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
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
(18)Print E6323 [S043]; (1980) 248 CAR 312 [title change Print F4554 [S043
(19)Print D7756 [S098]; (1978) 209 CAR 58
(20)Print D6124 [S068]; (1978) 209 CAR 609 [title change Print F2442 [S068
NATIONAL WAGE CASE NOVEMBER 1985 3
Storemen and Packers (S.C.F.S. Pty. Ltd.) Agreement (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
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
MR COMMISSIONER CONNELL MELBOURNE, 4 NOVEMBER 1985
REASONS FOR DECISION
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.'
We also note that the Commonwealth submitted in this connection:
'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 procedures which we have supported should, in our submission, be pursued without prejudice to the submissions any party or intervener might subsequently make in relation to any issue arising in the productivity case, including quantum and timing.'
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
The claim for 3.8% increase was based on Principle 1, National Wage Adjustments, and in particular paragraph (a) which is as follows:
"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."
A recommendation for the adjustment of overaward payments by 3.8% was also sought in accordance with paragraph (d) of the Principles namely:
"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."
Since the last National Wage increase, the CPI has increased by 1.4% and 2.4% in the March and June quarters 1985 respectively, making a total increase of 3.8%.
The unions, represented by the ACTU, ACPA and SPSF sought an immediate increase of 3.8%. They were supported in this claim by the Commonwealth, New South Wales, Victoria, South Australia and Western Australia.
While not objecting to an increase, the full amount of 3.8% was opposed by Queensland, Tasmania and Northern Territory.
The granting of any increase was opposed by CAI, which submitted that if, despite its submissions, an increase was awarded, it should be substantially less than 3.8%. A similar stand was taken by the Business Council of Australia (BCA), The Australian Chamber of Commerce and the Australian Retailers' Association.
The ACTU claim was also opposed by Australian Mines and Metals Association (AMMA) and by the National Farmers' Federation (NFF) which said that the granting of the claim in whole or in part would ignore fundamental economic difficulties.
Early in the proceedings, we were informed about an agreement concluded between the ACTU and the Commonwealth. This involved a formula for dealing with the productivity claim and the effect of the devaluation of the Australian dollar together with a recommitment by them to the Accord for a further two years. During the proceedings we were also referred by the employers to a number of disputes. In relation to those still current at the end of the proceedings, CAI submitted that we should adjourn the proceedings "until such time as the status of that agreement has become clear for all to see". Alternatively, CAI urged that "at the very least" the Commission should take the unions' conduct into account in deciding whether it would be prepared to follow the strategy of the ACTU/Commonwealth agreement.
NATIONAL WAGE CASE NOVEMBER 1985 9
We deal with this agreement and the disputes later. Our first task is to consider the 3.8% pay claim. The issue to be determined is whether there are exceptional or compelling circumstances which would justify the awarding of no increase at all or alternatively of an increase of less than 3.8%. In this connection, the state of the economy dominated the submissions before us.
As in the last National Wage Case, there are encouraging signs and also areas of concern about the state of the economy. These are reflected in some of the most recently published economic indicators included in the tables appended below. In interpreting these figures it is of course necessary to bear in mind that some of the more recent figures may be revised.
Subject to what we say later about the devaluation of the Australian dollar, we note the following pointers to continued economic recovery.
. 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.
Despite this list of credits, the areas of concern expressed in the Commission's decision of April 1985 have persisted in the period under review.
(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.
Much of the submissions in the present case centred on the balance of payments problem and the devaluation. The two are of course interrelated. The growing balance of payments difficulties have been due to a number of factors:
. 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
These factors together with the size of our international debt have been mainly responsible for the depreciation of the Australian dollar by nearly 20% (trade weighted) since December 1984. Moreover, the immediate effect of the devaluation has been to add to the balance of payments deficit.
12 NATIONAL WAGE CASE NOVEMBER 1985
The size of the devaluation is a tangible warning that Australia has been borrowing too heavily from abroad as reflected in the size of the balance of payments deficit and the international debt; but the devaluation also presents an opportunity to rectify this unsustainable state of affairs. This opportunity is provided by the restoration of our international competitiveness to the level of the early 1970's. It was not disputed that the opportunity will be lost to the extent that the price effects of the devaluation are ultimately fed into wages.
