Fair Work Act 2009
s.424—Industrial action

Svitzer Australia Pty Ltd
v
Australian Maritime Officers’ Union, The
(B2022/75)

Application to suspend or terminate protected industrial action - endangering life etc.

[1] On 18 February 2022 I made orders under s.424 of the Fair Work Act 2009 (Cth) suspending certain protected industrial action because I was satisfied that the action threatened to cause significant damage to an important part of the Australian economy. 1 A copy of those orders can be found at the end of this decision.

[2] I now provide my detailed reasons.

[3] For more than two years Svitzer Australia Pty Ltd (Svitzer) has been bargaining for a new enterprise agreement with three unions: The Australian Maritime Officers’ Union (AMOU), the Maritime Union of Australia Division of the Construction, Forestry, Maritime, Mining and Energy Union (MUA) and The Australian Institute of Marine and Power Engineers (AIMPE).

[4] On 11 and 14 February 2022 the AMOU issued notices to Svitzer under s.414(2)(b) of the Fair Work Act 2009 (Cth) (“FW Act”). The notices advised that protected industrial action would take place at the ports of Brisbane, Cairns, Port Botany, Port Jackson, Newcastle, Kwinana, Fremantle, Albany, Geraldton and Mourilyan from 17 February 2022 onwards.

[5] On 14 February 2022 Svitzer applied for orders under s.424 of the FW Act. Svitzer claimed that the looming industrial action threatened to cause significant damage to the Australian economy and certain state economies. Svitzer sought orders to suspend the protected industrial action for a period of three months.

[6] At the hearing on 18 February 2022 Mr Parry QC and Mr Rauf of counsel appeared with permission for Svitzer. Mr White of counsel appeared with permission for the AMOU.

[7] Svitzer led evidence from three witnesses: Ms Deniz Kirdar True (Svitzer’s General Manager – Harbour Towage East), Mr Craig Worling (Svitzer’s Port Manager in Brisbane) and Mr Greg Houston (an expert economist). Each of Svitzer’s witnesses were cross-examined.

[8] The AMOU filed and tendered a statement by Christopher Neiberding, a Senior Industrial Officer.

History of bargaining and industrial action

[9] The Svitzer Australia Pty Limited National Towage Enterprise Agreement 2016 (“the 2016 Agreement”) expired in December 2019. 2

[10] Since September 2019, Svitzer has been engaged in bargaining for a new proposed enterprise agreement to replace the 2016 Agreement. In the bargaining process masters employed by Svitzer have been represented by the AMOU, ratings have been represented by the MUA and engineers by the AIMPE.

[11] There have been approximately 50 bargaining and drafting meetings so far, as well as meetings between Svitzer and individual unions. The parties do not appear to be close to reaching agreement. It is not necessary in this decision to chronicle the history or even speculate about why no agreement has been reached.

[12] Both the MUA and the AIMPE have taken protected industrial action at various times since at least October 2020. The MUA has taken industrial action in various forms ranging from work bans to 24-hour stoppages. Svitzer said that between October 2020 and February 2022 the MUA issued 44 separate notices to take industrial action. It is not clear whether the industrial action referred to in each notice actually took place. The AIMPE issued four separate notices to take industrial action in September and October 2021. The industrial action referred to in the AIMPE’s notices included a ban on performing work during a period of leave, and 1-4 hour stoppages in particular ports.

The threatened industrial action

[13] The current protected industrial action is the first bout of protected industrial action by the AMOU since bargaining started.

[14] On 11 and 14 February 2022 the AMOU gave notices under s.414(2)(b) of the FW Act. Svitzer provided the following table summarising the effect of the notices:

[15] There are 121 masters employed at the ports impacted by the industrial action. There are 41 masters at Newcastle, 23 in Brisbane, 18 in Sydney, 12 in Fremantle, 8 in Kwinana and Geraldton, 6 in Cairns/Mourilyan and 5 in Albany.

[16] I make the following observations about the effect of the notices:

a) Between 17 February 2022 and 4 March 2022 there was to be five whole days of stoppages in Brisbane, and four whole days of stoppages in Newcastle, Sydney, Fremantle and Kwinana (being together five of the six highest staffed ports); and

b) From 18 February 2022 indefinite relief bans were to be in place in six ports, and were to apply to up to 41 masters in Newcastle, 12 in Fremantle, 8 in Kwinana and Geraldton, and up to 6 masters in Cairns/Mourilyan.

The impact of the industrial action on port operations

[17] Tugboats are essential to the arrival and departure of vessels into commercial ports. Svitzer operates vessels across all types of ports across Australia including container terminals, liquid bulk terminals, dry bulk terminals, roll-on/roll-off cargo terminals, cruise terminals and naval docks.

[18] Svitzer is the largest employer of Australian seafarers, employing approximately 540 masters, engineers and ratings to operate over 100 vessels that complete over 40,000 harbour towage jobs per year.

[19] The 2016 Agreement covers masters, engineers and ratings employed by Svitzer to perform marine towage services in Adelaide, Albany, Brisbane, Cairns, Eden, Fremantle, Geelong, Geraldton, Kwinana, Melbourne, Mourilyan, Newcastle, Port Kembla, Spencer Gulf (Port Pirie), Sydney (Port Jackson & Port Botany) and Westernport.

[20] Each crew is comprised of a master, an engineer and a rating. Vessels cannot be operated without a full crew of three. Therefore, when members of one union take industrial action the members of the other two unions cannot work.

[21] Save for a limited capacity to subcontract jobs in four particular ports (Port Botany, Port Jackson, Geelong and Eden), Svitzer has no capacity to mitigate the impacts of the threatened industrial action.

[22] Further, when a ban is placed on relief work during periods of leave, Svitzer is not able to cover absences with other employees.

