FWA 6192
REASONS FOR DECISION
Fair Work Act 2009
s.424 - Application to suspend or terminate protected industrial action - endangering life etc.
Sucrogen Australia Pty Ltd
The Australian Workers' Union; "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
BRISBANE, 27 AUGUST 2010
Section 424(1)(d) application for an order to suspend or terminate protected industrial action - at Sucrogen Sugar Mills.
 These reasons relate to an Order issued in proceedings pursuant to s.424 of the Fair Work Act 2009 (Cth) (the Act) to suspend for four weeks the protected industrial action to be taken across Sucrogen (the Applicant) sugar mills by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and The Australian Workers’ Union (AWU) (collectively the Respondents/Unions).
 The remaining s.424(1)(d) application to Fair Work Australia (FWA) sought the termination of the notified industrial action on the basis that the industrial action was causing significant damage to the Australian economy or an important part of it. The proceedings covered the course of the day and into the evening. A short determination was provided on transcript at the end of proceedings.
 This s.424 application was one of four applications made by Sucrogen, the Canegrowers Association and Kalamia and Pioneer Canegrowers associations. The other applications made pursuant to s.423 and s.426 were found to be jurisdictionally barred and a determination to this effect was recorded on transcript during the proceedings. These other Applications were dismissed on the basis that the industrial action was not being ‘engaged in’, contrary to the statutory requirements in s.423 and s.426.
 These other matters are mentioned as the Applicant sought to rely on some of the evidence from the other applications. Pursuant to s.590 I allowed this evidence to be addressed in the current application. An adjournment was provided to allow the Respondents’ to consider the material. The material had already been filed with the Applicants’ initial material. After considering the material the Respondents sought to cross-examine three of the witnesses.
 The industrial action referred to in the application (from 8.00 am on Wednesday 28 July 2010 to 8.00 am on Thursday 29 July 2010) is protected industrial action which was authorised by the ballot order dated 24 February 2010 (PR994172).
 As background to Sucrogen’s application that the protected industrial action has threatened, was threatening or would threaten to cause significant damage to the Australian economy, or an important part of it, it was submitted that Sucrogen produces sugar at various facilities throughout Australia, including the Sugar Mills at Victoria, Macknade, Invicta, Pioneer, Kalamia, Inkerman and Plane Creek Mills (Sugar Mills) and that these operations were being compromised by the industrial action which in turn was impacting on the surrounding economy.
 It was submitted that the Regional communities and economies that surround the seven Sucrogen Sugar Mills are underpinned by the operations of these Mills. The seven mills and related regional areas which from north to south are:
1. Plane Creek Mill - Sarina;
2. Inkerman Mill - Home Hill;
3. Kalamia Mill - Ayr;
4. Pioneer Mill - Brandon;
5. Invicta Mill - Giru;
6. Victoria Mill - Ingham; and
7. Macknade Mill - Halifax.
 The relevant legislation is set out as follows, the Applicant relied upon s.424(1)(d):
424 FWA must suspend or terminate protected industrial action—endangering life etc.
Suspension or termination of protected industrial action
(1) FWA must make an order suspending or terminating protected industrial action for a proposed enterprise agreement that:
(a) is being engaged in; or
(b) is threatened, impending or probable;
if FWA is satisfied that the protected industrial action has threatened, is threatening, or would threaten:
(c) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
(d) to cause significant damage to the Australian economy or an important part of it.
(2) FWA may make the order:
(a) on its own initiative; or
(b) on application by any of the following:
(i) a bargaining representative for the agreement;
(ii) the Minister;
(iia) if the industrial action is being engaged in, or is threatened, impending or probable, in a State that is a referring State as defined in section 30B or 30L—the Minister of the State who has responsibility for workplace relations matters in the State;
(iib) if the industrial action is being engaged in, or is threatened, impending or probable, in a Territory—the Minister of the Territory who has responsibility for workplace relations matters in the Territory;
(iii) a person prescribed by the regulations.
Application must be determined within 5 days
(3) If an application for an order under this section is made, FWA must, as far as practicable, determine the application within 5 days after it is made.