The Commonwealth submitted that although the favourable prospects outlined in the Budget for 1985-86 were based on full indexation, failure to take effective account of devaluation in wage determination would be inconsistent with continuing economic growth in the medium term and this would become apparent throughout 1986 and beyond. The adjustment for the effects of depreciation meant that "real wages will be lower than they would otherwise have been", but this was necessary to ensure that the benefits of growth and higher employment were not dissipated through higher inflation.
The Commonwealth put the issue in the following terms:
"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:
A higher rate of CPI increase would result in a higher rate of wage increase with that in turn leading to further price increases, and so on. That is, an increase in the underlying rate of inflation;
Second, the essential change in relative prices and profitability between the tradeable and non-tradeable sectors would be eroded;
Australia's international competitiveness would again weaken;
Fourth, the gain to domestic production and employment from stronger net exports would be eroded;
Fifth, and more generally, the acceleration in inflation would threaten the economic recovery. Business and consumer confidence would recede and the Government would be forced to tighten fiscal and monetary policies;
Finally, there would be further downward pressure on the exchange rate.
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."
CAI and BCA submitted in substantially similar terms. CAI said that "It is in the depreciation that the greatest hope for a major revival of the private sector, and particularly for employment in the private sector, is now available..." But, it said,"...a major depreciation is no guarantee that by itself it is sufficient to set an economy on a stable growth path. What it does is to rectify some of our past problems and make us more competitive with the rest of the world."
CAI also said that:
"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."
CAI pointed out that:
"...there are very strong inflationary pulses being sent through the economy at the present time...our manufacturing input prices from overseas destinations have risen...at an extraordinary high rate; our import price deflator has risen at an equally strong rate in the June quarter; the Australian dollar again now continues to weaken on foreign markets; the price level has already shown that it is on an upward course."
It is essential, CAI said, that these increased prices arising from the devaluation should not be passed into wages and then back into prices. The Commission should "act upon it right here and now by, at the very minimum, discounting the CPI for the direct effects of the depreciation".
BCA agreed with the Commonwealth that it was crucial "to ensure that the initial price effects (of devaluation) do not degenerate into a cost price spiral through the national wage mechanism" and it submitted that "wage and salary earners, like all other groups in the community should bear their share in the decline in real domestic income brought about by the depreciating currency".
The ACTU said:
"...it is agreed that the recent devaluation, a devaluation in excess of 20 per cent, and its associated price effects is exceptional. As a result there is agreement on the need to address the price effects of the recent unparalleled devaluation within the context of wage fixation. That is a very different thing from the view that discounting on account of devaluation should occur as a matter of course."
14 NATIONAL WAGE CASE NOVEMBER 1985
SHOULD THERE BE ANY PAY INCREASE?
While there is broad agreement on the economic implications of the devaluation, there is no agreement on what should be done about the claim for 3.8% national wage increase.
The employers generally argued that in view of the state of the economy no increase at all should be awarded on this occasion. CAI said that:
"...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."
Alternatively, CAI asked that the Commission should discount the 3.8% by the total of three discount factors : 1.2% for depreciation; 1.4% for increased government taxes, rates and charges; and 0.2% for industrial disputes; making a total discount of 2.8%. CAI urged that "at the very least" the Commission should discount for the price effects of depreciation.
BCA gave primary emphasis to the "overwhelming need" for discounting for the price effects of depreciation. Other employer organizations as well as Queensland, Tasmania and the Northern Territory also submitted that there should be discounting for the price effects of devaluation.
The claim for the 3.8% national wage increase is the last national wage claim under the Principles introduced for two years in September 1983. The evidence is clear that in this period the centralized system and the Principles underlying it have worked fairly well and have justified the Commission's expectations that the system would assist in promoting greater price and industrial stability as well as economic recovery.
Leaving aside the devaluation issue, the economic material before us shows that the economic recovery noted in the last National Wage Case has continued with greater strength. In the analysis of the economy in Statement No. 2 of the 1985 Commonwealth Budget (p. 13) it was said:
"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."
In all the circumstances, apart from the devaluation effect on prices, we do not believe that the case for no increase can be sustained on the basis of "exceptional and compelling" circumstances. As for CAI's submission that there should be discounting for increases in government taxes, rates and charges and for industrial disputes, we concur with the view expressed by the Commission in the April 1985 National Wage Case that such discounting is inconsistent with the concept underlying the present indexation package. We therefore reject this submission. Accordingly, the question for us to decide is what action to take on the matter of discounting for the effects of the devaluation on the CPI.
