100422950

PUBLIC SERVICE GENERAL AGREEMENT 2004

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES CIVIL SERVICE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED, DEPARTMENT OF INDIGENOUS AFFAIRS AND OTHERS

APPLICANTS

CORAM COMMISSIONER P E SCOTT

 PUBLIC SERVICE ARBITRATOR

DATE WEDNESDAY, 28 JULY 2004

FILE NO PSAAG 2 OF 2004

CITATION NO. 2004 WAIRC 12131

_______________________________________________________________________________

Catchwords Agreement – Registration of Agreement – Parties agree to Public Service Arbitrator making orders as to terms of Agreement – Relevant principles to be applied – Application of terms of Act – Industrial Relations Act 1979 (WA) s 6, s 26, s42G

 Level of salary increase – Increase in productivity – Management of work load – Statement of Principles – Relevance of comparative wage movements – The state of the national economy and the Western Australian economy – Relevant economic indicators to be considered – National and State Wage Case Decisions – Whether flat rate component be included – Gender equity – Industrial Relations Act 1979 (WA) s 6, s 26, s42G – Labour Relations Reform Act 2002, s 133 – Minimum Conditions of Employment Act 1993 (WA)

 Cashing out of annual leave – Purpose of annual leave – Minimum Conditions of Employment Act 1993 (WA) s 8

 Commuted allowance – unique role and responsibilities of unions in negotiations

Result Level of salary increase determined

 Cashing out of annual leave dismissed

 Union participation in negotiations required

Representation Mr J Dasey and Ms J Gaines and later Mr M Finnegan for the Civil Service Association of Western Australia, Incorporated

 Mr J Ridley and Mr R De Blank for the Department of Indigenous Affairs and Others

_______________________________________________________________________________

Reasons for Decision

1         This is an application for the registration of the Public Service General Agreement (“the 2004 Agreement”) between the Civil Service Association of Western Australia, Incorporated (“the CSA”) and the Department of Indigenous Affairs and Others (“the Government”) pursuant to s.41 of the Industrial Relations Act 1979 (“the IR Act”) in respect of employees covered by the Public Service Award (No. PSAA 4 of 1989) (“the Award”).  The parties also seek that the Arbitrator determine a number of issues pursuant to s.42G of the IR Act in what they describe as consent arbitration, which is not subject to the appeal provisions of the IR Act.  The three issues for determination are:

1. The level of salary increase to apply to each of the 2 years of the 2004 Agreement.  The Government says that 3.3 percent for each year is appropriate.  The CSA says that $60.00 per week or 6 per cent, whichever is greater, each year is appropriate.

2. The capacity for individual employees to apply for and be granted a cash payment in lieu of a proportion of accrued annual leave.

3. The inclusion of a provision allowing the employer to negotiate a commuted allowance for overtime or penalties directly with a group of employees without the necessity for the CSA’s involvement.

2         The arbitrated outcomes of the three matters in dispute will then form part of the 2004 Agreement to be registered.  There are also consequential amendments for the Award to apply on the same date as the date of operation of the 2004 Agreement.  The operative dates of the 2004 Agreement and the 2 salary increases have been agreed. 

3         The evidence presented was in the form of witness statements, with attachments.  The parties submitted witness statements in reply to each others’ statements, and then their further responses to those.  No witnesses gave oral evidence or were subject to cross examination.  The CSA’s main evidence was given by Toni Beverley Walkington whose witness statements included 84 attachments.  The CSA presented a further 17 witnesses.  The Government’s main witness was John Nickolas Serich whose statement attached 46 documents.  In addition, the Government produced witness statements from a further 28 witnesses.  This is in addition to the various authorities referred to by the parties.

4         I acknowledge the significant amount of material presented by the parties and the work they have put into ensuring the smooth conduct of the hearing of this matter, which although it was initially listed for 3 days, took 6 days to complete.

5         The evidence presented in this matter was not limited to the circumstances applying to employees covered by the 2004 Agreement as the parties intend to take the Arbitrator’s decision into account when finalising their agreements in respect of other employees.  According to government figures there are approximately 34,000 employees occupying approximately 30,100 full time equivalent (“FTE”) positions affected by this matter. 

6         The parties agree that the Wage Fixation Principles do not bind the Arbitrator in the circumstances of this matter.  The CSA says that if the parties are wrong in that regard, then the only relevant, although not binding, principle is Principle 10, and the requirement to address those matters contained in s.26 of the IR Act.  In any event, the parties believe that the objects of the IR Act and the requirements of s.26 are relevant considerations.

SALARY INCREASES

THE CSA CASE

7         The CSA says that there have been 2 serious injustices to its members over the last decade which require rectification:

1. The building pressure of work load, public expectations, increased scrutiny, and the regular and massive organisational upheaval.  It refers to structural changes, functional reviews and the changes through the Machinery of Government which it says was described by the Premier as the single biggest change in the history of the State’s biggest organisation.  The CSA describes these as enforced productivity improvements.

2. The erosion of the value of CSA covered employees’ salaries relative to other significant groups of public sector workers vis nurses, teachers and police, and the undervaluing of the crucial role played by CSA covered employees in the provision of health, education and law enforcement services, as well as the multitude of other areas of service provision in this State. 

Productivity Improvements

8         In respect of enforced productivity improvements, the CSA says that these have arisen in the jobs of the employees through increased work load pressures.  These are not productivity improvements which have been agreed to or worked out in any structured way but are the response of dedicated workers to the increased demands placed on them in the circumstances of reduced resources.  The CSA says that the Arbitrator should take account of the significant savings already made by the Government through its various reviews and restructures which have resulted in this enforced productivity and other savings which are planned. 

9         The CSA describes the essence of its case as being that it can show, across the sector, the effect of increased work load, the pressure on public sector employees, increased media scrutiny, increased public expectations regarding service delivery and the protection of community standards, significant legislative amendments and an environment of significant organisational change.  It says that this will lead to the conclusion that people are doing more, justifying proper reward which would be closer to 6 per cent than the 3.3 per cent increase proposed by the Government. 

10      The enforced productivity comes from increased work load pressures on all public sector workers within the CSA’s area of coverage.  The evidence is said to be from a broad cross-section of public sector agencies, demonstrating the increased work load generally without commensurate increases in resources and, in particular, FTE.  This has resulted in increases in productivity of the workers through a gradual, exponential process.  While the CSA says that the full solution to these issues is increases in staffing, and the 2004 Agreement to be considered for registration includes provision for addressing work load issues, appropriate pay increases would recognise the increased productivity. 

11      In the last 10 years, according to the CSA, there has been a steady reduction in the workforce within its area of coverage.  Public sector employee numbers have increased overall but the increase has been largely in additional nurses, teachers and police.  The reduction in CSA covered employees is despite an increase in the population of Western Australia.

12      Government reviews and voluntary redundancy processes over the last 3 years have led to a significant reduction in jobs in CSA areas with those which have been costed providing realised or projected savings in excess of $1.26 billion over a 4 year period. 

13      Pay equity was not fully realised over the public sector from the Public Service General Agreement 2002 (PSA AG 24 of 2002), (“the 2002 General Agreement”) due to the varying effects on actual pay levels of employees.  Through the era of enterprise bargaining, employees in different agencies received different levels of pay increases and contributed different measures of improved productivity.  Some employees, who have faired badly through enterprise bargaining, received significant increases to bring them up to the bench mark rate set in the 2002 General Agreement, while others received small or insignificant increases, and others received none.  Although the 2002 General Agreement provided increases of 3 per cent + 3 per cent + 1.5 per cent, the real average effect on salaries was 4.7 per cent.  With the final increase in the 2002 General Agreement, 86 per cent of employees met the bench mark rate.  The remaining 14 per cent did not receive a pay rise from the 2002 General Agreement.  An increase of 6 per cent in the first year of the 2004 Agreement would bring all but 96 employees within the bench mark, and a further 6 per cent would resolve the disparity in salary levels which arose due to agency level bargaining and set all employees on the same rates. 

General Community Outcomes

14      The Arbitrator is also asked to consider the general community wages outcomes of bargaining and of other decisions across the country and in this State, including those applying to significant groups in the Western Australian public sector. 

15      The CSA refers to widely utilised indicia which it says demonstrate that 3.3 per cent is below community standards, and a number of those indicia support 6 per cent, with almost all supporting more than 3.3 per cent.

16      The CSA seeks that the Arbitrator consider wages outcomes of significant groups in the public sector, vis nurses, teachers and police, all of whom have been offered higher amounts by the Government than has been offered to the CSA.  Those other negotiations have been carried out under the same government wages policy as applied to the CSA negotiations and this, the CSA says, demonstrates inequity in the application of the policy.  The CSA says that granting the claim will not fully restore the relative position of the CSA covered employees as to those in other groups. 

17      As to the impact of this matter on any other public sector employees, the CSA says that it will not have any negative effect as most of the negotiations involving the current round have been concluded. 

18      The CSA claims that efficiencies and cost savings arising from the many restructures, re-organisations and other changes in the operations of government can be utilised to cover the cost of the salary increases. This includes that employment arrangements in the public sector, including the inappropriate use of contracts and labour hire firms, and that the proper use of these arrangements would provide savings and efficiencies.  The CSA says that there is no argument that the Government has the financial capacity to pay and that this is evident from budget documents and other material produced by the Government, which demonstrate that the State is in a sound financial position.  There are current and projected surpluses and an unexpected windfall increase in revenue in the financial year.  The CSA says that its expert witness’s evidence demonstrates that the claim can be met without jeopardising the State’s financial position or its AAA credit rating. 

Flat Rate Component

19      The CSA says that pay equity will be served by meeting its claim, by awarding a flat rate increase to mitigate the inherent inequities in the current broad-banded pay structure.  Those inequities are said to fall very heavily on female members of the work force, who are clustered at the lowest salary levels.

20      According to the CSA, the existing relativities in the broad banded structure are part of an incomplete process, and under-value the lower classifications within the Award.  The broad banding process originally envisaged that competencies would be developed and introduced as a second stage, however, this second stage was never completed.  Because of this the broad banded structure does not have validity for the purposes of being maintained as any authoritative, established ratio.  Thus the relativities have no inherent status.

21      The CSA has surveyed its members and delegates who strongly support a flat rate component to the increase in salaries.  The Arbitrator should take account of those views.

Evidence of T B Walkington

22      The CSA brought evidence from a significant number of witnesses from a range of departments and agencies.  As noted earlier, its primary witness was Toni Beverly Walkington, the General Secretary of the CSA.  Her evidence dealt with a range of issues associated with the claim:

(a) Changes in staffing levels in the public sector - she has relied upon a number of documents provided by government agencies including the Profile of Western Australia State Government Workforce 2003 produced by the Public Sector Management Office.  This shows a reduction from 96,000 FTE in 1988 to 89,143 FTE in 1996, in spite of there being an increase in FTE in early 2001 due to extra staffing in health, education and training i.e. nurses and teachers.  Other documents are said to demonstrate a reduction in public sector staffing levels.

(b) The public sector has not grown at the same rate as the Western Australian population. 

(c) The CSA coverage, public accountability and work load - expectations of public accountability in the performance of the vast array of functions performed within the public sector has increased dramatically over recent years witnessed by:

(i) government commissions of inquiry including the WA Inc Royal Commission (October 2000); the Gunning Committee of Inquiry into the Finance Brokers Advisory Board (September 2000); Machinery of Government (June 2001); Royal Commission into the Finance Broking Industry (February 2002); Gordon Inquiry into Response by Government Agencies to Complaints of Family Violence and Child Abuse In Aboriginal Communities (August 2002); and the Police Royal Commission (25 February 2003).

(ii) inquiries conducted by agencies in respect of their own performance and expectations.  Reference was also made to the requirements for submission of annual reports to Parliament and auditing by the Auditor General, and to surveys conducted by the CSA of its members and delegates regarding employment security and work load.  Ms Walkington also refers to the announcement by the Minister for Consumer and Employment Protection of a panel to investigate working hours (May 2003).

(d) Structural and Functional Reviews and Changes:

(i) Machinery of Government - established to examine how best to reduce the number of departments and agencies.  Its report in 2001 resulted in the Premier announcing “radical changes to the structure of Government” would begin to take effect from 1 July 2001. There were 55 recommendations for change, including a Government commitment to reduce the Senior Executive Service by 60 positions.  However, Ms Walkington notes that one of the aims of the process was to reduce duplication i.e. “an outcome likely to lead to a decrease in staffing levels.”

(ii) The voluntary redundancy package 30 June 2002 - the announcement by the Deputy Premier and Treasurer on 12 April 2002 of an enhanced voluntary redundancy scheme aimed at shedding more than 400 staff from the public sector, which was available until 30 June 2002.  At the end of process, 251 voluntary severances were effected in the health sector prior to the organisational structure being finalised and the decision made about the future roles and functions.  In July 2002, the Deputy Premier announced that 732 voluntary packages had been taken up, of which 376 were centrally funded and 356 were funded by agencies from within their own resources to facilitate “restructuring and staff renewal”.  This was intended to provide savings of more than $50m over 4 years.  The Deputy Premier also indicated that of the 251 redundancies taken up in the health industry only 3 were nurses.  The final number of voluntary redundancies was significantly more than was proposed. 

(iii) Functional Review - this review, established by the Government in 2002, resulted in substantial changes, the first being announced on 3 January 2003, being a merger between the Department of Education and the Department of Training to form a new Department of Education and Training.  The merger was expected to see some 200 head office jobs shed, freeing up more than $100m over 4 years.  The CSA says that more than 200 jobs targeted were from CSA covered areas.  The Department of Industry and Technology was transferred to the Department of Minerals and Petroleum Resources to create a new department, saving $24m over 4 years and seeing 80 positions shed within that period.  Government announced plans to consolidate its procurement processes into one entity, expecting savings of $230m over 4 years, with a significant number of positions to be lost.  The Premier also announced a continuing assessment of the concept of sharing corporate services between agencies.  The CSA notes that the Premier claimed that the Government had created an additional 100 jobs in nursing, teaching and police.  In the Budget lockup briefing for unions and community organisations on 7 May 2003, the Treasurer is said to have outlined the expected results from the Functional Review providing budget savings of approximately $750m over the next 4 financial years and significant down-sizing of corporate service areas of government.  The Functional Review Implementation Team (“FRIT”) was then formed to continue the functional review process.  It proposed the creation of 5 corporate services cluster centres each providing corporate services for identified groups of agencies, one was to be dedicated to health, one for education and training and the final 3 for all other public sector agencies. 

(e) Use of Contract Work and Labour Hire Companies - the CSA refers to the Auditor General’s Third Public Sector Performance Report 2001 in which the Auditor General examined the use of contract staff in 4 agencies and found that “all 4 agencies reviewed routinely engaged fixed term and temporary contracts for extended periods in contravention of legislation and government policy on redeployment, merit selection and equity, the consequences of which (is) higher cost to government and the inability to demonstrate the employment of the best available person” (paragraph 52 of Toni Walkington).  This inappropriate use of contract and labour hire company labour contained potential risks of inappropriate engagement and higher staffing costs, engagement of unsuitable persons and at least a perception of patronage in appointments, workforce inflexibility, and a lack of necessary skills or expertise within the public sector.  As at June 2000, permanent staff within the public sector represented 71 per cent of the workforce, down from 81 per cent in 1995.  When the current government was elected, it established the Modes of Employment policy, including the conversion process for fixed term contract employees.  As a result of agencies’ failure to comply with the Modes of Employment policy, this issue has become a matter of concern to the CSA and consequently, the Modes of Employment policy is to be included in the Award and in General Agreements.  Ms Walkington says that there is wide-spread anecdotal evidence that many government agencies are in breach of this policy.  Ms Walkington also noted that the Auditor General stated that the use of contract for service arrangements comes at a high cost to the community. 

