100317064

TO GIVE CONSIDERATION TO THE NATIONAL WAGE CASE DECISION (SAFETY NET REVIEW – WAGES) DATED 6 MAY 2003

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

 ON THE COMMISSION'S OWN MOTION

PARTIES TRADES AND LABOR COUNCIL OF WESTERN AUSTRALIA, CHAMBER OF COMMERCE & INDUSTRY OF WESTERN AUSTRALIA (INC.), AUSTRALIAN MINES & METALS ASSOCIATION INC. AND THE MININSTER FOR CONSUMER AND EMPLOYMENT PROTECTION

CORAM COMMISSION IN COURT SESSION

  CHIEF COMMISSIONER W S COLEMAN

  SENIOR COMMISSIONER A R BEECH

  COMMISSIONER J F GREGOR

DATE OF ORDER THURSDAY, 5 JUNE 2003

FILE NO/S APPLICATION 569 OF 2003

CITATION NO. 2003 WAIRC 08450

General Order   -   State Wage Case   -   Application of section 51(2), (3) and (5) of the Act   -   Arbitrated Safety Net Adjustment   -   Minimum Adult Award Wage and Statement of Principles – June 2003

_______________________________________________________________________________

State Wage Case

The Commission in Court Session:

1          On 6th May 2003 the Australian Industrial Relations Commission (the “AIRC”) handed down its decision in the Safety Net Review – Wages Case (also referred to as the 2003 Living Wage Claim by the Australian Council of Trade Unions (the “ACTU”) [Print PR002003].

2          In the claim before the AIRC, the ACTU sought a $24.60 per week increase in all award rates with a commensurate increase in wage-related allowances.

3          In a statement issued with the decision the AIRC noted –

“….. [4] We have surveyed the indicators of recent economic activity in our decision. Growth in non-farm GDP has been at satisfactory levels and for the calendar year just ended was 4 per cent. Growth in total GDP was almost a full one per cent lower at 3.2 per cent due to the severe impact of the drought on farm production which declined by 19.1 per cent over the year. Private investment has grown strongly during 2002. Export performance weakened, in part because of the impact of the drought on agricultural exports, while imports grew strongly and accordingly net exports were negative. Inflation as measured by the CPI was around 3 per cent for the 12 months to December 2002. The labour market strengthened considerably during 2002, despite the impact of the drought conditions. Growth in both full and part-time employment was relatively strong, with unemployment moderating to just above 6 per cent in the first quarter of this year. Productivity continued to grow strongly. Profits also continued to grow and the share of GDP going to profit remains at historically high levels.

[5] The various measures of earnings growth indicate substantial movement throughout 2002. Wages under current agreements increased by 3.8 per cent. Average weekly ordinary time earnings rose by 4.7 per cent and the wage cost index (which, unlike the ordinary time earnings measure, is not influenced by workforce compositional change) grew by 3.3 per cent. Given the growth in earnings and generally favourable economic conditions we reject those submissions which contend that no increase at all should be awarded.

[6] In deciding whether to award the ACTU’s claim in full or in part it is necessary to consider the likely economic effects including the aggregate cost of the claim, the economic outlook and the impact of any increase upon the parts of the economy that are most likely to be affected by it.

[7] A number of parties urged us to be cautious in our assessment of the economic prospects for the near term, referring to the possibility of a further deterioration in the global economy, the possibility that some areas might continue to be drought-affected despite the recent encouraging rainfall in many rural areas and the possibility that the expected slowdown in dwelling construction might be more severe than expected. Among other things, reference was made to the state of the international equities market, recent rises in oil prices and the instability associated with the war in Iraq. While the economic prospects are still positive, we agree that there is a need for some caution and we have made some allowance for the present uncertainties in determining the ACTU’s claim.

[8] As the Commission indicated in the 2002 Safety Net Review, a substantial safety net adjustment may have some negative effects on employment in those sectors of the economy in which a high proportion of the workers are award reliant. That is an important consideration because in maintaining the award safety net the Commission is to have regard to, among other things, the desirability of attaining a high level of employment. We think that allowance should be made for the effect of our decision on employment in award reliant sectors including rural industries.

[9] The Commission indicated in its May 2002 decision that in the normal course in reviewing the safety net the Commission should seek to maintain a safety net of fair minimum wages for all award reliant employees. Despite the arguments advanced on this occasion by those proposing that any increase should be limited in its application, for example to those on the minimum wage, we are not persuaded that it would be appropriate to do so on economic, equity or any other grounds. We confirm the view expressed in the May 2002 decision and the reasons given for it.

