WA HEALTH - HSUWA - PACTS INDUSTRIAL AGREEMENT 2014

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2015 WAIRC 00332

DELIVERED : THURSDAY, 23 APRIL 2015

FILE NO. : PSAAG 19 OF 2014

Applicant

AND

Health Services Union of Western Australia

(Union of Workers)

Respondent

CatchWords : Commission in Court Session – WA Health – HSUWA – PACTS Industrial Agreement 2014 – Arbitration of salary increases in industrial agreement – Public Sector Wages Policy Statement 2014 – State of WA economy – Government expenditure – Principal objects of the Act – WA public health system – Timing of the implementation of the government wages policy – Equity in salary rates – Internal equities – Comparison salary increases of registered nurses and medical practitioners – Productivity and efficiency improvements – Changes within the public health system – 4 Hour Rule – National Emergency Access Target (NEAT) – Overall fairness

Legislation : Industrial Relations Act 1979 (WA)  s 42G, s 42G(4), s 26, s 26(1)(a), (c) & (d), s 26(2A) - (2C)

Result : Salary increases determined

Representation:

Counsel:

Applicant : Mr D Matthews of counsel and with him Mr J Carroll of counsel

Respondent : Mr M Ritter SC and with him Mr S Millman of counsel

Solicitors:

Applicant : State Solicitor for Western Australia

Respondent : Slater and Gordon Lawyers

Case(s) referred to in reasons:

Civil Service Association of Western Australia Incorporated, Department of Indigenous Affairs and Others [2004] WAIRC 12131 at [160]; (2004) 84 WAIG 2535

Health Services Union of Western Australia (Union of Workers) v Minister for Health – The Minister for Health is Incorporated as the Board of the Hospitals formerly comprised in the Metropolitan Health Service Board under s7 of the Hospitals and Health Services Act 1927 (WA) and has delegated all the powers and duties as such to the Director General of Health [2014] WAIRC 00371; (2014) 94 WAIG 566

Hospital Salaried Officers Association of Western Australia (Union of Workers) v Hon Minister for Health and others [2006] WAIRC 03473 at [14]; (2006) 86 WAIG 279 (“Health Professionals Work Value case”)

Hospital Salaried Officers Association of Western Australia (Union of Workers) v Royal Perth Hospital and others [2002] WAIRC 07218; (2002) 83 WAIG 23 at [156] (“Clinical Psychologists case”)

The Minister for Health in his incorporated capacity under s.7 of the Hospitals and Health Services Act 1927 (WA) as the Hospitals formerly comprised in the Metropolitan Health Service Board Minister v The Health Services Union of Western Australia (Union of Workers) [2013] WAIRC 00836; (2013) 93 WAIG 1565 (“Frontline Clerical Positions case”)

The Minister for Health in his incorporated capacity under s. 7 of the Hospitals and Health Services Act 1927 (WA) as the Hospitals formerly comprised in the Metropolitan Health Service Board, the Peel Health Services Board, WA Country Health Service and the Western Australian Alcohol and Drug Authority v United Voice WA [2014] WAIRC 01083; (2014) 94 WAIG 1621 (“UV case”)

Reasons for Decision

1         This is our unanimous decision.  The WA Health – HSUWA – PACTS Industrial Agreement 2014 (‘the 2014 Agreement’) was registered on 8 December 2014.  The parties to the Agreement were not able to agree on the salary increases to apply.  They have agreed under s 42G of the Industrial Relations Act 1979 (the Act) that the increases are to be determined by the Commission within the following limits: 

1. The first salary increase arbitrated within a range of 2.75% to 4% and which will apply on and from 1 July 2014; and

2. A second salary increase arbitrated within a range of 2.5% to 5% and which will apply on and from 1 July 2015. 

The legislation

2         Section 42G of the Act gives an express power to the Commission to make an order as to specified matters on which agreement has not been reached.  In deciding the terms of an order the Commission may have regard to any matter it considers relevant (s 42G(4)).  The manner in which the Commission is to exercise its jurisdiction is set out in s 26 as follows.

(1) In the exercise of its jurisdiction under this Act the Commission —

(a) shall act according to equity, good conscience, and the substantial merits of the case without regard to technicalities or legal forms; and

(b) shall not be bound by any rules of evidence, but may inform itself on any matter in such a way as it thinks just; and

(c) shall have regard for the interests of the persons immediately concerned whether directly affected or not and, where appropriate, for the interests of the community as a whole; and

(d) shall take into consideration to the extent that it is relevant —

(i) the state of the national economy;

(ii) the state of the economy of Western Australia;

(iii) the capacity of employers as a whole or of an individual employer to pay wages, salaries, allowances or other remuneration and to bear the cost of improved or additional conditions of employment;

(iv) the likely effects of its decision on the economies referred to in subparagraphs (i) and (ii) and, in particular, on the level of employment and on inflation;

(v) any changes in productivity that have occurred or are likely to occur;

(vi) the need to facilitate the efficient organisation and performance of work according to the needs of an industry and enterprises within it, balanced with fairness to the employees in the industry and enterprises;

(vii) the need to encourage employers, employees and organisations to reach agreements appropriate to the needs of enterprises and the employees in those enterprises.

(2A) In making a public sector decision the Commission must take into consideration the following —

(a) any Public Sector Wages Policy Statement that is applicable in relation to negotiations with the public sector entity;

(b) the financial position and fiscal strategy of the State as set out in the following —

(i) the most recent Government Financial Strategy Statement released under the Government Financial Responsibility Act 2000 section 11(1) and made publicly available under section 9 of that Act;

(ii) the Government Financial Projections Statement;

(iii) any submissions made to the Commission on behalf of the public sector entity or the State government;

(c) the financial position of the public sector entity as set out in the following —

(i) the part of the most recent budget papers tabled in the Legislative Assembly that deals with the public sector entity under the title “Agency Information in Support of the Estimates” or, if the regulations prescribe another part of those budget papers, that other part;

(ii) any submissions made to the Commission on behalf of the public sector entity or the State government.

3         The Commission also has regard for the principal objects of the Act.

Outline of the position of the Minister for Health

4         The Minister seeks an order that the salary increases be 2.75% and 2.5% respectively.  This is appropriate because it will, if the current forecast is accurate, exceed the Consumer Price Index increase for the financial year 2014/2015 and match the CPI increase forecast for 2015/2016.  This will maintain or slightly increase the real value of salaries which is fair.  The Minister states that it is incumbent on a party seeking higher increases to point to factors which would make the increases proposed by the Minister unfair. 

5         The Minister points to s 26 of the Act and submits that the factors which the Commission must take into account means the Commission is to have regard to the ‘overall fairness’ of an outcome.  This involves taking account of the interests of the employer, the employees and, no less importantly, the interests of the community or the public interest.  Sections 26(2A) – (2C) make clear, to the extent that it was not previously so, that where the government has a strategy on behalf of the people of Western Australia in relation to its financial position, the Commission must consider the impact of the exercise of its jurisdiction upon that strategy.  Public Sector Wages Policy Statements must be taken into account by the Commission. 

6         The Minister submits that the State’s financial position is problematic and the government has devised a strategy on behalf of the people of Western Australia to address the problems.  The Public Sector Wages Policy Statement 2014 is central, perhaps paramount, to the success of that strategy.  The Minister submits that given the tenuous bases for salary increases greater than the maintenance of real wages, the government’s strategy is decisive. 

