Mis 486/85 MD Print G0700

IN THE AUSTRALIAN CONCILIATION AND ARBITRATION COMMISSION

Conciliation and Arbitration Act 1904

NATIONAL WAGE CASE NOVEMBER 1985

In the matter of an application by The Amalgamated Metal Workers' Union to

vary the

Metal Industry Award 1984 - Part I(1)

(C No. 4181 of 1985)

And in the matter of an application by The Association of Professional

Engineers, Australia to vary the

Metal Industry Award 1971 - Part III - Professional Engineers(2)

(C No. 1650 of 1985)

And in the matter of applications by The Federated Storemen and Packers Union

of Australia to vary the

Storemen and Packers (A.C.T.) Award 1973(3)

(C No. 1729 of 1985)

Storemen and Packers (Bond and Free Stores) Award, 1973(4)

(C No. 1730 of 1985)

Storemen and Packers (Bulk Liquid Terminals, etc.) Award 1978(5)

(C No. 1731 of 1985)

Storemen and Packers (Carbon Black) Award, 1979(6)

(C No. 1732 of 1985)

Storemen and Packers (Container Depots) Award 1982(7)

(C No. 1733 of 1985)

Storemen and Packers' Fibre Processing Industry Award 1982(8)

(C No. 1734 of 1985)

Storemen and Packers' (General Stores) Award 1972(9)

(C No. 1735 of 1985)

_______________________________________________________________________________

(1)Print F4869 [M039]

(2)Print C1744 [M042];(1974) 163 CAR 388

(3)Print C1661 [S073];(1974) 158 CAR 645

(4)Print C0720 [S028];(1973) 156 CAR 22

(5)Print D8596 [S110];(1978) 214 CAR 742

(6)Print E0226 [S030];(1979) 223 CAR 864

(7)Print F0363 [S100]

(8)Print F3741 [S137]

(9)Print C3544 [S032];(1974) 161 CAR 149 [title change Print C6028 [S032 V002];

(1975) 166 CAR 856]

2 NATIONAL WAGE CASE NOVEMBER 1985

Storemen and Packers' General Stores (Northern Territory) Award, 1972(10)

(C No. 1736 of 1985)

Storemen and Packers (Grain Stores) Award, 1974(11)

(C No. 1737 of 1985)

Storemen and Packers' (ICI Australia Limited Bulk Handling) Award 1979(12)

(C No. 1738 of 1985)

Storemen and Packers (Kodak (Australasia) Pty Ltd) Award 1973(13)

(C No. 1739 of 1985)

Storemen and Packers (Materials Handling - Brambles) Award 1976(14)

(C No. 1740 of 1985)

Storemen and Packers (Oil Agents/Contractors) Award 1984(15)

(C No. 1741 of 1985)

Storemen and Packers (Oil, etc., Stores) Award, 1980(16)

(C No. 1742 of 1985)

Storemen and Packers' (Oil Companies) Award 1982(17)

(C No. 1743 of 1985)

Storemen and Packers (Oil Refineries) Award 1982(18)

(C No. 1744 of 1985)

Storemen and Packers (Philip Morris Ltd) Award 1978(19)

(C No. 1745 of 1985)

Storemen and Packers (Retail Warehouses, Victoria) Award 1981(20)

(C No. 1746 of 1985)

_______________________________________________________________________________

(10)Print B8372 [S074];(1972) 145 CAR 764

(11)Print B7040 [S033];(1971) 140 CAR 817 [title change Print C3257 [S033

V010]; (1975) 164 CAR 107]

(12)Print D1098 [S036]; (1976) 181 CAR 585 [title change Print E4037 [S036

V007]; (1980) 244 CAR 115]

(13)Print C3553 [S038]; (1974) 165 CAR 160

(14)Print D3001 [S039]; (1977) 193 CAR 423

(15)Print F7508 [S141]

(16)Print E6117 [S042]; (1981) 256 CAR 603

(17)Print E6858 [S041]; (1980) 248 CAR 565 [title change Print F4532 [S041

V006]]

(18)Print E6323 [S043]; (1980) 248 CAR 312 [title change Print F4554 [S043

V003]]

(19)Print D7756 [S098]; (1978) 209 CAR 58

(20)Print D6124 [S068]; (1978) 209 CAR 609 [title change Print F2442 [S068

V006]]

NATIONAL WAGE CASE NOVEMBER 1985 3

Storemen and Packers (S.C.F.S. Pty. Ltd.) Agreement [1980](21)

(C No. 1747 of 1985)

Storemen and Packers (Transit Stores) Award, 1972(22)

(C No. 1748 of 1985)

Allders International Pty Ltd Airport Terminals Duty Free and

Retail Stores Award 1982(23)

(C No. 1749 of 1985)

Airport Tourist Services Stores Award 1982(24)

(C No. 1750 of 1985)

The Australian Paint Industry (Storemen and Packers) Agreement 1976(25)

(C No. 1751 of 1985)

Brushmaking Industry Consolidated Award 1979(26)

(C No. 1752 of 1985)

