrangements dealt with in accordance with the enterprise arrangements principle.

138 The enterprise arrangements principle was brought into existence in the State Wage Case - May 1991 (1991) 36 IR 362. The Commission observed in the State Wage Case - December 1993 that the changes to the special case principle had resulted from a recognition of the increased devolution of industrial affairs to the parties. This devolution had occurred partly as a result of changes occurring in the federal arena, but also due to the changes in the statutory scheme that the Commission was then considering.

139 It is against this background that the Full Bench of the Commission in the State Wage Case - June 1998 came to consider the introduction of Principle 2 of the federal principles established by the decision of the AIRC in Safety Net Review - April 1998.

140 In the State Wage Case - June 1998 the Full Bench modified the operation of the federal principle, by identifying matters arising under the enterprise arrangements principle as not requiring consideration as a special case. In this manner the Commission adopted the same approach as it had done in the State Wage Case - December 1993.

141 The employer parties essentially contended that the enterprise arrangements principle should be amended so as to incorporate some mutually agreed changes. They also sought the alteration of the provision so as to have it apply to all consent awards (whether enterprise based or otherwise). In this latter respect their approach was opposed by the Labor Council and the Minister. The essential basis for this proposition was that consent awards had been considered by the Commission under different principles and, therefore, there may arise an inconsistency of approach.

142 The difficulty with this proposition, however, is that, whilst examples were given of matters that have been considered by this Commission variously under the enterprise arrangements principle and as consent awards, there was no evidence as to any inconsistency of approach by the Commission in dealing with such awards. Nor were any examples given of difficulties occasioned by the existing form of the principles. Indeed, it was not submitted that the existing principles had created difficulties as a matter of principle or practice.

143 In our view, no basis has been established to alter the structure of the principles dealing with consent awards. Those principles have now been in place effectively since 1993 without difficulty being occasioned, or any issue arising, at a theoretical or practical level as to the operation of the principles. In these circumstances, and in the absence of consent of all parties, a firm basis for the alteration of the principles would need to be established before their variation. None was forthcoming in this matter.

144 However, we note the willingness of the Labor Council to enter into discussions as to the form of the principles governing consent awards. We encourage the parties to take that course.

145 We note that Employers First contended, without opposition from any other party, paragraphs (g) and (h) of the enterprise arrangements principle were now otiose. We agree. Those paragraphs shall be removed from the principles we now make.

Terms of the Principles 146 The principles which we adopt are set out in Annexure B.

147 The Commission makes the following orders: 1) Pursuant to s50 of the Industrial Relations Act 1996, the Full Bench of the Industrial Relations Commission of New South Wales orders, for the purpose of awards and other matters under the Act, the adoption, partly and with modifications as contained in this decision, of the principles and provisions of the National decision of 2 May 2001.

2. Pursuant to order 1, the Commission orders that the Commission's Wage Fixing Principles shall be as set out in Annexure B.

3. Pursuant to s52 of the Act, the Commission orders that awards which do not contain wage increases awarded since 29 May 1991, other than safety net, State Wage Case and minimum rates adjustments, may be varied in accordance with the Commission's Wage Fixing Principles upon application to include a State Wage Case adjustment of: (i) $13.00 per week increase in award rates up to and including $490.00 per week; (ii) $15.00 per week increase in award rates above $490.00 per week up to and including $590.00 per week; and

(iii) $17.00 per week increase in award rates above $590.00 per week. At the hearing of any such application, the Commission may, in its discretion, award the whole or part of the amounts referred to in the Principles or determine that no amount should be awarded. 4) Pursuant to s52 of the Act, the Commission orders that the following rates may be increased by 3 per cent upon application in accordance with the Commission's Wage Fixing Principles: (i) existing allowances which relate to work or conditions which have not changed, including shift allowances expressed as monetary amounts and service increments; and (ii) junior rates expressed as monetary amounts. Counterpart awards should be adjusted by the same amount as their federal award counterparts. 5) Pursuant to s52 of the Act, the Commission orders the variation of awards generally, to delete paragraph 1 of the standard Anti-Discrimination clause as determined in the State Wage Case 1999 and insert in lieu thereof: "1. It is the intention of the parties bound by this award to seek to achieve the object in s3(f) of the Industrial Relations Act , 1996 to prevent and eliminate discrimination in the workplace. This includes discrimination on the grounds of race, sex, marital status, disability, homosexuality, transgender identity, age and responsibilities as a carer".