Evidence of Ms Deniz Kirdar True

[23] Ms Deniz Kirdar True, who is Svitzer’s General Manager – Harbour Towage East, gave evidence that on any given day there is at least two employees in each port on planned or unplanned leave. Ms Kirdar True’s evidence was:

“Due to the amount of leave typically taken and Svitzer’s reliance of relief work, it is highly likely that there will be disruption in the ports from the indefinite ban on recalling crew from their leave to cover absences. This is exacerbated due to the low number of casuals engaged in those ports and the number of permanent part time employees (PPT) who have fulfilled or are forecasted to fulfil their guaranteed period. I understand the numbers are as follows:

(a) Newcastle has one casual master, and it is hard to identify the impact of availability of PPT masters currently early in the year;

(b) Cairns has no casual masters and one 50% PPT masters available until only March 2022;

(c) Fremantle & Kwinana has 3 casual masters; it is hard to identify the impact of availability of PPT masters currently; and

(d) Geraldton has no casual masters and one 75% PPT master who is expected to be unavailable after September 2022.

The impact of both types of action notified will invariably mean that most vessel movement will come to a halt in the various ports impacted by the industrial action…”

[24] Ms Kirdar True explained in her evidence that for each NIL towage day, i.e. each day there is a 24-hour work stoppage, it takes each port up to 10 days to return to “normal”. Based on historical data Ms Kirdar True estimates, by way of example, that the port “recovery” time is approximately 3 days for Brisbane, 8-10 days for Newcastle, 3-4 days for Port Botany and 2-3 days in Fremantle and Kwinana. Ms Kirdar True said further that recovery time was likely to increase in circumstances where a port is already facing issues with congestion or capacity, and that she was aware that some ports are presently facing these issues.

[25] Most threatened stoppages were scheduled for 48 hours, although the second threatened stoppage in Brisbane is scheduled to last 72 hours. Ms Kirdar True made the following specific estimates about Svitzer’s recovery times:

“Taking a conservative approach and assuming that shipping lines employ the mitigation responses … I estimate that after a 48 hour stoppage it would take approximately 5 days for Svitzer’s operations to return to normal. However, normal levels of operation at Svitzer are not necessarily indicative of recovery by our customers and their customers.

Further, I note that all of the action notified involves a short return to work between stoppages (for example in Brisbane where there is a 72 hour gap between stoppages). Based on the Historical Data I do not consider that the period of time between stoppages will be sufficient for Svitzer to address the lost work and prevent flow on effects to the supply chain and I would anticipate that the next stoppage would compound the impacts of the one before it.”

[Emphasis added]

[26] Ms Kirdar True also explained that shipping lines respond to work stoppages in different ways. Svitzer does not have visibility over the decisions made by shipping lines and accordingly Ms Kirdar True does not have any historical data to rely upon. She did indicate that shipping lines might omit a port entirely, return to the port later in a voyage, slow down to delay their arrival or take other options.

[27] Ms Kirdar True also gave evidence, albeit of a very general nature, about “existing industry challenges” caused by innovative new competitors, COVID-19, droughts, significant changes in vessel size, global disruptions to trade patterns, changes in energy strategies, COVID related terminal capacity reduction due to covid-related workforce absences, weather events caused by La Niña (e.g. Newcastle and Brisbane) and Operational Changes (e.g. change of pilotage provider in Brisbane).

Evidence of Mr Craig Worling

[28] Mr Craig Worling has been employed by Svitzer as the Port Manager Brisbane since October 2021. From 2001 until 2021 Mr Worling worked for DP World Brisbane (and its predecessor P&O Ports) in various roles including Operations Superintendent and Berthing and Labour Manager. He is obviously very familiar with the stevedoring and towage industries and has developed an intricate understanding of the supply chain in the ports.

[29] Mr Worling gave evidence regarding the importance of berthing windows. In his evidence he said:

“Shipping schedules for container vessels are planned well in advance, they are often negotiated for at least a period of one year, and sometimes two years. Berth windows (also known as proforma/planned windows) can be slightly changed within that period of time by mutual agreement. Windows are also adjusted on a weekly basis due to tide restrictions and other minor issues.

Shipping schedules are negotiated between shipping lines and the relevant port authority

…

In order to make changes to the schedule, the shipping line needs to renegotiate with the terminal operator to see if the changes can be accommodated. However, this is difficult to achieve in busy ports or periods of congestion.

While there is some leeway if berthing windows are not met, this leeway is more likely to be a matter of hours. In the event that a vessel is delayed (by protected industrial action (PIA) or any other reason) for any longer than that, it results in a compounding effect on other vessels and the port generally. Idle time of a fully crewed and operating vessel causes increases costs to shipping lines which are then passed on the end user, being the importer/exporter. There are also demurrage fees (derived from additional costs such as fuel costs and usually expressed as a percentage of a contract) which are payable by the end customer in these circumstances.”

[30] Mr Worling said that sometimes vessel sliding (when a vessel is moved to later in the berthing schedule, reducing port calls rather than being cancelled) is available but can be limited by other vessels in the schedule and also by port resources. Mr Worling also said that cargo can be rolled (loaded onto the next vessel) but this is subject available space. Mr Worling said:

“When containers do not make it on a vessel, it can mean that perishable goods are ruined. Even if goods are not perishable, shipping customers often have timeline commitments which mean that orders cannot be fulfilled on time, and goods may no longer be needs and/or penalties charged. These circumstances can also result in damages claims.”

[31] Mr Worling gave evidence of current congestion in Brisbane, drawing from publicly available schedules and maps for anticipated movements in the Port of Brisbane, and opined that “for the period between 17 and 24 February 2022 the port is operating at near full capacity and is experiencing congestion.”

[32] Mr Worling provided specific information to support his view and said:

“This is consistent with my knowledge of recent events in Brisbane. I am aware that last week on 12 and 13 February 2022 there was a weather event, being strong winds which resulted in schedule slide and delays to most operators in the port. Further, it has been my experience that due to ongoing COVID-19 situation globally, there has been “off-window” pressure at Brisbane port and across the wider industry in general, which occurs when vessels are unable to enter port at their usual times due to a backlog or delay to previous services.”

[33] Mr Worling is less familiar with Port Botany and Newcastle operations but is of the view that both ports were or would be operating at near full capacity and experiencing congestion in the period between 16 and 24 February 2022. In his evidence Mr Worling provided schedules and traffic data to support his views, and indicated that he drew upon specialist knowledge from colleagues based in each port.