International Duty Free Stores Award, 1980(27)

(C No. 1753 of 1985)

Steel Distributing Award 1982(28)

(C No. 1754 of 1985)

Thomas Borthwick and Sons (Pipe Road) Skin and Hide Stores Agreement 1978(29)

(C No. 1755 of 1985)

in relation to wage rates

And in the matter of an application by The Manufacturing Grocers' Employees'

Federation of Australia to vary the

Manufacturing Grocers Award, 1982(30)

(C No. 1690 of 1985)

_______________________________________________________________________________

(21)Print E1507 [S117]; (1980) 233 CAR 621

(22)Print C3921 [S047]; (1974) 162 CAR 286

(23)Print F0699 [A258]; (1982) 287 CAR 264

(24)Print F0749 [A259]; (1982) 287 CAR 289

(25)Print D2454 [A117]; (1977) 186 CAR 699

(26)Print E1992 [B010]; (1980) 236 CAR 636

(27)Print E5602 [I024]; (1981) 252 CAR 416

(28)Print F1410 [S025]; (1983) 288 CAR 77

(29)Print E0266 [T062]; (1979) 225 CAR 400

(30)Print F0598 [M003]; (1982) 282 CAR 283

4 NATIONAL WAGE CASE NOVEMBER 1985

And in the matter of an application by The Association of Professional

Engineers, Australia to vary the

Professional Engineers (General Industries) Award 1982(31)

(C No. 1773 of 1985)

in relation to wage rates and conditions of employment on account of national

productivity

And in the matter of an application by The Confederation of Australian

Industry for a review of the Principles of Wage Determination

(C No. 1794 of 1985)

MR JUSTICE WILLIAMS

MR DEPUTY PRESIDENT ISAAC

MR JUSTICE MADDERN

JUSTICE COHEN

MR COMMISSIONER CONNELL MELBOURNE, 4 NOVEMBER 1985

REASONS FOR DECISION

THE APPLICATIONS

This is the third National Wage decision under the centralized wage fixation system adopted in September 1983.

The matters referred to this Bench are as follows:

1. Applications by various unions to increase wages, salaries and allowances by 3.8% to reflect increases in the eight-capitals Consumer Price Index (CPI) for the six months ended June 1985.

2. Applications by unions for 4% increase in wages and salaries or changes in conditions of employment on account of national productivity.

3. An application by the Confederation of Australian Industry (CAI) for a review of the Principles of wage determination.

At the commencement of the proceedings the Australian Council of Trade Unions (ACTU) on behalf of the unions sought to have the claims relating to the 3.8% CPI increase dealt with immediately and to have the other matters adjourned and dealt with later. CAI opposed that course and argued that the three matters should not be dealt with separately. On 5 September1985 the

______________________________________________________________________________

(31)Print F1735 [P067]

NATIONAL WAGE CASE NOVEMBER 1985 5

Bench made the following statement in which it decided that the 3.8% claim based on the CPI should proceed immediately and that the present Principles will continue to operate pending the outcome of the review.

The statement was as follows:

"There are at present three claims before the Commission, first, various union applications for 3.8% increase in wages and salaries in accordance with the CPI increases in the March and June quarters 1985, second, a claim for 4% increase in wages based on productivity increases and third, a claim by CAI for a review of the Principles.

The ACTU is seeking to have the claims relating to the 3.8% CPI increase dealt with immediately, and to have the other matters adjourned and dealt with later. CAI is opposed to this course. It argued that the three matters are closely intertwined and should not be dealt with separately. It submitted that the existing Principles were established on 23 September 1983 on the basis that they would continue in operation until October 1985 and that 'The review of the Principles will take place close to their expiry date upon an application for a review'. It was claimed that it would be impracticable to deal with the ACTU claim for 3.8% based on the CPI movements for the March and June quarters under the existing Principles and then deal with the 4% Productivity claim separately. Accordingly CAI submitted that the applications should 'be heard together and the Commission make one decision in settlement of those applications and at the same time announce the new package to operate into the future'.

CAI was substantially supported by Queensland, Australian Mines and Metals, Master Builders Association and Northern Territory.

The course of action proposed by CAI was opposed by the ACTU. It claimed that the 3.8% CPI application should be dealt with immediately under the existing Principles. It said that the productivity claim had been made consistently with the current Principles and should be dealt with under them but that it was prepared to discuss the claim with the Government and the employers and that it supported conferences to facilitate such discussions. The ACTU was also prepared to participate in conferences and in subsequent hearings regarding the Principles but it stated that it did not intend to participate in such conferences until it knew the outcome of the 3.8% CPI claim.

It emphasised that the 3.8% claim was made under the present Principles, that it was in accord with those Principles and that it should be dealt with under them. On the other hand, it said, the suggestion by CAI that the CPI and productivity applications be joined is inconsistent with the Principles. It said that there was a 'clear and legitimate expectation by wage and salary earners that the CPI claim made under the current Principles will be dealt with separately and promptly as provided for in those Principles'.