[10] We have decided, however, that in the current circumstances a tiered increase, which will provide a slightly higher increase for employees at the lower levels, is appropriate. On this occasion we have decided to give particular weight to the possible effect of our decision on employment levels. The amounts we have decided upon are:

1. a $17 per week increase in award rates up to and including $731.80 per week; and

2. a $15 per week increase in award rates above $731.80 per week.

[11] The form of the increase gives appropriate emphasis to the needs of the low paid whilst moderating the overall economic impact by providing a lower amount at the higher classification levels. While this tiered approach tends to reduce wage dispersion it also tends to distort relativities. Nevertheless the difference between the two amounts and the point in the salary scales at which the second tier cuts in mean that the effect on relativities, compared with a uniform increase, will be minimal. We turn to the question of operative date.

[12] The Commonwealth submitted that if, contrary to its submission, we were to award an increase of more than $12, the increase should be phased in over 18 months. We have given consideration to that submission and to various other proposals concerning the operative date of any adjustment we decide upon. We have decided that, except where permitted by the Statement of Principles, the adjustment provided for in this decision will be available from a date no earlier than 12 months after the increase provided for in the May 2002 decision.

[13] Consistent with our decision the federal minimum wage will be increased by $17 to $448.40 per week.”

4          The 2003 ‘Safety Net Review – Wages’ is a National Wage Decision for the purpose of the Industrial Relations Act, 1979 as amended (“the Act”). Pursuant to section 51 of the Act, the Commission on its own motion, is to consider the National Wage Decision and, subject to the requirements of section 50(10) of the Act, unless it is satisfied that there are good reasons not to do so, shall make a General Order to adjust, by the amount of any change in the rate of wages under that decision, rates of wages paid under awards in this State (section 51(2)(a)).

5          The Commission received submissions from all parties afforded the opportunity to be heard under section 50(10) of the Act as well as the representative of the Australian Hotels Association.

6          The Commission considered it necessary to be informed on any developments within the National economy and particularly in the economy of Western Australia in the period since the National Wage Decision was handed down which may give cause to reject the application of that wage adjustment to awards in this State. In those considerations the Commission was assisted by detailed analysis of the state of the National economy and particular features of the Western Australian economy including domestic demand, business investment, employment growth and the prospects for commodity prices. The net international trading position of the State given the importance of our export oriented economy and the present strength of the Australian Dollar was also the subject of submissions. The impact of Severe Acute Respiratory Syndrome (“SARS”) on the travel and hospitality industries was a significant issue that prompted the Australian Hotels Association to address the Commission.

7          The Commission is appreciative of the submissions presented by Ms Nicky Cusworth (Chief Economist, Chamber of Commerce and Industry, Western Australia), Ms Wenona Hadingham (Acting Director Economic and Revenue Policy, Department of Treasury and Finance, Government of Western Australia) and by Mr Des Crowe (Employee Relations Manager, Australian Hotels Association (the “AHA”)) for his insights into the state of the hospitality industry in Western Australia and trends in tourism in this State. These submissions together with the documentation presented by the Trades and Labor Council of Western Australia (the “TLC”), the Minister for Consumer and Employment Protection and the Australian Mines and Metals Association (the “AMMA”) has given the Commission a comprehensive overview of economic performance, trends and forecasts in the short and medium term time frames. Without in any way detracting from the scope of information provided to the Commission the following table provides a “snapshot” summary of some major economic indicators for Western Australia together with the relevant national equivalent.

 Major Economic Aggregates

(Department of Treasury and Finance, 26th May 2003)

8          Suffice to say there is nothing arising from the Commission’s consideration of the state of the National or Western Australian economies which cause us to be satisfied that there are good reasons not to make a General Order giving effect to the wage adjustments in line with the National Wage Decision. Furthermore there is nothing on industrial relations grounds which at this time would cause us to depart from that course.

9          It is recognised that in the exercise of its jurisdiction under Part II, Division 3 of the Act, the Commission, as always, is charged with the responsibility to act according to equity and good conscience and to consider particular matters identified under section 26 of the Act. In so doing the Commission notes that in isolation from any other matters the wage adjustment which flows from this National Wage Decision is not directly related to any productivity outcome, but when considered within the scope of the wage fixing system of which the accompanying Statement of Principles are an integral part, the adjustment contributes to maintaining the award safety net. This not only protects employees unable to reach an industrial agreement but provides the basis upon which enterprise agreements can be negotiated and productivity and efficiency initiatives can be implemented.

10       It is common ground between all parties heard by the Commission that effect should be given to the National Wage Decision in awards of this Commission.