[34] Mr Worling concluded that:

“Based on my knowledge and experience in the port of Brisbane, and knowledge of the current congestion, I anticipate that the impact of the Action on the port of Brisbane will result in downstream consequences for all port users. Depending on the type of cargo being carried, this impact will continue through to other parts of the Australian community, including supermarkets and building supplies.

There will be further congestion to that described above, which I anticipate will compound with the existing difficulties faced by the ports, as vessels will have nowhere to go and will be unable to be moved during the stoppage periods.

The resulting delays will be difficult to recover from in circumstances where the port and all the infinite resources within it (including tug boats, crews, cranes, berths and time as most parts of the supply chain already operate 24/7) are already at full capacity. “Recovery” in this context does not necessarily mean that all work that was scheduled for during the stoppage is carried out immediately after the stoppage, as scheduled as shipping lines my choose to take alternative approaches (such as those I outline above) to address the delays.”

While I do not have the same direct knowledge of the other ports, I anticipate that the impacts will be similar within the context of the usual operations of those ports.”

[35] The likely harm to Svitzer caused by the protected industrial action is not of itself relevant to the matters I am required to consider under s.424. However, the impact of the protected industrial action on Svitzer’s operation, in so far as it impacts or eliminates Svitzer’s capacity to provide towage services in affected ports, is materially relevant to assessing whether the protected industrial action could cause significant damage to an important part of the economy. 3

[36] Svitzer’s evidence establishes that when stoppages apply in affected ports, ships cannot be loaded and unloaded at all. 4 Svitzer’s evidence also establishes that after a stoppage Svitzer’s operations, and port operations more generally, take several days to return to normal.

AMOU Evidence

[37] The AMOU did not lead any evidence in chief regarding the effects upon the Australia economy or any significant part thereof. The AMOU’s evidence, given by Mr Neiberding, a Senior Industrial Officer, focused on the history of bargaining between the AMOU, Svitzer, the MUA and the AIMPE.

[38] Mr Neiberding was critical of Svitzer’s conduct in negotiations over a long period of time. I do not have to decide the matter but if Mr Neiberding’s evidence is correct then the AMOU’s members are entitled to be frustrated by several dramatic changes in Svitzer’s bargaining position and the considerable delay in finalising negotiations.

[39] Mr Neiberding’s filed statement concluded with the following:

“If the protected action is suspended, then our members will lose the main tool they have available to them under the legislation to try and shift the Applicant’s bargaining position. This is the first time they have taken protected industrial action in the negotiations. It will mean that the parties are less likely to reach agreement for at least that reason.”

Significant Damage to the National Economy – Principles and case history

[40] In determining an application for orders under s.424(1)(d) I am required to consider whether there is protected industrial action 5 that has threatened, is threatening or would threaten to cause significant damage to the Australian economy or an important part of it. If I am satisfied of each of these matters then I am required to make an order suspending or terminating the protected industrial action.

[41] In this matter there was no contest that:

i. the containerised and liquid and/or dry bulk trade are important parts of each state economy and of the overall Australian economy; and

ii. protected industrial action was threatened, impending or probable; and

iii. the protected industrial action threatened to cause damage to these important parts of the Australian economy.

[42] The real question for determination was whether the protected industrial action threatened to cause “significant” damage to these important parts of the Australian economy, as that term might be understood in s.424.

[43] It is helpful to review how the Commission has determined other s.424 applications.

[44] In Sucrogen Australia Pty Ltd v The Australian Workers' Union and others [2010] FWA 6192 Commissioner Spencer found that “the sugar industry is a highly significant domestic and export industry and a significant part of the Australian economy” (at [18]) and that the protected industrial action threatened to cause significant damage to that industry:

“[40] … Damage to the sugar industry cannot simply be measured in terms of the lost time related to the particular hours of the stoppage in the mills. Halting the crush has a domino effect that threatened to cause further unrecoverable losses. The sugar industry is seasonal and as such is dependent on perishable cane to be harvested and crushed in a specific time period for its optimal return. The flow-on effects from the sugar industry, being the major agricultural industry and employer in the area has considerable impact on that part of the economy and communities as was provided in the economic analysis presented. The proposed industrial action threatened to cause ‘significant damage’ to the seasonal employment, the completion of the crushing season and the associated contractual implications.

…

[44] On the evidence I was satisfied that the protected industrial action was threatening or would threaten significant damage on an important part of the Australian economy by compromising the crushing season at these mills. The impact of the industrial action would reduce the ability to harvest all of the season’s cane at the required time at the optimum CCS, prior to the very real threat of rain shortening the available harvesting and crushing period. I have taken into account the very real possibility that the industrial action in combination with the impending weather conditions may result in cane being left in the fields unharvested, the crushing season being cut short and the implications of such for growers not being able to meet their contractual obligations and the potential for further losses to all parties being substantial.”

[45] In Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations (2011) 214 IR 367, [2011] FWAFB 7444 three unions had been separately negotiating with Qantas and each union had engaged in protected industrial action. Qantas gave notice to take employer response action of locking out members of the three unions (at [8]). The Minister applied for an order under s.424 of the FW Act to terminate or suspend the protected industrial action threatened by Qantas, and also to terminate or suspend the protected industrial action being engaged in by each union.

[46] The Full Bench described the effect of the protected industrial action by the unions over the previous six months as follows:

“[7] Qantas produced material indicating that the protected action taken by the unions prior to 29 October had affected 70,000 passengers, led to the cancellation of 600 flights, the grounding of 7 aircraft, $70 million in damage. That protected action was associated with significant reductions in forward bookings and decline in market share.”

[47] The Full Bench found that it was unlikely that the industrial action taken by the unions was threatening to cause significant damage to the tourism and air transport industries (at [10]).

[48] The Full Bench described the likely effect of Qantas’ response industrial action as follows:

“[9] We heard unchallenged evidence from Mr Mrdak, Secretary, Department of Infrastructure and Transport and Mr Clarke, Secretary, Department of Resources, Energy and Tourism as to the importance of airline passenger and cargo transport to the economy and the effect of the grounding of the Qantas fleet on the aviation and tourism industries. The tourism industry, including aviation, was estimated as contributing 2.6 per cent to GDP and as having 500,000 employees. The value of inbound tourism is estimated at $24 billion per year.”