6. Pursuant to s33(4) of the Act, the Commission orders the deletion of paragraph 1.5 of Annexure A to the Review of the Principles for Approval of Enterprise Agreements 2000 decision and the insertion in lieu thereof: "1.5. In particular, the terms and conditions of employment in a proposed agreement must not unlawfully discriminate, either directly or indirectly, on the grounds of sex, race, marital status, homosexuality, age, disability, transgender identity or responsibilities as a carer".

7. These orders shall operate on and from today until further order of the Commission.

· Mr C Christodoulou with Mr P Howes for the Labor Council of New South Wales.

· Mr J V Murphy of counsel for the Minister for Industrial Relations and the Public Employment Office.

· Mr R Tripodi for the Australian Workers' Union, New South Wales.

· Mr T McDonald for Employers First and its affiliated organisations.

· Mr P Ronfeldt for Australian Business Industrial and the Registered Clubs Association of New South Wales.

· Mr D Ritchie for the Australian Retailers Association, New South Wales Division.

· Mr R Davies for the Australian Industry Group New South Wales Branch, New South Wales Road Transport Association Inc, Motor Traders' Association of New South Wales, Local Government Association of New South Wales, Shires Association of New South Wales, Catholic Commission for Employment Relations and State Chamber of Commerce and Industry (Industrial Relations) Association.

Annexure B - Wage Fixing Principles INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

1 Preamble These principles have been developed with the aim of providing for their period of operation, a framework under which all concerned - employers, workers and their unions, governments and tribunals - can co-operate to ensure that measures to meet the competitive requirements of enterprises and industry are positively examined and implemented in the interests of management, workers and, ultimately, Australian and New South Wales society.

In exercising its powers and obligations under the Industrial Relations Act 1996 ('the Act'), the Commission will continue to apply structural efficiency considerations, including minimum rates adjustments provisions.

Movements in wages and conditions must fall within the following principles.

2 When an Award may be Varied or Another Award Made Without the Claim Requiring Consideration as a Special Case

In the following circumstances an award may, on application, be varied or another award made without the application requiring consideration as a special case:

(a) to include previous State Wage Case increases in accordance with Principle 3;

(b) to incorporate test case standards in accordance with Principle 4;

(c) to adjust allowances and service increments in accordance with Principle 5;

(d) to adjust wages pursuant to work value changes in accordance with Principle 6;

(e) where the application is consented to by the parties;

(f) to adjust wages for the State Wage Case 2001 in accordance with Principle 8; and

(g) to approve of an enterprise arrangement reached in accordance with Principle 11.

(h) to adjust wages pursuant to an application claiming that work has been undervalued on a gender basis in accordance with Principle 14. 3 Previous State Wage Case Increases Applications for increases available under previous State Wage Case decisions will be determined in accordance with the relevant principles contained in those decisions. 4 Test Case Standards Test case standards established and/or revised by a Full Bench of the Commission may be incorporated into an award in accordance with the Act. Where disagreement exists as to whether a claim involves a test case standard, those asserting that it does must make an application for a special case.

5 Adjustment of Allowances and Service Increments (a) Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect relevant changes in the level of such expenses.

(b) Existing allowances which relate to work or conditions which have not changed, including shift allowances expressed as monetary amounts and service increments, may be increased by 3 per cent for the State Wage Case 2001 adjustment.

Counterpart State awards should be adjusted by the same amount as their federal counterpart.

(c) Existing allowances for which an increase is claimed because of changes in the work or conditions will be determined in accordance with the relevant provisions of the Work Value Changes principle of these principles.

(d) New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses.

(e) Where changes in the work have occurred or new work and conditions have arisen, the question of a new allowance, if any, will be determined in accordance with the relevant principles of these principles. The relevant principles in this context may be Work Value Changes or First Award and Extension to an Existing Award.

(f) New service increments may only be awarded to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant provisions of the Work Value Changes principle of these principles.

6 Work Value Changes (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 not only 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 position.

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 or 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 allowable under the State Wage Case 1989.

(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.

7 Standard Hours In approving any application to reduce the standard hours to 38 per week, the Commission will satisfy itself that the cost impact is minimised. Claims for reduction in standard weekly hours below 38 will not be allowed.