In substance the Commonwealth supported the ACTU approach as did New South Wales, Victoria, South Australia, Western Australia, Commonwealth Public Service Board, the State Public Services Federation and Australian Council of Professional Associations.

The issue to be determined is whether the three applications before us should be heard jointly or separately; and if separately, whether the present Principles should continue to apply pending the outcome of the review of the Principles.

6 NATIONAL WAGE CASE NOVEMBER 1985

Although the three matters have certain economic considerations in common, they raise a variety of different and complex issues. In relation to some of the issues connected with the productivity claim and the review of the Principles, conferences might be the appropriate way of dealing initially with them. It follows that it could take considerable time for these matters to be fully heard and properly decided.

The application for a national wage adjustment of 3.8% is made pursuant to Principle 1 of the present Principles. The relevant parts of Principle 1 are as follows:

'(a) Subject to Principle 3, the Commission will adjust its award wages and salaries every six months in relation to the last two quarterly movements of the eight-capitals CPI unless it is persuaded to the contrary by those seeking to oppose the adjustment.

(b) For this purpose the Commission will sit in February and August following the publication of the CPI for the December and June quarters respectively.'

It is clear that a joinder of the three issues would take the determination of the 3.8% claim well beyond the time scale contemplated by this Principle. Consideration of the other applications is not limited in the same way.

We have therefore decided that in order to comply with the terms and the spirit of the Principles, we should first hear and determine the application for a 3.8% national wage increase. However, this course of proceeding should not be seen as denying the interrelationship between the three matters before us. CAI pointed out that:

'In terms of the effect on inflation and employment, it is total labour costs and not merely wage costs alone which are important...it is fundamental that any claims for increases in wages or improvements in conditions, be tested against the capacity of the economy to sustain such increases without undesirable inflationary and employment consequences.'

'The Commission's decision on national productivity is related to but not dependent upon the decision in respect of the March and June quarters.

The ACTU has expressed its desire to proceed with the productivity claim and the review of the Principles by way of conference initially, and we commend that approach. However, because the present Principles expire at the end of this month, there is urgency in a review of the Principles being commenced as soon as possible following our decision on the 3.8%.

NATIONAL WAGE CASE NOVEMBER 1985 7

In all the circumstances, it is inevitable that there will be a time gap between the expiry of the present system and the outcome of the review of the Principles. The actions of the parties in this period will have a material effect on the outcome of the review and on the future of a centralized system of wage fixation. Concern was generally expressed that no hiatus should develop in the operation of wage fixing principles in a way which might prejudice the outcome of the review; and that to avoid such a situation the present Principles should continue to apply until the Commission has made its decision on the review of the system. It was also emphasized by the Commonwealth and various States that the Commission should determine that the present Principles will continue to apply until they are varied following the review in order to ensure continued consistency in wage fixing principles among all the tribunals. The Public Service Board drew our attention to the fact that several anomaly claims under the present Principles had not been heard and that in the interest of consistency and stability, such claims should be allowed to be

processed under the present Principles pending the outcome of the review.

A similar situation arose in 1981 and on that occasion the Commission said that:

'...it would be undesirable to leave a vacuum in respect of issues other than National Wage with no guidance for tribunals and parties. Accordingly, the present Principles will continue to apply to those issues until the outcome of the examination of the future of wage fixation. Any other course would jeopardise the proper outcome of those proceedings and create problems arising from decisions taken in the interim period.' [Print E5000]

We affirm that view in the present circumstances.

We note that the ACTU has expressed a preference for such a course, saying that 'there is clearly some logic in terms of continuing the current Principles for that period as has occurred in the past and particularly in view of the satisfactory operation of those Principles'.

It is critical to the operation of the present system that all claims for increases in pay and improvements in conditions be processed in line with the Principles. This condition has so far been sustained by the 'no extra claims' undertaking given and honoured by the vast majority of unions. The Australian Council of Professional Associations (ACPA) and The State Public Services Federation (SPSF) submitted that the commitment given for the duration of the present Principles should be continued until the new system is in place following the review. The ACTU said: 'our position is that there is our commitment for the two year period and the CPI claim which is our immediate priority and should be processed consistent with the movement that is required and should the Commission wish to seek from affiliates commitments in a similar way as was done in 1983, that is a matter for the Commission'.

The Commonwealth expressed a confident belief that in view of the responsible behaviour of the ACTU and the unions generally and their strong support for the centralized system, it is reasonable to assume

that unions would not act in a way which would prejudice the continuance of such a system.

8 NATIONAL WAGE CASE NOVEMBER 1985

We endorse the view expressed by ACPA that an extension of the 'no extra claims' undertaking to the interim period 'would be a reasonable expectation' to ensure that the review is not prejudiced by actions which violate the requirements of a centralized system.

On all the above considerations, we have decided that the 3.8% claim based on the CPI should proceed immediately and that the present Principles will continue to operate pending the outcome of the review."

THE 3.8% CLAIM

"Subject to Principle 3, the Commission will adjust its award wages and salaries every six months in relation to the last two quarterly movements of the eight-capitals CPI unless it is persuaded to the contrary by those seeking to oppose the adjustment."