(4) If FWA is unable to determine the application within that period, FWA must, within that period, make an interim order suspending the protected industrial action to which the application relates until the application is determined.
(5) An interim order continues in operation until the application is determined.
 The Explanatory Memorandum with respect to s.424 does not provide additional guidance.
 The New Shorter Oxford English Dictionary relevantly defines the following terms in s.424(1)(d) as follows:
threaten - Constitute a threat to; be likely to injure; be a source of harm or danger to
Significant - Important, notable; consequential
Damage - 1 Loss or detriment to one’s property, reputation, etc.; 2 Harm done to a thing or person; esp physical injury impairing value or usefulness
Important - Having great significance; carrying with it great or serious consequences, weighty, momentous
Part - A quantity which together with others makes up a whole (whether actually separate from the rest or not); an amount, but not all, of a thing or a number of things; a portion.
 A short determination was provided given the lengthy proceedings and the time available, that suspended the industrial action on the basis that further reasons would be provided at a later time. The determination provided Order PR999866 which suspended the industrial action from 7.00 pm on 27 July 2010 to 7.00 am on 27 August 2010. The determination was based, in summary on the following evidence.
 Primarily the impact of the threatened protected industrial action would be an immediate loss of $313,000 to the mills alone. The 24 hour stoppage included an additional period of approximately 18 hours of lost crushing as related harvesting is deferred (to avoid deterioration of uncrushed cane) as the mill is wound down in readiness for the stoppage and then time is required to prepare the boilers to recommence the crushing process, after the industrial action. Significant damage to the sugar industry cannot be determined on the basis of only a monetary measure associated with the time directly lost from the industrial action in a finite manner. A stoppage of the crushing process on the evidence threatened to have a compounding effect by reducing the optimum harvesting and crushing time.
 The evidence confirmed that there is particular pressure on the 2010 crushing season given that the forecast for this year promised an increased cane production and a recovery from the last three years, where the industry suffered economic and weather related impacts.
 The period of the crushing season and related timetable for the crushing of cane is specifically scheduled to provide for equity amongst growers in relation to commercially recoverable sugar content (CCS). This season also provided for an improvement in the forecast price of sugar. Many growers have entered into Forward Price Agreements with Sucrogen on this basis. Such agreements do not make provision for force majeure relief. Accordingly every disruption to “the crush” has the potential to significantly damage the ability for the parties to meet their contractual obligations.
 The industrial action taken in the current season from July 19 to 21 caused lost processing time of 72 hours that prevented the harvest of at least 100,000 tonnes of sugar cane in the Herbert. A further 70,000 tonnes was threatened by the current proposed industrial action arising from the effect of the reduced harvesting in preparation for the mill stoppage and then starting up the boilers after the stoppage. Whilst comparatively this period of industrial action may not be considered to be substantial in other industries, in the sugar industry which has an annual finite processing period and a perishable crop, the period is damaging to the prospect of crushing the crop in the time available, whilst the cane is at its peak and in fact completing the processing of the season’s crop.
 To date the sugarcane crop was only 28% harvested and long range weather forecasts currently predict La Nina conditions for later in the 2010 season for north east Australia.
 These issues were further explained in evidence as set out later.
 The evidence demonstrated that the sugar industry is a highly significant domestic and export industry and a significant part of the Australian economy. Mr Day’s (Executive General Manager Cane Products at Sucrogen) evidence is that the annual Australian sugar crop is 32 million tonnes, and that the yield of sugar per tonne of cane is about 13.9%. The average price per tonne of sugar is currently about $480 per tonne, valuing total domestic sales at $480 million and export sales at $1.7 billion. Sucrogen is responsible for between 40%-50% of all sugar produced in Australia.