(f) Further cost saving measures - Ms Walkington says that she is aware that agencies are required to return an efficiency dividend to government and many government agencies are required to maintain a FTE vacancy rate, with both measures having a combined effect of reducing the number of employees available to perform the work of Government. 

(g) Pay equity in the public sector: 

(i) Ms Walkington also refers to the Government Wages and Parity Policy which supports the principle of common conditions and pay enhancing efficiencies across the sector.  The difficulties associated with and consequent upon the previous government’s policy of enterprise bargaining by different agencies resulted in a disparity in the rates of pay across the sector.  These difficulties were associated with transfers and promotions, there was a disincentive to mobility in the sector and it was a source of dissatisfaction among employees.  The 2002 General Agreements in the public sector between the CSA and the Government created a common pay structure, which set the bench mark rates, paid to approximately 86 per cent of CSA covered employees.  When the final increase under the 2002 General Agreement occurred on 1 January 2003 approximately 14 per cent of workers covered by the 2002 General Agreement were still above the bench mark rate of pay.  As part of the issue of parity in rates of pay increases, Ms Walkington referred to the December 2003 decision of the Salaries and Allowances Tribunal.

(ii) Ms Walkington also gave evidence as to the basis of the CSA’s survey which demonstrates discontent amongst members with those previous disparate arrangements and strongly supports a flat rate component within the pay increases sought. 

(iii) Ms Walkington refers to the genesis of the current broad banded salary and classification structure.  She says that the competency standards which were intended to be developed as a consequence of the broad banding process were not subsequently finalised and implemented.  The job evaluations and classifications tools had been criticised as perpetuating gender bias and were referred to in the Equal Opportunity Commission’s 1989 report “Discrimination in Government Policies and Practices - (S.82b Report No. 4, Job Evaluation and Broadbanding in the Western Australian Public Service” (TBW 39)).  In 1990 the Equal Opportunity Review Committee commissioned Dr Christine Short to review equal opportunity in the Western Australian public service classification system.  Further, in March 2004, the Minister for Consumer and Employment Protection announced a review of gender pay discrimination in Western Australia citing that women employees are still earning significantly less than male employees in this State.  The CSA says that this differential exists between males and females in the public sector.  The Profile of Western Australian State Government Workforce June 2003 demonstrates that female employees in the Western Australian public sector are clustered in the lower salary ranges.  A flat rate pay increase would assist in addressing some of the gender equity deficit at the lower levels.

(h) Ms Walkington refers to recent wage negotiations between the Queensland public sector union and the Queensland State Government which provided for 3.8 per cent or $25.00 per week (whichever is the greater) in each year 1 June 2003, 1 July 2004 and 1 August 2005. 

(i) Comparisons with other Western Australian public sector workers - Ms Walkington refers to the total wage movements for public servants versus teachers, police and nurses between 1993/4 and January 2004.  (see TBW 42, 43, 44 and 45).  The CSA says that this demonstrates that public sector employees have not been treated equitably across that period of time and that nurses, teachers and police have received far better outcomes than those public sector employees who are within the CSA’s area of coverage. 

(j) Comparisons with community wage movements - Comparisons between level 1.1 public service classifications; Minimum Wage and other reported wage movements, eg. Australian Bureau of Statistics’ - Average Weekly Ordinary Time Earnings (“AWOTE”) figures between 1993 and 2003; the Minimum Conditions of Employment Act 1993 (“MCE Act”) - Minimum Wages between 1993 and 2003; and movements in wages monitored and reported on by a number of organisations including the Western Australian Labour Market, September quarter 2003 (issue number 4) produced by the Department of Consumer and Employment Protection, and the Agreements Database And Monitor Report (“ADAM”) no.38 September 2003 produced by ACIRRT are also said to support the CSA’s claim.

23      The CSA also produced witness statements from the following officers:

• Rosemary Rippon - Pathcentre,

• Brian Dodds - Department for Community Development,

• Lindsay Collins - Department of Land Information,

• Clinton Floate, Steven Farrell and Tania Shilcock - Department for Planning and Infrastructure,

• Jan Mason - Department of Industry and Resources,

• Bruce Hawkins - Department of Consumer and Employment Protection,

• Brendan Hewson - Department of Environment,

• Brian Ellis - Department of Justice,

• Phil McGuiness and Shannon Ellsson - Police,

• Hilary West and Phil Brough - Department of Education and Training,

• Kelvin Leek - Swan and Central TAFEs and

• Jonathon Gordon - Racing and Gaming WA.

24      The evidence from these witnesses covers particular areas of change which they say have occurred, work load issues which have been or need to be recognised, the demands of public expectations, and the changes brought by internal and external reviews, all of which they say demonstrate that productivity has increased.  I do not intend to traverse all of the evidence in this regard however, I refer to some of the evidence as to a number of departments and agencies.  Their evidence also covered issues relating to the 2 other matters for determination, being the cashing out of annual leave and issues relating to commuted allowances.

25      In respect of the Department of Justice, Mr Ellis has given evidence about the work of the Public Advocate, the Community Justice Services and the Prisons division.  Mr Ellis referred to the Justice Reform Programme dealing with reducing imprisonment rates, the closure of prison units, a decrease in services and the work associated with prison assessments.  Mr Ellis says proposed reductions in imprisonment rates were not ultimately realised, or did not occur to the extent predicted.  He said there was then a need to make changes and adjustments when the planned reduced work load did not eventuate. 

26      The evidence of Hilary West, an employee of the Department of Education and Training, made reference to a report by Mercer, Human Resource Consulting, in December 2002, entitled “School Support Staff - Classification and Workload Review, Western Australian Department of Education”(“the Mercer Report”).  In this document the reporters examined the work load and work value of school support staff and found changes in a range of areas including:

• Devolution of accountability from head office,

• Technology Change,

• Educational Changes,

• School Specific Factors, and

• Community Factors.

27      In its examination of the issues, the Mercer Report distinguished between those changes with a work load impact and those with a work value impact.  In respect of work load findings, a number of areas were identified including that:

“• Most school support officers are working unpaid overtime each week – sometimes up to 15 hours.

• Some school support staff work during the school holidays to catch up on the back log of work.

• Some school support staff regularly take work home.

• Almost all catch up on required reading at home.

• The overtime is necessary because skilled relief staff are almost impossible to find or keep.”

28      The Mercer Report noted that a 53 per cent increase in FTE is needed to cope with the existing work load (Chapter 6, page 80).  It recommended a number of aspects of change relating to work value findings including the reclassification of a number of positions. 

29      It also made recommendations to deal with each of the areas of additional work load identified.  Changes were recommended in reallocation of resources, management structures, finance related activities, physical assets, technological changes, educational changes and in respect of the allocation and use of discretionary days and FTE.  Other recommendations included the better management of working hours, noting that:

“Operating schools on a basis where staff regularly work longer than allocated hours for no pay or other recognition (such as time in lieu) is unsustainable in the long term and needs to be addressed.”

(Recommendation 15, page 87). 

30      The evidence indicates that the CSA took up this matter with the Minister for Education and Training.  His response to the CSA of 6 March 2004 included that:

“Following on from (a meeting with the CSA) I have discussed the issues raised with the Director General of Education, Mr Paul Albert.  He has confirmed, as you indicated in the meeting, that the department is currently working with your union to address acknowledged workload issue (sic) where possible.  While you have indicated that you believe efforts to reduce the workload have been largely exhausted, I do think that there is more that can be done and I have asked the department to further pursue this issue.

I confirm however that there is no budgetary provision for the measures you seek.  I have asked the Director General to examine further possibilities including some targeted expenditure to reduce crucial workload issue (sic) with your members.” 

(HRW 6)

31      Ms West says that in spite of the Mercer Report and the discussions with the Minister, there are still not sufficient resources to meet the work load identified.

32      Brendon Harley Hewson has given evidence in respect of the bringing together of the Waters and Rivers Commission and the Department of Environmental Protection to create the new Department of Environment.  He has also referred in particular to the work load-created stress which lead to the establishment of the “Stress Focus Group”.  The Stress Focus Group produced a report in May 2003 which identified a range of resource issues as well as problems within the planning processes of the Department.  Mr Hewson also notes that the spreading of record keeping, finance, procurement, personnel and payroll functions to officers at all levels in addition to their other duties has increased their work load. 

33      Mr Hewson also referred to the Auditor General’s Report (September 2003) - Public Sector Performance which recognised difficulties in proper resourcing of the Waters and Rivers Commission. 

34      In respect of the Police Department, Phillip Ralph McGuiness has given evidence that an increased number of sworn police officers not accompanied by increased unsworn numbers, has led to an increase in work load for unsworn officers.  There is also reference to 2 internal reviews, the Central Area Review and the Administrative Functions Review.  The latter shows that savings made in the administrative area have been redirected to fund pay rises for police officers.  Mr McGuiness’s evidence also refers to disgruntlement amongst unsworn staff over the Government’s preparedness to grant higher pay increases to police officers than to public servants.

35      Mr McGuiness also refers to the Royal Commission Into Whether There Has Been Corrupt or Criminal Conduct By Any Western Australian Police Officer which noted the need to give priority to “making up the extra personnel with civilians” to release police officers for operational duties.  Mr McGuiness also refers to increased community expectations on staff. 

36      Brian John Dodds has given evidence regarding a range of resourcing and work load issues at the Department for Community Development.  One such issue is being dealt with by the Joint CSA/DCD Workload Management Project aimed at managing the work of the Department within allocated resources.

37      These witness statements have provided the flavour of the evidence generally as to increased work load, frustration at a lack of progress in this regard, various reviews, amalgamations and restructures which the witnesses say have resulted in increased work load for public servants without additional resources, or reduced numbers for the same or, in some cases, increased work.

Economic Arguments

38      The CSA brought expert evidence from Dr Tyrone Carlin dealing with the economic environment and the financial impact of the claim.  Dr Carlin currently holds the position of Senior Lecturer in Management at the Macquarie Graduate School of Management.  He has substantial academic and professional qualifications in law and commerce and has undertaken consultancy work in the public and private sectors. 

39      Dr Carlin’s written statements addressed the Western Australian budget situation, in particular focusing on the WA 2003-04 budget papers and the approach taken by the Government to “line strategy with accrual resource allocations and performance defined in terms of outputs” (paragraph 14 of Dr Carlin’s statement 28 March 2004).  He notes the redefining of performance in the recent decade to focus not only on compliance with appropriations of public funds but also on achievement of objectives, and most recently on measurement and reporting of financial information on budget papers of the Government’s desired outcomes.  He refers to the budget process as “a fiscal strategy that aims to maintain the financial position of the Western Australian public service within tolerable ranges”.  This includes an increase in services while restraining growth of Government spending to 3 per cent.  He says that this appears to be in line with the expected Consumer Price Index (“CPI”).

40      Dr Carlin says that the Government’s tight budget strategy for the next 3 budget cycles aims at significant budget surpluses being produced.  He describes this as conservative fiscal policy aimed at the retention of the AAA Credit Rating, to be achieved by capping expense growth and allowing for increases in expenses up to but not exceeding the combined growth in population and inflation. 

41      Dr Carlin notes that as well as the expected surpluses, the Government has received a recent windfall bonus of an extra $453m in Commonwealth Grants, and the new distribution of those grants is to persist for 5 years.  Dr Carlin also notes in reference to the revised estimates for the 2004-05 financial year “with every other variable held constant the expected operating balance should fall in the range of $821m” plus the other windfalls. 

42      As to the general government sector wages growth, Dr Carlin says that since salaries make up a highly material share of aggregate expenses, the government would therefore attempt to restrain growth in that area.  He notes, though, that the WA 2003-04 Budget Paper No. 3 recognises that salaries are the government’s largest operating expense, accounting for around 40 per cent of that total and that the wages bill is expected to increase by 5 per cent in 2003-04 because of increased numbers of government workers such as through the recruitment of additional doctors, nurses and allied health professionals, the establishment of the new Corruption and Crime Commission and the response to the Gordon Inquiry. 

43      Dr Carlin notes that the Government’s estimates are based on each 1 per cent wage increase across the general government sector costing approximately $46m for each year.  He says though that this does not take account of the expense savings to be realised through the FRIT and the expenditure reductions associated with that for each agency.  He notes that provision has been made for wage increases of 3 per cent a year, where 1 per cent of that increase in salary is to be funded by agencies improving their efficiency. 

44      As a means of elaborating on his analysis, Dr Carlin has examined the financial position and performance of 2 large agencies being the Department of Justice and Legal Affairs and the Department for Planning and Infrastructure.  In respect of the Department for Planning and Infrastructure he notes that “administrative costs represent a key area of controllable cost within a department.  These costs are controlled in part by human agency, as a result of innovation and continuous improvement processes initiated by departmental staff.  Therefore, one view, even where employee related expenses grow at a faster rate than administrative expenses, this growth may be characterised by a partial dividend accruing to departmental employees as a result of their efforts to improve the organisation” (paragraph 39 Carlin 28 March 2004).

45      Dr Carlin says that if there is an assumption built into the Forward Estimates that labour cost growth will be constrained to approximately 3 per cent per year (the relative expense burden share data contained within his Table 8, which sets out budgeted and forward estimates of different categories of expenses which include employee expenses), this level could be increased without materially increasing the relative proportion of cost represented by labour in the Department for Planning and Infrastructure over the forward estimate horizon.  I take this to mean that he is of the view that even if employee expenses constituted a greater percentage rise than had been budgeted for, this would not materially affect the relative proportion of the cost of labour within the Department compared to other costs.  He also notes that employee related expenses appear to have fallen in the relevant periods and appear set for further decline in the next forecasted estimates periods.

46      In summary, Dr Carlin says that:

“Overall the analysis of expense trends suggest that employee related expenses within the Department of (sic) Planning and Infrastructure have been well controlled during the past several periods, and it appears that even with some growth in employee related expenses over forecast periods at levels in excess of those factored into current forward estimates, growth would still lie within sustainable levels, particularly given savings apparently achieved in relation to administrative expenses within the department”.

(paragraph 45 Carlin 28 March 2004).

47      Dr Carlin has undertaken a similar analysis in respect of the Department of Justice and Legal Affairs and found that notwithstanding FTE growth, the Department’s employee expenses have been constrained on an actual basis and into the forward estimated periods.  He says that the data suggests constrained overall deflated employee related expense growth. 

48      As a general proposition in respect of the approach taken by Government to financial analysis and the budgetary processes, Dr Carlin says:

“it is not appropriate to view the planned budgetary stance as a series of interlinked propositions as to fiscal capacity, nor even as the boundary of fiscal sustainability.  Rather, it is simply to be viewed as the product of a series of choices which have been made with respect to desired resource allocation outcomes for the foreseeable future.”