8 State Wage Case Adjustments In accordance with the State Wage Case 2001 decision awards may, on application, be varied to include a State Wage Case adjustment of $13.00 per week for wages up to $490.00 per week, $15.00 per week for wages over $490.00 per week and below $590.00 per week and $17.00 per week for wages above $590.00 per week subject to the following: (a) The operative date will be no earlier than the date of the variation to the award.

(b) Subject to paragraph (g), that at least twelve months have elapsed since the rates in the award were increased in accordance with the State Wage Case 2000 decision.

(c) At the time when the award is to be varied to insert the State Wage Case adjustment (or a proportionate amount in the cases of part-time and casual employees, juniors, trainees, apprentices, employees on a probationary rate, employees on a supported wage or with permits under s125 of the Act), each union party to the award will be required to give a specific commitment as to the absorption of the increase. In particular, the union commitments will involve the acceptance of absorption of the adjustment to the extent of:

(i) any equivalent overaward payments, and/or (ii) award wage increases since 29 May 1991 other than safety net, State Wage Case, and minimum rates adjustments.

(d) The following clause must be inserted in the award: 'The rates of pay in this award include the adjustments payable under the State Wage Case 2001 . These adjustments may be offset against:

(i) any equivalent overaward payments, and/or (ii) award wage increases since 29 May 1991 other than safety net, State Wage Case, and minimum rates adjustments.'

The above clause will replace the offsetting clause inserted into awards pursuant to the principles determined in the State Wage Case 2000 decision.

(e) By consent of all parties to an award, where the minimum rates adjustment has been completed, award rates may be expressed as hourly rates as well as weekly rates. In the absence of consent, a claim that award rates be so expressed may be determined by arbitration.

(f) The State Wage Case adjustment will only be available where the rates in the award have not been increased, other than by safety net or State Wage Case adjustments, or as a result of the application of the Minimum Rates Adjustment principle, since 29 May 1991.

(g) Increases arising from previous State Wage Cases may be phased-in upon application and where circumstances justify it, whether as part of the application of the increases arising from the State Wage Case 2001 or otherwise.

(h) In the absence of consent in respect of phasing-in, an application will be determined by the Commission. 9 Award Review Classification Rate The Award Review Classification Rate of $413.40 shall be the rate below which no full-time adult employee (excluding trainees, apprentices and employees on a supported wage or on a probationary rate) should be paid under the relevant award.

Where a classification in an award is below the Award Review Classification Rate the following process will apply on application:

(a) The award will be listed for a mention at which the parties will report as to:

(i) how the Award Review Classification Rate will be achieved, or

The Commission may direct the parties to confer in order to set a program for an updating of the award to reflect the Award Review Classification Rate.

(b) If the parties to the award do not appear at this mention, the Commission shall request the parties to the award to show cause why the award should not be considered obsolete, and rescinded under s17(3) of the Act.

(c) Where no agreement is reached with respect to (a) above, the Commission shall relist the matter in order to conciliate the issues in dispute.

(d) If the attempt at conciliation is unsuccessful the Commission shall arbitrate any outstanding issue. 10 Special Case Except for the flow on of test case provisions, any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the principles, will be processed as a special case before a Full Bench of the Commission, unless otherwise allocated by the President.

This principle does not apply to applications for awards consented to by the parties, which will be dealt with in the terms of the Act, or to enterprise arrangements, which will be dealt with in accordance with the Enterprise Arrangements principle. 11 Enterprise Arrangements (a) The Commission may approve of enterprise arrangements reached in accordance with this principle and the provisions of the Act.

(b) Industrial unions of employees and industrial unions of employers, or industrial unions of employees and employers, or employees and employers may negotiate enterprise arrangements which, subject to the following provisions, shall prevail over the provision of any award or order of the Commission that deals with the same matters in so far as they purport to apply to parties bound by the arrangements, provided that where the arrangement is between employees and an employer a majority of employees affected by the arrangement genuinely agree.

(c) An enterprise arrangement shall be an agreed arrangement for an enterprise, or discrete section of an enterprise, being a business, undertaking or project, involving parties set out in paragraph (b).

(d) Enterprise arrangements shall be for a fixed term and there shall be no further adjustments of wages or other conditions of employment during this term other than where contained in the arrangement itself. Subject to the terms of the arrangement, however, such arrangement shall continue in force until varied or rescinded in accordance with the Act.