 The statistics provided in evidence emphasised the importance of the industry and the importance it bears to that part of the Australian economy in that it provides a significant return to the parties to the industry and the related economy:
Industrial action taken and threatened
 The details of the industrial action taken to date at the Sucrogen sugar mills are:
(a) a 24 hour strike occurred from 7.00 am Monday 31 May 2010 to 7.00 am Tuesday 1 June 2010, including a total ban on callouts and overtime during the same period;
(b) a 24 hour strike from 7.00 am Thursday 10 June 2010 to 7.00 am Friday 11 June 2010, including a total ban on callouts and overtime during the same period;
(c) a 48 hour strike from 7.00 am Monday 19 July 2010 to 7.00 am Wednesday 21 July 2010, including a total ban on callouts and overtime during the same period.
 The industrial action which was threatened, according to the notice, was a 24 hour strike (with the same bans) from 8.00 am on Wednesday 28 July 2010 to 8.00 am on Thursday 29 July 2010. However the evidence was that 18 hours of downtime had to be added to this 24 hour stoppage, to allow for the growers to stop harvesting to ensure cane losing sugar content is not left in bins, whilst the mill is stopped and then to accommodate the restarting of the boilers after the stoppage.
Summary of Applicant’s Submissions
 It was submitted on behalf of the Applicant:
“Requirements of section 424
The requirements for an order terminating protected industrial action under section 424 are simpler; FWA need only be satisfied that the protected industrial action has threatened, is threatening or would threaten to cause significant damage to the Australian economy or an important part of it.
The statutory declarations of Mark Day and Tracey Garzotto establish clearly that industrial action is causing significant economic harm to Sucrogen. Sucrogen suffers a loss of approximately $313,000 for each day of industrial action (Day, paragraph 20). Additionally, because the crushing season is finite, there is an increasing risk that the crush will not be completed in 2010. If so, then Sucrogen’s permanent losses will increase dramatically to between $1.5m and $2m per day (Day, paragraph 26). A detailed financial analysis supporting these estimates by Mr Day are set out in Ms Garzotto’s statutory declaration.
These losses are clearly significant.” 2
 The Applicant further submitted that:
“the source, nature and degree of harm suffered for Sucrogen is set out in the statutory declarations of Mr Day and Ms Garzotto and, for employees, is a simple loss of wages (noting that for season[al] employees, the only guaranteed employment they may have is during the crushing season);
[and] there is a high likelihood that the harm will continue to be caused unless an order is made.” 3
 The Applicant confirmed that:
“...the industrial action has been engaged in for a protracted period of time. The industrial action which was authorised by the ballot is a series of rolling stoppages and overtime and call-out bans. The industrial action proposed commencing on Wednesday 28 July 2010 is the fourth incident of protected industrial action since 31 May 2010.” 4
 The Applicant explained the effect of the industrial action was seen as protracted by industry standards as follows:
“In some industries, this might not be regarded as protracted. For example, in the coal industry where the coal remains safely in the ground, and the employers are in a position to place the coal mine on care and maintenance at minimal cost if there is lengthy industrial action, what is ‘protracted’ may be quite a significant period of time. In the circumstances of the sugar industry, where there is a perishable crop, a defined crushing season and a significant risk that parts of the crop will be lost forever...
In the particular circumstances of this industry, the industrial action is already ‘protracted’ and likely to become more so unless an order is made.”5
 The Applicant emphasised that by any standards, the sugar industry is an important part of the Australian economy, and industrial action at the seven Sucrogen sugar mills (approaching half of the industry) will inevitably cause significant damage to that part of the economy. The Applicant explained that the North Queensland economy was reliant on the sugar industry for its economic wellbeing.
 In these circumstances, the requirements of s.424 are plainly satisfied, and FWA must make an order suspending or terminating the protected industrial action (s.424(1)).
 In circumstances where the parties have negotiated to exhaustion, the industrial action is impacting the growers’ harvest and the crush at the mills and potentially jeopardising the completion of the crush, the Applicant submitted that the appropriate order is to terminate the protected industrial action.
Summary of Respondent’s Submissions
 The Respondents’ submissions did not refute the importance of the sugar industry or conclusively challenge the impact of the industrial action. However they emphasised the legislative entitlement of the employees to take the appropriately authorised and notified protected industrial action.