[49] The Full Bench found that the employer’s lockout threatened to directly cause significant damage to the tourism and air transport industries and indirectly to industry generally (at [10]). 6 The Full Bench’s stated “primary consideration” was the effect of the protected action on the wider aviation and tourism industries (at [15]), and they thought they “should do what we can to avoid significant damage to the tourism industry” (at [13]). The Full Bench ultimately decided “to terminate protected industrial action in relation to each of the proposed enterprise agreements immediately” (at [16]).

[50] In Minister for Industrial Relations for the State of Victoria v Australian Workers' Union & Ors [2016] FWC 8826 Vice President Watson found that the threatened industrial would cause significant damage to the Victorian economy and additional damage to other parts of South East Australia (at [16]). His Honour’s order was subsequently revoked because it was found that the relevant industrial action was not protected industrial action. 7 Nonetheless the evidence before his Honour appears to estimate the threatened damage to the state economy by reference to the employer’s estimated loss (at [15]):

“Although there has been limited analysis of the economic impact of the industrial action, the impact is quite clear. Ms Lourey estimates that each day’s loss of gas production would cost the Victorian economy alone at the upper end of the range of $5-15m. If the industrial action continues for the period of the Notices, the loss to the Victorian economy is estimated to be in excess of $1.2b. These estimates are based on an estimated loss to Esso of $4.7m per day and a loss to gas consumers involved in manufacturing basic chemicals, glass and glass products, ceramic products, plaster and cement products of a further $9m.”

[51] In Minister for Industrial Relations for the State of Victoria v AGL Loy Yang Pty Ltd & Ors [2017] FWC 2533 Deputy President Clancy found protected industrial action that compromised Victoria’s power supply did threaten to “cause significant damage to the Australian economy or an important part of it, being at least the State of Victoria” (at [42]). His Honour found:

“[41] The evidence establishes the fundamental importance and significance of AGL Loy Yang’s Loy Yang A Power Station and Mine to Victoria’s power supply. The combined generation of Loy Yang A and Loy Yang B, which is also supplied by the Mine, regularly meets over 50% of Victoria’s power needs in Winter. The industrial action in the ETU Notice and the AGL Notice would almost immediately impact the power supply to Victoria and have implications for South Australia. Additionally, the reliability and resilience of the Victorian system would be compromised. The fundamental importance of the power supply to the operation of Victoria’s economy is self-evident. Businesses rely on a secure energy supply, and the transportation system depends on reliable power. The supply of power is vital to the operation of the hospital and broader healthcare system, as was highlighted in the evidence of Dr Romanes and Mr Robinson.”

[52] In Re Sydney Trains 8 Senior Deputy President Hamberger found that a 24-hour stoppage of trains across the rail network, coupled with overtime bans over a longer period, threatened to cause significant damage to the economy of Sydney:

“[46] This finding was supported by the NSW Treasury modelling that estimated that the cost to the NSW economy would have been in the order of $90 million. I note that this figure assumed no impact at all on the output of public sector workers, nor on the output of private sector workers who do not usually travel to work by train, even though many of them would have been affected by increased congestion on the roads. It also assumed that the output of the majority of private sector workers who do normally travel by train would have been unaffected. Moreover, the modelling only estimated the cost of the threatened overtime bans until 31 January 2018, even though they were of an indefinite nature. It is quite likely, in my opinion, that the cost to the economy, if the industrial action had gone ahead, would have been significantly more than $90 million modelled by Treasury. Such a loss of output would represent – in absolute terms – significant economic damage.”

[53] In Application by BP Refinery (Kwinana) Pty Ltd [2019] FWC 68 Deputy President Binet found that the unavoidable and inevitable consequence of threatened protected industrial action was a controlled shut-down of the BP Kwinana refinery (at [48]), which was the largest oil refinery in Australia and the only oil refinery in Western Australia (at [9]), and that a shutdown of the refinery would have a momentous effect on the Western Australian economy (at [52]).

[54] One can see from the above authorities that consideration of the phrase “significant damage to the Australian economy or an important part of it” travels far beyond the notion of merely “significant damage”.

[55] The anchor term in s.424(1)(d) is “the Australian economy” – which directs the Commission’s inquiry to whether there is a threat of damage to the whole Australian economy, or to a significant part of the Australian economy, or not.

[56] The Commission must start with an economy-wide perspective. If necessary the inquiry might then narrow to only a “part” of the economy. In the authorities cited above the Commission considered the impact of protected industrial action nationally 9, across whole states10, whole major cities11 and across whole industries.12

[57] Even though bargaining representatives have standing to make applications under s.424(1)(d) 13, including standing to apply for orders terminating their own conduct14, the individual interests of the bargaining parties are secondary considerations at best. So much can be seen from the fact that relevant Commonwealth, State or Territory Ministers have standing to make an application under s.424.

[58] In taking an economy-wide, state-wide or even industry-wide view the Commission must nonetheless hold to the objects of the FW Act generally, including “achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action” (s.3(f)).

[59] In National Tertiary Education Industry Union v University of South Australia (2010) 194 IR 30, [2010] FWAFB 1014 at [7]-[8] the Full Bench said:

“Section 424 provides that Fair Work Australia (FWA) must make an order suspending or terminating protected industrial action if it is satisfied that the action threatens to endanger the life, the personal safety, health or welfare of the population or part of the population or to cause significant damage to the Australian economy. The effect of making an order suspending or terminating protected industrial action is to bring to an end the right to take protected industrial action. This is achieved by the removal of the protection or immunity which would otherwise attach to the action. The termination of protected industrial action may also lead to FWA making a workplace determination under Part 2-5 of the Act (see ss.266 and 267).

Within the scheme of the Act, the powers in relation to the suspension or termination of protected industrial action are intended to be used in exceptional circumstances and where significant harm is being caused by the action. This is clear from the Explanatory Memorandum to the Fair Work Bill 2008:

“The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.

It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.” [paras. 1708-1709]”

[60] As the Full Bench in Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd 15 (“Woodside Burrup”) observed “effective industrial action will almost always cause harm to the employer’s business which, in turn, will frequently adversely affect third parties being the customers, clients or other persons who depend upon the timely supply of goods or services by that employer”.