(paragraph 50 Carlin 28 March 2004).

49      He notes that budgets reflect a series of choices and tradeoffs made at particular points in time and that there is no absolute requirement for those allocations to be set in concrete. 

50      Importantly, Dr Carlin says that based on his analysis, the gross impact of salary increases for government employees in the order of 6 per cent each year for 2 years, based on 1 per cent increase in salary levels in the first year equating to $46m increase in salary outlays:

“on salary expenses of 6 per cent in salaries would total approximately $276m.  Allowing for compounding, the second year impact of a further 1 per cent increase in salary costs would be in the order of $48.7m, suggesting second year total impact in the vicinity of $292m, and a combined impact across the two year time frame in the order of $568m.”

(paragraph 51 Carlin 28 March 2004). 

51      He notes too that the revenue forward estimates have been prepared on a prudent and conservative basis and that the impact of salary increases of 6 per cent would be lower than 2.3 per cent of forecast general government sector revenue for the financial years 2004-05 and 2005-06.

52      Importantly, he says that granting of the CSA’s claim of 6 per cent each year for 2 years would not be likely to threaten the retention of the State’s AAA credit status. 

53      Dr Carlin has also examined the situation of the State’s budget as it would be were 6 per cent pay rises granted and its AAA rating, by reference to analysis of a large sample study of United States corporations.  He examined a number of different measures including cash flow and total debt ratio, long term debt and capital ratio, and capacity to service debt via interest costs to earnings.  By comparing those measures between those corporations and the State Government, Dr Carlin concluded that the Government ratios “stood at a level commensurate with a AAA rating” (paragraph 59 Carlin 28 March 2004).  Dr Carlin concluded that, although he has not attempted to engage in a complete analysis of the financial position and performance of the Western Australian general government sector, he was of the opinion that the State’s AAA rating would, “in the absence of material changes to other operational and financial parameters, comfortably be retained” if salary increases of 6 per cent each year over the 2 years of the 2004 Agreement were applied.

THE GOVERNMENT CASE

54      The Government says that in dealing with this matter pursuant to s.42G of the IR Act, the Arbitrator ought to take into account the totality of the 2004 Agreement and that there has been a significant expansion of the benefits to employees and a comprehensive package of terms and conditions for CSA covered areas as a consequence of the application of 2001/2003 Government policies. 

55      The Government seeks that the Arbitrator recognise that it has a right to determine and implement policy.  It does not argue incapacity to pay but rather that the Government has established policy which ought be reviewed, in context, and maintained. 

56      The rationale for the Government’s view that its proposed 3.3 per cent for each of the 2 years is appropriate is as follows:

• That it should be seen as part of a substantial package of terms and conditions.

• It neither leads nor lags the rate of increase generally, but maintains the relative position with comparable groups in the jurisdiction.

• It is economically and fiscally responsible, taking account of the current industrial relations climate and the economic outlook for the State.

• There is an achievement of productivity gains as a consequence of the budget-driven process.

• It will maintain the real value of wages.

• It sits happily by reference to movements in the CPI and underlying wages growth.

• There are guaranteed salary increases with specified dates of payment.

• There is no onus on employees to justify and seek increases at the commencement of or during the term of the agreement.

57      The 2004 Agreement should provide for 3.3 per cent in the first and second years and it already provides for up to 2 per cent in the form of an allowance from the beginning of the first pay period commencing on or after 26 February 2005 for those who have had their salaries maintained.  The rationale for the 2 per cent payment is that up to 2001, the application of the then current wages policy resulted in disparities in pay and conditions between agencies and within occupational groups.  That disparity was up to 30 per cent.  Employment conditions varied significantly due to conditions being traded for pay increases.  There was a significant disparity in hours of work, leave entitlements and access to other conditions such as higher duties allowance.  In 2001, the Government recognised that this situation was untenable as it adversely affected labour relations within agencies, and compromised the effectiveness of operational and strategic management in the public sector.  The Government’s Wages and Parity Policy of 2001/2003 was for the restoration of parity of pay and conditions amongst like employees.  This had implications for increases of up to 20.96 per cent depending upon the relativity to the 2002 General Agreement rates of pay.  Following the January 2003 salary increases under the 2002 General Agreement, the Government says that 2,415 FTE (or 8 per cent of the current 30,100 FTE) remained in receipt of salaries in excess of the 2002 General Agreement rates of pay and had their higher salaries maintained.  Conditions of employment were brought back to a standard across the sector.  As a result, employees who had traded off conditions for pay increases had those conditions returned to them at no reduction in salary.  The value to employees of returned conditions was up to 10.5 per cent with an average value of 7 per cent.  This is comprised of a reduction of weekly hours from 40 to 37.5, days in lieu of public service holidays, 3 days’ short leave, 7 year accrual of long service leave and return of annual leave loading.  For those employees who cashed out long service leave valued at 9.28 days per annum, the increase through the return of conditions could be as much as 13.4 per cent.  The Government says that in the first year of the 2004 Agreement, with an increase of 3.3 per cent, 1,168 FTE of the employees who are salary maintained will have their salaries increased with the new 2004 Agreement rate, and after a second year increase of 3.3 per cent all but 90 FTE will be in receipt of the 2004 Agreement rate of pay (see Exhibit Book 3 documents 3, 4 and 5).

58      The Government says that the productivity improvements remain a significant factor in the measurement of agency performance.  A major shift in the 2001-03 policy from previous policies was the removal of the requirement that wage increases be contingent on productivity bargaining at an individual agency level.  The Government took the view that agency efficiency is a budget driven process monitored by the Department of Treasury and Finance, and the transition to centralised negotiations is to provide the opportunity for agencies to concentrate resources on organisational reform rather than on measuring individual employee productivity at a micro level.  The disparity in conditions of employment associated with the previous policies and agency-level bargaining involving disparate wage outcomes between different occupational groups was considered unacceptable.  There was said to be disparity in wages in the vicinity of around 30 per cent or $18,700 per annum of the average salary.  This was inequitable and unfair, agencies were competing with each other for employees, there was administrative inefficiency associated with resources being diverted into justifying productivity based increases, and redeployment and/or mobilising resources across the public sector to areas of most need was becoming increasingly difficult.  The policy contained principles of fair and equitable outcomes in occupational groups, the restoration and parity of wages and employment conditions and the establishment of bench marks.  Wages and conditions were to be negotiated centrally and core conditions of employment and wages were to be established amongst like employees.  The policy also had the objectives of facilitating the containment of wages growth to within government defined parameters and providing for wages outcomes that neither lead nor lag the rates generally.

59      According to the Government, its 2003/05 Wages Policy comprises of a package of reforms and expanded benefits including award modernisation, the conclusion of the 2004 Agreement and consequential award variations.  The Government identified the changes to conditions of employment associated with the 2004 Agreement including flexible working arrangements, personal leave, purchased leave, higher duties, days in lieu of public service holidays etc.  The wages outcomes ought to be viewed together with the current policy package.  Issues associated with the collective bargaining policy statement include the Fixed Term Contract Conversion Policy.  The Government also notes the Labour Relations Reform Act 2002 which focused on related matters. 

Government to Determine and Implement Policy

60      The Government maintains that it does not assert incapacity to pay but says that it has a right to determine and implement policies of its choosing, balancing competing requirements of public interest and financial sustainability.  It has taken its position to balance public interest and wages outcomes so as not to jeopardise the economic outlook of the State.  The Government says that there is a need to take into consideration all the circumstances in determining how it is going to allocate skills and resources within the public sector and that while decisions may attract criticisms, that is a matter for the Government subject to the electoral cycle.  For example, the Government has determined what savings it seeks to implement from the FRIT shared services cluster corporate services reform initiative and other such changes, and to channel savings back into key policy priorities such as health, education and law and order in accordance with its commitments.  The Government says that savings belong to government and government has a right to determine how it prioritises its expenditure. 

61      In Civil Service Association of Western Australia Inc v Attorney General and Director General of Ministry of Justice (“the Ministry of Justice case”) (1999) 80 WAIG 193 at 207 the Commission in Court Session referred to a decision of the Full Court of the Federal Court in Drake v The Minister for Immigration and Ethnic Affairs 24 ALR 577 at 608 in which Bowen CJ and Dean J noted:

“In a matter such as the present where is it permissible for the decision–maker to take into account relevant government policy in making his decision, but where the tribunal is not on statutory duty to regard itself of being bound by the policy, the tribunal is entitled to treat the government policies as a relevant factor in the determination in an application for review of the decision.” 

62      Brennan J re-affirmed that position in Re Drake (No. 2) (1979) 2 ALD 634. 

63      In this context, the Government says the Arbitrator should treat government policy as a relevant factor in determining wages outcomes, that it is not appropriate to ignore government’s proposed distribution of potential savings and allocate them primarily to CSA covered employees.  The Government says that significant weight ought to be given to its policies as opposed to the CSA’s case where the focus is only on wages outcomes for its members.  Government policy settings are broadly based and have to have regard to the public interest as well as the interest of employees, economic considerations and financial imperatives.  The future savings generated by government policy implementation should be able to be earmarked by government for expenditure on those areas of priority. 

64      The Government notes that there has been no nexus for public servants with any other occupational groups and the terms and conditions of Western Australian public servants are to be viewed as a comprehensive package and enhanced over time without any recourse to tradeoffs. 

65      The Government referred to the various increases and salary rates which apply in other States and noted that Western Australia has historically sat fifth and sixth amongst the states.  Currently it sits at approximately sixth.  Salary increases of 6 per cent or $60.00 would rank it No.1 in the year 2005. 

Community Movements

66      The Government believes that the CSA’s reference to the ADAM data produced by ACIRRT, is unhelpful because it contains a number of short comings.  These include that the category of “public administration sector” is far broader than administration of both central and state government policy, regulation and services.  The public sector category as defined by ACIRRT includes non-profit organisations undertaking welfare and community development work which are primarily funded by federal, state or local government.  It also includes government trading enterprises.  Accordingly, the Government says that this category is least useful as an indicator of average wage increases awarded to federal and state public servants.

67      The Government also noted that focusing on the quantum of percentage increases alone fails to recognise that there may have been trade offs in allowances and conditions to fund increases.  It also notes that the ADAM data ignores other factors such as when employees last received a pay increase. 

Minimum Wage Rates

68      The Government notes that legislation at the state and federal levels recognise that the role of the award is to form the safety net, and distinguishes between the setting of minimum wages for the safety net and increases arrived at through enterprise bargaining.  The Government notes that the award safety net review is focused on the low paid whereas agreement increases are tailored to suit the needs of the employer and the employees at a particular workplace or in a particular industry.  The rates of pay received by public servants through enterprise bargaining arrangements are well above the award safety net.  There is no nexus between the wage increases provided to employees through award safety net adjustments and those resulting from enterprise bargaining. This absence of nexus is said to be evidenced by the growing gap between award rates of pay and those provided in registered and certified agreements. The Government’s support for a $20.00 increase to the federal award safety net is said to have no relevance to the wage increase offered to Western Australian public servants through collective bargaining. 

Flat Dollar Component

69      The Government says, by reference to a number of submissions to the Australian Industrial Relations Commission’s National Wage Case May 2004, that for the purposes of a flat rate increase the low paid are generally found in the private sector, and that in the CSA’s claim of a flat $60.00 per week increase or 6 per cent, the flat rate increase would end at the top of the Level 4, with a salary in the vicinity of $49,293.  This does not constitute a low paid classification by any measure.  In the public service, any consideration of low paid classifications might be at the very lower levels, at Level 1.1 and 1.2, within the context that there are no low paid workers per se within the public sector. 

70      The Government says that the internal set of classification relativities have changed markedly over time as a consequence of flat dollar increases and have been compressed.  In the period prior to productivity bargaining that compaction slowed down.  A flat increase of $60.00 would dramatically change the relativities from those created some time ago and certainly from those which are relevant today. 

71      The Government disagrees with the CSA’s assertion that the classification system entrenches gender bias, and its reliance upon the Equal Opportunity Commission Report of 1989 and Dr Christine Short’s research in relation to the broad banded structure.  The Government says that broad banding involved rolling into Level 1 of the broad banded structure many of those lower entry-level positions which were predominantly occupied by females.  The broad banded structure then provided greater access to higher levels of the rates of pay by automatic progression without the need for promotion, thus remedying some of the issues associated with gender bias which were a feature of the previous classification structure.  Qualification barriers have been removed providing all base grade officers with access to the complete Level 1 scale. 

72      Further, the Government says that the existing classifications and rates of pay have been established over many years of negotiations, by consent and through the use of bench marks and work value considerations. 

73      The Government also refers to the decision in the Ministry of Justice case (supra), where the CSA argued that due to the disproportionate number of females in the lower classifications, the Commission should rectify the indirect discriminatory effect of awarding a percentage increase to lower classifications by granting a flat dollar increase.  In that case the Commission determined that there was simply inadequate evidence to grant a flat dollar increase on that basis.  The Government says that the CSA’s case in this matter has less validity than it did in the Ministry of Justice case (supra). The Human Resources Minimum Obligatory Information Requirement data (“the HR MOIR data”) gathered from agencies reporting to the Department of the Premier and Cabinet, while demonstrating that women fall at the lower salary levels, does not take account of the number of women in part time or less than full time work.  Even though there might be an over representation of women in receipt of lower salaries, the HR MOIR data does not identify whether that is by reference to part time (or less than full time) work or by reference to classification level. 

Productivity

74      Government says that there is no satisfactory measure of labour productivity for the Western Australian public sector, and refers to the findings of Kelly et al in “Workforce Beyond 2000 … Workforce Projections 2002 – 2022 - Population Ageing and the Western Australian Public Sector Workforce” (The Centre for Labour Market Research, 2003).  The Government says that a commonly used definition of productivity is “the rate at which goods or services are produced” or “output per unit of labour”.  It says that this definition can be applied to industries or activities that lend themselves to being quantified and where there is no requirement to factor in a quality criterion.  Such a definition is said to be meaningless in a service based organisation and this difficulty is enhanced in the public sector.

75      The Government brought witness evidence to rebut much of the CSA’s evidence.  The Government’s view is that the CSA’s witness statements came from only 12 agencies out of 114.  Those 12 agencies comprise around 12,000 to 13,000 CSA covered employees which, although a significant proportion, still is not a majority of the more than 30,000 or so public servants and government officers employed in the 114 agencies.  The affidavit evidence is also confined to relatively small areas within each of those agencies.  The bulk of the CSA’s witnesses provide anecdotal information and mere expression of opinion.  The Government says that these witnesses may genuinely have views and beliefs about their workplaces but they are views and opinions not necessarily borne out by the facts.  For example, a number of the witnesses have given evidence using terms such as “work load”, “productivity” or “work value” without defining the meanings of those terms.  The Government says that there is no universal or generally accepted definition that those witnesses have applied and therefore they should be treated with some degree of caution.

76      There was some criticism of the CSA witnesses’ statements on the basis that some provide little or no useful direct substantiation of the assertions made or credible back drop to the “litany of woes that the CSA members claim that beset the public sector” (transcript page 268).  The Government says that some of the affidavits contain statements of pettiness, irrelevance and trivia.  This they compare with the statements provided by Government witnesses “aware of their accountability and obligations associated with the nature of their responses”. 