11       However the scheme of section 51 of the Act as amended by the Labour Relations Reform Act No. 20 of 2002 has significantly changed the basis upon which a General Order is now made compared with that which issued when the June 2002 State Wage Decision was handed down ((2002) 82 WAIG 1369). Once satisfied that a General Order should issue, section 51(2)(a) and (b) of the Act combines the imperative for awards of this Commission to be increased by the same amount as that determined in the National Wage Decision with the prerogative for the Commission to adopt in whole or in part and with or without modification any principle, guideline, condition or other matter having effect under the National Wage Decision.

12       Section 51(3) of the Act requires the Commission to ensure that a General Order under section 51(2) has effect no more than 30 days after the day on which the relevant National Wage Decision was made. (The AIRC handed down the 2003 Safety Net Review – Wages (op cit) on 6th May 2003).

13       Section 51(5) of the Act provides that:

“Without limiting the generality of section 26(1), in the exercise of its jurisdiction under this section the Commission shall ensure, to the extent possible, that there is consistency and equity –

(a)                    in relation to the variation of awards; and

(b)                    in relation to when such variations have effect.”

14       The scheme of section 51 of the Act gives rise to some fundamental issues when a General Order is made. As a general proposition do the terms of section 51(3) impose a requirement which prevents the Commission from adopting in whole or in part and with or without modification any principle, guideline, condition or other matter having effect under the National Wage Decision which could cause the wage increase in awards in this State to operate from a date later than 30 days after the day on which the National Wage Decision was made? This issue has poignancy within the context of the May 2003 National Wage Decision and policy considerations followed by this Commission in the operation of the Wage Fixing System in Western Australia for a number of years.

15       The National Wage Decision specifies awards be varied by application on the following condition:

“[252] ………

(b) except where permitted by the Statement of Principles, the increases will be available from a date no earlier than 12 months after the increases provided for in the May 2002 decision in the award in question; …..”

[PR002003]

 (The exception provided for in the above condition is set out in Principle 8 – Arbitrated Safety Net Adjustments to the Statement of Principles (Attachment A to the Safety Net Review – Wages at p. 89). Principle 8 includes the following:

“(c)  In awards where the variation for a safety net adjustment arising from the April 1999, May 2000, May 2001, May 2002 or May 2003 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 variation may be waived.”)

16       With the availability of issuing General Orders to vary all awards from a common date, the Commission has in the past established “the beginning of the first pay period commencing on or after 1st August…..” as the operative date for the application of the arbitrated safety net adjustment to award wages in this State. Adoption of the condition to require the expiry of a twelve month period since the last increase arising from the application of the 2002 National Wage Decision would see awards of this Commission move with effect from the beginning of the first pay period on or after 1st August 2003; a significant period after the expiry of no more than 30 days after the date on which the May 2003 National Wage Decision was made.

17       The Minister submits that in accordance with section 51(3) of the Act the date of effect of the wage adjustment across all relevant awards can be no later than 5th June 2003. It matters not what provisions, conditions or terms are applied by the AIRC in the National Wage Decision, the legislation in this State is not displaced by AIRC requirements. The Act as amended by the Labour Relations Reform Act 2002 gives effect to Parliament’s intention to ensure that the award increase is granted in a timely manner. It is submitted that there is no economic or other merit argument that there should be a 12 month qualifying period for the increase. Furthermore section 51(2)(b) of the Act gives the Commission flexibility in adopting conditions and principles having effect under the National Wage Decision and thereby is not required to “slavishly follow” that decision. The flexibility vested in the Commission with respect to the application of matters having effect under the National Wage Decision together with the provisions of section 51(5) are submitted to empower the Commission to restructure wages schedules and other clauses to ensure that all eligible employees have access to the increase with effect from the date required by reference to section 51(3) of the Act.

18       The TLC supports the thrust of the Minister’s position on the effect of section 51(3) of the Act. It submits that within the context of the whole of section 51, subsection (3) is clear and unambiguous in requiring any wage increase made under section 51 to have effect within 30 days of the National Wage Decision. Although section 51(2)(b) enables the Commission to vary any condition under the National Wage Decision, the Commission is obliged by force of section 51(3) to make such modifications as will be necessary to give effect to the statutory requirement that awards are increased with effect from a date no later that 5th June 2003. This application of the Act is not inconsistent with section 51(5). The TLC submits that a reasonable interpretation of these two provisions read together is that subsection (5) relates to the difficulties alluded to by the Commission during the 2002 State Wage Case concerning the ability of the Commission to adequately and effectively deal with flow on effects of an increase in the minimum award wage and to bring consistency to wage schedules for junior rates.