[61] In Woodside Barrup the Full Bench undertook an extensive analysis of the “context of the Act as a whole” (at [25]-[43]) and concluded:

“[44] When regard is had to context of the FW Act as a whole and to the explanatory memorandum, the expression “significant harm” in s 426(3) should be construed as having a meaning that refers to harm that has an importance or is of such consequence that it is harm above and beyond the sort of loss, inconvenience or delay that is commonly a consequence of industrial action. In this context, the word “significant” indicates harm that is exceptional in its character or magnitude when viewed against the sort of harm that might ordinarily be expected to flow from industrial action in a similar context. In this way, an order will only be available under s 426 in very rare cases, as contemplated by the Explanatory Memorandum. It follows that it will not, of itself, be sufficient that the harm, viewed in isolation, can be characterised as “substantial”. Substantial harm to third parties is a common consequence of effective industrial action. Unless the harm is out of the ordinary then suspension would contrary to the legislative intention that suspension should not be able to used generally to prevent legitimate protected industrial action in the course of bargaining. In assessing whether there is “significant harm” context is also important. A particular quantum of financial loss may constitute “significant harm” in one context but not in another.”

[62] The Full Bench were considering the phrase “significant harm” in s.426 rather than “significant damage” in s.424, but in the course of their analysis did refer to the earlier Full Bench decision in National Tertiary Education Industry Union v University of South Australia [2010] FWAFB 1014, which was concerned with an application under s.424.

[63] In my view not all of the Full Bench’s approach to s.426 applications in Woodside Burrup is readily transposable to s.424 applications. If the “harm that might ordinarily flow from industrial action” or the “harm that is not out of the ordinary” nonetheless threatens to cause significant damage to the Australian economy or a significant part of it, then s.424 requires the Commission to make an order. There is no consideration of whether it is “appropriate” to do so (cf s.426(5)).

[64] The observations in Woodside Burrup are apposite to circumstances where the damage caused by protected industrial action is likely to be large. Viewed in isolation, amounts measured in tens or hundreds of millions are substantial. Viewed in the context of the wider Australian economy and the context of the FW Act, such amounts may or may not be “significant”.

[65] Predictions and estimations of likely damage might have to be considered in both absolute and relative terms, depending on the circumstances and the available evidence. In most of the cases referred to above the estimated damage, in monetary terms, was very large – in fact multiples of $10M and even $100M. Damage might not be ‘significant’ even if it is large in absolute terms, because it might be only a minute fraction of a much larger economy, state or industry. Conversely, a large quantum of damage might nonetheless be seen as ‘significant damage’ even if the damage is small in relative terms. Ultimately such assessments can only be made on the material available.

[66] It is also helpful to recognise the very tight timeframe within which the Commission must operate when determining applications under s.424. Section 424(3) requires the Commission to determine each application “as far as practicable” within five days after it is made.

[67] In this regard the Commission’s role is vastly different to a judicial body assessing [actual] damages. In almost all cases protected industrial action will cause damage. The Commission does not need to precisely quantify the likely damage, but there must be some proper basis upon which it can be satisfied that the damage would be significant (or not), over and above generalised predictions. 16 In assessing whether damage is “significant” the Commission can make an assessment of the order of magnitude of the potential damage.17

Damage to the Australian economy or an important part of it – expert evidence

[68] Svitzer relies on a report prepared by Mr Gregory Houston of HoustonKemp, dated 16 February 2022, which addressed the following:

a) The importance to the Australian economy of seaborne trade and towages services in the Affected Ports noting in particular that containerised and liquid and/or dry bulk trade makes an important contribution to each state economy and to the overall Australian economy. Towage services are an essential component of the economic infrastructure that underpins a range of export and import activity.

b) That the economic impact of the notified protected industrial action at the Affected Ports on the Australian economy, and/or an important part(s) of the Australian economy was likely to be significant. An indicative quantification of the total (including multiplier) effects associated with the Notified protected industrial action is up to in the order of $458-589 million.

c) That there are a number of sectors of the Australian or State economies whose business activities can reasonably be expected to lose a significant amount of value as a result of delays arising from the Notified protected industrial action. In particular, the export coal industry, meat export industry, retail industry, grain industry and liquid fuel import industry are such sectors who could be expected to be disproportionately affected by the industrial action.

[69] Mr Houston was an excellent expert witness in the sense that his report was comprehensive and properly disclosed and referenced the evidence and materials upon which it was based. In cross-examination Mr Houston was patient, careful, relied only on his specialist expertise, and he addressed each matter asked of him in a way that made it abundantly clear that his overarching purpose in giving evidence was to assist the Commission with its deliberations.

[70] Mr Houston estimated that the total loss arising from the stoppages was between $458-589 million. Mr Houston provided this estimation by using the following methodology and key assumptions:

(i) Each stoppage that was the subject of the AMOU’s notifications proceeded as scheduled (including the stoppages scheduled to occur prior to the hearing of Svitzer’s application);

(ii) The stoppages prevented all loading and unloading of vessels on the days in which they occurred, although for the two Sydney ports an alternative towage service provider could provide 60 per cent of the total towage service requirements for the Sydney ports, leaving 40 per cent of total service requirement unmet (meaning that in the Sydney ports the stoppages prevent 40% of ships from being loaded or unloaded);

(iii) Port activities and movements would be affected for a further 5 days after each 48 hour stoppage (based on an assumption he was asked to make that on average each port would take 5 days to return to normal after a 48 hour stoppage);

(iv) All of the trade activities that would otherwise take place in an affected port on a day of stoppage would be delayed and therefore “disrupted”;

(v) On the days of a stoppage 5-10% of disrupted trade would be lost – meaning lost output never to be recovered;

(vi) On each of the subsequent 5 days after a 48-hour stoppage 5% of disrupted trade would also be lost;

(vii) If a stoppage took place shortly after another stoppage the loss would be worse because of cascading delays, and the lost trade arising from the second stoppage would increase by a 1.5X multiplier;

(viii) A further economic multiplier (1.9X) must be applied to the calculated loss to take account of the interdependence between industries that make up an economy;

(ix) The amount of trade activity on any given day in each affected port can be estimated by reference to historical data from a comparable season/period (in this case the period from 1 January 2020 to 31 March 2020 for containerised freight and 1 September 2020 to 30 November 2020 for bulk freight);

(x) the average daily level of Gross State Product over the financial year ended 30 June 2020 is a reasonable estimate for the average daily rate over the relevant three-month period to 31 March 2020.