7         The Minister submits that there is nothing unfair to the employees covered by the 2014 Agreement resulting from the Minister’s position given: 

(a) the absence of productivity improvements in the 2014 Agreement;

(b) increased activity in some areas of the public health system alone is not a sound basis for a salary increase for any employee, let alone an across the board increase; and

(c) salary increases awarded to other, different, employee groups is an unsound and dangerous basis for salary increases for employees under the 2014 agreement even if they have the same employer.  This is especially so where, as here, those salary increases occurred for reasons particular to the groups receiving them, at a different time and in different circumstances. 

8         The Minister called evidence from Mr Neil Fergus, the Assistant Director, Health Industrial Relations Service for the Department of Health and from Mr Richard Watson, the Acting Executive Director of the Economic Business Unit of the WA Department of Treasury, which provides advice to the government on economic and financial policy issues, including responsibility for financial arrangements with the Commonwealth, monitoring and forecasting economic and revenue performance, State taxation policy and the statutory reporting on State finances. 

Outline of the position of the HSU

9         The Health Services Union of Western Australia (Union of Workers) (HSU) submits that it represents more than 16,000 people employed in the WA public health system, being allied health and other professional staff, administrative, clerical and technical staff (PACTS). 

10      It claims increases in salaries and wages comparable to the increases recently received by other public health workers in Western Australia such as doctors, nurses and support staff, who received pay rises of around 4%.  It says efficiencies, improvements and increased complexity of work mean that a wage increase in excess of what the Minister has offered is fair. 

11      The HSU says that the employees represented by the HSU have contributed to the unprecedented level of change within the public health system including new hospitals and services, service reconfiguration, funding changes and other changes, all of which are, according to the government itself, directed towards delivering better and more efficient and productive health services. 

12      The HSU points to changes to work design and work practices such as the 4 Hour Rule, significant and ongoing productivity improvements in health service delivery to which employees under the 2014 Agreement have contributed directly and in conjunction with other health service employees who are engaged in the delivery of health services within the integrated and multidisciplinary environment within which health services are delivered. 

13      The HSU also points to equity within the level of increases in rates of salary for PACTS in comparison with other employees in the public health system, ongoing efficiencies and improvements gained from the continuing flexibilities and customised provisions in the 2014 Agreement.  The HSU says there are no economic considerations such that they would preclude the Commission from making an order for the salary increases the union seeks. 

14      The HSU called evidence from Mr Dan Hill who is the secretary of the HSU and who has held that position for over 21 years, having been employed by the HSU for over 35 years.  There are 66 attachments to Mr Hill’s statement. 

15      The HSU also called evidence from the following:

-          Mr Jonathan Nugent, Pharmaceutical Benefits Scheme Reform Pharmacist at Sir Charles Gairdner Hospital for 19 months and who has been employed by WA Health for nine years.

-          Mr Ian Cooper, Head of Department, Physiotherapy at Sir Charles Gairdner Hospital and who has been in that position for two years, and employed by WA Health for 29 years.

-          Ms Cheryl Hamill, Acting Chief Librarian at Fiona Stanley Hospital and who has been in that position for two months and employed by WA Health for 36 years. 

-          Mr Benjamin Devine, Complex Care Coordinator at North Metropolitan Health Service and who has been in that position for more than four years, and employed by WA Health for over nine years. 

-          Ms Mary Joyce is Head of the Social Work Department at Sir Charles Gairdner Hospital and who has held that position for 15 years and employed by WA Health for 34 years.

-          Mr David Miotti, who is General Manager, PathWest at Fiona Stanley Hospital and has been in that position for eight years, and employed by WA Health for 26 years. 

16      The HSU says that the application of the government wages policy to the employees covered by the 2014 Agreement would be unfair for three reasons.  The first is what it described as the ‘internal equities’ argument. 

-          The ‘internal equities’ issue – HSU submission

17      The HSU emphasises a comparison only with other public health system employees who work alongside and with HSU members in providing the WA health service, arguing it would be unfair to grant all groups but HSU members a pay rise of 3.5 - 5% in the context in which those pay rises were given. 

18      The HSU’s reference to other health employees is primarily to registered nurses.  The HSU points to the wage increases in the industrial agreements applicable to registered nurses under various industrial agreements such as the WA Health – Australian Nursing Federation – Registered Nurses, Midwives, Enrolled (Mental Health) and Enrolled (Mothercraft) Nurses Industrial Agreement 2013 (the registered nurses agreements) registered on 16 October 2014 and which have a nominal expiry date of 30 June 2016.  The wage increases are: 

(1) 5% on and from 1 July 2013,

(2) 4% on and from 1 July 2014, and

(3) 5% on and from 1 July 2015. 

19      The HSU notes that the total wage increases of 14% agreed to by the government with The Australian Nursing Federation, Industrial Union of Workers Perth (ANF) for registered nurses were in excess of the 12.75% capped high point of the government wages policy that applied at the time the rates were agreed (ex D).  Further, the government did not restrict the increases only to registered nurses.  The government also agreed to pay the same wage increases to enrolled nurses and aboriginal health workers and others employed under the WA Health – United Voice – Enrolled Nurses, Assistants in Nursing, Aboriginal and Ethnic Health Workers Industrial Agreement 2014 (the UV Enrolled Nurses Agreement 2014).  The registered nurses agreements and the UV Enrolled Nurses Agreement 2014 are estimated to cover approximately 17,200 employees. 

20      The HSU acknowledges that there is no formal or historical link between wages increases for registered nurses within the public health system and salary increases for the PACTS represented by the HSU (evidence of Mr Hill, ts 106).  The HSU also acknowledges that headline percentage increases for HSU members since 1996 show that sometimes PACTS have received higher percentage salary increases than the percentage increases received by registered nurses, and sometimes they have received lower increases (ts 108). 

21      However, the HSU points to the fact that the dates of the two wage increases under the 2014 Agreement are the same as the second two wage increases under the registered nurses agreements, namely 1 July 2014 and 1 July 2015.  The HSU says that it sought only a two‑year term for the 2014 Agreement in order that the dates of the two wage increases align with the registered nurses agreements. 

22      The point made by the HSU is that the wage increases for registered nurses cannot be explained on the basis of some reduction or compromise of conditions, or for structural efficiencies, nor was it in recognition of any work value assessment of registered nurses.  The HSU acknowledges that the wage increases agreed to be paid to registered nurses were agreed on the eve of a State election and there were particular circumstances that gave rise to them occurring (ts 138) but the fact that it was then flowed on to the UV Enrolled Nurses Agreement 2014 and, according to the HSU, to medical practitioners, shows it would be unfair to preclude the HSU members from a similar wage increase. 

23      The HSU submits that not to apply the same percentage increases to PACTS as applied to registered nurses would be to reward those who took industrial action, or threatened to escalate industrial action, but not those who sought arbitration.  It would send the wrong message to the HSU, unions and employees throughout the State (ts 138).  It would be contrary to the principal objects of the Act which include the promotion of goodwill in industry and seeking to provide means for preventing and settling industrial disputes not resolved by amicable agreement. 

24      The HSU’s reference to other health employees is also to medical practitioners.  The HSU points to the industrial agreements covering medical practitioners which came into effect on 23 December 2013.  The salary increases payable are: 

(1) 3.75% on and from 1 October 2013;

(2) 3.75% on and from 1 October 2014; and

(3) 3.5% on and from 1 October 2015.

