State Wage Case 2006 - STATEMENT [2006] NSWIRComm 208

CORAM: Wright J President; Walton J Vice-President; Harrison DP; Boland J; Bishop C; Stanton C

CATCHWORDS: Statement in State Wage Case 2006 [2006] NSWIRComm 204

HEARING DATES: 05/06/06, 06/06/06, 07/06/06, 14/06/06

Mr M Thistlethwaite Unions NSW

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

Mr E Leahy Catholic Commission for Employment Relations

Mr T McDonald Employers First LEGAL REPRESENTATIVES: Australian Retailers Association

Mr T Abrams Printing and Allied Trades Employers Association of New South Wales

Mr M Moir Australian Business Industrial Australian Industry Group, New South Wales Branch and affiliated associations

Ms D Talbot Local Government and Shires Association of New South Wales

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: Wright J, President Walton J, Vice President Harrison DP Boland J Bishop C Stanton C Monday, 26 June 2006

Application by Unions New South Wales for a State Decision - State Wage Case 2006 under s 51 of the Industrial Relations Act 1996

[2006] NSWIRComm 208 1 By its application of 10 November 2005, Unions New South Wales, the State Peak Council for employees, sought a State decision pursuant to s 51(1) of the Industrial Relations Act 1996 ("the Act") setting general wage-fixing principles through which, inter alia, upon application, the rates of pay and allowances in awards may be increased by 4 per cent from the twelve-month anniversary date of adjustments to wages and allowances made under the State Wage Case 2005 (2005) 142 IR 337.

2 In the result, for the first time under the Act, the Commission is required to consider an application to set wage-fixing principles in the absence of a National decision (as defined in s 48 of the Act) triggering the operation of s 50 of the Act.

3 In its interlocutory decision in Re State Wage Case 2006 [2006] NSWIRComm 67 of 6 March 2006 the Full Bench resolved two threshold matters: first, that a decision of the Commission on the present application could properly be described as a "State decision" within the meaning of the Act (so that the Commission had jurisdiction to grant the application); and secondly, that the Commission should not grant the application of the Commonwealth Minister for Employment and Workplace Relations ("the Commonwealth"), and a number of employer interests, to adjourn the application by Unions NSW until the question of adjustments to minimum wages had been dealt with at the federal level by the Australian Fair Pay Commission ("AFPC") and the Australian Industrial Relations Commission ("AIRC") sometime later this year or early in 2007. For different reasons, both of these issues resurfaced and required some further comment before the Full Bench considered the application proper.

4 As to the first matter, our decision makes it clear for the reasons given that this is a State decision. As to the second matter, we have again made it plain that by the passage of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), the legislative scheme for wage fixation in the federal industrial system under the Workplace Relations Act 1996 (Cth) so dramatically diverged from the requirements of the legislation governing our jurisdiction, in both its objects and provisions governing wage-fixing, as would render a deferral of our decision-making in favour of the AFPC a failure to properly discharge our statutory functions. 5 The persistent contentions advanced by the employers in favour of a comity of approach were plainly untenable, in particular the submissions by reference to the concept in its title that the AFPC is required to fix fair rates of pay. 6 After reviewing the extensive economic and other material and the submissions of the parties, we have concluded that Unions NSW has established a substantial case for an increase in minimum award wages. The primary reason for this conclusion is that the applicant has established, on the evidence, that there are "good reasons" for the purposes of s 51(1) of the Act to warrant that outcome. Having regard to the basis for safety net adjustments in modern times, the applicant was entitled to rely upon, subject to countervailing economic considerations, movements in wage costs as reflected in the wage price index and the erosion of the purchasing power of wages within the relevant period to establish a case for a general adjustment in wages. The claim is in conformity with those criteria. More significantly, and having regard to the requirements of the Commission to set fair and reasonable conditions of employment for employees under s 10 of the Act (see also s 3(a)), we consider that a powerful case has been established by Unions NSW and the New South Wales Minister for Industrial Relations for the adjustment of wages of the low paid, having regard to the economic position of those workers, including their income and living costs, and questions of wage dispersion and income inequality. These workers have little or no bargaining power so as to engage in enterprise bargaining and have a reduced capacity to sustain themselves and their families at an acceptable standard upon the present levels of minimum wages. We have discussed these issues at some length in our decision.

7 We do not consider that there is any proper basis, having regard to the state of the national or NSW economies, to alter this conclusion. There is a strong national economy. Risks attending upon the continued successful operation of that economy should not be overstated, as some employers have sought to do, particularly for the period 2006/2007. The NSW economy has not performed as well as the national economy but there is nothing in its performance which would indicate that we should adopt any different approach in this State than would be appropriate if one had regard to the national economy alone. That is because the fundamental economic indicators in NSW plainly indicate, as the NSW Government has submitted, there is a capacity to sustain the claim. We have given consideration to the potential for "disemployment" effects arising from an adjustment in minimum rates, but we do not think that any evidence has been presented in this case which would warrant a conclusion that any determination we make should be tempered on this basis. We are mindful that granting other than moderate minimum rates adjustments may have the potential, although inconclusively so on the present state of empirical studies, for some adverse employment effects the dimensions of which may vary considerably. However, we do not consider such adverse employment effects have been demonstrated in this case. We have identified in our decision the approach we propose to adopt in this respect but consider that moderate adjustments in minimum wages are sustainable without significant adverse employment effects having regard to the state of the national and New South Wales economies. 8 We have decided that an increase of $20 per week is appropriate. In doing so, we would observe that the decision we make, if applied to the relevant amounts relating to the minimum wage and AWOTE in Table 9 of our decision, would result in only the maintenance of the latest relativity. It would certainly not return the relativities to the levels of the 1990s. The Award Classification Review Rate shall be increased by $20 to $504.40 per week. Relevant allowances shall be increased by 4 per cent. We would observe, in establishing that increase in rates of pay, we have had regard to the failure by Employers First and the Joint Employers to identify any position in the proceedings as to wage adjustments other than contending for no wage increase at this time. 9 Whilst PATEA proposed a review of the Commission's Wage Fixing Principles (without indicating any position as to what changes were needed) no other party proposed any change other than those that are a necessary consequence of our decision in these proceedings. We will make the necessary consequential changes to the existing Principles, including deleting reference to counterpart awards, such reference for the reasons earlier given now being obsolete. We also place the parties on notice that in any State Wage Case proceedings in 2007 the parties will be required to make submissions as to the form, content and relevance of the various Principles. 10 The Principles we adopt are set out in Appendix A to our decision. ORDERS

11 We make the following orders: 1. Pursuant to s 51(1) of the Industrial Relations Act 1996 the Full Bench of the Industrial Relations Commission of New South Wales orders that the Commission's Wage Fixing Principles shall be as set out in Appendix A to this decision.

2. Pursuant to s 52 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 $20 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.

3. Pursuant to s 52 of the Act, the Commission orders that the following rates may be increased by 4 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. 4. These orders shall operate on and from today until further order of the Commission.

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