[71] Mr Houston indicated that in economic terms the protected industrial action would cause other damage to the economy, such as forcing participants to make substitute/inferior choices (assuming, as economists do, that each participant in the economy otherwise makes optimal choices) and the like. Mr Houston has not tried to estimate these other kinds of damage.

[72] Mr Houston was not asked to estimate loss that might have been caused by the other workplace bans imposed by the AMOU or the 4-hour stoppages scheduled for Albany. There is evidence of the operational impact of those bans for Svitzer but no evidence at all of any likely damage to the economy.

[73] The cornerstone of Mr Houston’s calculations is his assumption that 5-10% of disrupted trade would be lost on each day of each stoppage, and that 5% of the trade disrupted on each of the subsequent 5 days after a 48-hour stoppage would also be lost. In crude terms the 5% and 10% assumptions have been applied to very very large numbers (the value of daily trade) and result in an estimate of a very large loss.

[74] In his report Mr Houston explained how he came to assume that 5-10% of the disrupted goods are likely to be “lost”:

“130. The direct value of goods disrupted by industrial action that I estimate above is not an estimate of the value lost completely, since many of the disrupted goods will likely be delivered to their destination eventually, albeit after a delay. At one end of the spectrum of possibilities, a delay may give rise to an inconvenience for an importer, without necessarily translating into a permanent loss in output and sales that, in turn, results in lost wages and profit. Businesses or consumers falling into this category are likely to be those for whom the import supply chain is a modest or occasional component of their enterprise.

131. At the other end of the spectrum are importers for whom containerised freight supports complex production and distribution supply chains and/or where international competitiveness demands cost efficiency, as arises from well-functioning, just in time product processing. For these industries, the economic harm occasioned by delays in the flow of inputs to the point of production carries a much greater risk of irrecoverable damage.

132. I adopt a range of conservative assumptions in respect of the proportion of disrupted containerised goods that are lost as a consequence of a two day strike in port, ranging from five to ten per cent of disrupted goods.”

[75] Mr Houston was cross-examined extensively on these assumptions. He candidly explained that the assumptions are not based on any objective data but are an estimate, using his general expertise and his extensive knowledge of the industry, of what could be reasonable to assume having regard to the effect of a delay on different sectors of the economy. As Mr Houston said, some sectors will lose everything, some lose very little.

Damage to the Australian economy or an important part of it – Findings

[76] The 5-10% estimates are crucial to Mr Houston’s calculations. By Mr Houston’s methodology each 48-hour stoppage causes the following loss:

1. 5-10% of a day’s trade for each of the two days of stoppage; plus

2. 5% of a day’s trade for each of the next five days after the stoppage.

[77] Each instance of loss is almost doubled again by the 1.9X economic multiplier applied in Mr Houston’s calculations.

[78] The 5-10% estimates do not rest on strong foundations. If these estimates of irrecoverable loss are slightly too high, in percentage terms, the mathematical consequences are enormous. For example, if Mr Houston’s estimate is halved – meaning the estimated loss on the days of the stoppage is only 5% (being the lower percentage figure in his estimate range) and the loss on subsequent days is 2.5%, then Mr Houston’s estimate at the top of the range is out by $294,500,000.

[79] I am concerned to place a heavy reliance on the end-numbers contained in Mr Houston’s calculations. In expressing this concern I am not critical of Mr Houston’s evidence at all. It is an unremarkable feature of expert economic evidence that estimations and assumptions are applied to large sums of money.

[80] There is no evidence to contradict or support Mr Houston’s estimate that 5-10% of trade will be lost, and I am in no better position to provide an estimate than he is. In fact, in light of Mr Houston’s experience and expertise, I am in a markedly inferior position to make such an estimate.

[81] However, I am able to forensically assess whether Mr Houston’s estimate is a sufficiently sound basis to determine Svitzer’s application under s.424. I do not have to determine the actual value of the threatened losses in the same way that a judge might have to calculate actual loss. From Mr Houston’s evidence I can comfortably assess the order of magnitude of the potential damage. 18

[82] The first matter to note in making my assessment is that Mr Houston’s calculations include estimations of loss caused by stoppages that occurred prior to the hearing on 18 February 2022. It was not controversial at the hearing that an order under s.424 could only apply prospectively. The Commission can only consider whether future protected industrial action threatens to cause damage. That said, prior industrial action might affect the estimation of damage that future industrial action might cause.

[83] Three 48-hour stoppages commenced prior to the hearing on 18 February 2022. The losses estimated in Mr Houston’s report for these stoppages must be disregarded. I have not attempted to calculate the value of those losses, suffice to say that Mr Houston’s calculation assumes that members of the AMOU engage in nine separate 48-hour stoppages, which means that up to one third of the total estimate must be disregarded. 19

[84] Secondly, I am not satisfied that Mr Houston’s assumption that 5% of each day’s trade is lost for five days after a stoppage is sound. It was not an assumption he was asked to make and Svitzer’s evidence does not go so far as to support it. The evidence was that on average it takes five days for port operations to return to normal after a 48-hour stoppage. Mr Houston estimates that the loss on the fifth day after a stoppage (i.e. when port operations are almost back to normal) is the same as the first day after the stoppage and, more importantly, in the same range of loss estimated for each of the days of the stoppage itself. That is, even though he estimates the loss on the days of a stoppage to be between 5% and 10%, if one were to accept the lower end of the range as being reasonable, Mr Houston estimates exactly the same loss on the first day of the stoppage as he does for the fifth day after the stoppage has finished.

[85] I can readily accept that loss will arise across the five days that port operations recover after each stoppage, but I am again concerned to place significant weight on the assumption that the loss on the later days after the stoppage is exactly the same as the days of the stoppage itself.