(e) For the purposes of seeking the approval of the Commission, and in accordance with the provisions of the Act, a party shall file with the Industrial Registrar an application to the Commission to either:

(f) On a hearing for the approval of an enterprise arrangement, the Commission will consider in addition to the industrial merits of the case under the State Wage Case principles: (i) ensuring the arrangement does not involve a reduction in ordinary time earnings and does not depart from Commission standards of hours of work, annual leave with pay or long service leave with pay; and

(ii) whether the proposed award or variation is consistent with the continuing implementation at enterprise level of structural efficiency considerations.

(g) The Commission is available to assist the parties to negotiations for an enterprise arrangement by means of conciliation and, in accordance with these principles and the Act, by means of arbitration. If any party to such negotiations seeks arbitration of a matter relating to an enterprise arrangement such arbitration shall be as a last resort.

(h) Enterprise arrangements entered into directly between employees and employers shall be processed as follows, subject to the Commission being satisfied in a particular case that departure from these requirements is justified: (i) All employees will be provided with the current prescriptions (eg award, industrial agreement or enterprise agreement) that apply at the place of work. (ii) The arrangement shall be committed to writing and signed by the employer, or the employer's duly authorised representative, with whom agreement was reached. (iii) Before any arrangement is signed and processed in accordance with this principle, details of such arrangement shall be forwarded in writing to the union or unions with members in that enterprise affected by the changes and the employer association, if any, of which the employer is a member. (iv) A union or employer association may, within 14 days thereof, notify the employer in writing of any objection to the proposed arrangements, including the reasons for such objection and in such circumstances the parties are to confer in an effort to resolve the issue. (v) Where an arrangement is objected to by a union or employer association and the objection is not resolved, an employer may make application to the Commission to vary an award or create a new award to give effect to the arrangement.

(vi) A union and/or employer association shall not unreasonably withhold consent to the arrangements agreed upon by the parties. (vii) If no party objects to the arrangement, then a consent application shall be made to the Commission to have the matter approved in accordance with paragraph (e) of this principle.

(viii) Such arrangement once approved shall be displayed on a notice board at each enterprise affected.

12 Superannuation (a) An application to make or to vary a minimum rates or paid rates award which: (i) seeks a greater quantum of employer contributions than required by the Superannuation Guarantee (Administration) Act 1992 (Cth) ('the SGA Act'); or (ii) seeks employer contributions to be paid in respect of a category of employee in respect of which the SGA Act does not require contributions to be paid;

shall be referred to a Full Bench for consideration as a special case, unless otherwise allocated by the President. Exceptions to this process are applications which fall within the Enterprise Arrangements and First Awards and Extensions to Existing Awards principles.

(b) If an application is made that does not fall within paragraph (a), the Commission will, subject to paragraph (c):

(i) make or vary an award by inserting a clause stating: 'Superannuation Legislation - The subject of superannuation is dealt with extensively by federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth), the Superannuation (Resolution of Complaints) Act 1993 (Cth), and s124 of the Industrial Relations Act 1996. This legislation, as varied from time to time, governs the superannuation rights and obligations of the parties'. (ii) if appropriate, ensure that the award contains specification of an employee's earnings (eg 'ordinary time earnings') which, for the purposes of the SGA Act, will operate to provide a 'notional earnings base', and

(iii) if the award is to continue to prescribe a 'flat dollar' amount of employer contribution, ensure that appropriate amounts are inserted so as to give effect to the levels of contribution required from time to time under the SGA Act.

(c) The Commission may award provisions which differ from those in paragraph (b): (i) by consent; or (ii) in the absence of consent, by arbitration, provided the Commission is satisfied that there are particular factors warranting the awarding of different provisions. Such factors may include: (A) the wishes of the parties; (B) the nature of the particular industry or enterprise; (C) the history of the existing award provisions; (D) relevant decisions of the Commission establishing superannuation principles; and (E) relevant statutory provisions.

(d) Before any different provisions are awarded under paragraph (c), either by consent or arbitration, the Commission must be satisfied, on expert evidence, that the award to be made will not contain requirements that would result in an employer not meeting the requirements imposed by the SGA Act.

(e) Subject to s124 of the Act, any specification of a fund will carry with it the obligation for an employer to pay contributions at such intervals as are required by the fund.