25      The HSU says that the industrial agreements covering medical practitioners were negotiated under the terms of the 2009 government wages policy and noted that there are no linked improved efficiency/work practice reform initiatives contained in their terms, however there were a number of improved conditions and benefits for medical practitioners (ex 8 at [55]). 

26      The HSU makes the submission that an Australian Medical Association (WA) Incorporated circular to its members (ex 8, DPH 18) lists a number of efficiency measures that have not been actually specified in the agreements.  While the effective implementation of those measures requires the active participation of medical practitioners, effective implementation also relies heavily on the active engagement and support of PACTS. 

27      These efficiency measures are the reason the medical practitioners received increases above projected CPI to the level of the WPI forecast at the time, however the government refused to offer increases above government wages policy to the HSU for the 2014 Agreement.  This is unfair. 

28      The HSU notes that employees covered by the UV Enrolled Nurses Agreement 2014 received more favourable treatment given that in their case the forecast applied was the forecast at the commencement of negotiations and was a forecast more favourable than the forecast applied to the negotiations for medical practitioners.  This shows the government applies its wages policy in different ways at the same time to two different groups of employees employed by the same employer.  The HSU suggests this shows the arbitrary way in which the government applies its wages policy, or alternatively that the policy should be regarded more as a guide than as a strict parameter.  The current wages policy was announced by the government on 13 June 2013, however, it was not implemented until 1 November 2013, being applied to all public sector industrial agreements that expire after that date. 

29      The HSU also refers to the industrial agreement for health support workers, the United Voice – Support Workers Agreement 2012 AG 51 of 2012 which provides for the following wage increases:

(1)               4.5% agreed from 5 December 2012;

(2)               4.25% arbitrated from 1 August 2013, and

(3)               4.25% arbitrated from 1 August 2014. 

30      In Mr Hill’s evidence the HSU notes that the support workers agreement straddles what it sees as the major industrial agreements operating in the public health system.  The support workers agreement represented ‘the last of that previous wage round’ and wage rates were arbitrated rather than agreed (ex 8 at [76]).   The support workers agreement formed part of the background of rates taken into account by the HSU in considering what is a fair wages outcome for its members, however the emphasis is on the wage increases received by nurses and also by medical practitioners.

-          The ‘internal equities’ issue – the Minister’s submission

31      The Minister submits that the salary increases for registered nurses were achieved in unique circumstances, having no application to the present case.  In the lead up to the 2013 State election, registered nurses took industrial action and planned a strike for 25 February 2013 with rolling stoppages to continue thereafter.  The agreement was reached with the ANF on 25 February 2013.  The Minister points out that the HSU itself conducted an industrial campaign in support of the 2014 Agreement, including a stop work rally held at Parliament House on 25 June 2014 (ex A at [35]) and 12 hour rolling stoppages ([38]), before the Commission on its own motion convened a conference and made recommendations which resulted in industrial action being suspended. 

32      The Minister rejects any submission that the salary increases received by medical practitioners is relevant to the salary increases to be applied to the PACTS.  The evidence of Mr Fergus emphasises that the pay increases for any given discrete employee group or groups within the public health system is not a reliable or reasonable way to determine the pay increase for another discrete group.  This is because pay increases have been arrived at by a variety of measures, in a variety of circumstances, have taken into account matters which may be applicable only to the particular group concerned, have been arrived at with different policies applying, do not necessarily involve any comparison or assessment of the duties of one employee group as against those of another employee group, and are arrived at in the context of varying economic and financial circumstances. 

33      In Mr Fergus’ evidence the circumstances of the industrial agreements for medical practitioners included: 

1. Provision for doctors in training to break their employment to undertake a period of employment in privately operated hospitals within the State in certain circumstances;

2. One additional week of professional development leave for senior practitioners;

3. Articulation of enforceable obligations for the professional responsibilities of practitioners;

4. Changing the structure of the head of department allowance;

5. Improved contract completion payment provisions for senior practitioners; 

6. Capacity to engage interns on a part time basis; and

7. The higher duties provision moved from the general provisions section of the industrial agreement to the doctors in training provision (ex A at [89]). 

34      The Minister rejects any suggestion that the salary increases to be determined by the Commission should take into account salary increases achieved by medical practitioners and registered nurses employed by the Minister.  The Minister does not dismiss the facts that they have the same employer as the HSU’s members, that those members work alongside medical practitioners and registered nurses in the delivery of healthcare, and that they all work in the public health system in Western Australia; however, there is no established historical link between salary increases for medical practitioners and registered nurses and salary increases for HSU members.

35      In the Minister’s view, the Commission’s task is to undertake a far more objective and sophisticated analysis of the matter and it must assess the exact extent to which it is actually unfair that the salary increases for medical practitioners and registered nurses is greater than the salary increases offered to PACTS by the Minister. 

36      The Minister submits that, objectively, the difference between the amount the Minister says the Commission should award and the salary increases achieved by medical practitioners and registered nurses is not unfair in any way.  It is not demonstrative of something negative about the way the Minister regards and treats the respondent’s members, especially given the good pay increases they have received over a long period of time.  The Minister says that the HSU’s members are well paid, including by interstate comparisons.  Once the circumstances of the economic considerations and the significance of the Public Sector Wages Policy Statement 2014 are fully understood, the differences in the salary increases achieved by medical practitioners and registered nurses could not result in a finding that the salary increases of 2.75% and 2.5% were unfair in such a way that the Commission should award a higher increase. 

37      The Minister submits that even under the concept of comparative wage justice, there had to be something intrinsic about the value of the work being done to warrant the salary increase, even if the assessment was only whether the work being done had the same value when compared to the work of the group being paid the higher wage.  There are many considerations which affect salary increases for each group and, the Minister submits, the endless variety of those considerations means that a comparison of the outcomes is at best inexact and at worst completely meaningless. 

38      The Minister submits that the economic circumstances that were present when the registered nurses received their wage rise in 2013 and when the medical practitioners received their salary rise are not present now: things have changed, and for the worse.  The government has a plan to address that, and those circumstances mean that even if there could be said to be a link between the wage increases received by those groups of employees and the PACTS, the change in economic circumstances ought to be determinative. 

39      The Minister also submits that there are many HSU‑covered employees who do not work alongside medical practitioners and registered nurses. 

-          The ‘internal equities’ issue – Consideration

40      We find that there is no historical link or nexus between the salary increases given to registered nurses and the salary increases given to the PACTS represented by the HSU. 

41      The evidence of past wage increases in the statements of both Mr Fergus and Mr Hill does show a general consistency in the percentage increase to registered nurses and the PACTS represented by the HSU.  This is likely to be, as the Minister suggests, by coincidence rather than by design because of the cycle of enterprise agreement negotiations common to both groups of employees and, in recent years, the application of a government wages policy to the circumstances of the employees to be covered by the enterprise agreement being negotiated. 

42      The lack of any historical link or nexus between the salary increases given to registered nurses and the salary increases given to the PACTS means the HSU’s submission that the 2014 Agreement should contain the same percentage wage increase given to nurses must fail.  It is clear that headline percentage increases for PACTS since 1996 sometimes were higher than the percentage increases received by registered nurses and sometimes lower. 

43      The HSU submits that to not apply the same percentage increases to PACTS as applied to registered nurses will reward those who took industrial action, or threatened to escalate industrial action, but not those who sought arbitration.  We do not agree: those who took industrial action, or threatened to escalate it, have received the reward of the increases the government offered to them. 