 The submissions centred on the wording of s.424(1)(d) and the requirement for the industrial action to “cause significant damage to the Australian economy or an important part of it.” Principally their collective submissions rejected that the proposed industrial action would cause significant damage and further they argued that whilst the sugar industry represented an important industry, it did not represent an important part of the Australian economy, on a comparative basis.
 In particular, in cross-examination, Ms Rogers of the CEPU challenged the sugar industry statistics raised by the Applicants, on the basis that these were not provided as a proportion of the Australian economy. Therefore, she argued the impact of the industrial action was demonstrated as damage to these sugar mills, but it was not representative of an important part of the Australian economy on the material presented. It was submitted that no comparative data or statistics were provided to meet the statutory test of an important part of the Australian economy.
 Further the decision of Bacon C in BHP Coal Pty Ltd, Hay Point Services Pty Ltd v CFMEU, CEPU and AMWU 6 was referred to. In this decision a similar provision of the legislation as it then appeared was considered - s.170MW(3)(b). That provision was in relatively similar terms to s.424 whereby “industrial action...is threatening... (b) to cause significant damage to the Australian economy or an important part of it”. The decision provided a lengthy summary of the circumstances of that matter. The decision concluded that the coal export industry was not an important part of the Australian economy as follows:
“ What is before the Commission on this submission is:
. The export coal sector constitutes 8.3% of all of Australia's exports.
. The revenue generated by the export coal sector is approximately $8.3 billion.
. Professor Norman believes that roughly 120 million tonnes of coal were exported last year.
. Mr Tuck values the production lost for a one week strike at the five mines to be $33.65m based on a loss of 478300 tonnes.
. Mr Tuck advises that the annual budgetted production for the five mines is 20.8 million tonnes.
. The revenue generated by the export coal industry for last year was 1.3% of Australia's GDP ($8.3b/$640b).
. The export coal sector is a relatively small employer. The exact number of direct employees was not provided but it is likely to be about 10,000 to 12,000 employees if the ratio of exports (120 million tonnes) to total production (243 million tonnes) is correct.
 I turn to consider whether or not the coal export industry is an important part of the Australian economy. Australian annual GDP is $640b of which the export coal industry comprises $8.3b or 1.3%. I was not provided with any reason why the export coal industry should be considered as a separate part of the economy to the domestic coal industry. There is no need to resolve this question because it is only the export coal sector that is advanced as an important part of the Australian economy.
 Professor Norman's evidence is that the Australian export coal sector constitutes an important part of the Australian economy. This was not directly contested by CFMEU. However, CFMEU in its material relies on production figures for the entire black coal industry.
 It must be said that this point was not specifically dealt with in the submissions. The parties appeared to approach the point as though it should be taken that the export coal sector is an important part of the Australian economy. I have a predisposition to that point of view, however when scrutinised some of the material caused me to have some reservations. The industry is a relatively small employer and is 1.3% of GDP. It constitutes 8.3% of export income but that is not relevant to the subsection because the test is not that it be an important part of an important part of the Australian economy. At some point using the economic data required by Coal and Allied the point needs to be fully debated (or made out if the parties agree on it). It must be said however that as a matter of degree 1.3% of GDP on its face is not immediately suggestive of an "important" part of the Australian economy.
 I have concluded that the evidence does not establish that the entire export coal sector is threatened in the way advanced by BHP. More likely BHP may come under pressure on price or volume in future negotiations with customers. The extent of that pressure will be dependent on a number of things including the supply and demand balance at the time of the negotiation. Even if BHP did lose some volume it is not automatic that the customer will source that supply from another country.
 There is little hard economic data before me which could support a conclusion that the outcomes predicted by BHP threaten to cause significant damage to the whole of the export coal sector (if that sector is an important part of the Australian economy). What may happen in contract negotiations at some time in the future is in my view quite speculative and considerable caution would need to be exercised if any reliance was placed in these predictions in order to terminate these bargaining periods. The High Court requires more than general predictions when determining the existence of the s.170MW(3) circumstances.