NATIONAL WAGE CASE NOVEMBER 1985 15
DISCOUNTING FOR DEVALUATION
The need to adjust wage increases for the price effects of devaluation was not disputed by anyone. However, as we have said, there was disagreement on the timing of discounting for devaluation and the total amount of discounting. Apart from the ACTU, it was generally agreed that the devaluation had raised the CPI for the March and June 1985 quarters by 1.18% which for practical purposes may be rounded to 1.2%. This figure is derived from the Statistician's estimate of CPI increases which are directly related to imported goods and petroleum products. Although the Statistician makes it clear that his figure is not an estimate of the effect of devaluation as such on the CPI, the Commonwealth suggested that it provides "a reasonable guide" to the direct effects of the devaluation in the two quarters under review. The ACTU, on the other hand, regarded it as overstating the direct effects but we are not persuaded that the overstatement, if any, is likely to be significant.
CAI and other employers generally argued that if the Commission were disposed to grant a national wage increase on this occasion, at the least the 3.8% should be discounted by 1.2%. Various estimates were presented about the total direct and indirect effects of the devaluation but because of the decision we have come to on the present claim, it is not relevant for us to deal with the total effects here.
The Commonwealth submitted that a key issue for determination in this case is how to "accommodate effectively the depreciation in the wage system so that its benefits can be realized and a sustained acceleration in inflation avoided". It said further that "Both the national productivity claim and the indexation claim currently before the Commission are relevant to the response of wage determination to the depreciation". Accordingly, it said, in pursuit of the objective of confining the inflationary effects of the devaluation, it had entered into discussions with the ACTU for a deferral of the ACTU's productivity claim and for a consideration of options to prevent the primary price effects of devaluation from feeding into wages. The outcome of these discussions was an agreement involving a re-commitment by the ACTU and the Commonwealth to the Accord for a further two years. The "centre-piece" of this agreement, the Commonwealth said, was an "integrated approach" to the depreciation issue.
The ACTU submitted that the "agreement provides an effective mechanism for quarantining the adverse price effects of devaluation and for regaining and building upon the economic gains, or the gains made on the inflation front since 1983". The preamble to the terms of the agreement notes that it is "designed to reduce the level of inflation by overcoming the problem associated with depreciation whilst maintaining the high levels of growth necessary to ensure further increases in employment and the capacity to improve living standards through superannuation". The agreement was endorsed at the ACTU Congress in September 1985.
In substance, the specific terms of the agreement of particular relevance to the submissions before us include the following:
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.
Other terms of the agreement relate to support for certain changes to the present Principles, to tax reform, and to industry development.
The Commonwealth claimed that the agreement for an "integrated approach" to the depreciation issue was "economically sound and industrially viable". It said that the Commission should look beyond the immediate impact of the devaluation on the quarters under review and should have regard to future economic and industrial implications arising from its actions. The claims, it said, should be assessed "as part of an ongoing system". In line with the approach taken in previous cases "medium and longer term considerations remain of vital importance". That approach has been "vindicated in terms of the continuation of economic recovery and greater industrial stability". The "slight economic advantage" gained from taking a short term view should be balanced against the dangers of sectional pressures being developed and putting the system at risk. Further, the Commonwealth submitted, the net difference to the rate of inflation in 1986-87 from adopting the deferred discounting approach compared to immediate discounting "would be negligible". It said that the approach proposed under the agreement, on the other hand, provides the basis for continued economic and industrial stability by avoiding any hiatus in the Principles and continuing the "no extra claims" undertaking of the unions.
CAI, BCA and other employers, Queensland, Tasmania and the Northern Territory, opposed the deferment of discounting and were strongly critical of the Commonwealth/ACTU agreement on which it was based; they were not parties to it and were not involved in the negotiations which preceded the agreement. CAI protested strongly that it was not aware of the terms of the agreement until some time after it had been finalised and until after it had made submissions about the order and timing of the hearings regarding the various issues before us.
Against this, the ACTU said that:
"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."
CAI submitted that the nature of the agreement "clearly threatens the independence and integrity of the Commission". Further,
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."