19       However if the view is taken that section 51 gives rise to some ambiguity, it is submitted that the Minister’s Second Reading Speech on the amendments to the Act under the Labour Relations Reform Act 2002 make it clear the subsection 51(3) “require[s] the Commission to give effect to the National Wage Decision in State Awards no later than 30 days after the effect of the National Wage Decision. This is to ensure that the increase is granted in a timely manner.” (Hansard 19th February 2002, 7511 at 7517).

20       The AMMA submits that it is arguable that section 51(3) of the Act does no more than require the Commission to make its decision operative within 30 days of the National Wage Decision. It does not require the increase to be effective within that time frame. The handing down of the decision with provision for the arbitrated safety net adjustment by the 5th June would meet the requirements of section 51(3). In its terms the arbitrated safety net principle should provide for the adjustment on the basis of award applications with the 12 month expiry since the last increase in accordance with the Federal decision. This approach it is submitted is consistent with the principle of not treating State employees differently and the objective of implementing the increase in a timely fashion.

21       In considering the application of the National Wage Decision in this jurisdiction, CCIWA submits that it should be appreciated that the qualification of the 12 month expiry period which applies to the application of the arbitrated safety net increase to Federal awards means that in may instances there is a significant period between when the decision is handed down and when the increase operates in a particular award. This can be many months. Implementing the increase in a timely manner in fact should not mean that employees in this State should have a significant advantage over their Federal colleagues. To argue that the implications of section 51 of the Act merely gives rise to a “one-off” compression of 2 months to bring awards of the Commission into line with the Federal system is in CCIWA’s view a nonsense. A National Wage Decision may have a prospective wage increase. This has been the case in the past. The operation of section 51 to make a wage increase effective within the 30 day limit irrespective of the terms of the Federal decision would destroy the integrity of that decision. Commitments and conditions have been a feature of the basis upon which many National Wage Decisions have functioned. It makes no sense to impose a restriction on the Commission with respect to its ability to effectively improve conditions which are an integral part of a National Wage Decision in its application in this State. To apply an increase in isolation from the conditions attached could perpetuate problems for award structures in this State in circumstances where increases arising from a National Wage Decision provide programmed wage adjustments contingent upon such exercise as award reviews or the implementation of structural efficiency initiatives. The imposition of the adjustment within the 30 day limit in Western Australia would destroy the efficacy of the award structure. It has been a feature of the wage fixing system that the substance of a National Wage Decision be implemented in its entirety. The timely implementation of wage adjustments by award applications has been a purposeful strategy adopted to reduce the impact of the National Wage Decision on aggregate wage growth. This approach should be maintained for economic reasons and to ensure equity with employees covered by Federal awards.

22       In interpreting section 51 of the Act, CCIWA emphasises the importance of the words that require the General Order to adjust “by the amount of any change in rates of wages” in subsection 51(2)(a). The word “amount” should be understood to mean “extent”. The extent of any change in the rate of wages under the National Wage Decision is then placed within the context within which it is intended to operate. i.e. a $17.00 per week increase in award wages up to and including $731.80 per week ($15.00 per week above that award rate), with the payment being no earlier than 12 months since the operation of the last increase. The extent of the increase must be viewed as a whole. To have regard to the amounts of $17.00 and $15.00 respectively in isolation from the context of the extent of the increase renders the amounts meaningless. To apply the increase in a timely manner as section 51(3) requires can be taken to be that the General Order can be implemented within the 30 day limit but that there would be no increase earlier than the expiry of 12 months since the date on which the award was last varied to give effect to an arbitrated safety net adjustment.

23       The CCIWA submits that alternatively in reading section 51(2)(a) and (b) together, it is permissible for the Commission to impose as a condition or principle arising from the National Wage Decision the requirement for there to be the expiry of the 12 month period. Under section 51(3) the General Order could have effect within the 30 day limit but that the increase available would be subject to the principle adopted to ensure the expiry of the 12 month qualifying period for awards to be varied.

Chief Commissioner and Senior Commissioner:

24       Section 50 of the Act provides:

“(2) Subject to this Act, the Commission may, of its own motion or on application of the Council, the Chamber, the Mines and Metals Association or the Minister –

(a) make General Orders relating to industrial matters in accordance with and subject to this Division; and

(b) add to, vary, or rescind any General Order so made.

…..”

25       Under section 51(2)(a), subject to being satisfied, the Commission shall make a General Order to adjust by the amount of any change in the rate of wages under the National Wage Decision, rates of wages paid under awards; and

 By section 51(2)(b) the Commission may make a General Order to adopt in whole or in part and with or with out modification any principle, guideline, condition or other matter having effect under the National Wage Decision.