 For the foregoing reasons I am not satisfied that the circumstances of s.170MW(3) exist or have existed. Accordingly, the Commission lacks the jurisdiction to terminate the bargaining periods that are the subject of these applications. It is my conclusion that the detailed economic analysis that is required by Coal and Allied in order to establish the existence of the s.170MW(3) circumstances results in a much higher jurisdictional bar than earlier Commission decisions concerning the subsection might have suggested.”
 Evidence was provided from a series of experts from the Sucrogen sugar milling operations and the Canegrowers’ Association.
 The evidence on behalf of the Canegrowers’ Association was that the industrial action will:
“Damage the ongoing viability of cane growers supplying sugarcane to Sucrogens mills in the Herbert River region based in the Hinchinbrook Shire.
For an 11 year period from 1998 to 2008 inclusive cane growers in the three regions have suffered severe economic difficulty caused by exceptional seasonal conditions including floods, drought, disease (orange rust and sugarcane smut) that have necessitated two changes out of major productive varieties, historically low sugar prices and legislative constraints.
The 2009 season provided some economic respite to the industry but pressure remains to change out of Smut susceptible varieties. Ploughing out areas of harvested susceptible varieties for rapid re-plant by spring is an important element of the strategy to manage the impact of Sugar Cane Smut Disease.
Every delay to the harvest restricts and constrains the recovery from Sugar Cane Smut Disease. There are a limited number of days in the window of opportunity when weather conditions are suitable from June 21st to end of August.
More importantly, every delay in the harvest necessitates an extension of the season at a high marginal cost to the canegrowers whose cane value is determined by the commercially recoverable sugar content (CCS) at the time of harvest when the cane is processed.
The industrial action taken on July 19th to 21st has amounted to more than 72 hours of lost processing time when the weather was fine, thus preventing the harvest of at least some 100,000 tonnes of sugar cane in the Herbert. The action now notified threatens a further 70,000 tonnes from the effect of reduced harvesting in preparation for the stoppage and starting up cold after the stoppage.
A core value of the sugar industry is the recognition of the importance of agricultural viability and overall industry sustainability that the crop be processed in time to manage the risks of:
- Damage by low CCS
- Leaving cane unharvested
- Subsequent year’s consequential loss by late harvested rationing poorly for the next season’s crop.
The 1998 season is an example of what can go wrong in a “La Nina” weather pattern such as affected the Herbert. In that season the crop available for harvest was estimated at 5.1 million tonnes. Harvesting ceased on 21st November after an exceptionally wet harvest and the mill closed with 4.14 million tonnes actually processed and paid for and 47 685 tonnes being harvested and below 7ccs where it is not eligible for payment.
More than 900,000 tonnes of sugar cane was left unharvested that year which was a major economic catastrophe for the Herbert.
The CCS chart including the 1998 season illustrates the particular behaviour of CCS for that season...
Long range weather forecasters are currently predicting La Nina conditions for later this year in the north east of Australia.
The following is an extract from the Bureau of Meteorology web site July 22nd 2010.
“Pacific Ocean in early stages of a La Nina event
Issued on Wednesday 21 July 2010 | Product Code IDCKGEWWOO
Tropical Pacific Ocean temperatures continued to cool over the past fortnight, and are now approaching levels typical of a La Nina. Similarly, other ENSO indicators are also at or exceeding La Nina thresholds. As computer models predict the central Pacific will continue to cool over the coming months, it is now highly likely that the Pacific is in the early stages of a La Nina event, and that 2010 will be considered a La Nina year.
Signs of an emerging La Nina event have been apparent in the equatorial Pacific for several months. Pacific Ocean temperatures have cooled steadily throughout the year and are now more than 1°C cooler than average in some areas on the equator. The Southern Oscillation Index (SOI) has increased in value and is suppressed over the central Pacific. All of these key indicators are at levels typical of the early stages of a La Nina event.
La Nina periods are usually, but not always, associated with above normal rainfall during the second half of the year across large parts of Australia, most notably eastern and northern regions. Night time temperatures are typically warmer than average and Tropical Cyclone risk for northern Australia increases during the cyclone season (November-April).”