[86] Taking into account all of the above matters I am prepared to accept that the proposed stoppages scheduled to occur after 18 February 2022 were likely to cause damage of at least $100M nationally between 18 February 2022 and the end of the last stoppage on 5 March 2022. The damage, in economic terms being loss referred to by Mr Houston as “lost output never to be recovered”, includes damage to the particular state economies in which the stoppages were to occur of amounts proportionately less than $100M.

[87] I am satisfied that damage of this magnitude is significant damage in both relative and absolute terms. I note that Mr Houston’s estimates were materially higher than $100M and I am open to the likelihood that the actual damage could have been much more.

[88] Damage of at least $100M in two and a half weeks is a significant sum in absolute terms. No more needs to be said of this.

[89] In relative terms, compared to the state economies in which the stoppages were to occur, the likely damage was also significant. Mr Houston’s report included estimates of loss relative to state GSP (gross state product) – differentiating between containerised goods and bulk goods because of the different mix of work at each affected port. Mr Houston estimated that:

(a) a 48-hour stoppage in Port of Brisbane would cause loss of up to 1.19% of Queensland’s GSP 20;

(b) a 48-hour stoppage in Newcastle would cause a loss of up to 0.24% of NSW’s GSP 21;

(c) a 48-hour stoppage in Port Botany would cause a loss of up to 0.52% of NSW’s GSP 22; and

(d) a 48-hour stoppage in Fremantle would cause a loss of up to 0.96% of Western Australia’s GSP. 23

[90] In determining that the likely damage is absolutely and relatively significant, I have also taken into account the objects of the FW Act and the scheme within the Act to regulate protected industrial action. The FW Act provides only limited grounds for the Commission to intervene and remove the protection that is otherwise available under s.418.

[91] Acknowledging that protected industrial action is one of a limited number of suasions available to parties to compel the other to agree 24, and that effective industrial action will almost always cause harm to the employer’s business and potentially cause harm to others25, the damage that the scheduled 48-hour stoppages threaten to cause the affected state economies is sufficiently significant that that I am required to make orders under s.424.

[92] It is important to recognise that these findings are particular to one type of protected industrial action that is the subject of these proceedings: 48-hour stoppages that halt trade for the period and disrupt trade for a further five days. There is no evidence at all that the 4-hour stoppages in Albany or the bans on relief work in any port are likely to cause damage of any similar magnitude.

Orders under s.424

[93] Having found that the 48-hour stoppages scheduled to occur after 18 February 2022 were likely to cause significant damage to the Australian economy or an important part of it, I was required to make an order under s.424 to either suspend or terminate the protected industrial action.

[94] It is very much a matter of discretion for the tribunal to suspend or terminate the protected industrial action (so long as one option is chosen).²⁶ Svitzer did not ask for orders terminating the protected industrial action and in my view it is not appropriate to do so in any event.

[95] The remaining matter of contention was the duration of the suspension order. Svitzer submitted that the suspension order apply for a period of three months. The AMOU argued that if an order be made, the order should only apply for a short period.

[96] In Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations (2011) 214 IR 367, [2011] FWAFB 7444 the Full Bench’s stated that their “primary consideration” was the effect of the protected action on the wider aviation and tourism industries (at [15]), and they thought they “should do what we can to avoid significant damage to the tourism industry” (at [13]).

[97] In this matter the last of the 48-hour stoppages was scheduled to commence in Fremantle on 3 March 2022. In doing what I can to avoid significant damage to important parts of the Australian economy, I should ensure that the suspension order apply until at least the end of the last scheduled stoppage.

[98] One consequence of making an order under s.424 is that any other industrial action, including action that does not threaten significant damage to the Australian economy, loses the protection that s.418 otherwise provides (per s.413(7)). 27 That is, making orders about one form of industrial action may dramatically affect a bargaining party’s capacity to take other forms of industrial action.

[99] Svitzer’s application is a case in point. Svitzer asked for orders that would have effect far beyond protecting affected economies from damage caused by the 48-hour stoppages. In practical terms, if the orders under s.424 operate for three months then the AMOU and its members would not engage in relief bans or shorter stoppages because they would have no protection under s.418 from the legal consequences of their actions.

[100] The FW Act allows for bargaining representatives, including opportunistic bargaining representatives 28, to apply for orders under s.424. Moreover, the FW Act even allows for bargaining representatives to apply for orders suspending or terminating their own industrial action.29

[101] On many occasions the Commission has formulated orders under s.424 by reference to the history of bargaining between the parties and predictions or concerns about future bargaining. That is, in formulating orders under s.424 the Commission has considered matters well beyond the avoidance of the dangers described in s.424(1)(c) and well beyond the prevention of the damage described in s.424(1)(d).

[102] The parties led evidence in relation to the history of bargaining for the proposed new agreement however these matters were not sufficiently explored or ventilated at hearing to allow me to make orders that could have significant consequences for future bargaining.

[103] For all of the above reasons I decided to adopt the more cautious approach of making orders to suspend protected industrial action only for the period over which 48-hour stoppages were scheduled. I note in this regard that the consequences of the orders I made were similar to the orders made by Commissioner Spencer in Sucrogen Australia Pty Ltd v The Australian Workers' Union and others [2010] FWA 6192. Commissioner Spencer suspended protected industrial action for a period of 4 weeks (at [1]) in order to provide a cooling off period, to allow the growers to harvest their cane and the millers to progress the crush at an important stage, and also to maintain “the leverage of the employees to then continue to take protected industrial action” (at [46]).

DEPUTY PRESIDENT

Appearances:

Mr F Parry QC and Mr B Rauf of Counsel, for the Applicant
Mr E White of Counsel for The Australian Maritime Officers’ Union

Hearing details:

2022.
Sydney (By Video using Microsoft Teams)
February 18.

Printed by authority of the Commonwealth Government Printer

<PR739052>

ANNEXURE
Orders made on 18 February 2022

Fair Work Act 2009
s.424—Industrial action

Svitzer Australia Pty Ltd
(B2022/75)

Application to suspend or terminate protected industrial action - endangering life etc.