26       The Act goes on to provide that:

“51(3) If the Commission makes a General Order under subsection (2) the Commission shall ensure that the Order has effect no more than 30 days after the day on which the relevant National Wage Decision was made.”

27       The terms of section 50 of the Act provide that the making of a General Order is “Subject to this Act” and is in accordance with and subject to Division 3 of the Act.

28       Being “Subject to the Act” requires compliance with sections 34 (decision to be in the form of award, order or declaration), section 35 (decision to be first drawn up as minutes) and section 36 (decision to be sealed and deposited). The effect of these provisions is that the decision of the Commission in Court Session shall be contained in a General Order, signed and delivered, the delivery being the depositing of it in the Office of the Registrar. Upon that event happening the decision of the Commission in Court Session has been pronounced (see McCorry v Como Investments (1989) 69 WAIG 1000 at 1002). None of these provisions (sections 34, 35 or 36) go to the issue of the order “having effect”.

29       The other provision in section 50 which conditions the making of a General Order is that which requires it to be in accordance with and subject to the provisions of “this Division”.

30       In this respect it is the type of General Order which must be identified. In this instance it is a General Order which issues pursuant to the “Powers and duties of Commission in respect of National Wage Decisions” (section 51).

31       Conditions precedent to making a General Order under this section of the Act require that the Commission must:

         be dealing with a decision of the Full Bench of the AIRC which is a National Wage Decision for the purpose of our Act; and

         must have given the parties specified under section 50(10) the opportunity to be heard.

32       When the Commission in Court Session is satisfied that a General Order is to be made, then:

         the General Order must adjust by the amount of any change in the rate of wages under the National Wage Decision, rates of wages paid under awards, (section 51(2)(a)); and

         the General Order may adopt in whole or in part and with or without modification any principle, guideline, condition or other matter having effect under that decision (section 51(2)(b)).

33       The General Order that issues shall ensure that the Order has effect no more than 30 days after the day on which the relevant National Wage Decision was made.

34       Apart from the provisions of the Act under sections 34, 35 and 36 to which the making of a General Order is subjected (and these go only to the procedure by which a General Order is pronounced) the only other requirements when making a General order under section 51 of Division 3 are those set out in section 51 itself.

35       It is the meaning of the words “that the order has effect no more that 30 days after the day on which the relevant National Wage Decision was made”, which needs to be determined.

36       As stated by Brinsden J in McCorry v Como Investments (op cit):

 “I am commanded by section 18 of the Interpretation Act 1984 as amended to approach the interpretation of a provision of a written law by applying a construction that would promote the purpose or object underlying the written law, whether that purpose or object expressly stated in the written law or not and that construction shall be preferred to a construction that would not promote that purpose or object. In my opinion, this is a case where I should apply the law as enunciated in Grey v Pearson (1857) 6 HLC 61 at 106 per Lord Wensleydale in which he stated that the grammatical and ordinary sense of the words be adhered to unless that would lead to some absurdity, repugnancy or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the word may be modified so as to avoid that absurdity and inconsistency but no further.”

37       Applying this dictum to section 51(3) it is clear that in the ordinary and grammatical sense the purpose of the provision is to ensure the application of the National Wage Decision within a specified time. This applies to both the amount of the increase and the conditions under which it is paid. It is not necessary to go outside the terms of this Division of the Act to ascertain the purpose or object underlying the written word. The words “has effect” are not a legal term and therefore it is not necessary to go beyond the ordinary and grammatical sense in their application. If it can be said that these words impute a technical application within the context of the Act, then guidance can be taken from other sections.

38       The Act recognises the difference between the delivering or making of an award and the provisions of an award having effect. By section 34 the decision of the Commission shall be in the form of an award, order or declaration. Section 39(1) provides that an award comes into operation on the day in which it is delivered or on such later date as the Commission determines and declares. By section 39(2) the provisions of an award “have effect” on such day or days as is or are respectively specified in the award. By analogy therefore the requirement in section 51(3) is a requirement to ensure that the provisions of the General Order have effect no more than 30 days after 6th May 2003. It is not that the order is made or delivered no more than 30 days after 6th May 2003.

39       By section 51(3) the General Order must adjust rates of wages by the amount of any change in the rates of wages under the National Wage Decision and may adopt the principles having effect under the National Wage Decision subject to modification no more than 30 days after 6th May 2003. To do so, the wages are to be adjusted and the principles adopted by 5th June 2003.