Disruption to Supply of Goods and Services
The whole supply pattern for sugar cane harvesting and processing is built around a system of continuous crushing, seven days per week, 24 hours per day with stoppages only for adverse weather and breakdowns.” 7
 Mr David Lando, Chairman of the Canegrowers’ Burdekin Association, stated in evidence:
“For the past three years, sugar cane growers in the Burdekin district have suffered economic and weather related impacts that have resulted in a production decline. This is in addition to low world prices received prior to the 2009 season. 2010 was forecast as being a year that promised an increase in production and further recovery from the 10 years of poor prices with a forecast price of $43.13 per tonne of cane.
The crush start date is set on the basis of the maximisation of revenue. Growers have limited opportunity in which to harvest their crop in a period either side of the CCS peak. A one unit drop of CCS is equivalent to approximately $4.05 (GST excl) per tonne of cane at today’s prices. Any disruptions to the crushing season diminish the opportunity to maximise such income.
To manage the risk of disruptions to the harvest caused by wet weather, to maximise revenue from the 2010 increased production and to try and ensure the ongoing viability of growers, this year’s harvest commence two weeks earlier than the usual time.
Any gain from the earlier commencement has been reduced by the industrial action to date which has resulted in a loss of 168 hours of actual cane crushing time at each of the four Sucrogen Mills in the Burdekin region. During this time Burdekin growers have been prevented from delivering approximately 385000 tonnes of sugar cane.
There is extreme concern that should this industrial action continue, a significant portion of the crop could be rendered unharvestable and the balance not able to achieve its true value.
Disrupt the supply of goods or services to an enterprise carried on by CANEGROWERS:
To date, the 2010 crop is approximately 28% harvested. The financing and cash flow requirements generally are that the first 50% of a particular season’s crop proceeds are used to service trade debts (eg fuel) and short term carry on finance requirements (eg repayment of overdrafts). Fertiliser and ratooning crop expenses fall in the period August through to November and continued industrial action may result in critical agricultural activities not being undertaken or at least significantly delayed. This will result in a negative impact on the yields of next season’s crop and finances.
Reduce the person’s capacity to fulfil a contractual obligation:
There is a very significant percentage of growers who have taken advantage of futures trading possibilities and have locked in prices for the 2010 crop. To do this, they must enter into a Forward Price Agreement with Sucrogen. Clause 11 of this Agreement clearly demonstrates that the grower does not have access to Force Majeure relief.
“ 11 Liability of Grower
(a) If the quantity of Cane delivered to CSR by the Grower for the Relevant Season is less than the quantity of the Committed Cane Tonnage for the Relevant Season, then the Grower shall pay to CSR, on demand by CSR, the amounts determined in good faith by CSR as its losses under the Risk Management Contracts and any other costs, expenses, losses and damages suffered or incurred by CSR (including the unrecovered amount of the Administration Fee applicable to the Grower and any losses resulting from the closing out of price and currency exposures) as a result of the Grower’s failure to deliver the quantity of Committed Cane Tonnage for the Relevant Season.
(e) The parties agree that the Grower shall not be able to claim Force Majeure relief in relation to the Grower’s obligation to supply the quantity of Committed Cane Tonnage for the Relevant Season, nor is the Grower permitted to terminate the Cane Supply Agreement as a result of any event of Force Majeure.”
There is an obligation to deliver under the Forward Price Agreement and such obligation is normally to commit up to an estimated 50% of the grower’s crop for up to 3 years forward. This figure of 50% will most probably be a higher figure in 2010 due to the reduced crop following the weather impacts of 2009. Growers may not be able to meet their cane supply requirements under the terms of the Agreement should industrial action continue.
Cause other economic loss to the person
Many growers employ people to assist with the harvest and delivery of sugar cane. The average rate paid ... is $20.47 per hour. These people are generally not able to be stood down while industrial action is being undertaken and the ability to have them perform different tasks is limited.” 8
 Ms Tracey Garzotto, Sucrogen’s Senior Commercial Manager, who has been employed by Sucrogen for 30 years, estimated Sucrogen’s loss if a day of industrial action cannot be made up at the end of the season to be as follows:
“This analysis is carried out on the assumption that, as a result of wet weather, industrial action or any other reason, Sucrogen is unable to extend the crushing season before the entire crop is crushed, and therefore the day’s production can not be recovered.