[1] Pursuant to s.424 of the Fair Work Act 2009 (Cth) (the Act), the following protected industrial action by members of the Australian Maritime Officers’ Union (AMOU) employed by Svitzer Australia Pty Ltd (Svitzer) is suspended until 6 March 2022:

a) A 48-hour stoppage of work commencing at 7.00am on 19 February 2022 in Kwinana;

b) A 48-hour stoppage of work commencing at 12.01am on 22 February 2022 in Port Botany and Port Jackson;

c) A 48-hour stoppage of work commencing at 6.00am on 22 February 2022 in Brisbane;

d) A 48-hour stoppage of work commencing at 7.00am on 23 February 2022 in Kwinana.

e) A 24-hour stoppage of work commencing at 6.00am on 24 February 2022 in Brisbane;

f) A 48-hour stoppage of work commencing at 7.00am on 24 February 2022 in Fremantle; and

g) A 48-hour stoppage of work commencing at 7.00am on 3 March 2022 in Fremantle.

[2] This order is binding on:

i. Svitzer Australia Pty Ltd (Svitzer);

ii. The Australian Maritime Officers’ Union (AMOU)

iii. All employees of Svitzer who are members of the AMOU and who are covered by the Svitzer Australia Pty Limited National Towage Enterprise Agreement 2016.

[3] This order comes into operation at 18:00 hours on the date of this order.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

 1   PR738544.

 2   AE417722.

 3   See by analogy Tyco Australia Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Electrical, Energy and Services Division) (Qld Divisional Branch) (2011) 208 IR 243 at 249-250; [2011] FWAFB 1598 at [28]-[31].

 4   Noting the evidence that in Sydney some towage work (60%) can be done by Svitzer’s competitor.

 5   Being current, or threatened, impending or probable industrial action per s.424(1)(a) and 424(1)(b).

 6   On judicial review in Australian and International Pilots Association v Fair Work Australia (2012) 202 FCR 200, [2012] FCAFC 65 at [67]-[70], [129] and [176]-[180] the Full Court found that on the Full Bench’s findings “no order could be made terminating or suspending the protected industrial action being engaged in by any of the unions.” The Full Court ultimately did not disturb the Full Bench’s order because they found that the order terminating Qantas’ protected industrial action was properly made, and by reference to s.413(7) found that “the effect of the FWA order meant that neither side was able to engage in the industrial action which it had with the immunity offered by s 415” (at [90]).

 7   Esso Australia Pty Ltd v Australian Manufacturing Workers’ Union (2018) 281 IR 147, [2018] FWCFB 4120.

 8   Re Sydney Trains (2018) 277 IR 389, [2018] FWC 632.

 9   Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations (2011) 214 IR 367, [2011] FWAFB 7444.

 10   Minister for Industrial Relations for the State of Victoria v Australian Workers' Union & Ors [2016] FWC 8826, Minister for Industrial Relations for the State of Victoria v AGL Loy Yang Pty Ltd & Ors [2017] FWC 2533 and Application by BP Refinery (Kwinana) Pty Ltd [2019] FWC 68.

 11   Sucrogen Australia Pty Ltd v The Australian Workers' Union and others [2010] FWA 6192 and Re Sydney Trains (2018) 277 IR 389, [2018] FWC 632.

 12   Sucrogen Australia Pty Ltd v The Australian Workers' Union and others [2010] FWA 6192 and Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations (2011) 214 IR 367, [2011] FWAFB 7444.

 13   Fair Work Act 2009, s.424(2)(b)(i).

 14   Australian and International Pilots Association v Fair Work Australia (2012) 202 FCR 200, [2012] FCAFC 65 at [93]-[94] and [173] and Schweppes Australia Pty Ltd v United Voice (2011) 214 IR 282 at 294, [2011] FWA 9329 at [57].

 15   (2010) 198 IR 360 at 374, [2010] FWAFB 6021 at [41], citing FH Transport Pty Ltd v Transport Workers’ Union of Australia (1997) 75 FCR 480; (1997) 74 IR 236.

 16   Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at 208, (2000) 99 IR 309 at 317, [2000] HCA 47 at [28].

 17   See by analogy Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (2010) 198 IR 360 at 376-377, [2010] FWAFB 6021 at [47].

 18   See by analogy Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (2010) 198 IR 360 at 376-377, [2010] FWAFB 6021 at [47].

 19   The actual figure to be disregarded would not be as high as one third of the total estimates because Mr Houston applied a multiplier to the calculated losses for some of the remaining stoppages because they were scheduled to closely follow earlier stoppages.

 20   Total loss for containerised goods up to 0.98% and for bulk goods up to 0.21%, GSP measured over a 7-day period.

 21   Total loss for bulk goods up to 0.24%, GSP measured over a 7-day period.

 22   Total loss for containerised goods of 0.46%, bulk goods up to 0.06%, GSP measured over a 7-day period and assuming that 60% of towage work during a stoppage in Sydney could be outsourced to another operator.

 23   Total loss for containerised goods up to 0.72% and for bulk goods up to 0.19%, GSP measured over a 7-day period.

 24   Australian and International Pilots Association v Fair Work Australia (2012) 202 FCR 200, [2012] FCAFC 65 at [153].

 25   Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (2010) 198 IR 360 at 374, [2010] FWAFB 6021 at [41], citing FH Transport Pty Ltd v Transport Workers’ Union of Australia (1997) 75 FCR 480; (1997) 74 IR 236.

26 Australian and International Pilots Association v Fair Work Australia [2012] FCAFC 65 at [92].

 27   National Tertiary Education Industry Union v Monash University [2013] FWCFB 5982 at [54] and also National Tertiary Education Industry Union v University of South Australia (2010) 194 IR 30, [2010] FWAFB 1014 at [13].

 28   Australian and International Pilots Association v Fair Work Australia (2012) 202 FCR 200, [2012] FCAFC 65 at [157] and [166].

 29   Australian and International Pilots Association v Fair Work Australia (2012) 202 FCR 200, [2012] FCAFC 65 at [93]-[94] and [173] and Schweppes Australia Pty Ltd v United Voice (2011) 214 IR 282 at 294, [2011] FWA 9329 at [57].