"It would be appropriate for the Commission, after hearing the parties to an award and being satisfied that a proper case has been made out, to recommend the indexation of overaward payments when award payments are indexed."

NATIONAL WAGE CASE NOVEMBER 1985 9

THE ECONOMY

. Gross Non-Farm National Product (income based) grew by 5% in 1984-85. This is the largest increase since 1972-73 and it comes after a rise of 3.4% in the previous year.

. This rate of growth was sustained in the second half of 1984-85 and the Commonwealth Budget forecast is for a similar growth in 1985-86. According to the OECD the signs are that in 1985 and 1986, Australia's Gross Domestic Product growth will be higher than that of all other OECD countries except Japan.

. Employment grew by 2.8% in 1984-85 on the year before, compared to 0.9% in 1983-84. Over the year to September 1985, the growth rate was 3.2%. Although part-time employment has grown faster than full-time employment, the latter contributed 78% of total employment growth in the year to September 1985. The OECD forecasts a growth rate of 2.75% for 1985 and 2% for 1986. These are the highest rates forecast for any of the OECD countries.

. The unemployment rate fell from 9.6% in 1983-84 to 8.6% in 1984-85. Although there have been small fluctuations in the declining trend in unemployment this year, the rate was down to 8.1% in September, the lowest for the year, despite a rise in the labour participation rate.

. Overtime worked in May 1985 was 10.8% higher than in May 1984.

CAI's Index of Economic Activity based on real overtime earnings, shows a continued rise although the rate of growth slowed down in the first half of this year.

. Job vacancies figures have risen significantly over the year.

. Retail sales have continued to grow in real terms. The June 1985 figure was 2.8% higher than a year earlier.

. The ANZ Index of Factory Production, reflecting the course of manufacturing output, shows a steady recovery towards the peak of 1980-81.

. The private sector has taken a larger share in the growth of GDP, showing a more broadly based economic development than in the previous year. In 1983-84, the private sector contributed 1.2

10 NATIONAL WAGE CASE NOVEMBER 1985

percentage points to the 4.9% increase in GDP while in 1984-85, the private sector's contribution was 3.3 percentage points to 4.6% GDP growth. Another sign of a more firmly based recovery is the turnaround in Business Fixed Investment from -10.5% in 1983-84 to +4.1% in 1984-85. The Budget Papers forecast a slightly higher growth in Business Fixed Investment in the year ahead.

. The more broadly based economic growth is also reflected in the growth of employment in the private sector which contributed 86%

of total employment increase in the year to August 1985.

. The recovery in the share of profits noted in the April 1985 National Wage decision has been maintained.

. Average real unit labour costs are holding at the average level of the late 1960's and early 1970's.

. The inflation rate as measured by the CPI (adjusted for Medicare) is down from 7.9% in 1983-84 to 5.8% in 1984-85. But the effects of devaluation, which we will examine presently, have reversed the downward trend in the CPI.

. The increases in weekly and hourly award rates between June 1984 and June 1985 were 2.6% and 2.7% respectively, the lowest rates of increase since the wages pause of 1982-83. In the same period, Average Weekly Earnings (All Persons) rose by 3.2%, the lowest annual rate of increase for twenty years. It should be noted, however, that although the available statistics do not allow a confident measurement of earnings drift due to overaward

pay increases and other increases in violation of the Principles, it seems that some drift and possibly a sizeable drift has occurred in certain areas.

. The current Principles were formulated "on the basis that the great bulk of wage and salary movements will emanate from national adjustments".(32) This requirement has been met. In the period from September 1983 to July 1985, 95% of the increases in award rates were due to national wage increases. The remaining 5% includes inter alia the effect of one-off adjustments arising from metal industry catch-ups and the establishment of equitable bases. The 1985 Budget Statement No.2 (p.64) says:

"What is now clear is that the money wage moderation and strong economic growth of the last couple of years have brought real wages and profitability broadly back into line with the situation of the late 1960's and early 1970's. If this situation is maintained, and if it is widely accepted that it will continue, then another of the important constraints which inhibited economic performance in the 1970's will have been overcome."

. As reflected in industrial disputes statistics, the considerable improvement in the industrial relations climate noted in the April 1985 National Wage decision(33) has been maintained.

______________________________________________________________________________

(32)Print F2900 p.49; (1983) 291 CAR 3 at 51 (33)Print F8100

NATIONAL WAGE CASE NOVEMBER 1985 11

. The unemployment rate is still very high, and the rate of decline in unemployment continues to be slow.

. Real interest rates are among the highest in the OECD countries and have risen further in recent months. This situation is a discouragement to business investment despite the restoration of the share of profits to earlier levels. Although business investment increased in 1984-85 after two years of negative growth, it is still down as a proportion of GDP as compared with the 1970's.

. The Bureau of Agricultural Economics expects the net real value of rural production to fall by over 20% in 1985-86.

. The balance of payments deficit for 1984-85 is $10.2 billion or 4.9% of GDP. This is higher than anticipated a few months ago and higher than that of nearly all OECD countries. The expected slowing of world economic growth and the deterioration in the terms of trade will maintain the strain on our balance of payments.