77      However, the Government says that an analysis of the statements provides some general trends or themes in the following categories:

“Work loads, funding, work value or changes in the nature of work, changes in organisational change, increase in pressures or stress and increased output.”

78      The Government’s affidavits have come from the Departments of Education and Training, Environment, Community Development, Justice, Land Information, Planning and Infrastructure, Western Australian Police Force, Consumer and Employment Protection, Racing, Gaming and Liquor, and Industry and Resources.  There is also evidence in respect of Government Officers Salaried, Allowances and Conditions Award 1989 covered officers at Central TAFE and the Pathcentre together with general, central responses from the Department of the Premier and Cabinet and the Department of Treasury and Finance.  The Government says that the mere lack of direct rebuttal by Government witnesses to statements or assertions in CSA witness statements does not mean that those statements are accepted.  Rather they might be viewed as unverified information about which assumptions, fallacious or otherwise, have been made. 

79      However, there is particular challenge to Ms Walkington’s statement at paragraph 61 of a requirement on many government agencies to maintain an FTE vacancy rate.  Geoffrey Alexander Hay from the Department of the Premier and Cabinet says that central government agencies have no knowledge of such a requirement, and that agencies are funded to provide services and determine their appropriate staffing requirements. 

80      While the CSA deals with a question of population growth and a ratio of public servants to population, Mr Hay says that this is not relevant, rather staffing levels need to be determined according to the range of services to be provided by government. 

81      As to particular areas of alleged work load problems in the CSA’s witness statements the Government made particular reference to its own witnesses’ responses including in respect of the Department for Community Development.  The Government says that Mr Intini’s evidence recognises that there were resource and work load issues, however, they are being addressed.  There have been increased resources to deal with particular areas of priority and work load, for example the Government’s response to the Gordon Inquiry included the creation of additional positions which have been filled, and the Department has proposed an additional $12m in its budget submission.  It says that the Joint CSA/DCD Workload Management Project is a continuation of those principles and that work load is being managed in a fair, consistent and strategic manner. 

82      The Department for Planning and Infrastructure’s Licensing Centre has increased staffing and restructured the call-centre to meet the demands of the work load and the needs of the staff.  It is said that this, however, does not provide evidence that there had been an increase in the output required of individual employees, or an increase in productivity.  John Mercadante, the Director Human Resources for the Department, says also that there is no difficulty in recruiting planners as alleged by Clinton Floate for the CSA.  He says that there has been a backlog of some applications to the Department and strategies have been developed for it to be managed, including recruitment of additional planners.  There have been periodic voluntary, structured and paid overtime sessions.

83      There was also evidence from Amanda Lee Hurt and Alan Ray Gregory from the Department dealing with the changes which have occurred, which challenge some of the evidence of Tania Debra Shilcock and Stephen James Farrell.

84      There was also evidence in respect of the Department of Employment and Consumer Protection receiving additional funding and an additional 61 FTE to meet the focus on areas of compliance and regulation. 

85      The Department of Justice’s witnesses Michael Shane Cardy, Terence William Simpson, Travis Lang, Christine Anne Laird, Michael Herbert Johnson and Leslie Harrison have also dealt with the matters raised by Mr Ellis in his evidence.  Mr Cardy says CSA covered Prison Division staff is 471, not 300 as reported by Mr Ellis.  Mr Simpson says that there has been a decrease in FTE consistent with a reduction in work.  Ms Harrison set out a range of strategies being considered by the Department to deal with excessive hours worked by prison counselling staff.  Michelle Scott, the Public Advocate, gave evidence of measures to address the work load in her office, including an increase in FTE.  Mr Johnson, the General Manager of Community Justice Services, provided a statement in which he reported the development of a Case Assessment and Management Model, which has been piloted.  It will be rolled out state-wide and will assist staff in managing their work loads.  Amongst other things, he refers to a report dealing with improving stability of staff and providing a new level of professional case practice oversight over a relatively short period of time.

86      Brendan James Richard O’Neil, the Acting Director Corporate Services of the Department of Environment, says in response to Mr Hewson’s statement, that additional resources have been allocated to the Department from 215 FTE in September 2001 to 438 FTE in March 2004.  He says that further funding increases have been provided to deal with deficiencies identified by the Auditor General’s September 2003 - Public Sector Performance Report - Management of Water Resources in Western Australia.

87      The issue of work load and resources within the Department for Community Development as detailed in the CSA’s evidence seems to be acknowledged by Mino Franco Intini, who is the Executive Director Business Services of the Department, in that he notes that there have been significant pressures on existing resources, and that “funding for additional field staff in the 2002/03 budget was sought, however, a decision by Treasury was deferred pending the findings of the Gordon Inquiry”, and that “the Department’s budget for 2004/05 contains proposals for additional funding for $23m for 30 Protection and Care Workers.”

88      The Government also says that issues of work load can be dealt through a co-operative process, and that there is a demonstration that this has the capacity to resolve issues.  The provision in the 2004 Agreement will provide a process whereby agencies can responsibly and meaningfully deal with issues of work load and work towards resolving them in a co-ordinated and co-operative manner. 

89      The Government says that work load issues have historically arisen from time to time and it envisages that the current issues will be resolved. 

90      In summary, the Government says that the CSA’s evidence has been confined to a small fraction of the employees in each of the limited number of agencies covered by the 2004 Agreement and that even if the CSA’s evidence was unequivocally accepted, it relates only to generalisations about particular sections of some agencies.  Some of it is not verifiable, and some of the statements in respect of work loads are highly subjective, assume different definitions and are being used as a tenuous basis for justifying a wage increase.  It says that none of the evidence seeks to demonstrate in an objective or quantifiable way actual change from one point in time to another.  Rather there is a universal assertion that work load is forever building, is non-cyclical and is demonstrably different from the past, whereas there is no clear, incontrovertible evidence of those things.  However, the Government noted that it values and endorses public servants who are dedicated and conscientious, and acknowledges their commitment and effort. 

91      In respect of allegations of reductions in funding, changes in staffing or re-organisation of arrangements, the Government says that there has not been a reduction in funding but rather there might be a change in the mix of services which results in a need to transfer resources away from some areas into others.  However, as a result of the wages policy of 2001/2003 and 2003/2005, consistent with the comments made by Mr Hay, the number of public servants and government officers has dramatically increased since December 2000.  The Government also noted the difficulty in defining and measuring productivity in the public sector by reference to the evidence of Professor Guthrie in the Ministry of Justice case (supra). 

92      In respect of the future productivity on account of the establishment and the implementation of shared service clusters through FRIT, the Government says that prospective productivity cannot be attributable across all CSA covered employees and is realisable only in years to come, not in terms of the agreement under consideration.  The number of staff affected in any event, is a relatively small percentage of the more than 30,000 CSA covered employees.  This would mitigate against any claims that the CSA have already raised.  The Government says that the CSA would have to demonstrate that the savings were generated by the productivity of the affected employees and not by technology, improved processes, reduction of duplication or other factors not directly attributable to the employees concerned.  The employees themselves will not be doing anything significantly different and it would not constitute a change in work value.  It may result in cost savings and efficiencies deriving from outside the control of the individuals concerned through things such as aggregation, reduction in the wide diversity of processes and systems across the public sector, an increase in the scale of service delivery to raise efficiency, removing duplication of the overheads, standardisation etc.  However, it is not about fewer employees doing more work. 

93      The Government says that there is no formula for sharing the gains from productivity improvements and that this was accepted by the CSA in the Western Australian Public Sector (Civil Service Association) Enterprise Bargaining Framework Agreement 1995 which stated:

“(c) Sharing Gains from Productivity Improvement

The parties accept that there is no precise formula for the sharing of gains from productivity improvements, but in any agreement, in addition to employee benefits, there must be a clear and specific return to the Government.  Productivity improvements may be related to work practices or arrangements, subject to acceptance that where capital expenditure requires changes in work methods and/or the number of employees and the changes are of a nature that enhances the investment, it shall qualify as a productivity improvement, provided that there is a net benefit to the agency.

Agreements should not rely primarily on improvements which are merely the result of good management, new technology or financial reforms/initiatives.  For example, in the case of capital investment (technology), changes arising from capital expenditure, for which the agency takes the risk and which require a reasonable return on the funds invested, do not necessarily count as a productivity improvement.

The treatment of improved efficiency arising from major capital expenditure is to be agreed by the parties to each agency agreement.

Where employees repackage or sacrifice employment conditions, eg. extra public holidays, this can be considered as salary packaging and all or most of the saving or productivity improvement made by the agency can be returned to the employees.”

(75 WAIG 2500 at 2501)

94      The Government also referred to the 1991 National Wage Case Decision (Print K0300) where it was noted that:

“We are not expressing an opinion that wage earners have no claim to benefit from growth in productivity due to other causes such as the general advance of technology and the growth in capital.  It should be recognised however, that the distribution of all benefits of productivity in growth at the enterprise level would lead to inequity and ultimately to a distorted and unsustainable wage structure.  Such a situation is not compatible with either a flexible labour market or industrial peace.” 

95      The Government also notes that the decision in the Ministry of Justice case (supra) at page 27 stated that models which measure productivity do not necessarily transfer to wage increases in any scientific way; ultimately that is a matter for the parties to negotiate.  It also recognised the difficulty in assessing the worth of those productivity outcomes (page 39).  Further, the Government emphasises that there has been a change, a new era now in wage fixation, that the period of the enterprise agreements from 1995 through to 2001 is now ended and productivity needs to be dealt with in a different manner.

Work Value Change

96      The Government says that the CSA is seeking to use work value as a basis for its claim and that this is not allowable in the current context of an across the board pay rise for all levels.  It has not demonstrated that the current classification system actually undervalues the lower classifications in particular, and there is no inherit undervaluing at any level.  The concept of Work Value contained in the Statement of Principles pre-dates its incorporation into those Principles and was a common basis for increased rates of pay prior to the current era.  However, the incorporation of the test within the Principles and the fact that the Principles do not apply to this arbitration does not remove the necessity in such a claim to meet the requirements of the Work Value test, whether embodied in the Principles or not. 

97      The Public Sector Management Act 1994 and Approved Procedures have the effect of giving the work value concept or principle primacy in the classification system.  In the application of the Work Value test, it cannot simply be that a change in work load or volume, nor organisational restructuring or departmental amalgamation, would automatically constitute a significant net addition to work requirements.  In fact, those changes may not substantially alter the work requirements of any position.  If the CSA is seeking wage increases for all classifications, it has the onus of demonstrating a significant net addition to the work in respect of each classification. 

98      The Government denies that the broad banding process has not been completed and says that there is no justification for that view or the view that the classification structure undervalues the work of classifications, especially at the lower levels. 

Wage Comparisons

99      The Government says that there can be no direct comparison between public servants and government officers in Western Australia with any other public servants or occupational groups in this State or elsewhere.  Outcomes of agreements in other areas are simply not comparable and are irrelevant.  Each of those outcomes has been as a consequence of particular circumstances and the merits of each set of negotiations. 

100   As to the CSA’s comparative schedules (TBW 42, 43 and 44) in respect of the relative positions of CSA officers to nurses, teachers and police from 1993, the Government says that these percentage differences had no rationale or status at the time and no nexus exists between those groups.  There is no rational basis for any comparison between those positions and CSA officers and the fact that they have different relativities now is of no real consequence.  There is no nexus with police, nurses and teachers and the wage increases for each of the groups is determined on its own merits, taking account of the different claims, packages and circumstances, all of which are different for each group. 

101   The Government also takes a different view of the calculation of the average percentage increase across CSA covered areas since July 2001 in that according to Mr Sims’ affidavit, it is 4.7 per cent whereas Government says that it is 5.42 per cent and takes account of the 2 per cent allowance including the return of terms and conditions with a value in the vicinity of 10.57 per cent.

Economic Argument

102   The Government says that by reference to the statements of Timothy Michael Marney, from the Department of Treasury and Finance, the economy is performing satisfactorily and can afford a salary increase for public sector employees provided that it is moderate, and that excessive wage increases will put the economy at risk.  Mr Marney provided statements dealing with general economic indicators within Australia and Western Australia and an overview of the State’s economy including Gross State Profit, employment, wages growth and the CPI. 

103   Gross State Product increased by 5.9 per cent in 2001-02 and 3.9 per cent in 2002-03.  The Government Mid Year Financial Projection Statement (“MYFPS”) of 19 December 2003, forecasts strong Gross State Product growth at 4.54 per cent for 2003-04 and a slight drop in 2004-05 to 4.25 per cent.  Conditions in Australia’s labour market have strengthened after a relatively weak patch in the middle of 2003, however, unemployment remains unacceptably high at around 6 per cent, and, in March 2004 at 5.5 per cent and there has been employment growth in recent times.  The outlook for employment in Western Australia is positive and business confidence is running at high levels, with slow growth in the labour force, forecasting employment to increase by 2 per cent in 2003-04 and 1.75 per cent in 2004-05. 

104   The Wage Cost Index (“WCI”) for Western Australia generally grew an average of 3.5 per cent over 2003 with the Government’s MYFPS of 3.25 per cent in 2003-04, and 3 per cent in 2004-05.  Over 2003, the WCI for public sector employees increased on average of 3.9 per cent while the CPI increased by 2.2 per cent.  The CPI is forecast to increase by 2.5 per cent in 2003-04 and 2004-05.  Real wages in the public sector have increased faster than the CPI and this will continue. 

105   There is a dispute between Mr Marney and Dr Carlin as to what might constitute excessive wages growth which might exacerbate inflationary pressures.  Mr Marney was critical of Average Weekly Earnings (“AWE”) as a measure of underlying wages growth saying that it has serious methodological problems.  The WCI is to be preferred as a measure of wages growth.  He says that the Australian Bureau of Statistics notes that the AWE does not provide a reliable indicator of changes in wage rates as it is significantly affected by compositional shifts in the workforce and does not take into account the number of hours worked or of employees’ promotions to positions with higher rates of pay and different responsibilities.  Users who require a reliable measure of change in wage and salary rates should refer to the quarterly WCI series which directly measures changes in wage and salary rates each quarter.  However, the WCI series is a “price index which measures changes over time in wage and salary costs per employee jobs, unaffected by changes in the quality and quantity of the work performed”.  (ABS, catalogue number 6345.0, December 2003, page 18)  For a number of reasons associated with the broad statistical measures of the WCI series, Mr Marney says it is the more useful index.

106   Mr Marney says that wage increases in excess of the MYFPS are likely to put at risk the economic outlook for the State, noting that “wage increases granted to CSA covered employees traditionally impact on the outcomes for other occupational groups within the public sector and also influence expectations of wage outcomes in the private sector.”  Of particular concern would be the adverse implications for inflation and interest rates and for the State’s attractiveness as an investment destination.  He also notes that excessive wages growth exacerbates inflationary pressures including the prospect of increased interest rates which could affect both highly geared households and business investments and have a substantial adverse consequence for the economy.  He noted that excessive wages growth could contribute to the wage – price spiral.

107   In an analysis of the affidavits of Dr Carlin and Mr Marney, the Government seeks to downplay the significance of Dr Carlin’s conclusions on the basis that Dr Carlin says that he did not seek to replicate comprehensively the full ratings methodology to examine whether or not the State’s AAA rating might be jeopardised in any way by the granting of the CSA’s claim in its current form, that his analysis is a theoretical one which does not take account of the realities of providing a budget and forecasts in the real world content.