40       The construction that would promote the purpose of object as stated in the written law does not enable the analysis of the operation of a National Wage Decision under section 51(3) to assume or surmise terms and conditions which are not included in the present decision but which may or may not be a feature of some future Federal decision. The intent in the legislation is clear; the terms of section 51(2)(a) and (b) envisage the strict application of the wage outcome under the National Wage Decision with or without conditions, guidelines or principles attached. In other words the adjustment by the amount of any change in the rate of wages under the National Wage Decision must have application under a General Order. This increase can stand alone and the Commission shall ensure that it has effect no more than 30 days after the day on which the Federal decision was made. On this analysis it is not open to the Commission to consider adopting the requirement for there to be the expiry of 12 months since the last arbitrated safety net adjustment, with or without modification as a principle, guideline or condition. The terms of section 51 of the Act are intended to exclude such a matter from having effect.

41       On the basis of this together with the requirements of section 51(5) of the Act, it is our view that the submissions on behalf of the AHA, AMMA and CCIWA for an award by award application of the wage increase flowing on from the National Wage Decision should be rejected.

Commissioner Gregor:

42       I have reached a different conclusion to my colleagues concerning the date of operation of the increases we award in this matter.

43       There has been considerable debate between the parties about the date of operation of any Order to be made by the Commission arising from the Safety Net Review 2003 (SNR03). This debate arises from differing interpretations of section 51(3) of the Act. The section in its entirety is as follows:

51. Powers and duties of Commission in respect of National Wage Decisions

(1) In this section, “National Wage Decision” means a decision which — 

(a) is made by a Full Bench of the Australian Commission;

(b) relates to rates of wages; and

(c) is applicable generally to awards made under the Commonwealth Act.

(2) Subject to section 50(10), when and as often as a National Wage Decision is made after the coming into operation of this section the Commission shall of its own motion consider that decision and —

(a) unless it is satisfied that there are good reasons not to do so, shall make a General Order to adjust, by the amount of any change in the rate of wages under that decision, rates of wages paid under awards; and

(b) may make a General Order to adopt in whole or in part and with or without modification any principle, guideline, condition or other matter having effect under that decision.

(3) If the Commission makes a General Order under subsection (2) the Commission shall ensure that the order has effect no more than 30 days after the day on which the relevant National Wage Decision was made.

(4) Subject to this Act, the Commission may add to, vary or rescind a General Order made under subsection (2) but the Commission shall not add to or vary such an order in relation to any amount other than the amount of any change in the rate of wages under the relevant National Wage Decision.

(5) Without limiting the generality of section 26(1), in the exercise of its jurisdiction under this section the Commission shall ensure, to the extent possible, that there is consistency and equity —

(a) in relation to the variation of awards; and

(b) in relation to when such variations have effect.

44       Because of the linkage of section 51 the National Wage Decision, as defined, the interpretation of this section must be done against the background decision the Australian Industrial Relations Commission (AIRC) in the SNR03 which is at focus in these proceedings.  The substance of the decision an implementation is contained in Paragraph 252 of the Reasons of the AIRC Full Bench issued on 6th May 2003. Relevantly the implementation of the adjustment is described in the following manner:

[252] Implementation of the adjustment will be subject to the following conditions:

(a) the increase will be fully absorbable against all above-award payments;

(b) except where permitted by the Statement of Principles, the increases will be available from a date no earlier than 12 months after the increases provided for in the May 2002 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 subject to Principle 10;

(d) …

(e) …

45       The relevant effect of this paragraph is that adjustments to Federal awards will operate no earlier than the date on which the particular award is varied, subject to a phasing in of increases permissible where the circumstances justify it, subject to an application under Principle 10. For all awards the increases will be available no earlier than 12 months after the increases provided in the Safety Net Review 2002 to the award in question.

46       The effect of this schema for the implementation of the adjustments is that there are varying dates of implementation across the awards of the AIRC but the adjustment, whenever made, will have effect no earlier than 12 months since the last increases. In my opinion the legislative intent of section 51(3) of the Industrial Relations Act was to ensure as much as practicable uniformity in respect of the money amounts awarded between the AIRC and this Commission.  That intent is obvious in section 51(2)(a) which binds this Commission, unless it is satisfied there are good reasons not to do so, to make a General Order to adjust, by the amount of any change in the rate of wages under National Wage Decision (NWD), the rates of pay under its awards. Whereas by section 51(2)(h) it can adopt any principle, guideline or condition with or without modification. 

47       Expressed in ordinary language this means unless there are good reasons not to do so this Commission must adopt the money amounts awarded in NWD. But it may establish different Principles or conditions.

48       The submission on behalf of the Minister is that clause 51(3) should be interpreted to mean that this Commission must award any increases 30 days after the issue of the Decision of the SNR 2003, that is after the 6th May 2003. This would have the effect of amending all awards by General Order two months before the expiration of the 12 month period of operation from the date of operation from the last General Order issued by this Commission in 2002.