. The substantial and rapid devaluation of the Australian dollar noted in the last National Wage decision has persisted and its inflationary effects are now visible in the two quarterly CPI figures under consideration. This has lifted our inflation rate once again well above the OECD average and threatens to widen the difference even more.

. Australia's external debt increased substantially between June 1984 and June 1985, Total Gross Debt standing at 33% of GDP. Although much of this increase was due to the devaluation itself, the size of the external debt imposes a substantial burden on the balance of payments in servicing the debt.

. the low level of international competitiveness of the Australian economy

. the more rapid rate of growth of the Australian economy relative to that of the rest of the world resulting in imports being inadequately balanced by exports

. depressed world prices for our exports especially of minerals and metals in a slowing world market

. the high cost of servicing our sharply growing external debt

12 NATIONAL WAGE CASE NOVEMBER 1985

THE DEVALUATION

"The desired effects of depreciation are therefore clear: a lowering of import volumes and expansion of export volumes, a lowering of the current account deficit, a check to growth in external indebtedness and a stimulus to domestic production and employment but none of these benefits can be taken for granted. Depreciation through its effect on tradeable goods prices has an inevitable one-off effect on the CPI but it also has the potential to add to the ongoing rate of inflation.

This latter effect is avoidable if the effect of the depreciation on the CPI is appropriately accommodated in wage and other income determination processes.

If the one-off effect on prices were allowed to flow through into wages and other incomes the following consequences could be expected:

NATIONAL WAGE CASE NOVEMBER 1985 13

In respect of the last point, there are ample precedents elsewhere of a seriously destabilising cycle arising from a lack of control of domestic inflation leading to exchange rate depreciation, which then feeds back into domestic inflation, and so on, in a vicious circle.

We do not suggest that our economy is close to entering such a vicious circle, but it is a threat of which policy needs to be cognizant. Budgetary and monetary policy have been framed paying due regard to the containment of this threat. Wage and other income determination processes must do the same."

"To ensure that Australia is able to take full advantage of the changed circumstances that industry now finds itself in, it is necessary firstly, to ensure that movements in labour costs do not impede the adjustment process and, secondly, and just as importantly, it is critical that inflationary pressures are not allowed to run out of control during the adjustment process."

14 NATIONAL WAGE CASE NOVEMBER 1985

SHOULD THERE BE ANY PAY INCREASE?

"...given the nature of the problems that are before us in this community, there cannot be a more inappropriate way to proceed into the future than by granting a wage increase for the wholly irrelevant reason that there has been a CPI increase. Whatever else such a course might achieve, it will not make Australia more competitive."

"The Australian economy performed well in 1984-85 and, in many respects, the economic fundamentals are stronger now than they have been for some time. Good growth seems certain to be maintained into 1986 and, with the maintenance of an appropriate policy mix, this expansion can be carried beyond 1986. All sectors of the community share a common interest and responsibility in helping to bring about this result. In no area is this more critical than on the wages front. Recent experience has demonstrated the very real benefits that restraint on nominal income growth can bring to the whole community."

NATIONAL WAGE CASE NOVEMBER 1985 15

DISCOUNTING FOR DEVALUATION

1. A full national wage adjustment of 3.8% in the present case and a

deferment of any discounting for devaluation to the next national wage

adjustment "expected to occur in April 1986". The discounting on that

occasion will cover the direct effects of the devaluation on the CPI for

the four quarters of 1985 and should be limited to 2%. To compensate for the effect of the 2% discounting on the living standards of employees,

income tax will be reduced appropriately as from 1 September 1986.

16 NATIONAL WAGE CASE NOVEMBER 1985

2. In relation to the 4% productivity claim made by the ACTU, the agreement provides for extension and improvement of occupational superannuation generally to be "offset against national productivity and be based on a three per cent wage equivalent". Except "in very isolated circumstances", negotiations on superannuation can proceed on the understanding that the cost impact of new or improved arrangements will not occur before 1 July 1986 and that implementation will occur progressively to "about mid-1988, as negotiations between unions and employers were completed industry by industry, occupation by occupation or, in certain circumstances, company by company".

The Commonwealth admitted that there were a number of complex issues related to superannuation which would need to be discussed in conference between employers and unions prior to any productivity case being commenced.

3. The current Principles will continue to apply until new Principles are adopted. The Commonwealth's support of the terms of the agreement is based on the continuance of the "no extra claims" commitment by the unions.

"The employers within the CAI have publicly and unequivocally rejected the Accord strategy and, as a result, cannot be part of the full consultative process upon which the voluntary agreement is based."

NATIONAL WAGE CASE NOVEMBER 1985 17

"Instead of a reasoned debate before the tribunal, which gives the Commission all of the available options and allows it to make an impartial decision, the Commission is faced with doing what the ACTU and the Government want, or being accused of frustrating Government economic policy."