Estimate of Numbers Covered by the Agreement and Cost

108   The Government has put forward its best estimate of the numbers of officers or FTEs who will be covered by the 2004 Agreement at around 30,100 FTE in 114 agencies.  The CSA accepts these figures as being the best estimate but there are some differences between the parties as to the number of FTE in each level and increment.  The Government’s estimates of cost have assumed that 70 per cent of officers in each level would be at the top increment point.  Given those assumptions as to total numbers of employees, and the percentages within each classification and level, according to the Government’s calculations, the additional cost of the Government’s proposed 3.3 per cent each year is, for 2004, $41,678,531 and for 2005, $43,053,923.  By comparison, the CSA’s proposal of $60 or 6 per cent each year is, for 2004, $97,304,268 and for 2005, $98,419,615.

CSA RESPONSE

109   In respect of productivity being budget driven, the CSA says that this means that the amount of money allocated to an agency drives efficiencies, or the amount of resources it has dictates the achieving of productivity, and that this fits with the evidence the CSA has presented about increasing work pressure and enforced productivity.  The CSA would say that this in fact constitutes budget enforced productivity. 

110   As to the terms of the 2004 Agreement, the CSA says that many of the changes in the package of conditions do not constitute any significant improvement in conditions of employment but rather a re-arrangement of benefits and the way in which they are taken.  In respect of the Work Load Management clause, the CSA says that this is a good start towards dealing with the work load but the CSA’s experience through the Department of Education and Training and the Department for Community Development is that the issues will not be automatically addressed and that they are likely to require disputation and struggle by the workers involved.  The inclusion of the clause itself does not resolve the problem.  Nothing will change by the registration of the 2004 Agreement.  It simply provides an opportunity for a process to be put in place to address issues. 

111   The CSA denies that it is suggesting that certain particular comparisons have weight beyond forming part of the matrix of information which would inform the Commission in the process of decision making.  Further, the CSA says that the rates of pay in the other state public services are not relevant because some have implemented competency based classifications whereas others are out of date.  The levels from state to state are not necessarily comparable and therefore an attempt at comparison is not able to adduce any worthwhile results.

112   In terms of looking at the situation for teachers, nurses and police, the CSA is simply demonstrating the environment of bargaining in which the parties operate and that, while those agreements have reached a particular outcome under the same policy, the policy is being applied selectively and differently by the Government.  It also notes that new classifications were arrived at in the Teachers’ Agreement, and the Police Agreement contains something called “relativity adjustments”. 

113   The CSA also says that it has provided data from a range of sources covering a range of indicators for the purpose of assisting the Arbitrator to decide the current bargaining environment and what constitutes low, average and high outcomes for the purpose of putting into context what might be appropriate for the CSA covered areas.  The CSA refers to the decision in the South Australian teachers’ case, (The Australian Education Union v the Department of Education, Training and Employment - Print T 1383) and notes that it describes the approach that the CSA wishes to be taken.  At paragraph 51, the Full Bench of the Australian Industrial Relations Commission made reference to the Tasmanian teachers’ case, quoting from that decision, and making its own following comments:

““The information in these exhibits (covering interstate comparisons and the Tasmanian teachers’ case) does not lend us to the view that we should fix the salaries of Tasmanian teachers at the same level as those in any other State or in either Territory.  It does, however, assist us considerably in determining the salaries claim as it provides a broad picture of teachers (sic) salaries across Australia during the 1990s.” 

Likewise, the information before us provides a similar broad picture, not only as to salaries but also as to conditions of employment, particularly, those relating to work load.  We have found this information generally assistance and have taken into account in reaching our decision.”” (paragraph 52)

114   As to the maintenance of relativities versus the issue of flat rate increases, the CSA says that by awarding the amount it seeks, for example, the relativity for Level 1.5 would move from 33.04 per cent of the Level 9.2 rate, to 34.29 per cent in the first instance and to 35.30 per cent in the second instance.  This would not constitute a significant flattening of the structure in the scheme of things. 

115   The CSA says that it is not its intention to attempt to re-establish relativities at a later time by claiming that they have been compacted by flat rate increases.  Any attempt to re-establish relativities would need to be on the basis of a proper analysis of the classification structure and associated matters.  In any event, the CSA says that the basis of its claim for a flat rate is in the context of percentage movements where the higher level is maintained in the relativities but that a combination of a flat rate at the lower levels and a percentage increase maintains a middle ground. 

116   As to the 2 per cent additional allowance, the CSA says that that should not be taken into account in determining the appropriate level of salary increases.  That is a matter which comes from attempting to provide a solution to the inequities which arose from the variable outcomes and disparities applying across the public sector due to enterprise bargaining and workplace agreements. 

National Wage Case Decision

117   The Arbitrator asked the parties to address the relevance of the National Wage Case Decision of 5 May 2004.  The CSA says that this has no absolute application to this matter for a number of reasons. The first is that the National Wage Case affected all industries as opposed to the Commission looking at the particular circumstances of this case.  Further, the National Wage Case is award-based not agreement-based so there are different environmental considerations.  However, the CSA notes that the National Wage bench has been happy to apply flat rate increases for some time although sometimes they are in steps.  The National Wage bench does not appear to be overly concerned about the maintenance of relativities in the application of flat rate increases. 

118   Where the National Wage bench agreed with the Commonwealth that the WCI data was the most useful direct measure of changes in wages costs for a particular position and therefore the most useful indicator for its purposes, the CSA says that the Arbitrator’s purpose in this case is a different one than that in the National Wage Decision.  The National Wage Case looks at the situation across all industry across the country, in respect of the safety net, in which case sector comparisons or interstate comparisons are said to have less relevance.  Rather the CSA says that it is necessary to take account of all factors in the Commission’s considerations in this matter.

119   In the Government’s view, the National Wage Case flat dollar increases are for the purpose of ensuring safety net adjustments are made to award-based employees as opposed to enterprise bargaining outcomes.  Otherwise, the Government says that consideration of this matter does not require consideration of the National Wage Case Decision.

CONCLUSIONS

120   This arbitration is undertaken in an entirely new era of wage fixing in this State.  It occurs by virtue of the amendments to the IR Act by the insertion of provisions dealing with the processes and outcomes of agreement–making between parties.  S.42G is part of the set of amendments bought in by the Labour Relations Reform Act 2002, in this case, by s.133.  It provides:

“42G. Parties may agree to Commission making orders as to terms of agreement

(1) This section applies where —

(a) negotiating parties have reached agreement on some, but not all, of the provisions of a proposed agreement;

(b) an application is made to the Commission for registration of the agreement as an industrial agreement, the agreement to include any further provisions specified by an order referred to in subsection (2); and

(c) an application is made to the Commission by the negotiating parties for an order as to specified matters on which agreement has not been reached.

(2) When registering the agreement, the Commission may order that the agreement include provisions specified by the Commission.

(3) An order referred to in subsection (2) may only be made in relation to matters specified by the negotiating parties in an application referred to in subsection (1)(c).

(4) In deciding the terms of an order the Commission may have regard to any matter it considers relevant.

(5) When an order referred to in subsection (2) is made, the provisions specified by the Commission are, by force of this section, included in the agreement registered by the Commission.

(6) Despite section 49, no appeal lies from an order referred to in subsection (2).”

121   In the past, parties and the Commission have been bound by the limitations of the Statement of Principles arising from the various State Wage Decisions.  Consideration was to be given to the state of the award safety net.  Where parties were unable to reach agreement on one or more aspects of an otherwise agreed set of conditions for an enterprise agreement, the arbitration of that dispute could not occur other than by reference to the Statement of Principles. 

122   In this case, the Arbitrator is able to consider a significant issue of dispute between the parties and incorporate the outcome in the 2004 Agreement for registration.  In determining the dispute, the Arbitrator is to determine only the matters which the parties seek to be determined, taking account of the range of possible outcomes in the area of dispute.  The considerations include the objects of the IR Act, as set out in s.6, and the provisions of s.26.  In this case, the dispute between the parties as to the levels of salary increase provides for 2 issues to be determined:

1. The percentage increase, between the limits set by the parties’ own positions, in this case between 3.3 per cent and 6 per cent for each of 2 years; and

2. Whether there should be a flat rate component.

123   The parties are agreed that the Arbitrator’s decision should be within the limits of that range of outcomes.  Neither party suggests that the other’s position ought be exceeded by going above or below it, notwithstanding that the provision of s.42G(4) provides that the Commission may have regard to any matter it considers relevant.  The parties were unable to agree on the factors upon which their respective positions of 6 per cent + 6 per cent or 3.3 per cent + 3.3 per cent should be based.  They take different approaches.  Furthermore, neither party is able to identify in particular terms why their position “adds up”, why it is worth 6 per cent + 6 per cent or 3.3 per cent + 3.3 per cent.

124   Notwithstanding the provisions of s.42G(4), it is clear that s.26 of the IR Act contains matters which the Arbitrator is nonetheless bound to take into account.

The Evidence

125   A significant amount of evidence was provided by the CSA from employees in a range of departments and agencies relating to reduced resources and increased work load.  The CSA described the combined effect of these factors as enforced productivity improvement.

126   The evidence demonstrates that over the last decade in particular, in those sections of the agencies about which evidence has been provided there have been ongoing or recurring processes of review and enquiries about the focus, services and functions to be and which are being provided by those agencies.  These have resulted in a range of different types of restructures, including amalgamation of departments, outsourcing, privatisations, and in some cases, the break up of departments.  The functions and services provided by the Government have changed in a number of ways including that additional and new services or functions are undertaken, some cease, and others are no longer performed by Government, or are not performed in the name of the Government. 

127   There is no particular report which provides, on an agency by agency basis, any analysis of changes in service provision by the introduction of new services, the modification or deletion of existing services, outsourcing or contracting out, or competition with the private sector and compares that with the changing levels of and allocation of resources over time.  Further, there is no analysis of the benefits of changed technology, amalgamations, and rationalisations which might explain any perceived increase in work load, work value or productivity.  There is no way of comprehending the total impact on staff numbers and resources of each of these changes, the effect on the amount of work to be done by public service officers, and the number of hours of work attaching to that.  It is simply not possible then, across the board, to establish a balance sheet to prove or disprove any or any particular amount of so called enforced productivity improvement.  It is only possible to say that the work of government has changed in many ways over the years as to the nature, volume and manner in which the work is performed.  The public service responds to government initiatives in the most effective, efficient and productive manner, as part of the ongoing review and re-assessment of how the community can receive value for money from the public service.

128   Based on the evidence, it is clear that in recent years the public sector workforce has decreased overall.  There was an increase in 2001, however, it has not been within the areas covered by the 2004 Agreement.  Additional numbers have been in nurses, police officers and in associated areas.  (see Profile of Western Australian State Government Workforce 2003).  That increase reflects government’s priorities.  Government is entitled to establish its priorities.  In any event, total numbers of employees is only relevant when it can be allocated to particular amounts of work to be done, and to particular methods of performing that work.  It needs to be viewed in context.  That context includes whether some of that work is no longer to be performed, or is to be performed by the private sector.  For this reason, total numbers and ratios as to population are not helpful or indicative in determining either actual work load per employee or productivity.

129   Governments, as do all employers, determine by the allocation of resources, the priorities in terms of functions and services to be performed.  The employer has the right to determine those priorities and the amount and type of goods or services to be produced or provided. If the employer chooses not to produce a particular good or service, that is the employer’s choice.  Similarly, if the employer chooses to provide a different good or service, or provide it in a different way than it formerly had been provided, that too is the employer’s right.  It is not the role or responsibility of the employees to make such a decision, although they may perceive, from their no doubt experience–based views, that a product or service ought to be or continue to be provided and produced, and in a particular manner.  This is the role of the employer.  Having made its decision as to the nature or type of product or service and how it is to be produced or provided, it is up to the employer to provide the mechanism, structure and resources to achieve that purpose.  For employees to decide to put in extra resources by the working of uncalled for hours of work may be counterproductive.  If the employer fails to provide adequate resources for the execution of its decisions such that employees are required to make an unpaid or unrewarded but nonetheless expected contribution, such a requirement is exploitative.  When resources do not match the requirements for the tasks and functions within the required timeframes, a range of problems result.  These include adverse effects on employees, their health, and on their families.

130   If employees work overtime in accordance with a request or direction from their employer, then they have a right to be paid in accordance with their award or agreement provisions.

131   In the case before the Arbitrator, there is a significant amount of evidence of an anecdotal nature, and evidence of individuals’ experiences and perceptions, which indicates that many government officers have good reason to believe that, in a range of departments and agencies, there has been a real and significant increase in work load, and a reduction in resources allocated to that work load.  The evidence demonstrates that many employees have a commitment to the performance of their work which they say sees them working harder and longer than their employers compensate them for.  This is not so much that they are required by their employers to perform additional work, but they choose to do so for a variety of reasons.  Those reasons include the commitment to the achievement of their employer’s goals, a belief that the work needs to be done, a lack of direction not to perform the additional work, and in some cases, tacit approval by the employer or supervisors, with an understanding that no overtime will be paid.

132   This is not the appropriate manner of managing excessive work load.  The appropriate manner is the proper allocation of resources to the work which the employer requires to be done.  That includes appropriate structures, people, materials and technology. 

133   It is appropriate that employers properly recompense employees for their efforts.  It is also important that employers choose which areas and what tasks and functions will be allocated resources, and the time frames for performance of those tasks and functions. 

134   The evidence in this case has not simply been of an anecdotal or subjective type, purely from the perspective of the employees.  There are independent reports which support some of their evidence about excessive work load, eg. the Mercer Report and the Auditor General’s Report (September 2003) – Public Sector Performance Report on Management of Water Resources in Western Australia..  The need for additional people has clearly been recognised by some of the departments and agencies, in some sections of those departments and agencies, and is in the process of being addressed.  There is also evidence of some difficulties in the allocation of resources to address some of the work load issues. 

135   The parties to the 2004 Agreement have recognised work load as an issue which needs to be addressed, and they have provided a mechanism for work load issues to be raised and addressed.  Clause 26. – Workload Management of the 2004 Agreement provides as follows:

“26. WORKLOAD MANAGEMENT

26.1 Employers are committed to providing a safe and healthy work environment and will not require employees to undertake an unreasonable workload in the ordinary discharge of their duties.

26.2 The objective of this principle is to ensure workload allocation is fair, manageable and without risk to health and safety.

26.3 Employers shall take reasonable steps to ensure that employees:

(a) do not work excessive or unreasonable hours;

(b) are able to clear annual leave; and

(c) are paid or otherwise recompensed for work as provided for under the Award and this General Agreement.

26.4 Employees are required to perform, attain or sustain a standard of work that may be reasonably expected of them.

26.5 All relevant indicators of workload should be monitored.  Indicators may include:

(a) nature of work;

(b) work patterns;

(c) environment in which work is performed;

(d) volume of work;

(e) level of performance;

(f) turnover;

(g) accident rate;

(h) incidence of workers compensation;

(i) sickness absence;

(j) early retirement records;

(k) referral rates and general feedback from counsellors; and

(l) exit information.