CAI also referred to the 1985 Budget Speech in which the Treasurer made the following pointed references to the devaluation effect:
"If the initial and full price effects of the depreciation were to be transmitted to wages via indexation decisions, our cost increases would noticeably exceed those of our major competitors for years to come."
"That is why, temporarily, we must modify our normal support for full wage indexation."
"...in the next two wage indexation cases the Government will argue ... that the price effects of depreciation be taken into account".
"We seek a small reduction in the size of wage rises to allow the economy to digest the adverse consequences of the depreciation..."
CAI stated that it saw the terms of the agreement between the Commonwealth and the ACTU as a backtracking on the Commonwealth's commitments concerning discounting for the effects of the devaluation and as a pre-empting of the Commission's consideration of the ACTU productivity claim.
BCA submitted in similar terms. It said that "the agreement circumvents and seriously undermines the authority and independence of the Commission, and indeed the various State industrial tribunals, by prescribing and assuming as a fait accompli a scenario for the next two years..." Referring to the circumstances of the first Accord, it said "in doing it again, as it were, and doing it in even more unequivocal terms, the longer term independence of this Commission must be threatened ..."
We were advised that the Industrial Council of CAI had adopted the following resolution in relation to the agreement:
"...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."
These are very strong words and they are not warranted. While we understand the disquiet of the employers about the kind of agreement presented to the Commission in these proceedings, it is hardly necessary for us to point out that the Commission makes its decisions on the merits of the material put before it regardless of the source of such material. Its reasoned decisions provide no basis for the belief that the Commission acts as a "rubber stamp" for any party or intervener.
18 NATIONAL WAGE CASE NOVEMBER 1985
As for the ACTU/Commonwealth agreement, we make it quite clear that we are not in a position to endorse or to reject it. What we have before us for decision relates to the timing of discounting for the devaluation-induced increases on the March and June 1985 CPI quarterly movements. This is only one part of the agreement. The other parts relate to the position of the ACTU and the Commonwealth in future cases.
As with any matter, the particular issue currently before us will be decided on its merits having regard to all the material presented. In this connection, the other elements in the agreement and in particular the recommitment of the ACTU and the Commonwealth to the Accord must form part of such material. But that must not be taken in any way as endorsement by the Commission of the agreement. We note that BCA recognizes:
"...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."
As we said earlier, the submissions before us show general agreement that the depreciation-induced increase in the CPI should be discounted for purposes of wage adjustment in order to avoid the "vicious spiral" effect of the depreciation. However, there is disagreement on the timing of discounting, more specifically on the effect of deferring the 1.2% discount to April 1986, and also on the appropriate size of discounting for the total effect of devaluation.
As for the 1.2% discount factor, CAI claims that this figure should be applied now because it relates specifically to the two quarters relevant to the present case and should be determined within the present Principles. It said that to wait until April 1986 before discounting for "a depreciation that has taken place in February and March of 1985, that is some 14 months earlier, means ... that the barn door is being shut well and truly after the horse has bolted".
On the same question, BCA said that while it acknowledged that:
"...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."
BCA also said that the labour cost increase underlying the agreement was too high a price to pay "for the uncertain longer term benefits associated with it". There was an overwhelming need, it said "to discount as quickly as possible and in full for the price effect of devaluation".
In view of our decision to extend the present Principles until they are altered or abandoned, and the requirement on all unions to renew their undertakings, we believe that a broader perspective than that argued by CAI and BCA is justified. Moreover, in our ruling of 5 September 1985 on the procedure for dealing with the three applications before us, we said that the course of proceeding first with the claim for a 3.8% national wage increase "should not be seen as denying the interrelationship between the three matters before us". This interrelationship was stressed by both CAI and the Commonwealth.
NATIONAL WAGE CASE NOVEMBER 1985 19
The relevant question for us to determine therefore is whether the economic cost of deferring the 1.2% discounting to April 1986 is significant.
Projections made by BCA on the basis of the National Economic Summit model shows a marginal difference in the rate of inflation and in the index of international competitiveness as between applying 1.2% discount now and doing so in April 1986. The following figures supplied by BCA compare the effects on the inflation rate and the index of international competitiveness resulting from applying 1.2% discount now and delaying it to April 1986:
1.2% applied now and Full discounting applied
remainder of full dis- in April & September 1986
counting in April & September 1986
Inflation Index of Inflation Index of
rate international rate international
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
The above figures show that delayed discounting would result in a slightly higher inflation rate for the quarters to December 1986, after which the inflation rate from delayed discounting would be slightly lower than from immediate discounting. The BCA indicated that by 1988, the two courses would result in the same rate of inflation.