49       That creates the plainly absurd result that awards of this Commission will be adjusted prior to the adjustment of awards in the AIRC.

50       The clear intent of section 51(2) of the Act is that this Commission will pass on the money amounts as they are awarded by the AIRC in full unless it is satisfied there are good reasons not to do so, that is, it must pass on all of the moneys not part, but it can make changes to the Principles and guidelines as in other conditions.

51       The written law is to be interpreted by applying a construction that would promote the purpose or object underlying the written law in preference to a construction that would not. In such circumstances the grammatical and ordinary sense of the word may be modified to avoid absurdity and inconsistency but no further (McCorry v Como Investments op cit). There is absurdity or at the very least inconsistency in the section as I have discussed previously. It is in that case permissible to examine extrinsic aids to arrive at the true interpretation.

52       When one looks to the Second Reading Speech on introduction of the Labour Relations Amendment Act 2002 there are some aids to the interpretation offered in the speech by the Minister where he said as follows:

“The Gallop Government therefore has implemented Recommendation 103 of the Fielding review, which provides the Commission with the full discretion to either apply or not apply the national wage principles as it sees fit.

Also consistent with Fielding’s recognition that the National and State economies are inseparable, the actual dollar amount determined in the National Decision will not be modified by the Commission should it determine to flow on the decision.”

53       As for section 51(3) the Second Reading Speech says:

“A new provision has been created that requires the Commission to give effect to the National Wage Decision increase in State awards no later than 30 days after the effective date of the national Decision. This is to ensure that the increase is granted in a timely manner.

Section 51 will also explicitly require the Commission to ensure there is consistency and equity in the variation of awards.  This is to ensure that no employee to which the decision truly relates, misses out on the increase because of some technicality.”

54       As I have noted above the SNR 2003 operates as it has done for a number of years with the Federal Awards being amended, some of them on different dates, but with the effective date being no less than 12 months since the last increase. The requirement for this Commission is to give effect to National Wage increase within 30 days to ‘ensure the increase is granted in a timely manner’. Clearly the intent simply is this Commission is not to delay dealing with a National Wage Decision. To give effect to that Decision it is clear that Western Australian awards whenever they are varied, cannot be varied prior to the 12 month period and still comply with the Decision of the AIRC. The obligation of this Commission is to adopt the money amounts without change unless it rejects all of the wage increases.

55       It is my view to give proper interpretation to section 51(3) this Commission can issue a General Order to operate not before 1st August 2003, this will provide the same effective date of operation for awards under jurisdiction of this Commission as awards under the jurisdiction of the AIRC. This will mean that over the year each of them will get the same money amount regardless of when that increase commences.

56       For these reasons I would issue a General Order to operate from the first pay period commencing on or after 1st August 2003.

The Commission in Court Session:

57       In the case of the tourism and hospitality industries to which our attention was directed, the operation of the wage fixing principles may be important. This will be addressed further in this decision.

58       Consistent with the dictates of section 51(3) as to the requirements to give effect to the increase in wages under the arbitrated safety net and the terms of section 51(5) of the Act, awards are to be varied by General Order to provide for:

(a)               a $17.00 per week increase in award rates up to and including $731.80 per week; and

(b)               a $15.00 per week increase in award rates above $731.80 per week;

(c)               the Minimum Adult Award Wage be increased by $17.00 per week to $448.40 per week; and

(d)               by majority the above increases will have effect on and from 5th June 2003.

59       The Statement of Principles has been an integral part of the wage fixing system in this State. We consider that they remain relevant to maintaining an award safety net, facilitating structural efficiency and promoting enterprise bargaining. Up until now the art has been to see that effect was given to the National Wage Decision (and this included the Principles) within the framework of the Industrial Relations Act, 1979 as amended.

60       With amendments under the Labour Relations Reform Act, 2002, the Commission now has discretion in adopting principles, guidelines and conditions. However the focus remains on adopting those matters which have effect under the National Wage Decision. They cannot be extraneous to that decision but must be considered within the legislative framework of the Act, as now amended. In this respect the provisions of section 51(5) are relevant.

61       All parties support the retention of the Statement of Principles although there are issues arising from various proposals to accommodate amendments to the Act introduced under the Labour Relations Reform Act 2002.

62       In the first instance it is noted that the Principles under the AIRC decision in the National Wage Case have only been varied to reflect the arbitrated safety net adjustment, the dates and references relevant to those increases.