26.6 Where employee performance issues are identified these will be managed in accordance with an agency’s performance management policy and should take into account:

(a) training and development;

(b) application of skill and competencies;

(c) capacity to perform at a required level;

(d) individual accountability; and

(e) communication and feedback.

26.7 Workload issues may be dealt with as a function of the agency joint consultative committee.

26.8 With the exception of employee performance related issues, where workload issues are identified a review team agreed by the parties will be convened within 21 days of a written request from either party.  Broader consultation of the findings of the review team can be undertaken through the joint consultative committee.”

136   The remedy for an inappropriate work load is the recognition of the problem and its rectification.  It is not, in the long term, appropriate to remedy work load by increasing rates of pay.  Certainly an increase in the rates of pay may act as some sort of recognition and reward to employees, but it is the resolution and rectification of the problem which is needed.  As I have noted, the parties have provided for that situation.  If the implementation of the provisions of the clause does not resolve the issue, then there are other mechanisms in place including recourse to the Commission for the issues of work load to be addressed.  I would urge employees to utilise the mechanism set out in the 2004 Agreement to raise and attempt to resolve the issues they have identified in evidence.

137   The employees covered by the 2004 Agreement perform important work in the operation of the State, including in some key areas of health, education and policing services, where the Government has chosen to direct more resources and higher pay for nurses, teachers and police officers but not for administrative or support staff.  I acknowledge and recognise that there are many employees whose commitment to their jobs in the face of limited resources means that they have worked above and beyond the hours of their engagement and without additional remuneration.  However, it should not be and cannot be the basis for an across the board increase in salaries which will forever elevate the whole salary scale.  Rather, the work to be performed must be determined by the employer and the appropriate resources applied to the work.

138   If the CSA’s claim of enforced increased productivity due to work load pressures were based on the concept of increased work value, then, the concept of a significant net addition to the value of the work, and the attendant conditions, applies.  Although the Wage Principles per se do not apply to an arbitration of this nature pursuant to s.42G of the IR Act, the concept of work value assessment is one which has been in use for many years prior to its inclusion in the Principles.  Increased work volume does not of itself constitute increased work value.  In this case, the effect of the granting of the claim based on any concept of work volume or work load pressures which may be addressed, and thereby not continue, would have the effect of “ratcheting up” the whole of the salaries structure across the board, as it relates to all employees.  In those circumstances, such an increase would not be justifiable.

139   The CSA also relies on increased scrutiny and public expectations to justify its position.  These are features of most work environments in contemporary society and are not exclusive to or more onerous on the CSA’s area of coverage.  They may add to work pressures, but not to productivity or work value.

140   Accordingly, I find that the basis on which the CSA has constructed its claim, of enforced productivity improvements arising from increased pressure of work load, public expectation, increased scrutiny and organisational structural changes, is not able to sustain the claim it has made.  That is not to say that there has not been an increase in productivity.  Clearly, over the last 2 decades in which the wage fixing system has linked pay rises to Restructuring and Efficiency (67 WAIG 435), Structural Efficiency (68 WAIG 2412), and through enterprise bargaining on the achievement of particular productivity gains, there have been significant improvements in the way in which work has produced results.  Past productivity has, throughout the period, not been able to be accommodated by the Principles, and rightly so.  In addition to the particular contribution made by employees, Government has made changes to the mechanisms by which its goals and priorities are met, by way of restructuring of departments and agencies, outsourcing, privatising and contracting out by the application of different work arrangements and changes in technology. 

141   Employees have been rewarded by increases in their rates of pay on account of those improvements in productivity much of which has arisen not simply by them working harder or longer, but also by them performing their work more effectively and efficiently through the application to their work of advances in technology and better structural and procedural arrangements.

142   The employees are to be rewarded for their contribution to the increase in productivity, and the employer is to reap the benefits also.  However, generally speaking, there is no way to distinguish between the improvements in efficiency and productivity brought about by employees’ efforts alone and those which are attached to changed work methods, changed structures and the application of technology.  It was stated by the Australian Industrial Relations Commission in the National Wage Case decision of 30 October 1991 that employees have a claim to some of the benefits of growth in productivity “justified by and commensurate with employees’ contribution to enterprise efficiency and productivity”.

143   The question arises as to how to measure productivity.  There are many definitions of productivity, however its measurement in the public sector is problematic.  Kelly et al in Workforce Beyond 2000 (supra) noted:

“Labour Productivity

Economists are often concerned with measuring the growth in labour productivity, taken as the growth in output per unit of labour input for a given unit of time.  Changes in this measure of productivity result from improvements in labour efficiency, technological change and other factor inputs such as capital.  Typically, it is estimated using real gross domestic product per hour worked, or as the ratio of value added to full-time equivalent workers. It is difficult to find estimates of labour productivity growth for the public sector because of a lack of sound measurement techniques for the estimation of output or value added.

A ‘consensus’ estimate derived from the literature would suggest labour productivity growth for the Australian economy as a whole will lie somewhere around 1.76 over the next two decades.  Table 6.2 shows the growth rates in the population, the public sector workforce and the ratio of population to public sector employees for selected States.  For the five mainland States the population is growing at a faster annual rate than public sector employment.  Thus, the rate of increase in the ratio of population to public sector employees is also positive.  At first glance this appears to be a reasonable proxy for labour productivity growth, however, some caution needs to be exercised.  Over the period in question the public sector has embraced outsourcing to the private sector on an unprecedented scale and has also cast off various services to the private sector, or allowed for private operators to compete with the public sector in delivery of services.  There is also no indication of the value of the output in question.  With these caveats in mind the data for Western Australia suggest an increase in productivity, averaged across the sector, of around 1.6 per cent per annum since 1983.

Table 6.2: Growth Rates of Public Sector and Population,

1983-2002

Source: ABS Cat no. 6248 “Wage and Salary Earners, Public Sector, Australia, table 3; ABS Cat no. 3101.0 Australian Demographic Statistics”

(pages 31-32)

144   Therefore, according to Kelly et al, the yearly average increase in productivity would be around 1.6 per cent each year since 1983.  However, I note the difficulties in measuring productivity in the public sector.  As noted earlier, I am not satisfied that population per public servant as a measure is, according to Kelly et al, “a reasonable proxy for labour productivity growth” in Western Australia.

145   However, there have been pay rises since 1983 which well and truly account for such increases in productivity at the level of 1.6 per cent each year.  Having said that, some of those pay rises accounted for trade offs in conditions.  Some of those trade offs have been returned through recent general agreements and as part of the parity of conditions arrangements.  It is not now appropriate to go back, as this claim does, and seek to identify and measure productivity improvements said to have arisen by force through the lack of application of resources, and distinguish those from increases in productivity which have been rewarded through enterprise agreements.  In that context, it is inappropriate to award salary increases on the basis claimed.

146   The question arises though, in the current, and new era of wage fixing as to how to reward employees for their ongoing efforts, for their maintained and continuing improvements in productivity and to ensure that their rates of pay keep pace with those applicable to the workforce generally, and in a manner appropriate to sustain the economy generally, their industry sector and their employment.

147   As far as the Government’s alternative basis for establishing an appropriate rate is concerned, I must express some serious reservations about the basis of setting rates of increases in salaries through a process involving productivity being “budget driven”.  It is true that government has the right and indeed the responsibility to establish its priorities and to set a budget to meet those priorities. As with any organisation, from a household to a major corporation, from a small business to a national government, priorities are set and resources found to meet them.  Sometimes it is necessary to defer particular goals, or to borrow to achieve them.  Sometimes there are windfall gains which enable the earlier achievement of some goals, or the enhancement of some arrangements.  Unexpected expenses arise which also must be met.

148   The current round of wage negotiations is a case in point.  The Government set its wages policy which included budgeted provisions for specific pay increase percentages.  Yet, where particular cases were seen to warrant their being excepted from the generally applicable policy, higher pay increases were agreed, eg. The Western Australian Police Service Enterprise Agreement for Police Act Employees 2003 (No. PSA AG 45 of 2003).

149   Government policy is a matter for weighing in the balance with many other issues in the setting of salaries.  The budget-driven process should not be taken to mean that a rigid adherence to the budget set by government is necessary for the equitable resolution of this matter.  In fact, the Government, in submitting to this arbitration, has accepted that this is so. 

150   Budget driven productivity improvements can result in a process where meeting the budget becomes the focus and aim, rather than a tool for and a constraint upon the achievement of the priorities of government, being the provision of services.  It has the potential to lead to an ever increasing demand on employees through continuing reductions in resources allocated to the achievement of the provision of services by the application of budgetary constraints.  This would lead to the sorts of complaints raised in the CSA’s witnesses’ evidence, eg. regarding school support staff and in the Department for Community Development.  Although such situations must ultimately be recognised and addressed, there may be a period of inadequate resourcing brought about by continued reductions in personnel before such situations are identified and addressed.

151   As to the expert witness evidence of Dr Carlin and Mr Marney, Dr Carlin says that, based on what might be described as a theoretical analysis, with all other things being equal, the CSA’s claim of 2 annual increases of 6 per cent is viable according to the State’s financial position, and would have no real prospect of an adverse impact upon the State’s credit rating.  Dr Carlin also says that the budgeted forward estimates do not constitute a set of figures based on fixed assumptions which will necessarily hold true.  Rather he says that budgets are fixed according to a set of priorities and are adjusted according to practicalities and exigencies as they arise.  On the other hand, Mr Marney says that the State’s budgets and forecasts have been established taking account of the principles and priorities of the Government, taking account of particular objectives, and increases of the magnitude sought by the CSA have the potential, taken with other uncontrollable factors, to affect the State’s financial position and its rating by external agencies.  This has the potential to create negative impacts including on this State’s future borrowing arrangements. 

152   Mr Marney says that a wage outcome at a higher level than that provided for in the MYPFS would result in an unacceptable risk of an adverse economic impact.  Dr Carlin says that Mr Marney’s statement does not provide any demonstration as to why wages growth at or below the levels countenanced by the MYPFS would be safe or acceptable.  Dr Carlin says that this challenges the credibility of Mr Marney’s statement in that regard.  Mr Marney, in response to Dr Carlin’s statement, concludes that given the manner in which Dr Carlin has undertaken his analysis, he believes that rating agencies would draw a different conclusion than Dr Carlin as to the State’s net debt position.  Further, Mr Marney is critical of Dr Carlin’s reference to a windfall bonus of an extra $453m on the basis that “the increase in Goods and Services Tax (GST) grants to Western Australia in 2004-05 relative to the 2003-04 Mid Year Review (MYR)) due to the change in the Grants Commission distribution formula is actually $284m.  The remainder of it is natural growth in the GST revenue, of which all states obtain a share”.  Mr Marney also notes that since the MYR, the Australian dollar/US dollar exchange rate has changed significantly reducing the royalty revenue by about $13.5m for each one cent increase.  Also, the sale of the gas pipeline has not yet occurred and therefore no stamp duty on the sale has been achieved.  Mr Marney comments also on the State’s sources of revenue limiting the budgetary benefits of a strong domestic economy due to the fact that the State’s own sources of revenue will constitute only about 50 per cent of its income.  He says that “historically only State taxation revenue (which is only around 30 per cent of total revenues) bears any consistent relationship to growth in the State’s economy and budget benefits for the State from royalty revenue growth are, over time, largely lost through the Commonwealth Grants Commission redistribution process” (paragraph 16, Marney, April 2004).

153   Mr Marney also draws attention to Dr Carlin’s analysis being based on holding constant all other variables, and that this assumption is overly simplistic because it ignores the inevitable pressures that adversely impact on the State’s finance such as the impact of a steeper than projected decline in housing activity on stamp duty and other matters.  Mr Marney also says that Dr Carlin’s statement that a risk associated with the implementation of a capital charging regime is the over inflation of cost aggregates at a whole government agency and output level, is factually incorrect.  He says that the capital user charge does not add to the growth and whole of government expense levels due to the fact that it is an internal government transfer between the Department of Treasury and Finance and agencies that is taken out of the whole of government aggregates. 

154   Each of these 2 witnesses takes a different approach to the analysis of the budget and forward estimates and to the certainty or otherwise provided by the budget driven wages policy of the Government.

155   It is clear from the economic information available, that the State’s financial situation is sound.  There is no challenge to whether the Government’s position could be met without adverse impact on the state of the Western Australian economy.  Mr Marney does not suggest that the CSA’s claim could not be met, but argues against it on the basis that it may have adverse consequences to the overall budget and for the State’s credit rating.

156   The issue remains as to what is reasonable given the expectation of ongoing productivity of the employees concerned, the effect of the outcome on the State’s finances and the maintenance of a reasonable level of salaries taking account of general and, particularly public sector, wage movements as well as the cost of living.

157   It is fair to say that a good deal of progress has been made between the parties in this and the 2002 General Agreement to return the public sector to a situation where employees are treated equitably across the sector by the setting of bench marks and the equalisation of conditions.  That process has involved some employees both maintaining their higher rates of pay and benefiting from the re-introduction of conditions for which they had previously received their higher rates of pay.  The Government, as well as the employees, has and will continue to benefit from the move towards the restoration of parity.

158   The need to facilitate the efficient organisation and performance of work in accordance with the needs of an industry and enterprise within it, balanced with fairness to the employees in the industry or enterprise is one of the most significant aspects of this case.  The question which is raised by this application, at this time in the wage fixing history as it has evolved over the last decade or so, is what is the value to be applied to the continuing efforts and future work towards the efficient organisation and performance of work by the public service according to the needs of the Government balanced with fairness to employees in that employment.  This involves a consideration of the value to be ascribed to the continuing productive efforts of the public service as a whole in Western Australia, not at the level of individual agencies but across the board.  That measurement could come from a range of considerations including:

(a) the amount the parties could reasonably have agreed between themselves;

(b) the value the Government has placed on the work of the public service through its budget processes;

(c) the value of the existing and future levels of productivity which will continue to be affected by the requirement on governments to deliver changing and increasing benefits to the community (i.e. present and future productivity).  These arrangements are in accordance with the employer’s prerogative to initiate more efficient work methods and the employees’ acceptance of the need to accommodate changes brought about in aid of those new methods; and

(d) the valued of work considered within the context of community movements measured by reference to increases agreed or awarded in other public sector employment and in the community generally.

159   The amount the parties could have agreed is, in the context of agreements reached in the private and public sectors in recent times, relatively broad.  I think it is fair to say that the amount of 6 per cent with a minimum of $60.00 per week is unrealistically and extremely high given a range of considerations including what has been agreed elsewhere, which I shall deal with later.  Any amount in excess of 4.5 per cent in each of the 2 years of the 2004 Agreement would still be at the high end of the range.  Also taking account of the overall context of agreement-making in the Government and private sectors, 3.3 per cent is at the lower end of that range, although I note that some government sector agreements provide a lower increase eg.  the Department of Health Medical Practitioners (Metropolitan Health Services) AMA Industrial Agreement 2004 (PSA AG 3 of 2004).  In its budget processes the Government has, through its general wages policy, allowed for an even lower amount than that, at 3 per cent.  Yet, clearly that amount has been exceeded by the Government in other negotiations to which I shall refer later.