(f) In determining applications as to specification of fund, the Commission will, as appropriate: (i) ensure that any fund specified by it is one into which payment will meet the employer's obligations under the SGA Act;

(ii) have regard to the Superannuation Industry (Supervision) Act 1993 (Cth) ('the Supervision Act') which provides for the prudent management of certain superannuation funds and for their supervision by the Insurance and Superannuation Commissioner. In particular, the requirement with respect to equal representation of employers and members on what are called 'standard employer-sponsored funds' (Pt 9 of the Supervision Act) should be noted; (iii) have regard to previous decisions of the Commission with respect to the specification of a fund or funds; and (iv) have regard to relevant statutory provisions. (g) Due to the variety of existing award superannuation provisions and the impact and complexity of the SGA Act, all applications to the Commission may not be capable of being dealt with in accordance with the approach set out above. In any such case it may be appropriate for the application to be dealt with as a special case.

13 First Award and Extension to an Existing Award Any first award or an extension to an existing award must be consistent with the Commission's obligations under Part 1 Chapter 2 of the Act. In determining the content of a first award the Commission will have particular regard to: (a) relevant wage rates in other awards, provided the rates have been adjusted for previous State Wage Case decisions and are consistent with the decision of the Stage Wage Case 1989;

(b) the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which the work is performed;

(c) for conditions of employment, other than wage rates, prima facie the existing conditions of employment; (d) that the award would comply with the requirements of section 19 of the Act. 14 Equal Remuneration and Other Conditions

(a) Claims may be made in accordance with the requirements of this principle for an alteration in wage rates or other conditions of employment on the basis that the work, skill and responsibility required, or the conditions under which the work is performed, have been undervalued on a gender basis.

(b) The assessment of the work, skill and responsibility required under this principle is to be approached on a gender neutral basis and in the absence of assumptions based on gender.

(c) Where the undervaluation is sought to be demonstrated by reference to any comparator awards or classifications, the assessment is not to have regard to factors incorporated in the rates of such other awards which do not reflect the value of work, such as labour market attraction or retention rates or productivity factors.

(d) The application of any formula, which is inconsistent with proper consideration of the value of the work performed, is inappropriate to the implementation of this principle.

(e) The assessment of wage rates and other conditions of employment under this principle is to have regard to the history of the award concerned.

(f) Any change in wage relativities which may result from any adjustments under this principle, not only within the award in question but also against external classifications to which the award structure is related, must occur in such a way as to ensure there is no likelihood of wage leapfrogging arising out of changes in relative positions.

(g) In applying this principle, the Commission will ensure that any alternative to wage relativities is based upon the work, skill and responsibility required, including the conditions under which the work is performed.

(h) Where the requirements of this principle have been satisfied, an assessment shall be made as to how the undervaluation should be addressed in money terms or by other changes in conditions of employment, such as reclassification of the work, establishment of new career paths or changes in incremental scales. Such assessments will reflect the wages and conditions of employment previously fixed for the work and the nature and extent of the undervaluation established.

i) Any changes made to the award as the result of this assessment may be phased in and any increase in wages may be absorbed in individual employees' overaward payments.

(j) Care should be taken to ensure that work, skill and responsibility which have been taken into account in any previous work value adjustments or structural efficiency exercises are not again considered under this principle, except to the extent of any undervaluation established.

(k) Where undervaluation is established only in respect of some persons covered by a particular classification, the undervaluation may be addressed by the creation of a new classification and not by increasing the rates for the classification as a whole.

(l) The expression 'the conditions under which the work is performed' has the same meaning as in Principle 6, Work Value Change.

(m) The Commission will guard against contrived classification and over classification of jobs. It will also consider: i) the state of the economy of New South Wales and the likely effect of its decision on the economy;

ii) the likely effect of its decision on the industry and/or the employers affected by the decision; and iii) the likely effect of its decision on employment.

(n) Claims under this principle will be processed before a Full Bench of the Commission, unless otherwise allocated by the President.

(o) Equal remuneration shall not be achieved by reducing any current wage rates or other conditions of employment.

15 Economic incapacity Any employer or group of employers bound by an award may apply to, temporarily or otherwise, reduce, postpone and/or phase in the application of any increase in labour costs determined under the principles on the ground of very serious or extreme economic adversity. The merit of such application shall be determined in the light of the particular circumstances of each case and any material relating thereto shall be vigorously tested. Significant unemployment or other serious consequences for the employees and employers concerned are significant factors to be taken into account in assessing the merit of any application.

Such an application shall be processed according to the Special Case principle.

Any decision to temporarily reduce or postpone an increase will be subject to a further review, the date of which will be determined by the Commission at the time it decides any application under this principle.

16 Duration These principles will operate until further order of the Commission.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.