While there are necessarily reservations on the assumptions used in the model, it is generally agreed that the projected difference between discounting now and doing so in April 1986 is more reliable than the absolute figures projected for each course. Thus, on BCA's projections, the differential effect of delaying the 1.2% discounting till April 1986 cannot be regarded as significant and does not support its submission that there is an "overwhelming need to discount as quickly as possible". We have therefore come to the conclusion that the economic effect of postponing the 1.2% discounting to April 1986 is minimal and transient and will have a negligible impact on the economy's competitive advantage brought about by the devaluation.
In the absence of compelling circumstances for immediate discounting, we believe it is proper to allow the various terms of the ACTU/Commonwealth agreement to be tested at the appropriate time on the basis of the programme underlying the agreement. In expressing this view, we emphasize that the decision on the timing of the 1.2% should not be regarded as an endorsement of the agreement and in no way pre-empts the outcome of the other elements of it. Indeed, given the negligible economic cost of deferred application of the 1.2% discounting, to refuse such deferral without having fully heard and examined submissions relating to productivity and the total discount figure, would in our opinion amount to prejudging the merits of those elements.
20 NATIONAL WAGE CASE NOVEMBER 1985
To elaborate on why our decision in favour of deferral of the 1.2% discounting does not pre-empt or prejudice the outcome of the other terms in the agreement which are foreshadowed to come before the Commission, we say the following:
1. Any discount figure in addition to the deferred 1.2% is still a matter for argument at the time discounting is applied. The Commission cannot and does not at this stage accept the 2% limit agreed between the ACTU and the Commonwealth. The CPI for the second half of 1985 as well as the size of the devaluation effect on the CPI for the period are still to come. Also, by then a clearer view of the general effects of devaluation on the economy will be available.
It is conceded by the Commonwealth that the agreement between it and the ACTU on the 2% discounting limit is "without prejudice to the right of employers or other interveners to seek a different outcome". That claim, the Commonwealth said, will be "arbitrated on in the course of the national wage case before the Commission. It will be granted in full or it will be further discounted according to the decision of the Commission on the merits."
2. We have nothing of substance before us to determine the size of productivity growth for purposes of distribution. The productivity claim is still to be argued. The outcome of that claim is therefore entirely open both as to the size of productivity available for distribution and the form of distribution. This point was also conceded by the Commonwealth which said:
"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."
3. The outcome of the application of the employers for a review of the principles is also in no way pre-empted by our decision on the timing of the 1.2% discounting. Indeed, there should be no presumption at this stage that a centralized system based on national wage adjustments will necessarily emerge from that review. The actions of the parties relating especially to their commitment to the Principles between now and the completion of the review, will have a material effect on its outcome and on the future of the centralized system. In the event that the review results in an interval longer than six months between the present and the next national wage case, the deferral of the 1.2% discounting to the delayed national wage adjustment would not be to the disadvantage of the economy.
There should be no doubt therefore that the outcome of the size of discounting for devaluation, of the productivity claim, and of the review of the Principles are entirely open and are in no way pre-empted by the terms of the ACTU/Commonwealth agreement. We note that the Commonwealth has said that:
"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
are not, they are matters no doubt the Government will discuss in accordance with the framework of the Accord processes with the union movement and one...cannot...anticipate what the outcome of those discussions...will be."
RECENT INDUSTRIAL DISPUTES
In the Commission's previous National Wage decision, it drew attention to the necessity expressed in the 1983 decision for all concerned, including unions, governments and employers to accept commitment to the requirements of the indexation system for it to work. It also drew attention to signs of weakening commitment in some areas and stressed that:
"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)
In some areas those weaknesses are still apparent. As we noted earlier, in the proceedings before us the employers referred to a number of disputes and drew our attention in particular to three matters which remained active at the close of proceedings.