This analysis does not take into account a reduction in sugar cane CCS content which occurs late in the season. A day’s production at the end of the season is not as profitable as a day’s production in the middle of the season because the sugar yield is lower. This has the capacity to increase the amount of the loss.
My assumptions are Sucrogen would have crushed 90,000 tonnes of cane that day (our crushing capacity is between 90,000 - 100,000 per day); the sugar yield is 13.9% (which is the average yield); the sugar price is $480 per tonne (which is the current price being received by Sucrogen for its product)
Therefore, in summary, Sucrogen’s potential loss per day of industrial action if the result is that the cane not be crushed at all (leaving aside ethanol losses) are as follows:
(a) unavoidable unproductive costs of each stoppage - $187,000;
(b) loss of cogeneration power revenue - $66,000;
(c) loss of sugar production - $1,609,000.
Therefore, in summary, for each day of industrial action:
(a) leaving aside losses in its ethanol business, Sucrogen will suffer losses of approximately $253,000, made up of unproductive labour costs and cogeneration power revenue losses;
(b) depending on the maximum available length of the crushing season, Sucrogen may incur further losses in the vicinity of $1,609,000.” 9
 Further, Mr Mark Day, Executive General Manager Cane Products provided detailed evidence regarding the Applicant’s offers that had been made in negotiations with the Unions. He stated “My understanding is that none of these proposals were acceptable to the employee bargaining representatives, and therefore the Sucrogen negotiators have been unable to negotiate any productivity improvements of sufficient financial value to offset the labour cost increases to Sucrogen.” 10
 Mr Day stated in evidence, in response to questions as follows:
“You say that the annual sugar crop is worth in the order of $2.18 billion. Is that correct??---Yes.
And of that, $1 billion annually is Sucrogen's share of the pie?---Yes, but it (indistinct) revenue and some cogeneration revenue.
But $1 billion is an accurate estimate of your income for the year?---For the total revenue, yes, before paying for cane and all of our operating costs.
You also state that the loss approximately for every day of action is $313,000 a day. Is that correct??---In clause 20, yes, that's an estimate of the costs for when we have to shutdown and when we restart around the stoppages.11
From the growers' perspective - so I have an understanding of the impact - is that the further out - we've seen a chart previously, that the further out that the season is elongated, there is an impact on the CCS content?---Yes, and that's assuming that you can still crush the cane. So each season will have its own CCS curve but as you get into that hotter temperature and it's dry, towards late November and early December, you see that the CCS level tail-off. So I think that somebody else has presented you with a graph showing that. Basically that affects the sugar content of the cane which has a significant impact on (indistinct) In that $313,000 we haven't estimated the cost on the harvesting sector or on the growers.12
One day - does that have any sort of impact in terms of this forward-pricing contract?---Yes, what we're talking about here is whether the cane gets crushed or not at the end of a season. So the $313,000 assumes that we can still crush the cane and that the weather is fine at the end of the season. If the wet season comes in early and we're not able - we can't harvest when the paddocks are wet because we have mechanical harvesting and all that. So if that cane is left standing in the field, then in clause 26 it outlines what one day across our whole group would cost once again in terms of EBIT. I've also, because we've got some cane farms, made a rough estimate of what it would cost the growers. So this is by far the largest impact. If we don't stop for a day, then we can still get caught at the end of the season with wet weather but we would have crushed another day's cane.