44      We find also that there is no established or historical link between the salary increases granted to medical practitioners and the PACTS.  Increases granted to medical practitioners in their industrial agreements do not, of themselves, provide a basis for increasing the salaries in the 2014 Agreement by a corresponding percentage. 

45      Nevertheless, there has been a general consistency in the past percentage increases to the salaries of medical practitioners and to the salaries of PACTS.  As is the case with the percentage increases to nurses’ wages over time, this is likely to be result of coincidence rather than design.

46      The HSU submits that to the extent to which medical practitioners received the benefit of what flowed from the agreement reached with nurses, then it should apply also to the PACTS.  However, the extent to which medical practitioners did receive a benefit from a ‘flow on’ from the wage increase to nurses has not been established. 

47      In our view, there is substance in the HSU submission that effective implementation of efficiency measures including those identified in the medical practitioners agreement also relies heavily on the active engagement and support of PACTS.  The extent of this was not the subject of detailed evidence and is not easy to quantify, however, it is a relevant consideration.  

-          A further issue – Timing

48      Before reaching a conclusion on what the HSU described as the ‘internal equities’ argument, it is necessary to consider the HSU’s third reason why the application of the government wages policy would be unfair. 

49      The HSU points to the timing of the implementation of the government wages policy.  The HSU acknowledges, correctly, that the Commission is not to judge the fairness of the government wages policy.  What the HSU does submit is that the application of the 2014 policy has caused an unfairness due to the timing of its application because the other employees within the integrated health system will have reached two sets of industrial agreements under the 2009 policy but the PACTS represented by the HSU will have reached only one. 

50      The HSU urges the Commission to look in a holistic way at the position it presents in relation to the wage and salary increases in the registered nurses agreements, in the UV Enrolled Nurses Agreement 2014 and in the medical practitioners agreements on the one hand, and the salary increase sought for PACTS who work alongside them.  It states that all of these employees together are part of an integrated workforce that provides health services and it would be unfair to grant all groups but one a pay rise of between 3.5% to 5%, for example, because of the context in which those pay rises were given. 

51      The State Government Wages Policy 2009 is the wages policy which applied prior to the State Government Wages Policy 2014.  It applied to enterprise agreements expiring after 1 July 2009.  It was based, generally, upon wage increases being no greater than forecast movements in the CPI for Perth, but wage increases could be negotiated up to the higher level of the forecast movement in the Wage Price Index for Perth in exchange for trade-offs or efficiencies. 

52      However, the evidence shows that both salary increases of 2.75% from 1 July 2014 and 2.5% from 1 July 2015 for PACTS in the 2014 Agreement are significantly less in percentage terms than the corresponding wage increases in the registered nurses agreements and the UV Enrolled Nurses Agreements 2014 of 4% and 5%, and the corresponding salary increases for medical practitioners of 3.75% and 3.5%.  They are also significantly less than the arbitrated wage increase for support workers of 4.25% from 1 August 2014.

53      The fact that the salary increase offered to the PACTS in the 2014 Agreement is significantly less than the increase received by registered nurses is largely, though not entirely, the result of the difference between the 2009 and 2014 State wage policies.  The wage increase available under the 2009 government wages policy was able to be 4.25% (the projected WPI) compared with 2.75% (the projected CPI) available now. 

54      It is also the result of the further 0.75% in the first year, 0.25% in the second year and 0.75% in the third year agreed between the government and the ANF.  The fact that the government reached an agreement with the ANF on the eve of an election for a wage increase which exceeded the then government wages policy has formed the most significant part of the HSU case, perhaps inevitably.  It is no surprise that it would be relied upon by the HSU in its negotiations for the 2014 Agreement, and in these proceedings.  It has not assisted the Minister’s argument that the State government wages policy should be applied uniformly and without exception. 

55      We note that fairness is a relative concept, and the circumstances of each industrial agreement being reached are different.  In that regard, we endorse the comments of Scott C that: 

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.

Civil Service Association of Western Australia Incorporated,
Department of Indigenous Affairs and Others
[2004] WAIRC 12131; (2004) 84 WAIG 2535 at [160]

56      Even though comparative wage justice is no longer a valid reason by itself for the Commission to award an across the board salary increase, it is understandable that an employee assesses whether he or she has been treated fairly by reference to how others in similar circumstances are treated.  In this case, there is some validity in the HSU’s depiction of the registered nurses and UV enrolled nurses having been treated more favourably by receiving a wage increase exceeding the government wages policy in a context where they, medical practitioners and the PACTS who work alongside them, are part of an integrated workforce that provides health services. 

57      That there is a perception of unfairness, or of PACTS being devalued, is evidenced in some of the statements of the witnesses called by the HSU.  It is not a perception going to a comparison between the actual salaries of particular classifications.  The evidence of Mr Hill in relation to the salary comparison between the entry-level health professionals classification and the entry-level rate for a registered nurse from 1996 through to 2014 (ts 107 and ex B1 and B2) makes that clear. 

58      However, in the context of a past general consistency of industrial agreement wage and salary increases to PACTS, registered nurses and medical practitioners in at least the more recent past, a significantly lesser percentage increase to PACTS is undesirable.  While this is not by itself a reason why the HSU’s claim is made out, it is a relevant consideration.

-          Productivity and efficiency improvements

• The HSU submission

59      The second reason why the HSU says that the application of the government wages policy to the employees covered by the 2014 Agreement would be unfair is that there have been productivity and efficiency improvements since the 2011 Agreement.  Further, a summary of the changes made in the 2014 Agreement from the 2011 Agreement is attached to Mr Hill’s statement (DPH 34). 

60      The HSU emphasises that the 2014 Agreement has built into it a capacity for flexibility which has an ongoing life.  It includes various flexibilities as a rollover set of clauses, which have ongoing application and which facilitate productivity changes and efficiencies which then occur.  By way of example, cl 8.5 refers to agreement flexibilities as a whole allowing for the substitution of mutually agreed terms and conditions; clause 9.1(a) refers to the employment of employees as appropriate in the circumstances; clause 14.1(f) allows the hours of work to be reviewed and changed and clause 14.3 generally discusses flexible work arrangements. 

61      Mr Nugent’s evidence in summary is that Pharmaceutical Benefits Scheme (PBS) reform applies to all public hospitals except King Edward Memorial Hospital.  PBS reform in 2013/2014 has delivered $35 million in revenue to WA.  Approximately 60% of the total revenue from PBS is new revenue.  The ABF/ABM (activity based funding/activity based management) reconfiguration programme in 2014 has led to a reduction in hospital costs which has saved Sir Charles Gairdner Hospital (SCGH) $1.7 million in 2014/15.  Mr Nugent also refers to separate changes in the public health system leading to increased efficiencies by changes to work design and work practices.  Pharmacists are involved in the ongoing adaptation and implementation of the 4 Hour Rule.  A satellite pharmacy arrangement has been introduced to meet interim NEAT (national emergency access targets) targets.  The complexities of pharmacists’ work have increased.

62      Mr Cooper’s evidence is that physiotherapists at SCGH have delivered the same patient outcomes with 20% less staff.   There have been significant changes in practice to achieve previous outcomes with minimal impact on patient care.  The emerging role of Advance Scope Physiotherapist has allowed for a medical substitution model in selected clinics, and physiotherapists in those clinics perform work previously done by medical practitioners, allowing for significant savings via salary and efficiency costs.  In July 2014 an ABF model was introduced.  In 2013/2014 there was a 23% reduction of FTE (full‑time equivalent) in physiotherapy and over 40% to staffing levels of occupational therapists, requiring significant changes in practice to achieve previous outcomes with minimal impact on patient care.