63       It is accepted that the Principles need to address the provision of interim awards and arrangements whereby the terms of industrial agreements are incorporated by consent of the parties into awards. The power to vary awards to reflect statutory and other requirements, to promote efficiency and to facilitate implementation is vested in the Commission (section 40B). Any limitation on that power by operation or application of the wage fixing principles would be contrary to the Act. In its application section 40B will contribute to maintaining the efficacy of awards as the safety net. In this respect it is sufficient to merely note its relevance in Principle 1.

64       Consistent with the role to support enterprise bargaining, the provision for making Enterprise Orders should not be inhibited by requirements directed at award variation. The Principles should reflect this exclusion.

65       Detailed submissions were presented by the TLC on the introduction of an equal pay principle. There is not scope for this principle within the General Order as it is not a matter having effect under the National Wage Decision. There is however an imperative associated with the general intent of such a provision in that section 40B(1)(c) of the Act places the onus on the Commission to ensure that award provisions do not discriminate against employees on any ground unlawful under the Equal Opportunity Act, 1984 (see section 11). The TLC or any other applicant is able to bring the application the TLC foreshadows under section 50 of the Act.

66       Another Principle on which the TLC made extensive submissions is the Test Case Principle. It seems to be of the view that this Principle has atrophied, if not that then is so inflexible in its application to render it inoperative. These criticisms have not resulted from any direct experience with its application in recent years, nevertheless the criticism remains. It should, in the TLC’s view be more facilitative in flowing on general community standards without detracting from the Commission’s responsibility to act in accordance with section 26 of the Act. It is difficult to reconcile the competing claims of flow on and discretion, however there should be nothing in the application of this Principle to prevent community enjoyment of accepted standards no matter from where the movement has its genesis. The test is really in its operation and there is little to commend the rewording of the Principle at this time.

67      The obligation on the Commission to decide matters which come before it according to equity, good conscience and the substantial merits of the case derive from the legislative provisions.  The present State Wage Case is a case in point. It is the provisions of section 51 which oblige the Commission to flow on the National Wage Decision unless there is good reason not to do so. In the absence of a similar legislative provision the amendment sought will not achieve its stated aim. The Commission cannot by an amendment to the State Wage Principles alter the requirement upon an applicant to present sufficient evidence in support of a claim for the Commission to exercise its discretion. Whether that sufficient evidence is the whole or part of an “entire Federal test case” is a matter for an applicant.

68       Finally there is the issue of the efficacy of Principle 12 – Economic Incapacity to which we are alerted by the submissions of the AHA. Having regard for what has been decided on the operation of section 51(3) of the Act, it is incumbent on the Commission to ensure that Principle 12 is not contrary to the requirement to give effect to the increase within the prescribed period. On reflection the General Order which increases awards by the amount of the wage adjustment under the National Wage Decision will not be impugned by subsequent applications which may seek to reduce or postpone that increase. A minor amendment will make this clear.

69       In summary the Commission has decided that:

 Awards are to be varied by General Order to give effect to the arbitrated safety net adjustment of:

(a) a $17.00 per week increase in award rates up to and including $731.80 per week;

(b) a $15.00 per week increase in award rates above $731.80 per week; and

(c) the Minimum Adult Award Wage is to be increased by $17.00 per week to $448.40 per week.

70       By majority the Commission has decided that these arbitrated safety net adjustments and the adjustment to the Minimum Adult Award Wage will have effect on and from 5th June 2003.

71       Further the Commission has decided that:

                     Arbitrated Safety Net Adjustments (and the increase to the Minimum Adult Award Wage) are to be absorbed under the same terms as previous Arbitrated Safety Net Adjustments.

                     The Statement of Principles – June 2002 is to be varied to provide as the Statement of Principles – June 2003 in terms to reflect the application of statutory amendments to the Act under sections 36A(2), 36A(3), 40A, 40B and 42I. Furthermore the Principles are varied to accommodate the adjustment to the Arbitrated Safety Net and the Minimum Adult Award Wage. The Principle regulating applications under “Economic Incapacity” has been varied for clarification.

72       In making a General Order under section 51(2) and (3) the Commission has to the extent possible ensured consistency and equity in relation to the variations of awards and in relation to when such variations have effect pursuant to section 51(5) of the Act.

73       The review by the Commission of the Minimum Weekly Rates of Pay referred to in Section 51D will issue separately.

74       The Minutes of a Proposed General Order granting the $17.00 per week increase (up to and including award rates of $731.80 per week) and $15.00 per week increase (award rates above $731.80 per week) being the arbitrated safety net adjustments, the increase to the Adult Minimum Wage to $448.40 and giving effect to the Statement of Principles – June 2003 will issue.