So the industrial action at this time has the most impact, at this time of the season. Is that what you're saying?---At any time of the season because if we lose a day's crushing and the wet season comes in early - if we don't remove a day's cane, then clause 26 outlines that the impact to us and our EBIT is about one and a half to 2 million dollars per day and to the growers it's in excess of $2 million per day.”13
 Mr Peter Sheedy, Canegrowers’ Association provided evidence regarding the effect of the forward pricing contracts:
“We do have a contractual obligation to supply cane and we've forward-priced and therefore have a commitment to deliver sugar to the market and that's all handled on our behalf by Sucrogen through Queensland Sugar. Now, we do have a serious obligation that isn't forgiven by force majeure unless it's something that's through the absolute control of CSR or Sucrogen. So that's a serious obligation that we have. You know, things are priced on the intercontinental exchange and we've entered into serious contractual arrangements - our growers have. So that's an absolute obligation to deliver. Anything that threatens the ultimate delivery of that sugar is a serious issue for us.”14
 In the current matter in measuring ‘significant damage’ a distinction must be drawn between the determination in relation to the nature of the coal industry (as referred to) and the sugar industry. 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.
 The negotiations (between the parties Sucrogen and the current Unions) for the new enterprise agreement commenced in relation to a proposed Sucrogen Enterprise Agreement 2009 (Enterprise Agreement) on 17 July 2009.
 The decision to suspend the industrial action was based on an assessment of the evidence that the effect of the industrial action on that part of the Australian economy - North Queensland - threatened significant damage. This is due to the significant reliance of the North Queensland economy on sugar cane, and the need to maximise the return from the available crushing period.
 The forecast weather conditions predicted for North Queensland and this year’s crushing season also particularly constrain the opportunity for the sugar industry to ‘bounce back’ from the previous years of sub-standard production.
 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.
 The Applicant summarised the course of the bargaining as follows:
“A very lengthy and intense negotiation period (now approaching 12 months) has failed to secure an agreement, despite many days of negotiation and assistance from Fair Work Australia. Two proposals for a replacement enterprise agreement have been considered by the workforce, on each occasion with at least conditional support from their union bargaining representatives. On each occasion, the proposal has been rejected.
Mr Mark Day, the Executive General Manager - Cane Products, who has ultimate authority for Sucrogen’s offers, has sworn that Sucrogen’s current wage offer (3.75% per annum for two years) is the maximum offer which he will authorise in the absence of any acceptance by the workforce of productivity improvements which add identifiable value. Following almost 12 months of negotiation between the respective bargaining representatives in relation to the possibility of productivity improvements, and the absence of any acceptance by the employees of any proposals, it can safely be assumed that the current position from the employee side is of equal determination.” 15
 The suspension of the industrial action on the basis of the legislative criteria in s.424(1)(d) provides a cooling off period in this now protracted dispute. The short period of the suspension allows for the parties to have what now must be termed final negotiations in this matter, but also relieves the pressure on the employees (many of whom are particularly dependant on this seasonal employment), the growers to harvest their cane and the millers to progress the crush at this important stage whilst the CCS content is still maintained at suitable levels and prior to the prospect of rainfall. The leverage of the employees to then continue to take protected industrial action is maintained and it is anticipated that in this four week period, urgent discussions without the threat of industrial action from both sides, will bring about an agreement on the very few remaining issues between the parties.
Mr Daniel Williams, Minter Ellison, for the Applicant
Mr Greg Trost, Queensland Cane Growers Association Union of Employers
Mr Martin Smith, Boulton Cleary and Kern Lawyers, on behalf of the Kalamia and Pioneer Canegrowers’ Association
Mr Derek Broanda, The Australian Workers’ Union
Ms Pat Rogers, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Ms Lucy Weber, “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
Tuesday 27 July 2010
1 Exhibit 9, Statement of Mr Matthew Leslie.
2 Submissions of the Applicant.
7 Exhibit 6 - Statement by Canegrowers Herbert River supporting an application by Canegrowers under section 426 of the Fair Work Act 2009.
8 Exhibit 1, Statement of Mr D Lando.
9 Exhibit 7, Statement of Ms T Garzotto.
10 Exhibit 8, Statement of Mr M Day.
11 PN650-653 Transcript of Proceedings.
12 PN669 of Transcript of Proceedings.
13 PN673-675 Transcript of Proceedings.
14 PN571 Transcript of Proceedings.
15 Applicant’s submissions.
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