63      Ms Hamill referred to a major example of work redesign and change which resulted from the merging with the Royal Perth Hospital library and the move to Fiona Stanley Hospital to provide a combined set of resources to six public hospitals and two area health services.  Systems of information support for those involved in developing standards commenced in 2013 and the library service now requires staff with higher level skills. 

64      Mr Devine referred to the development of the Complex Needs Coordination Team (CoNeCT) multi-disciplinary and inter-professional team from allied health disciplines working together.  They have built on the experience in a way that it can be more effectively used now as a bridge between hospital and community settings.  Involvement of CoNeCT has reduced by approximately half the total number of Emergency Department presentations.  It has streamlined the process where patients involved in guardianship matters may be managed in the community while awaiting hearing instead of occupying a bed. 

65      Ms Joyce gave evidence that the national health target for accessing Emergency Departments for 2015 has increased to 76%.  In 2012 there was the introduction of an activity-based funding model and she stated how that has involved retraining staff to optimise the funding opportunities.  She refers to the upskilling of social work staff and broadening of responsibilities to change to a ward‑based model which is a more specialist model and which has continued from late 2013 with 4% less staff.  She gave evidence about significant and ongoing productivity improvements and the increased complexity of her work. 

66      Mr Miotti gave evidence of a new PathWest laboratory for the Fiona Stanley Hospital to be a central hub and reference laboratory, consolidating laboratory services with less duplication of services, equipment and staffing resulting in a higher level of efficiency.  There has been an increase in productivity of 15.5% between 2009/2010 to 2013/2014, or 3.9% pa, relating to the number of test panels per operational FTE.  This was achieved by staff within PathWest performing an increased workload through more efficient work practices. 

67      The HSU maintains that the Commission is able to take into account increased efficiencies from the 4 Hour Rule which commenced prior to the 2014 Agreement because the targets required by NEAT which were introduced in 2012 have required greater efficiencies to meet a 90% compliance.  This could not have been taken into account in the 2011 Agreement. 

68      The HSU also submits that the increased productivities and efficiencies which were raised in the Frontline Clerical Positions case ([2013] WAIRC 00836; (2013) 93 WAIG 1565), but which could not be taken into account in that case because it was a work value claim, should be taken into account in this matter. 

69      The HSU accepts that it did not call witnesses from the general division but states that does not mean there is no evidence of changes to efficiencies and productivities within those areas.  In particular, the HSU refers to changes and reforms in the medical practitioners industrial agreement which necessarily will require work to be done by administrative and clerical staff.  The same applies with respect to the NEAT.  Further, Mr Hill referred to the National Safety of Quality Health Standards and the role of administrative, clerical and supervisory staff in their implementation. 

70      The HSU says that the evidence overall allows the Commission to infer there have been productivity increases and efficiencies across the board without the HSU needing to call further witnesses.  The changes that are being talked about in the public health system are large-scale changes and it would be wrong to think that does not involve major change by the PACTS to assist in those changes. 

71      Significantly, according to the HSU, the minimalist changes made in the UV Enrolled Nurses Agreement 2014 compare closely to the minimalist changes made in the 2014 Agreement and are in contrast to the significant improvements in conditions granted to employees employed under the registered nurses agreement. 

72      There is evidence too that some matters in the support workers agreement are already dealt with in the 2014 Agreement, at least to some extent (ts 31):  simplified contract of service provisions; additional circumstances for the engagement of fixed term contract employees; circumstances for the engagement of fixed term contract employees; clarification of redundancy and redeployment provisions; simplification of processes to agreed changes to work cycles and roster changes; provisions dealing with underpayments and overpayments; a process to address excessive annual leave; long service leave in single days; changes to the parental leave process; although the evidence of Mr Fergus is that the savings and efficiencies these might have represented in the UV case ([2014] WAIRC 01083; (2014) 94 WAIG 1621) are not present in the 2014 Agreement (ex A at [53]).

• The Minister’s submission

73      The Minister points to the lack of any evidence about what changes, if any, have flowed from the medical practitioners agreement, where they have occurred and to what extent persons in the general division have contributed to them.

74      The Minister says the 2014 Agreement contains no measurable savings or efficiencies, referring to the evidence of Mr Neil Fergus.  Mr Fergus’ role includes the key responsibilities of the occupational groups industrially covered by the ANF and the HSU, as well as other unions, ensuring that industrial relations practices are congruent with the whole of health governance framework and meet all public sector compliance and accountability requirements.  He has been involved in negotiating the industrial instruments applicable to the HSU for the past five years.  

75      In the evidence of Mr Fergus (ex A at [97], the changes to the 2014 Agreement include: 

(a) Amendments to improve the interpretation of existing provisions being formatting, grammar and typographical errors;

(b) Amendments to allowances linked with movements in the Public Service Award 1992 consistent with the provisions of those clauses with such a link;

(c) Clarification of multiple recall provisions consistent with custom and practice;

(d) Inclusion of additional Health Professionals and other Specified Callings consistent with relevant decisions since the 2011 Agreement;

(e) An option to access half the period of annual leave at double pay for the purposes of clarity and access to this entitlement; and

(f) Enhanced parental leave entitlements, consistent with improvements contained in the Public Service and Government Officers General Agreements 2011 and 2014, in particular: 

● Higher duties for continuous period of 12 months part of the first four weeks of paid parental leave;

● Clarification of options for part‑time employees – the greater will apply of average or contractual hours to calculate paid parental leave;

● Access to personal leave for one week of simultaneous leave (partner leave);

● Increase to maximum eight weeks of simultaneous leave on approval (partner leave);

● Clarification that paid parental leave remains intact whether birth results in other than a live child after 20 weeks;

● Special temporary employment option;

● Clarification that entitlements at half pay option does not extend service beyond full pay equivalent;

● Definition of unpaid grandparental leave includes adoption of grandchild; and

● Clarification that unpaid grandparental leave is to a maximum of 52 continuous weeks but can be taken anytime up to 24 months from birth/adoption. 

76      It is the evidence of Mr Fergus that these changes are not of a kind, or of sufficient significance, to have an effect on the quantum of salary.  Further, it is not sustainable for value to be harvested for continuing flexibilities each time an industrial agreement is subject to negotiation. 

77      The Minister states that any argument that changes have increased work value must be addressed on a case by case basis; there is a robust reclassification review system within the Commission to allow this to occur and it is one to which the HSU and the Minister have had resort, to mutual benefit, in the past. 

78      Further, structural changes should not form the basis for across the board salary increases given that such changes do not affect everyone and the impact upon those that they do affect is unequal.  The unequal distribution of contribution to change does not provide a reasonable justification for an across the board wage increase.  The HSU’s submission that ‘everyone needs assistance from clerical and administration staff’ is vague and does not tie in the General Division to any productivity improvements that may have occurred.  It does not explain in a way that the Commission could be comfortable relying upon that the General Division has delivered productivity improvements. 