"...if as a result of any decision the Commission makes in this case, employers perceive that the Commission is going to act as a rubber stamp for deals made between the ACTU and the Federal Government and simply endorse labour cost increases of the order of 10 per cent over the next 10 months then employers will be left with no choice than to regard the Commission's independence as seriously compromised. Furthermore, employers would need to reconsider the value of participation in any conferences or proceedings relating to wage fixing and indeed would need to reconsider their whole attitude to the system of industrial relations in Australia including the relevance of the Conciliation and Arbitration Commission."

18 NATIONAL WAGE CASE NOVEMBER 1985

"...that in the current proceedings the Commission cannot totally ignore the new Accord agreement. The revised prices and income Accord forms a central element of the Government's economic and industrial relations policy and will inevitably form the backdrop against which the Commission considers its decision in this and subsequent cases."

"...a decision in this and in any other national wage case needs to take into account broader and longer term economic and industrial relations objectives, the Council submits that one cannot overlook the fact that the implementation of a full 3.8 per cent price adjustment at this time would of itself have serious adverse economic consequences going well beyond the short term which cannot be put to one side."

NATIONAL WAGE CASE NOVEMBER 1985 19

1985 Dec. 7.98 - 8.16 -

1986 March 8.20 - 8.55 -

June 7.05 - 7.47 -

Sept. 6.20 - 6.68 -

Dec. 5.51 - 5.70 -

1987 March 5.12 - 5.03 -

June 5.15 - 4.98 -

1985-86 - 81.8 - 82.0

1986-87 - 82.8 - 83.1

20 NATIONAL WAGE CASE NOVEMBER 1985

"Just so that there can be absolutely no doubt about the submission that we are putting, the outcome of the productivity claim on its merits is a matter entirely for the determination of this Commission and the ACTU/Government agreement in no way seeks to pre-empt, and indeed in no way can pre-empt, that outcome. That claim will be determined on its merits and the result will need to be accepted by all parties as part of their commitment to the centralized wage system."

"What the new agreement constitutes is a strategy between the Government and the trade union movement of an integrated approach to seek to achieve the realization of those expectations. If those expectations are not realized, and to the extent that they

NATIONAL WAGE CASE NOVEMBER 1985 21

RECENT INDUSTRIAL DISPUTES

"It is implicit in the undertakings given by the unions that decisions of the Commission in connection with the application of the Principles will be processed and accepted without recourse to industrial action."(34)

"There is no campaign by any union in the building industry for a 35-hour week."

(34)Print F8100 p.19

22 NATIONAL WAGE CASE NOVEMBER 1985

On the nurses' dispute, the ACTU contended that:

"...the nursing problem does represent a national problem in respect to singularly unique circumstances. The dispute is a complex dispute, involving a wide range of issues, and not simply wage rates. That dispute is ... before the Victorian Industrial Relations Commission in full session and will be processed in accordance with the guidelines of that Commission."

In connection with allegations that the matters referred to are incompatible with the agreement between the ACTU and the Government, the ACTU said:

"We have no other dispute taking place; we have ACTU affiliates overwhelmingly supporting the ACTU/Government agreement. The totality of the disputes - one instance of industrial action - must be measured against the background, where the commitments made by the union movement have effectively expired; the no extra claims provision in the Accord reinforced in the agreement is overwhelmingly adhered to notwithstanding the expiration of the formal commitment to the Commission's Principles."

In relation to the nurses' dispute, the Commonwealth said that in the context of the past two years:

"...one sees many serious disputes that have been resolved and one would hope and expect that this current dispute will be able to be resolved in the context of a resolution that will ensure that the Principles have been adhered to. We say that in that context...the issue of the nurses' dispute should not be regarded as one that in any way impinges upon the integrity, validity or sustainability of the...Accord for a further two years. This is not the first occasion that problems have arisen...as far as we are concerned, of course, we look to the ACTU to, in accordance with the agreement, play its part in ensuring the resolution of these industrial disputations..."

NATIONAL WAGE CASE NOVEMBER 1985 23

which officials of the Storemen and Packers' Union agreed to recommend to the members of the Union for all bans to be lifted. This recommendation resulted in the lifting of bans in all States except Victoria. In Victoria, by a narrow margin, the recommendation was rejected by the members of the Union.

and implemented by all branches except Victoria where despite Federal/State Branch and delegates unanimous endorsement of the recommendation, the members voted against it.

In the April 1984 National Wage decision, the Commission made it clear that:

______________________________________________________________________________

(35)Print F5000 p.15; (1984) 293 CAR 40 at 54

24 NATIONAL WAGE CASE NOVEMBER 1985

DECISION

"Any claims for improvements in pay and conditions other than those provided by Principles 1 and 2 must be processed in accordance with Principles 4 to 11 below. No application for a national wage adjustment to an award will be approved by the Commission unless all the unions concerned in the award give an undertaking that for the duration of these Principles they will not pursue any extra claims, award or overaward, except in compliance with the Principles."

OPERATIVE DATE

NATIONAL WAGE CASE NOVEMBER 1985 25

1985. The ACTU based its argument on the practice of a "regular six-monthly period of operation" adopted since the inception of the current Principles and it referred to two exceptional circumstances which had led to a substantial delay in the current proceedings.