160   As to community movements, caution must be exercised.  Comparative wage justice is not available as a basis for salary increases.  One cannot use any particular individual or group of bargaining outcomes external to this group as the basis of a salary increase for this group for a number of reasons.  The first consideration is that each set of negotiations brings with it unique circumstances.  These include the history of bargaining for that group and whether it took account of structural or classification changes, work value, or adjustments to conditions as part of a total package.  For example, one agreement might focus on costly adjustments to conditions applicable to a large group at a particular location, and another may aim to provide greater benefits to a group at the lower levels of classification according to their numbers. Another consideration might recognise a higher qualification, and yet another might need to take account of attraction and retention issues.  The terms of an agreement and the timing of it may also be considerations.  The realities of negotiations often mean that one segment of employees within the group has a greater need than another.  A satisfactory outcome to any particular set of negotiations often involves pragmatic considerations which may not be able to be assessed by an external party attempting to apply quantitative measurements.

161   Further, applying a ranking system to demonstrate where within a group a particular outcome might fall can be significantly affected by the timing of the examination of the group within a wage cycle.  While this arbitration may come at the end of the bargaining round and therefore not have much precedent or impact in this round it is the case that in any set of negotiations the parties look at their own previous negotiations outcomes and compare them with others in arriving at their conclusions about what is reasonable.  If they believe they did not do as well as other groups last time, they will factor that into their considerations.

162   However, a large enough sample of the outcomes of negotiations may provide some indicator of the trends, and the context rather than the basis of an adjustment.  There are a number of measures of the outcomes of bargaining which can give an indicator of what might be appropriate for the employees covered by the 2004 Agreement.

163   The ADAM data produced by ACIRRT includes a public administration sector.  This sector averaged 4.3 per cent increase in Average Annual Wage Increases in agreements certified in 2003.  The highest increase was 5.1 per cent.  It should be noted that the public administration sector includes a far broader range of types of organisations than are covered by the 2004 Agreement.  It includes some non-profit organisations which receive government funding, and also includes government trading enterprises, both of which have somewhat different approaches to salaries and conditions when compared to the departments and agencies covered by this agreement.  However, this does not mean that as part of the overall mix of indicators, this should be excluded.

164   The Commonwealth Department of Employment and Workplace Relations reports that public sector pay rises from federally registered public sector agreements contained an average 4.8 per cent increase per year in the March quarter 2004, with private sector increases being around 3.9 per cent per annum.

165   I note the dispute between the parties as to the use of either the WCI or the AWOTE as measures of pay increases in the labour market.  I accept Mr Marney’s argument that due to the composition of the AWOTE sample, the WCI is a more appropriate measure.  The WCI for Australia for the public sector has increased by 4.3 per cent per annum to the March quarter 2004 (ABS Wage Cost Index 6345.0 Key Figures Tables 1 and 2).  For Australia, in private and public sectors combined, the increase was 3.5 per cent.  For Western Australia, in the combined private and public sectors, it was 3.1 per cent.

166   The total picture would not be complete without the outcomes for other state government employees.  In the case of police, the recently registered Western Australian Police Service Enterprise Agreement for Police Act Employees 2003 provided for a 3 per cent increase in salaries for each year 1 July 2003, 2004 and 2005.  In addition, each year there are undefined “relativity adjustments” of 1.2 per cent, 1 per cent and 2 per cent respectively.  This provides total increases in salaries of 4.2 per cent, 4 per cent and 5 per cent respectively.

167   The Government School Teachers and School Administrators Certified Agreement 2004 provided for 3 per cent per annum from 1 January 2004, 2005 and 2006.  In addition, classroom teachers level 3, school administrators, school psychologists, education officers and school development officers, directors - schools and directors – schools and services, and area directors all receive 3.3 per cent.  A new senior teacher classification has been introduced and this will apply to 9,800 teachers.  Six thousand two hundred will receive an increase of 5.74 per cent and 3,600 will receive 4.56 per cent.

168   I note that in respect of nurses, the Minister for Health, on the commencement of negotiations for a replacement enterprise bargaining agreement administratively applied an increase of 3.4 per cent to be paid on the expiration of the then current agreement, from 1 May 2004.  As already noted, AMA agreements resulted in 3 per cent increases each year.  The Health Services Union of Western Australia (Union of Workers) agreements which cover, amongst other classifications, administrative and clerical officers who do similar work to CSA covered areas, provide for $28.60 per week or 3.4 per cent which ever is higher for 2004, and 3.5 per cent for 2005.

169   Consideration also needs to be given to the CPI.  The CPI for the 8 capital cities rose by 2 per cent per annum and for Perth by 1.6 per cent per annum to the March quarter 2004 (ABS Consumer Price Index Australia. 6401.0, Tables 1 and 2).  Unemployment in Australia is relatively low at 5.5 per cent and 5.0 per cent in Western Australia, seasonally adjusted for May 2004 (ABS Labour Force Australia 6202. Table 12).

170   As to the State and National Wage Case Decisions, and the adjustment of the Minimum Award Wage and the Minimum Wage pursuant to the MCE Act, these are rates set in quite a different context to that which applies in the negotiation of agreements.  They are minima applying in the award and legislated safety net situations.  However, they also have a place, albeit a very limited one, in the mix.  The State Wage Case decision of 3 June 2004 provided an award safety net increase of $19.00 per week, and the same to the Minimum Award and MCE Act Minimum Wages, which constituted a 4.23 per cent increase from 4 June 2004.

171   The economic indicators of State Gross Product, unemployment, WCI for WA generally and for the public sector, and the CPI all tend to the prospect that 2005 will bring slightly lower State Gross Product, employment and WCI.  In those circumstances a slightly lower salary increase in 2005 is appropriate.

172   Taking account of all of these matters including the objects of the Act and s.26 considerations, in the context of the broader public sector and the range of employees and agencies, an increase of 3.8 per cent in the first year and 3.6 per cent in the second year of the 2004 Agreement would be reasonable to account for all the factors identified above, and would not be excessive.  According to information provided by the Government, such an increase would cost approximately $47,993,000 in 2004 and $49,721,000 in 2005, as compared with the Government’s proposal of $41,678,531 and $43,053,923 respectively.  In the context of the National and State economies, this is sustainable and will not lead to adverse economic consequences.  Inflation and unemployment are unlikely to be affected to any significant extent given the state of the National and State economies.  Accordingly, I conclude that the 2004 Agreement should provide a salary increase of 3.8 per cent in 2004 and 3.6 per cent in 2005.

173   As to the issue of a flat rate increase, the decision of the Commission in Court Session in the Ministry of Justice case (supra) raised a number of significant issues.  The argument raised by the CSA in that case was to the effect that a flat dollar increase in lieu of a percentage increase would yield benefits in respect of pay equity on the basis that any percentage increase delivered yields significantly greater amounts for officers at higher levels than those at lower levels.  The Profile of Western Australian State Government Workforce as at 30 June 1998, prepared by the Ministry of Premier and Cabinet and a progress report Women In Management in the Western Australian Public Sector show a disproportionate number of women are employed at a lower level within government employment.  The CSA in the Ministry of Justice case (supra) argued that this was on the basis of a lower proportion of representation of women at the higher levels and that a flat increase would address to some extent indirect discrimination on the basis of gender.  The Commission in Court Session said that there was insufficient before it to assess the merits of the argument. 

174   The case before me in this matter includes a similar argument.  The CSA says that while it seeks a percentage increase in both years of the 2004 Agreement, that a flat rate, which would have the effect of giving a higher percentage increase to the lower classifications, would have a positive effect upon gender equity.  Ms Walkington in her statement referred to the report of the Commissioner for Equal Opportunity in 1989 which held that “job evaluation could be effective in identifying and helping to eliminate wage discrimination”.  It also expressed the view that officers at Level 1 “were treated less favourably than those at Level 2 and above” for a number of reasons including a lack of systematic job evaluations at Level 1, and that “the introduction of a new system of classification on the basis of salary alone reinforced the position of those at the bottom of the scale – in this case, women, migrants and Aborigines” (page 10-11).

175   Ms Walkington also referred to Dr Christine Short’s study of gender equity in pay scales in the public sector.  Dr Short undertook a “(Review of) Equal Employment Opportunity in the WA Public Service Classification System” in October 1990.  In doing so, she examined the classification system and concluded:

“Clearly only one major conclusion can be made.  There is evidence of wage discrimination within the current pay system used in the W.A. public service which can be attributed to the failure to examine the relative work value of female keyboard operators at the time of introducing equal pay for work of equal value for these officers in 1977.  This is perpetuated by the current classification system which has been shown to contain few of the features the literature requires of a less biased system.

If wage discrimination is to be eliminated or at least reduced within the W.A. public service, steps must be taken to improve or replace the current classification and job evaluation system.  The above recommendations constitute the minimum changes that could be made to Bipers to enable Level 1 officers to be evaluated with some degree of equity.  Other options apart from adapting Bipers exist, the full range is given below.”

(page viii Executive Summary)

176   Dr Short set out a range of options including not changing BIPERS but training classification review committee members and managers in equal employment opportunity considerations; moving to a different assessment tool such as Cullen Egan and Dell’s system; and developing a new evaluation and classification system specifically for the Western Australian public service.

177   Clearly, a major issue from her report was the failure to properly identify the work value of female keyboard operators in 1977.

178   Computerisation has clearly changed the way in which work is performed in many agencies. I do not have before me any information which enables me to conclude that female keyboard operators’ work value remains an issue, if such a group exists in the way it did in 1977.  In fact, I have no information as to the work value of keyboard operators, or those Level 1 jobs in which females may be clustered.

179   I accept that in 1989 and 1990, it was found that the lower levels of the pay structure were contrary to gender equity requirements.  However, a number of issues associated with the CSA’s case in this regard cause me concern.  The CSA’s argument is that a flat rate increase would assist gender equity because those at the lower levels, i.e. predominantly women, would benefit.  However, the arguments of the Equal Opportunity Commissioner and Dr Short point to job evaluation as being the remedy.

180   Further, to say that any amount of flat increase will take the issue in the right direction without attempting to remedy the underlying cause, and without examining the actual impact, is simplistic.

181   In addition, fourteen years has passed since Dr Short’s report.  I do not have before me any information about whether and why the gender proportions at particular levels have changed, whether BIPERS has been modified, whether the other recommendations made by Dr Short have been implemented, and if so, to what effect.  More importantly, the matter of gender equity is to be the subject of a review to be undertaken at the instigation of the State Government, and a report is due in September 2004.  The outcome of that review may have a better prospect of providing a systemic remedy, whereas a flat rate increase, with unknown effects, would be a mere bandaid, and would compress relativities without any overall benefit for gender equity.

Low Paid

182   The Government made reference to the State and Territories’ Governments’ submission to the Minimum Wage Case 2004 conducted by the Australian Industrial Relations Commission (“AIRC”).  In dealing with the issue of what constitutes the low paid, the AIRC noted the findings of the Second Report from The State of Working Victoria Survey conducted by ACIRRT entitled “The Low-Paid in Victoria”.  The AIRC described it as providing “a comprehensive analysis of the number and distribution of low paid workers in Victoria.  For the purposes of the survey, it defined low pay as a rate less than $12.15 an hour ($461.70 per week). 

183   The AIRC noted:

“… The findings in the report are usefully summarised in the States and Territories’ submission:

• low paid workers were earning on average $10.42 per hour, with an estimated 285 000 Victorian workers earning less than the lowest federal minimum hourly rate;

• women are more likely to be low paid, as are young and older workers, and workers from non-English speaking backgrounds;

• workers’ qualifications are aligned to employment status, with workers holding only a high school or vocational qualification more likely to be low paid;

• non-metropolitan workers are more likely to be low paid when compared to their metropolitan counterparts;

• low paid workers are more likely to be casual and less likely to be in a union;

• low paid workers are predominantly found in the private sector and concentrated in the industries of accommodation, culture, recreation and personal services, retail trade, construction and wholesale trade;

• the low paid in occupational groups are concentrated in elementary clerical, sales and services, or tradespersons and related workers occupational groupings;

• almost one-third of all low paid workers were employed with their current employer for less than one year, with only 6 per cent of low paid workers being employed for 10 years or more; and

• low paid workers find it harder to care about their jobs and are less likely to feel pride in their organisation.”

184   The AIRC “accept(ed) that differences between the economies and labour markets of several states and territories make it inappropriate to generalise directly from the report to other states and territories”.  It accepted that “Victoria was atypical so as to preclude generalisation of the results to Australia generally”.  The AIRC also accepted that “the relatively low response rate (29%) in the absence of non-response testing, suggests that results should be treated with some caution and treated as indicative rather than absolute.”  Nonetheless, the AIRC considered that the report provided some indications of assistance to it.  Further, the AIRC went on to say:

“[308] As noted in the May 2003 decision, the Commission acknowledges that increases in award wages are a blunt instrument in addressing the needs of the low paid in employment.  We accept that a significant number of households with minimum wage earners lie in the middle or high income bands.  Moreover, we recognise that adjustments to award wages are a relatively inefficient means of increasing the disposable income of the low paid.  On-costs mean that for every dollar awarded by the Commission, employers must spend more than $1, whereas the impact of tax and tax transfer arrangements means that, in many cases, the employee receives substantially less than $1 as additional disposable income.  Nevertheless, increasing award wages is the only instrument that the Parliament has conferred upon the Commission in order to discharge its statutory obligation to maintain a system of enforceable awards that act as a safety net of fair minimum wages and conditions of employment in the context of living standards generally prevailing in the Australian community.”

(Print PROO2004)

185   Therefore, while the description of low paid set out the “The Low Paid in Victoria” is helpful, it tends to confirm that those within the public sector covered by the 2004 Agreement are not generally considered to be low paid.  An examination of the actual salaries at Level 1 shows that the 21 year old or Level 1.1 salary is $27,805 ($533.07 per week).  The top of Level 1, at 1.9 is $34,748 ($666.20 per week).  The National Wage Case and State Wage Case decisions in recent years have provided flat rate increases.  As noted earlier in these Reasons, the State Wage Case decision of 3 June 2004 granted $19.00 per week to take the Minimum Award Wage and Minimum Wage for purposes of the MCE Act to $467.40, an increase of 4.23 per cent.  $467.40 as an annual salary is $24,380.  It could not reasonably be argued that the Level 1.1 at $3,425 per annum or $65 per week above the annual Minimum Wage constitutes low pay (see also Negus C in Civil Service Association of Western Australia (Incorporated) v Country High Schools Hostels Authority and Others 72 WAIG 244 at 246).

186   Accordingly, I do not find that a flat increase component is justifiable on what is before me, and at this time.

CASHING OUT OF ANNUAL LEAVE

187   The Government proposes a provision to enable employees to cash out up to 50 per cent of the accrued annual leave at the employee’s initiative.  The clause proposed is as follows:

1.1 The parties agree that annual leave should be utilised as time off.  This clause, however, recognises that some employees may have excess and overdue annual leave.  This clause provides for employees receiving payment in lieu of excess and over due annual leave.

 This clause will not be taken of itself to imply that there are grounds for diminishing employee’s entitlements to annual leave nor to negate the employer and employee responsibility in the accessing of and taking of annual leave.

1.2 Subject to clause 1.3, the employer and employee may agree that the employee forego part of his or her entitlement to annual leave in exchange for equivalent payment at the rate which would have applied had leave been taken.  The payment is to include annual leave loading.