79      The 2011 Agreement expressly provided that salary increases provided in that agreement were in full and final settlement of productivity improvements up to the date of the commencement of the agreement, being 27 September 2011 (‘WA Health – Health Services Union – PACTS – Industrial Agreement 2011’ PSAAG 18 of 2011, clause 7.3).  Therefore, productivity improvements or efficiencies achieved under a prior industrial agreement, or existing before those agreements, cannot be relied upon to ground a claim for a salary increase under the 2014 Agreement. 

80      The 4 Hour Rule commenced in April 2009 and there is presently insufficient evidence to conclude on what basis efficiency improvements from changes to work design and work practices could support an across the board salary increase.  Other than for amendments to parental leave, productivity improvement changes accepted by the Commission in the UV support workers case are not present in the 2014 Agreement. 

81      Further, the wage increases for any given discrete employee group or groups need to recognise that the results have been arrived at by a variety of measures, some by agreement and some as a result of arbitration.  There has been a variety of circumstances and the results take into account matters applicable only to the group concerned.  Previous results have been arrived at with different policies applying, especially government wages policies, and do not necessarily involve any comparison or assessment of the duties of that employee group as against those of another employee group. 

-  Conclusion regarding productivity and efficiency improvements

82      Section 26(1)(d)(v) obliges the Commission to take into account any changes in productivity that have occurred or are likely to occur.  The 2011 Agreement expressly stated that salary increases provided in that agreement were in full and final settlement of productivity improvements up to the date of the commencement of the agreement, being 27 September 2011. 

83      There is evidence demonstrating that there have been changes to productivity since the 2011 Agreement, however, not all aspects can be relied on. 

84      The HSU refers to changes associated with multidisciplinary teams.  However, the introduction of such teams was relied upon as being part of the increased work value relied on initially in the Clinical Psychologists case ([2002] WAIRC 07218; (2002) 83 WAIG 23 at [156]) and was claimed and accepted as applying equally in the Health Professionals Work Value case ((2006) 86 WAIG 279; [2006] WAIRC 03473 at [14]).  Therefore, this is a matter already accounted for and cannot be relied on in this case. 

85      There is also a claim that the emerging role of Advance Scope Physiotherapist, allowing for a medical substitution model, is an example of significant savings and improved efficiencies by different methods of working.  This matter came before the Public Service Arbitrator in 2014 ([2014] WAIRC 00371; (2014) 94 WAIG 566).  The evidence in that matter was that the role was trialled from 2006 and formal approval given for the creation of the positions in 2010.  There was then a delay in a number of years in the formal creation of the position due to disputation about the classification level.  That classification level was determined by the Arbitrator in the decision in 2014.  However, the work of the position has been ongoing since 2006 (see [4] – [12] of that matter).  Therefore, this too is not a matter which can be relied on in this case. 

86      The development of the 4 Hour Rule is also relied on as demonstrating increased flexibility and efficiency.  The background to the 4 Hour Rule is set out in the Frontline Clerical Positions case ([2013] WAIRC 00836; (2013) 93 WAIG 1565).  The 4 Hour Rule commenced in 2009 as part of the National Emergency Access Target (NEAT) programme.  This set out a staged process, with progressively increasing targets, over a period of years.  The objective was that the percentage of patients to be seen and either discharged from Emergency Departments of hospitals or admitted to wards within four hours would increase over time.  The first stage related to tertiary hospitals, and other types of hospitals followed at later stages.  The percentages of patients to be dealt with within four hours increased as the years progressed.  The NEAT comparison shows the target NEAT for 2013 as being 81%, for 2014 being 85% and for 2015 being 90% (see ex JMN2). 

87      The National Elective Surgery Target (NEST) is a similar programme but relating to elective surgery. 

88      These two programmes, along with others, demonstrate that efficiency and productivity measures are not necessarily achieved and accounted for in one bite.  Rather, they may be one‑off programmes or part of an ongoing programme with progressive targets which are assessed, reviewed and revised over time. 

89      Therefore, while the 4 Hour Rule as it was in 2009 may be completely accounted for in the 2011 Agreement, since 2011 there have been further efficiency and productivity increases through the same programmes, which the HSU is entitled to rely on. 

90      Also, while the 4 Hour Rule may have been rejected in respect of a work value claim in the Frontline Clerical Positions case, it has currency as part of the ongoing programme in NEAT. 

91      It is true that NEAT has application particularly to Emergency Department staff, be they medical practitioners, nurses, or PACTS, all working to achieve the same target.  However, it has a flow‑through effect in that the wards of the hospitals need to coordinate with the Emergency Departments and to be managed in such a way as to allow for the acceptance of patients from the Emergency Department within the time allowed, according to the targets.  This requires ongoing improvements in efficiency and productivity, beyond the Emergency Department, part of which was recognised as increased workload and efficiency in the Frontline Clerical Positions case.  It also has application in areas such as pathology and, as demonstrated by Mr Nugent’s evidence, in pharmacy. 

92      The National Safety of Quality Health Standards is another programme requiring the active participation of PACTS for the benefit of efficiency and proper operation.  Mr Hill referred to the Australian Commission on Safety and Quality in healthcare (ex 8, DPH 18) and the role of PACTS in their implementation, giving evidence that HSU members are engaged in all of the identified segments of the health workforce achieving the standards (ex 8 at [244]). 

93      The PBS reforms have also produced benefits for the public health system through the work of PACTS. 

94      Therefore, while there is not evidence of a uniform level of increased productivity and efficiency across all groups of PACTS within the ambit of the HSU, there is evidence of broad ranging, as well as particular, measures which apply equally to those employees as they do to registered nurses and medical practitioners. 

95      These are valid points and should be given some weight when the Commission takes into consideration any changes in productivity that have occurred or are likely to occur.

96      With respect to both registered nurses and medical practitioners, the salary increases they received were able to be greater than the projected movement in the CPI because their agreements were concluded under the 2009 government wages policy which permitted an increase greater than CPI where there were demonstrated increased productivities and efficiencies.  In our view, the changes to conditions in the 2014 Agreement going to increased productivity and efficiency, together with the increased productivity and efficiency changes referred to by the witnesses called by the HSU, are matters the Commission is required by the Act to take into account.

97      One of the underlying expectations of enterprise bargaining is that the resulting agreement will contain increased productivities and efficiencies tailored to the employer’s operations.  This is part of the Public Sector Wages Policy Statement 2014 at 4.  If these are not given value, and not recognised in the salary outcome, it may lessen the incentive for them be negotiated.  In turn this may lessen one of the perceived advantages of enterprise bargaining. 

98      The Commission in an arbitration under s 42G is not being asked to determine an increase in work value for a particular group of employees, nor the reclassification of an employee or class of employees and nor is it being asked to award differential wage increases to all of the employees covered by the 2014 Agreement.  It is being asked to decide a fair salary increase for all PACTS.  In this respect, the Commission stands in the shoes of the parties. 

99      The Commission, deciding the matter according to equity, good conscience and the substantial merits of the case, and taking into account the matters required under s 26, should be slow to depart from the manner in which the parties have successfully concluded and implemented industrial agreements in the past, and which they urge upon the Commission on this occasion. 

100   It is within the concept of enterprise bargaining across a workforce that there is an element of generalisation, perhaps even pragmatism, given that the history of industrial agreements to which we have been referred in the evidence shows in each case wage increases applied generally, or across the board.  The evidence does not suggest that in each case there were improvements in productivity and efficiency by each one of the employees covered by the respective agreements in equal measure, or at all.  Determining a valuation to these changes to produce an across the board increase is not a mathematical exercise.  There is much to be said for the evidence of Mr Hill (ts 121) that in more recent times, there has been less science attached to measuring what efficiencies are worth in dollar terms.  