CAI submitted that claims were being pursued in three major industries in a manner which was incompatible with the agreement between the ACTU and the Commonwealth. These involved an alleged campaign for a 35-hour week in the building and construction industry by The Australian Building Construction Employees' and Builders Labourers' Federation, threats of industrial action by The Transport Workers' Union of Australia in support of claims for superannuation in the road transport industry, and claims, backed by industrial action, by the Royal Australian Nursing Federation against the Victorian Government relating to extensive reclassification and restructuring of nurses' salaries.
Extensive debate took place between the parties as to the nature and significance of these various disputes and their relevance to these proceedings.
CAI submitted that we should adjourn the proceedings "until such time as the status of that agreement has become clear for all to see". Alternatively, the Commission should "at the very least", take the unions' conduct into account in deciding whether it would be prepared to follow the strategy of the ACTU/Commonwealth agreement.
In relation to the building industry dispute the ACTU contended, amongst other things, that:
"There is no campaign by any union in the building industry for a 35-hour week."
As to the transport industry, the ACTU submitted:
"...in the transport industry we have a situation whereby the Transport Workers' Union and employers have reached an agreement in principle to develop superannuation in the transport industry. The question is not one of whether or not superannuation will be _______________________________________________________________________________
(34)Print F8100 p.19
22 NATIONAL WAGE CASE NOVEMBER 1985
implemented but one of timing and the type of scheme. The TWU has said that they are prepared to discuss the matter further in the context of the ACTU/Government agreement. The TWU supported the agreement at the ACTU Congress and has advised the ACTU of its preparedness to negotiate in the context of the agreement and within the terms of the commitment they have given and abided by to the Commission. Contrary to the position put by the CAI, they are prepared to have further discussions between the employers and the union and to do so in the context of the ACTU/Government agreement."
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..."
On 24 October, after the Bench had reserved its decision, the presiding member received a telex from CAI requesting a relisting of the National Wage Case because of industrial action in the paint industry. CAI noted that the action, which was in pursuit of "improved superannuation and that employers should contribute to a fund of the employees' choice" was completely inconsistent with the terms of the ACTU/Commonwealth agreement.
The paint industry dispute, which was before Commissioner Griffin, was further heard by the Commissioner on 28 and 29 October but no resolution was achieved. On 30 October, by direction of the Bench, Williams J held a conference attended by CAI, the ACTU and the Federated Storemen and Packers' Union and the Commonwealth as well as the employers concerned, as a result of
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.
Subsequently, we received the following telex signed by the General Secretary of the Federated Storemen and Packers' Union of Australia, Mr Greg Sword:
"The Union, following conference with the Commission on Wednesday as part of the settlement of the current paint dispute, agreed to recommend a return to normal work. That position was supported
and implemented by all branches except Victoria where despite Federal/State Branch and delegates unanimous endorsement of the recommendation, the members voted against it.
The Union is undertaking steps to convene a meeting at the earliest possible opportunity to recommit that decision to conform with the national view of the Union."
Having regard to these developments and particularly to the part played by the Storemen and Packers' Union and the ACTU in endeavouring to restore full return to normal work, we have decided not to reopen the National Wage Case.
However we emphasize that any industrial action in pursuit of the superannuation claim is inconsistent with the terms of the ACTU/Commonwealth agreement. The Commonwealth has made it clear that many complex issues relating to superannuation are still to be worked out and it has stated that conferences would need to be held for this purpose. We are greatly concerned that before the commencement of these conferences, industrial action should be taken contrary to the terms and the spirit of the agreement on which the ACTU and the Commonwealth have relied in support of deferral of discounting in this case. The integrity of this agreement depends on the parties to it being able to ensure that its underlying procedures are adhered to without industrial action.
In the April 1984 National Wage decision, the Commission made it clear that:
"...the existing Principles are capable of being adapted to cover cases where a breach of the commitment has occurred. In particular, if during the life of the package the Commission decides that there has been a breach of the commitment it can refuse to grant subsequent national wage increases. Other courses consistent with the Principles may also be available to the Commission in particular cases."(35)
We reaffirm that this is the proper approach. We emphasize also in regard to the paint industry matter that any continued industrial action should be taken into account when the relevant award is before the Commission for implementation of this decision.
(35)Print F5000 p.15; (1984) 293 CAR 40 at 54
24 NATIONAL WAGE CASE NOVEMBER 1985
We note the assurances of the ACTU, Victoria and the Commonwealth that the nurses' dispute will be "processed in accordance with the guidelines".