1.3 The following criteria applies to the cashing out of annual leave:

a) the employer agrees in writing to a request in writing by an employee to cash out annual leave; and

b) there is an annual leave entitlement that has accrued in previous years and is over due to be taken; and

c) no more than 50% of any years annual leave entitlement can be cashed out; and

d) annual leave accruing in the year the request for cashing out is made cannot be cashed out in that year.

1.4 It is the employee’s responsibility to seek information on any taxation implications arising from the payout of annual leave.”

188   The Government has conducted a survey of agencies and 53 such agencies responded.  Seventy 2 per cent responded that they had previously made arrangements for cashing out, and a third had made provision for cashing out in an enterprise bargaining agreement. In 89 per cent of those agencies, employees actually cashed out annual leave.  Seventy nine per cent of agencies which responded had received requests from employees to cash out annual leave.  Sixty four per cent of all agencies which responded had employees who had requested cashing out and this included agencies who had not previously provided such arrangements. 

189   Although the agencies reported having received such requests, the survey was not able to provide statistics of the numbers of employees who had made such requests or how many had taken up the cashing out option.

190   The Government says that its proposed clause is aimed only at employee-initiated payouts and would not be for the purposes of agencies reducing any annual leave liability.  It says that it recognises the need for rest and recuperation for employees in accordance with the purposes of annual leave, however, the proposed clause would provide an option to the employee for his or her own benefit. 

191   The Government also notes that s.8 of the MCE Act provides for the capacity of cashing out annual leave as follows:

“8. Limited contracting‑out of annual leave conditions

(1) An employer and employee may agree that the employee may forgo up to 50% of his or her entitlement to annual leave under Division 3 of Part 4 if — 

(a) the employee is given an equivalent benefit in lieu of the entitlement; and

(b) the agreement is in writing.

(2) An agreement referred to in subsection (1) is of no effect if the employer’s offer of employment was made on the condition that the employee would be required to enter into the agreement.”

192   The Government says that the provision would not diminish community standards but would provide an enhancement to employees and at their initiative (see Exhibit Book 4 tab 44 and exhibit C).

193   The CSA opposes the cashing out of annual leave saying that:

(a) Such a provision would diminish the community standard of annual leave;

(b) Annual leave is for the purpose of rest and recreation.  The impact on the physical and mental health of employees and balancing working and personal lives are important considerations.  Reference was made to a number of authorities for the purpose of annual leave being for rest and recuperation and the use for leisure purposes, and not for money; 

(c) The Government’s motivation was demonstrated by the substantial amount of leave accrued in the public sector and employees have not been able to take leave for various reasons including that they have been discouraged by their employers from taking their entitlements (see CSA Binder 3, TBW 66 and other witness statements);

(d) Cashing out can be a more expensive alternative for the Government because for each employee who cashes out two weeks’ annual leave there would be payment for 54 weeks in the year;

(e) Cashing out is helpful to the Government to reduce other difficulties such as in back filling for staff on leave and the requirement to pay higher duties allowance; 

(f) The significant leave liability burden on the Government arises at least in part due to work load pressures referred to in the evidence of CSA witnesses in the salary increase part of the case, and inappropriate management practices (see Walkington paragraphs 143 onwards and responses to a survey of members who reported that they did not take leave for reasons associated with work load, the employer’s refusal to approve leave and other matters beyond their control); 

(g) The Profile of the Western Australian Government Workforce 1995 prepared by the Public Sector Management Office demonstrates the increase in leave liability.  In addition the Public Sector Management Office has recognised the social cost of employees not taking leave and urges managers to consider it when developing leave management strategies.  It recognises the mental and physical fatigue associated with work without the appropriate leave breaks (page 34 of profile of Western Australian Government Workforce 1995); and

(h) The Public Sector Management Office has also recognised the pressure of work, the lack of skilled replacements, the lack of funds for higher duties allowance and overtime.  It has also recognised the commitment of employees to their work as reasons for the need to better manage employees actually taking annual leave.  The CSA says that the Public Sector Management Office has not urged as a method of managing annual leave that there by any payout of an entitlement. 

194   The CSA is also critical of the Government’s proposal in that while cashing out of annual leave is said to be at the employee’s initiative, it requires the employer’s approval for the cashing out.  It is therefore not within the employee’s control.

CONCLUSIONS

195   Annual leave is and has always been for the purpose of employees taking a break from their work to refresh themselves and to ensure that they are able to rest and recuperate from their work (Hospital Employees’ Industrial Union of Workers, WA v Hon. Minister for Health and Others (CICS) (1977) 57 WAIG 282 and Beech SC in Department of Justice v Civil Service Association of Western Australia 82 WAIG 2178).  It is true that from time to time employees might experience financial difficulties and need to obtain additional monies for various reasons.  It would be desirable for a provision to enable employees to choose at their own initiative to receive a pay out for a portion of their annual leave or other entitlements to do so.  The choice should be theirs alone. 

196   However, given the difficulties, clearly obvious from the evidence, of employees taking annual leave, and also issues recognised by the Public Sector Management Office in its own documentation, and that of the Auditor General, I have serious reservations about providing any arrangement which might be utilised by employees under pressure in their work to not take annual leave.  This would change what ought to have been genuinely at the employee’s initiative and for the employee’s own purposes when in reality it may not be.  It would also provide a financial incentive to forego leave (see also Just Cuts (Canberra and Queanbeyan) Agreement, 2000 – 2003 FB of the AIRC (Print T3829)). 

197   Although I acknowledge that there is a provision in the MCE Act which enables employees to cash out up to 50 per cent of their annual leave and that there are provisions in a small number of agreements or awards involving the CSA, I would need to be convinced that employees would then benefit from such a provision to any significant degree.  I note the Government’s statistics arising from the survey of agencies but also note that those agencies which have responded that they have received requests from employees or enquiries from employees about the cashing out of a proportion of their annual leave, have given no evidence of any significant level of such enquiries.  I have nothing to indicate whether those agencies received a single enquiry or a multitude of them. 

198   In regard to the terms of the proposed clause, subclause 1.1 “recognises that some employees may have excess and overdue annual leave”.  In the management of leave there is provision within Clause 23. – Annual Leave, subclause (9) of the Award for the employer to direct an employee to take accrued leave.  That is within the power of the employer to manage and ought to be managed.  As I noted in the Reasons for Decision earlier in respect of the salary increase, it is for the employer to manage its resources and direct the appropriate application of those resources.  It is the normal practice for employees to nominate the period of leave they wish to take and to apply for leave.  However, the employer retains the right to direct employees to take leave and roster them accordingly.  In those circumstances, if there is a significant leave liability which any employer wishes to deal with, then the power exists to do so.  It goes without saying though that leave ought be managed in such a way which is sympathetic to the employees’ needs. 

199   Accordingly, the proposed cashing out of annual leave clause is not to be included in the 2004 Agreement.

UNION PARTICIPATION IN COMMUTED ALLOWANCE

200   The Government seeks that employers should have the capacity to enter into an agreement with a group of employees to establish a commuted allowance for shift work and/or overtime in lieu of the present requirement to negotiate with the CSA.  The employees would receive no less than the Award entitlement and the employer would provide the CSA with the full details of the agreement prior to its implementation.  Provision would be made for a review of the allowance at least annually or if there is a major change in circumstances.  The Government produced a draft clause as follows:

“(a) The employer may enter into a written agreement with the group of employees effected to pay an annual commuted allowance payable fortnightly in lieu of the allowances or some of the allowances due to be paid under Clause 22 Overtime and/or Clause 21 Shift Allowance of the Award.

(b) The employees shall not be paid less than the payments they would be entitled to under the award calculated over a 12-month period.

(c) The employer shall review the allowance at least annually or sooner if circumstance change that leads to a significant effect on the arrangement of and quantum of the allowance as originally agreed.

(d) The employer shall advise the association in writing with full details of the agreement within 21 days of the introduction of the allowance as per (a) above or any changes as a consequence of a review under (c).”

201   The Government says that the purpose of such a provision would be to facilitate the efficient organisation and performance of work.  Under current award provisions there is no capacity for agencies to negotiate such allowances for groups of employees in instances where there is no CSA membership and therefore the CSA may have no interest in entering into discussions or reaching agreement with the employer.  This can lead to frustration amongst the employees and the agency itself.  It would also avoid unjustified delays caused by the CSA’s reluctance to participate. 

202   In support of its claim the Government refers to the circumstances which arose in respect of the Totalisator Agency Board (“TAB”) when that agency sought to negotiate a provision which was enabled through the enterprise bargaining agreement provision.  However, according to the Government’s evidence, the CSA did not willingly and actively negotiate in good faith.  Part of its reason appeared to be that it had no members in the agency and had decided not to enter into discussions with the employer in those circumstances.  The Government says that this was contrary to the CSA’s commitments contained within their enterprise agreement to engage in negotiations for such matters. 

203   The Government has provided affidavits from Eric Joseph Baines, the Manager Human Resources with the former TAB and Robert Allan Heaperman, a Labour Relations Advisor with the Department of Consumer and Employment Protection, which chronicle the events from 2002 through to 2004.

204   The clause proposed by the Government is said to provide that the employee shall receive no less than he or she would have been entitled to under the Award and therefore cannot be disadvantaged.  The employees cannot be required to enter into the agreement with the employer and will have the freedom to decide whether or not they wish to have their allowance commuted. 

205   The Government says that the CSA was avoiding negotiating or discussing the matter with the employer, and by its actions it failed to meet its obligations.  It ignored the views of the employees of the TAB in unreasonably opposing an agreement.   The Government says that the current situation allows the CSA an arbitrary right of veto and that the TAB highlights the difficulties associated with an intransigent approach by the CSA. 

206   The Government says that inserting a provision into the 2004 Agreement to enable negotiation with the employees directly in these circumstances would meet s.6 - Objects of the IR Act, and in reference to s.6(a) would assist in promoting good will in industry and enterprises.  It would also promote the principles of Freedom of Association and the right to organise because without such a clause employees who are not members of the CSA are denied the ability to enter into a commuted allowance arrangement.  It would not be any impediment or constraint on the CSA’s right to organise. 

207   During the course of the hearing the Arbitrator put to the Government whether its needs would be met and difficulties overcome if the CSA agreed that even if it had no members at a particular enterprise or site that it would enter into negotiations on the principle of the matter and Mr Ridley for the Government said that that would go some significant way to dealing with the issue, recognising that there were some matters of principle to which the CSA, according to its policy, could not agree.

208   The CSA takes quite a different position in respect of the TAB matter saying that the history of relations between the CSA and the TAB goes back further than the period covered by the statements of Messrs Baines and Heaperman.  It provided evidence of the TAB’s view of negotiating with the CSA in the era of workplace agreements. 

209   The CSA takes issue with the clause as proposed by the Government in that only the employer is to review the allowance annually to see whether it is appropriate, not the employer and the employees together.  Further, while the Government says that the CSA is to be advised prior to the arrangements being introduced, the last paragraph of the proposed clause provides that the CSA would be advised within 21 days of the introduction.  The CSA says that that does not necessarily mean that 21 days prior to the introduction. 

210   The CSA also questions what might constitute a “group” as proposed by the clause and whether it is simply 2 or more people. 

211   The CSA also says that it can demonstrate a myriad of commuted allowance industrial agreements that are currently registered which demonstrates that agreements with the CSA have a greater propensity not to be misused as opposed to individual agreements.  There is also a question as to whether or not the provision contained within the Government’s proposed clause deals with, on average, the group not receiving less than the Award or that each individual employee is not to receive less than the Award.  The Government has said that its intentions are that no individual shall receive no less than the Award.  The CSA says that commuted allowances are established on the basis of an assumption as to work arrangements which provide for an averaging.

212   As to any checks on the agreement, the CSA says that it would be far more difficult to undertake an assessment of such an arrangement to ensure no disadvantage to individuals if the CSA were not involved. 

213   The CSA also says that it has a demonstrated ability to negotiate industrial agreements for commuted allowances with employers and cites a number of such arrangements including through award amendments. 

CONCLUSIONS

214   Through their place as parties to awards, their role in enterprise bargaining recognised by the Statement of Principles and because of their registration pursuant to the IR Act, unions have special rights and privileges (see IAC in Ngala Family Resource Centre v ALHMWU 77 WAIG 2251 and FB in ALHMWU and Ngala Family Resource Centre and Others 75 WAIG 2815).  Those rights and privileges also bring with them obligations.  Those obligations include to negotiate with an employer where the employer seeks to do so in accordance with commitments that have been given, as part of general industry wide negotiations.  That obligation arises on the basis that the union is a party to the award or agreement, not because it has a member at a particular site.  This places unions in a difficult position of being expected to negotiate where it has no members and where there is no particular interest for it.  However, to refuse to negotiate with an employer on the basis that it has no members denies the employer and employees at that particular workplace the opportunity to come to some amicable arrangement which might otherwise constitute contracting out.  The union’s unique role enables it to act as advisers to the employees and to bring some measure of experience and expertise on behalf of the employees which might otherwise be missing.  One can understand why a union would say that if there are no members at a site or enterprise then it should not be expected to expend its resources on negotiating on behalf of the employees.  However, our system of industrial relations provides that awards have coverage over employees whether they are members of the union or not. 

215   In this particular case, I make no judgement on the issue between the CSA and the TAB as it occurred in respect of the commuted allowance situation.  The evidence appears to have been of some frustration between the parties over a period of time related to a range of issues including the employer’s policy during the period of workplace agreements.  One can understand a union being reluctant to enter into arrangements which might be of interest to the employer where there has been some difficulty in the past.  In this particular case one can understand the CSA’s reluctance to participate in the negotiating arrangement where, firstly, it had no members and, secondly, it had previously been excluded. 

216   It is not my intention to grant the clause which the Government has sought on this occasion on the basis that such a clause contains a number of difficulties including that the review of any agreement reached would be at the employer’s instigation and that there is no real provision for the employees concerned to instigate a review of the allowance.  Further, while I do not question that the Government’s intention is a proper one in respect of finding a means for negotiation to resolve an issue between an employer and a group of employees, the fact is that the system of awards and agreements is based on those matters being dealt with between the parties to the Award and the 2004 Agreement, being the employers and the CSA. 

217   The objects of the IR Act include a whole array of both complementary and competing issues as they relate to this matter.  However, as I have noted earlier, the CSA has a unique place which brings with it obligations.  I would expect the CSA to enter into negotiations with an employer to deal with matters such as the commuted allowance notwithstanding that it has no members in the particular workplace.  In doing so, I do not mean to suggest that the CSA would be so churlish as to refuse to negotiate any new future arrangements but rather to insure that there is no misunderstanding as to the obligations on both parties to the Award to enter into negotiations should one side wish to do so.  Those negotiations ought to be as to the merits of the matter the other side wishes to negotiate.  Parties always retain the right to disagree and to have policies of their own which might be opposed to the policies of the other party with whom they are to negotiate.  However, the system of industrial relations under which awards are created enables difficulties to be resolved.

218   Accordingly, while I am not prepared to include in the 2004 Agreement a provision allowing negotiation directly with a group of employees, I trust that these Reasons for Decision will be of assistance in the resolution of any future such issues.

219   The parties are to prepare a schedule for the registration of the 2004 Agreement to incorporate these reasons.