The Government’s wages policy and financial strategy

101   This formed a significant part of the Minister’s case. 

- The Minister’s submission

102   The Minister refers to the statement of Mr Watson (ex C) which contained the Public Sector Wages Policy Statement 2014, which is the most recent government financial strategy statement; the 2014‑15 Government Mid‑Year Financial Projections Statement; and the part of the most recent budget papers under the title ‘Agency information in support of the estimates dealing with the Department of Health’.  

103   The Minister submits that the government is now budgeting for a deficit of $1.3 billion in 2014/2015 and $900 million in 2015/2016.  If the Public Sector Wages Policy Statement 2014 is not adhered to, the deficits will be larger than currently predicted.  The government’s financial strategy is to return the budget to surplus in the shortest possible time while still meeting its responsibilities.  The size of public sector wages and salaries is central to this financial strategy.  The importance of adherence to the Public Sector Wages Policy Statement 2014 cannot be overstated. 

104   The 2013/2014 Budget measures included a cap on general government agencies’ salaries budgets with increases limited to the projected growth in the Perth CPI and the introduction of a new public sector wages policy.  In Mr Watson’s evidence, the Department of Health’s budget does not have the capacity to pay for above CPI wage increases without impacting on service delivery. 

105   The government has a financial strategy.  That strategy includes ensuring that general government sector expense growth does not exceed revenue growth; to maintain a cash surplus from operating activities for the general government sector of at least 50% of infrastructure spend per year; to maintain the total non‑financial public sector net debt to revenue ratio at or below 55%; and to maintain a cash operating surplus for the public sector net debt of at least 5% of operating cash receipts.  It also seeks to provide a fair and efficient taxation system that is competitive with other Australian States.  WA’s headline credit rating has been downgraded one notch by Moody’s Investor Services. 

106   The government is committed to responsibly managing the State’s finances and regaining the State’s triple‑A credit rating.  Recent measures have been specifically targeted to address concerns raised by credit rating agencies in their downgrade announcements. 

107   Measures contained in the Mid‑Year Review are the latest instalment in a reform programme delivering ongoing efficiency improvements in the public sector.  This includes a new public sector wages policy that caps wage increases to inflation.  These measures have resulted in the lowest growth in salaries since 2000‑2001 of 5.2%.  Salaries expenditure is the single largest component of general government recurring spending and as such, limiting growth in salaries expenses remains critical to ensuring the overall sustainability of the State’s finances.  Even relatively small increases in salaries expenditure have the potential to increase pressure on the State’s finances and dilute the impact of corrective measures implemented by the government and may require offsetting reductions in service provision, higher taxes and/or put pressure on forecast levels of net debt. 

-          The government wages policy

108   The government wages policy requires that increases in wages and associated conditions for all industrial agreements be capped at the projected growth in the Perth CPI as published from time to time by the Department of Treasury.  Compliance with the wages policy is crucial to achieving a return to budget surplus.  Since it came into operation in November 2013, all negotiated wage outcomes have been settled at projected CPI, which includes wage agreements reached in 2014 for police, firefighters, general public servants, teachers, TAFE lecturers and various Public Transport Authority groups. 

-          The Department of Health’s financial position

109   The financial position of the Department of Health as presented in the 2014‑15 Budget Paper No. 2, pages 127 – 153 were referred to by Mr Watson.  It identifies spending risks and major spending changes.  The annual wages bill for employees covered by the 2014 Agreement was $1,226 million in 2013/2014, including allowances and superannuation costs.  It estimates that granting the HSU’s claim which would amount to a 9% increase over the two year life of the Agreement as an additional $59 million.  This figure includes not just the cost of salaries but also the associated cost of leave entitlements. 

110   Mr Watson’s evidence is that the Department of Health is funded for a wage increase consistent with projected CPI and would be expected to absorb the cost of any additional wage increase.  The Department’s budget is already under pressure from a range of sector‑wide saving measures and the requirement to realise efficiency improvements to achieve convergence with the national PAC for hospital services by 2017/2018.  The cost of any additional wage increase is thus expected to impact on service delivery. 

111   In his evidence, Mr Watson acknowledged that the government did provide for greater amounts in the Health budget in relation to the increase to the wages of nurses, however it chose not to do so in relation to the increase  to the salaries of medical practitioners.  It is correct to say that there is no intended decrease in health services offered to the WA public as a result of the wage increase granted to nurses.  In relation to the salary increase for medical practitioners, it is not anticipated that it would decrease the quality of health services provided to the WA public (ts 51/52). 

112   The cost of the HSU’s claim in this matter of $19.9 million is 0.25% of the Health budget.  It is 0.07% of the total budget expenditure of government of $28.4 billion. 

113   The Minister submits that s 26(2A) and (2B) requires the Commission to have regard to the government’s strategy for dealing with the economic situation in which the State finds itself.  The Commission is required to look at the State’s budgetary position quite apart from the State’s economy, although it may always have been part of looking at the State’s economy, but it must also look at what impact its decision is going to have on the State’s plans in relation to that budgetary position.  The Minister urged strongly that in this case even if there was a link between the salaries of PACTS and the salaries of nurses, the changed economic circumstances will prevail.  If the budgetary position is to be improved, it is crucial, as Mr Watson’s evidence is, that wages growth comes within CPI. 

-          The HSU’s submission

114   The HSU submits that the Commission has always had regard to the government wages policy, the government’s financial statements and forecasts and plans in making its decisions.  The question of weight is one entirely for the Commission.  It submits that the policy in this case cannot be said to apply throughout the public sector without exception because the wage offer made to nurses is outside the policy; it is therefore of ‘limited weight’. 

115   The HSU says the Commission can have regard to whether limiting wage increases to CPI for this group of employees is, in all of the circumstances, fair or unfair.  The question that needs to be examined is what is the fair and reasonable wage rise in all of the circumstances, including the wages policy and other economic evidence. 

116   The HSU’s submission is that the economic evidence does not loom large in this case because of the relatively small impact that the wage increases sought by the HSU will have on the government budget.  The estimate of an additional $59 million cost includes leave liability which may or may not be taken in the financial year to which the figure relates and is not necessarily the impact of the proposed wage increase, it is the possible impact (ts 59).  Further, the evidence of the impact of the wage increases sought will be minimal; there is no realistic or cogent evidence that any health services will decrease as a result.  There has been no decrease in health services from the wage and salary increases resulting from the agreements with registered nurses, UV enrolled nurses and medical practitioners.  As, on the evidence, the 2015/2016 Budget has not as yet been drawn, the wage rises sought would be accommodated within that.

-          Conclusion regarding the government wages policy and financial strategy

117   Other than whether the calculation of the cost of the HSU claim should take into account the cost of leave, the evidence of Mr Watson was not challenged and is accepted.

Consideration

118   This is the first occasion on which the Commission has been required to consider s 26(2A). 

119   The Minister says the question for determination by the Commission is whether there are any other factors present which are so overwhelming as to make the salary increases offered by the Minister unfair in such a way that the Commission, despite the matters referred to in s 26(2A) and (2B), feels compelled to award a higher increase.  However, formulating the question in this way suggests that the matters referred to in s 26(2A) and (2B) are a standard against which other factors are to be judged and we do not agree that is an appropriate description of the Commission’s task.