"First, the filing of the application was not undertaken until the handing down of the Federal Budget and the attendant statistical information on the grounds that it would be pointless to commence submissions without the benefit of that critical economic information. Second, the Commonwealth Government sought an adjournment in order to allow it to put submissions after the ACTU congress in order to consider a decision of congress which would fundamentally affect its submissions in this hearing."

OUTSTANDING CLAIMS

CONCLUSION

26 NATIONAL WAGE CASE NOVEMBER 1985

Appendix

TABLE 1

CONSUMER PRICE INDEXES

______________________________________________________________________________

Australia OECD

______________________________________________________________________________

Major

Medicare Trading

Eight Adjusted Partners

Capitals (a) Total (b)

______________________________________________________________________________

1982-83 11.5 11.5 6.3 5.0

1983-84 6.8 7.9 5.3 3.7

1984-85 4.3 5.8 4.9 4.1

_______________________________________________________________________________

Quarters Per cent change on a year earlier

1983 September 9.2 9.2 4.9 3.3

December 8.6 8.6 5.2 3.4

1984 March 5.9 7.6 5.7 4.0

June 3.9 6.5 5.5 3.9

September 3.6 6.1 5.3 3.9

December 2.6 5.1 4.8 4.0

1985 March 4.4 5.3 4.6 4.1

June 6.7 6.7 4.7 4.6

Per cent change on previous quarter

1983 December 2.4 2.4 1.4 1.1

1984 March -0.4 1.2 1.3 0.8

June 0.2 1.1 1.3 1.2

September 1.3 1.3 1.0 0.7

December 1.4 1.4 1.1 1.3

1985 March 1.4 1.4 1.1 0.9

June 2.4 2.4 1.5 1.6

______________________________________________________________________________

(a) Effect of Medicare removed from Eight Capitals as calculated by Commonwealth Treasury.

(b) United States, Japan, West Germany, France, UK, Italy, Canada and New Zealance weighted according to their shares of imports and exports in total trades.

Source: ABS, Cat. No. 6401.0, Treasury estimates and OECD Main Economic Indicators.

NATIONAL WAGE CASE NOVEMBER 1985 27

TABLE 2

WAGE RATES AND EARNINGS

_______________________________________________________________________________

Weighted Average Average Weekly

Weekly Minimum Ordinary Time

Award Rates: wage Earnings:full-

and salary earners - time adult males

persons (b)

______________________________________________________________________________

Change on Change on Change on Change on

previous a year previous a year

period earlier period earlier

% % % %

_______________________________________________________________________________

1982-83 11.0 14.5

1983-84 5.3 7.6

1984(a) March 0.0 4.8 2.0 7.3

April 4.1 9.2

May 0.1 9.3

June 0.0 9.1 3.1 9.8

July 0.0 9.0

August 0.0 9.1

September 0.0 9.1 1.1 9.9

October 0.0 4.5

November 0.0 4.6

December 0.0 4.4 1.4 7.8

1985 January 0.0 4.4

February 0.0 4.3

March 0.0 4.3 0.5 6.2

April 2.5 2.7

May 0.1 2.8

June 0.0 2.8 1.2 4.3

July 0.0 2.7

August 0.0 2.7

_______________________________________________________________________________

(a) Monthly comparisons for Weighted Average Weekly Award Rates and quarterly comparisons for Average Weekly Ordinary Time Earnings.

(b) Full-time adult males has been chosen because it is less affected by compositional changes than other earnings series.

Source: ABS. Cat. No. 6312.0, Cat. No. 6301.0

28 NATIONAL WAGE CASE NOVEMBER 1985

TABLE 3

CIVILIAN LABOUR FORCE EMPLOYMENT AND UNEMPLOYMENT

(Seasonally adjusted)

______________________________________________________________________________

Employment change on

corresponding month

a year earlier Unemployment rate

% %

______________________________________________________________________________

1983 June -1.6 10.3

1984 January 1.4 9.5

June 3.6 9.2

July 3.7 8.8

August 3.6 8.9

September 3.5 8.8

October 3.2 8.6

November 2.9 8.7

December 2.5 8.5

1985 January 3.0 8.5

February 3.3 8.3

March 2.0 8.8

April 1.3 8.5

May 2.2 8.4

June 2.0 8.7

July 2.3 8.2

August 2.8 8.3

September 3.2 8.1

_______________________________________________________________________________

Source: ABS Cat. No. 6202.0

NATIONAL WAGE CASE NOVEMBER 1985 29

TABLE 4

PERCENTAGE CHANGES IN MAJOR COMPONENTS OF

REAL GROSS DOMESTIC PRODUCT(a)

______________________________________________________________________________

Six months to (b)

Dec June

1983-84 1984-85 1984 1985

______________________________________________________________________________

Private Consumption Expenditure 2.7 3.8 3.7 5.5

Private Gross Fixed Capital Expenditure:

Dwelling 9.7 14.4 14.7 3.9

Non-dwelling construction -23.4 17.5 35.2 12.7

Equipment - 6.2 0.4 - 5.4 - 0.2

Business fixed investment -10.5 4.1 2.3 2.8

Total - 3.4 6.6 5.3 2.0

Total Private Domestic Demand 1.5 4.3 4.0 4.8

Total Domestic Demand 1.9 4.9 4.2 6.7

Exports 7.4 14.8 17.3 11.7

Imports 6.0 15.8 24.4 - 5.7

Gross Non-Farm Product (expenditure based) 3.0 4.7 2.3 10.0

Gross Non-Farm Product (income based) 3.4 5.0 3.5 5.3

Gross Farm Product 33.3 - 1.4 -11.8 22.6

Gross Domestic Product (expenditure based) 4.6 4.3 1.3 10.7

Gross Domestic Product (income based) 4.9 4.6 2.5 6.3

_______________________________________________________________________________

(a) At average 1979-80 prices.

(b) Seasonally adjusted and expressed as annualized rates.

Source: Table 1 of Commonwealth Exhibit 11 based on ABS Cat. No. 5206.0

30 NATIONAL WAGE CASE NOVEMBER 1985

TABLE 5

FACTOR INCOMES

(Percentage shares)

_______________________________________________________________________________

Private Non-farm

Non-farm Sector (f) Corporate Sector (g)

Wage Share Profit Share Wage Share Profit Share

(a) (b) (c) (d)

Average

1966-67 to 62.9 17.1 68.5 31.5

1972-73

Year:

1972-73 63.2 16.9 68.5 31.5

1973-74 65.5 15.1 71.5 28.5

1974-75 68.4 13.0 74.2 25.8

1975-76 67.1 13.5 73.1 26.9

1976-77 66.2 13.8 72.4 27.6

1977-78 66.2 13.1 73.2 26.8

1978-79 64.4 14.4 70.6 29.4

1979-80 64.1 14.9 69.5 30.5

1980-81 64.5 14.8 69.8 30.2

1981-82 65.8 13.2 72.3 27.7

1982-83 65.7 12.7 72.6 27.4

1983-84 62.6 14.8 67.8 32.2

1984-85 61.6 15.0 67.4 32.6

______________________________________________________________________________

Half Year (e)

1983-84 I 63.0 14.2 na na

II 61.9 15.5 na na

1984-85 I 62.2 14.9 na na

II 61.0 15.1 na na

_______________________________________________________________________________

(a) Non-farm wages, salaries and supplements as a percentage of gross non-farm product at factor cost.

(b) Gross operating surplus of trading enterprise companies and financial enterprises (less imputed bank service charge) as a percentage of gross non-farm product at factor cost.

(c) Ratio of the wages, salaries and supplements of the private non-farm corporate sector to the gross product at factor cost of the non-farm corporate sector.

(d) Ratio of the gross operating surplus of the private non-farm corporate sector to the gross product at factor cost of the private non-farm corporate sector. The gross operating surplus of the private non-farm corporate sector is defined as the gross operating surplus of non-farm trading enterprise companies and private financial enterprises.

(e) Seasonally adjusted

(f) Includes claimants other than wages and profits

(g) Covers nearly 50% of GDP

Source: Commonwealth Exhibit 11, Table 5 based on ABS, Quarterly Estimates of National Income and Expenditure (Cat. No. 5206.0) and unpublished ABS estimates.

NATIONAL WAGE CASE NOVEMBER 1985 31

Appearances:

I. Watson and W. Kelty of the Australian Council of Trade Unions, with S. Crean for The Federated Storemen and Packers Union, with G. Harrison for The Amalgamated Metal Workers' Union, and with B. Eames for The Manufacturing Grocers' Employees' Federation.

S. Green and F. Austin for the Australian Council of Professional Associations.

C.G. Polites for the Metal Trades Industry Association of Australia and others.

E.R. Cole for the Commonwealth Public Service Board.

R. Merkel Q.C., G. Moore and G. Giudice of Counsel for the Minister of State for Employment and Industrial Relations on behalf of the Commonwealth (intervening).

M. Moore of Counsel and B.C. Hungerford of Counsel for Her Majesty the Queen in Right of the State of New South Wales (intervening).

R.N. Overall and M. Wright for Her Majesty the Queen in Right of the State of Victoria (intervening).

J.W. Johnston for Her Majesty the Queen in Right of the State of Queensland (intervening).

M. Jarman for Her Majesty the Queen in Right of the State of Tasmania (intervening).

P. Jackson of Counsel and G. Harbord for Her Majesty the Queen in Right of the State of South Australia (intervening).

S. Home for Her Majesty the Queen in Right of the State of Western Australia (intervening).

M. Davis for the Government of the Northern Territory (intervening).

R. Smith for The State Public Services Federation (intervening).

P. Houlihan of Counsel for the National Farmers' Federation (intervening).

D.J. Marks for the Master Builders Federation of Australia (intervening).

B. Shinners for the Australian Mines and Metals Association Incorporated (intervening).

B.D. Purvis for the Australian Wool Selling Brokers Employers Federation (intervening).

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