However, we add that it is not only the numbers of industrial actions in pursuit of claims inconsistent with the Principles which could threaten the system. Experience has shown that the results of a small number of actions in strategic areas which have the potential for wide flow-on can make the system unworkable. As we have already stated, the actions of the parties in the period leading up to the review of the Principles will be an important consideration for the Commission in determining whether a centralized system based on National Wage Cases should continue.
On all the above considerations we have decided to award an increase of 3.8% on this occasion and to defer discounting by 1.2%. Any discount figure, in addition to the 1.2%, based on the price effects of devaluation for the September and December 1985 quarters will be decided in the next National Wage Case. In accordance with Principle 9, appropriate allowances should be adjusted by 3.8%.
It would be consistent with our decision, for the Commission, appropriately constituted, to recommend the same percentage increase to overaward payments. However, we make it clear that increases in overaward payments received since the last National Wage decision beyond the indexation adjustment recommended in that decision, should not be included in any such recommendation.
Having regard to the delay in the review of the Principles and to our decision of 5 September 1985 to extend the operation of the Principles beyond their expiry date of October 1985, we have decided that consistent with Principle 3, a renewed undertaking must be given by all unions seeking the present national wage adjustment. Principle 3 states:
"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."
The new undertaking will apply for a period of six months. It should be inserted in awards at the time an award is varied to give effect to this National Wage decision in the following form which has been adapted from the current No Extra Claims clause in the Metal Industry Award 1984 - Part I:
"It is a term of this award (arising from the decision of the Australian Conciliation and Arbitration Commission in the National Wage Case decision of November 1985) that the unions undertake that for a period of six months they will not pursue any extra claims, award or overaward, except where consistent with the Principles."
The ACTU supported by South Australia asked that the operative date for this decision be the first pay period commencing on or after 6 October
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."
ACPA supported the submissions of the ACTU on operative date but it also put a secondary submission that 6 October 1985 be the date for increasing wages and salaries and that increases for all extraneous payments should be from the date of decision.
CAI opposed retrospectivity and contended that it should not be granted unless delays in proceedings had been occasioned by the employers or the Commission and it referred to problems "which confront employers in dealing with retrospective decisions".
The normal practice is that retrospectivity is not granted in national cases. The question of retrospectivity did not arise in the three previous national wage cases under the present Principles. It was possible to schedule and complete those cases in time for decisions to apply on a six-monthly basis. We are not persuaded that the reasons for the delay which has occurred on this occasion call for a departure from normal practice. Accordingly, the national wage increase will operate from the beginning of the first pay period to commence on or after 4 November 1985.
Earlier in our decision we referred to the fact that in addition to the applications for a national wage increase, there are applications by the unions for 4% increase in wages and salaries or changes in conditions of employment on account of national productivity and an application by CAI for a review of the Principles.
A conference of interested parties will be arranged by Williams J within the next three weeks to consider the programme relating to the remaining two sets of claims.
For the reasons set out in our decision we have decided that in accordance with Principle 1, awards generally should be varied to give effect to the overall increase of 3.8% in the CPI since the last national wage increase. Also, in accordance with Principle 9 appropriate allowances should be adjusted by 3.8%. These adjustments are subject to the undertaking referred to in Principle 3 being given by the unions concerned and the awards being varied accordingly.
The increases will operate from the beginning of the first pay period to commence on or after 4 November 1985.
We refer all the matters before us, other than those relating to productivity and the review of the Principles, back to the Presidential members in charge of each Panel for implementation in the light of what we have said about commitment to the Principles.
26 NATIONAL WAGE CASE NOVEMBER 1985
CONSUMER PRICE INDEXES
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
WAGE RATES AND EARNINGS
Weighted Average Average Weekly
Weekly Minimum Ordinary Time
Award Rates: wage Earnings:full-
and salary earners - time adult males
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
CIVILIAN LABOUR FORCE EMPLOYMENT AND UNEMPLOYMENT
Employment change on
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
PERCENTAGE CHANGES IN MAJOR COMPONENTS OF
REAL GROSS DOMESTIC PRODUCT(a)
Six months to (b)
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
Non-farm Sector (f) Corporate Sector (g)
Wage Share Profit Share Wage Share Profit Share
(a) (b) (c) (d)
1966-67 to 62.9 17.1 68.5 31.5
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
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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