120   The HSU says the task of the Commission is to answer the question - what is the fair and reasonable wage rise in all of the circumstances, including the State government wages policy and the other economic evidence?  This more closely describes the obligation on the Commission in s 26 of the Act than does the question posed by the Minister but it too, with respect, does not fully describe the Commission’s task. 

121   Notwithstanding the recent insertion of s 26(2A) and (2B) the Commission is still to act according to equity, good conscience, and the substantial merits of the case without regard to technicalities or legal forms: s 26(1)(a) of the Act.  It is to have regard for the interests of the persons immediately concerned whether directly affected or not and, where appropriate, for the interests of the community as a whole: s 26(1)(c).

122   In doing so, it must take into consideration the matters in s 26(1)(d) and, in this case where the Commission is making a public sector decision, it also must take into consideration not just the public sector wages policy but also the financial position and fiscal strategy of the State and the financial position of the Department of Health: s 26(2A). 

123   The legislation does not make s 26(2A) a standard against which the other considerations are to be assessed.  Nor is s 26(2A) of greater weight than those matters in s 26(1)(d).  Section 26(2C) specifies that ‘[t]he matters the Commission is required to take into consideration under subsection (2A) are in addition to any matter it is required to take into consideration under subsection (1)(d).’  Each of the considerations in s 26(1)(d) and (2A) are to be given their own weight.  Deciding what is the fair outcome of this arbitration under s 42G of the wage increases for the 2014 Agreement involves a balancing of the parties’ respective positions in the context of those considerations.

124   The HSU has demonstrated a past general consistency of industrial agreement wage and salary increases to registered nurses, medical practitioners and support workers in at least the more recent past, and that a significantly lesser percentage increase to PACTS is undesirable. 

125   The evidence of some dissatisfaction of HSU members at the size of the salary increases in the 2014 Agreement compared to nurses, medical practitioners and support staff and consequent loss of morale is undesirable in the context of the need for PACTS to work together to provide the standard of healthcare in the community. 

126   The application of the government wages policy from November 2013 needs to rest upon an equitable basis.  The HSU has shown that in its case it does not rest on an equitable basis.  The PACTS are part of a health workforce that, in the cases of registered nurses and medical practitioners, received the higher wage or salary increases available under the 2009 government wages policy.  The salary increases under the 2014 Agreement are significantly lower.

127   It produces a situation where the PACTS are making a greater contribution to the recovery of the State’s financial position and fiscal strategy than the medical practitioners, registered nurses and support staff with whom they closely work.  That is inequitable.

128   We take into account that what became the 2014 Agreement commenced in close proximity to the end of the application of the 2011 wages policy.  The HSU commenced consultation with its members prior to Christmas 2013 (ex 8 at [144]).  Bargaining for the 2014 Agreement formally commenced by letter dated 23 December 2013, from Mr Fergus as Acting Director, received by the HSU on 31 December 2013, which proposed the commencement of negotiations for a new agreement (ts 103 and ex 8, DPH 32).  This is less than six weeks after the Public Sector Wages Policy Statement 2014 itself commenced.  The HSU’s formal claim is dated 7 April 2014 (DPH 33). 

129   The timing of the 2014 Agreement, which with the expiry dates of the registered nurses and the medical practitioners agreements and the arbitration of the support workers’ agreement together can be seen as ‘the last of that previous wage round’ as Mr Hill described, and the significantly lesser percentage salary increases to PACTS in the 2014 Agreement compared to those received over the same periods of time by nurses, medical practitioners and support workers, is significant. 

130   The HSU has also shown that there are some changes in productivity and efficiency since the 2011 Agreement in the work performed, and in the 2014 Agreement that have occurred or are likely to occur.  Although the extent of productivity improvements and the value to be attached to them is controversial, there is a need to facilitate the efficient organisation and performance of work according to the needs of the Department of Health.  While it is not clear the extent to which the wage increases received by registered nurses were based upon significant changes to productivity and efficiency, there should not be a perception of workplace inequality from a significantly different wages increase. 

131   This arbitration is occurring at a time when the State is experiencing the most challenging fiscal environment for many years and ongoing global economic uncertainty.  While the state of the national economy is not a consideration relevant to this matter, the state of the economy of WA, and the capacity of the Department of Health to pay, are part of the considerations under s 26(1)(d) and (2A). 

132   The rate of growth will be the slowest rate of growth since 1990‑91 and State final demand is expected to fall by 1% in 2014‑15.  Revenue estimates in the Mid‑Year Review have been revised down since the 2014‑15 Budget by $5 billion over the forward estimates period, due mainly to weaker commodity prices, particularly for iron ore and oil, as well as lower taxation revenue forecasts due to moderating economic conditions and weaker employment and wages growth.  There is an estimated general government sector operating deficit in 2014‑15 of $1.3 billion.  Net debt for the total public sector is forecast to increase from $20.8 billion at 30 June 2014 to reach $30.9 billion by 30 June 2018. 

133   We recognise that compliance with the government wages policy is crucial to achieving a return to budget surplus.  The Department of Health is funded for a wage increase consistent with government wages policy and would be expected to absorb the cost of any additional wage increase.  The Department’s budget is already under pressure. 

134   Although the government wages policy has been shown to have been exceeded by the government in the case of registered nurses and UV enrolled nurses, the background of wage agreements reached on the basis of government wages policy in 2014 for police, firefighters, general public servants, teachers, TAFE lecturers and various public transport authority groups is compelling.  It demonstrates a recognition of the significantly changed economic circumstances applying now than applied at the time the registered nurses and medical practitioners agreements were made.  There is much to be said for the submission on behalf of the Minister that in these circumstances salary increases for PACTS in line with the projected CPI for Perth, and which may exceed CPI if the current forecast is accurate, are fair. 

135   We have concluded that HSU has shown that it has not had a fair go and that fairness requires a salary increase in excess of projected CPI.  While it is clear that there is no historical link or nexus between the salary increases of PACTS and those of registered nurses and medical practitioners, it is unhelpful and not conducive of productive working relationships, for there to be a significant disparity over time. 

136   Although s 26(1) and (2A) of the Act provide an opportunity for the Commission to consider claims for salary increases greater than projected CPI should the circumstances warrant, and each case will be considered on its merits, arbitrated wage or salary increases greater than projected CPI should be the exception rather than the rule due to the State experiencing the most challenging fiscal environment for many years.

137   To prescribe a salary increase greater than CPI in the 2014 Agreement is not taken lightly.  It will be in the interests of the persons immediately concerned but it may impact upon the Department of Health’s ability to provide health services to the community, although it is not inevitable that it will do so.  The salary increase to be ordered is not to be reached with mathematical precision, particularly in circumstances where there is no agreed valuation of any productivity and efficiency improvements. 

138   In our view salary increases of 3.75% and 3% are fair in the circumstances of the wage and salary increases received by medical practitioners, nurses and support workers over the corresponding period, the timing of the 2014 Agreement, and that there has been some increase in productivity and efficiency since the 2011 Agreement.  The increases will provide salary increases to the PACTS in the public health system which have greater consistency with the wage and salary increases received by medical practitioners, nurses and support workers over the corresponding period but take account also of the economic circumstances facing the State and its fiscal strategy to deal with them. 

139   There will be a consequent, though marginal, cost increase to the Department of Health’s budget.  There will be a negligible effect on the State’s economy, and no evidence to suggest it will have any effect upon the level of employment or inflation. 

140   A minute of proposed order now issues.