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TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1035055-1
COMMISSIONER JONES
AM2012/218 AM2012/240
Sch. 5, Item 6 - Review of all modern awards (other than modern enterprise and State PS awards) after first 2 years
Application by National Retail Association
(AM2012/240)
Fast Food Industry Award 2010
Application by Australian Industry Group
(AM2012/218)
Fast Food Industry Award 2010
(ODN AM2008/10)
[MA000003 Print PR985113]
Melbourne
10.13AM, TUESDAY, 13 NOVEMBER 2012
Continued from 12/11/2012
PN1467
THE COMMISSIONER: All right. I see there's a change of appearance.
PN1468
MR M FOLLETT: Commissioner, I seek permission to appear today solely for the purposes of dealing with the evidence of Mr Ian Harper.
PN1469
THE COMMISSIONER: All right, permission granted Mr Follett.
PN1470
MR FOLLETT: Thank you. Your Honour, I've had discussions with my learned friend about the manner in which we deal with Professor Harper's evidence.
PN1471
THE COMMISSIONER: Yes.
PN1472
MR FOLLETT: What I think we propose is that Professor Harper would take the stand, I would ask him some questions which assist in forming an understanding as to how the report that he will seek to tender has come to be, and his role in it, which I think will assist the Tribunal in dealing with the next step. Which would be at that point in time an objection from my learned friend to the tender of at least some of the materials contained in that report which can then be dealt with.
PN1473
THE COMMISSIONER: All right.
PN1474
MR FOLLETT: So if that's convenient to the Commissioner, and I'd seek to call Professor Ian Harper.
THE COMMISSIONER: All right. Mr Harper.
<PROFESSOR IAN ROSS HARPER, SWORN [10.15AM]
<EXAMINATION-IN-CHIEF BY MR FOLLETT [10.15AM]
MR FOLLETT: Professor Harper, could you please repeat your full name and business address for the transcript?---My full name is Ian Ross Harper. My business address is 550 Bourke Street, Melbourne.
PN1477
And who are you employed by, Professor Harper?---I'm employed by Deloitte, a partnership.
PN1478
And what is your role at Deloitte?---I'm a partner in the part of the firm that's referred to as Deloitte Access Economics.
PN1479
What does Deloitte Access Economics do in general terms?---Deloitte Access Economics provides economic consulting services to the general community.
PN1480
All right. Do you have in your possession, Professor Harper, a copy of a Deloitte Access Economics report in the Australian Industry Group Industry Impacts of Provisions of the Fast Food Industry Award 2010 Final Report dated 4 April 2012?---I do.
PN1481
Now as I read that report it contains some broad materials regarding the state of the fast food industry in Australia?---That's correct.
PN1482
And they're contained in part 3?---That's correct.
PN1483
It contains some information on consultations with some major franchise operators, and the report at pages 4 and 5 contains a short explanation as to how those consultations were conducted, and then part 5 contains a result to those consultations?---That's correct.
PN1484
Then there is some material dealing with a survey of some smaller fast food operators conducted by Sweeney Research, and a summary of how that material was put together is contained on pages 2 to 4, and then the results of that survey are contained in part 4 of the report?---That's correct.
**** IAN ROSS HARPER XN MR FOLLETT
PN1485
Then the final part of the report contained in part 6, headed Key Findings, has some assessments of the broad macro-economic impacts or likely or potential consequences which have arisen from the material contained in the consultations, the survey and the state of the market?---That's correct, Commissioner.
PN1486
What parts of the report do you have responsibility for?---Commissioner, my responsibility overall is what we call quality assurance partner. So my role was to read the report in its entirety and to check it for economic logic and coherence. In particular I was asked to focus on section 6, chapter 6 of the report which dealt, as Mr Follett says, with the economic implications of the results of the surveys and consultations that come earlier in the report.
PN1487
Can I just take you to page 35 of the report, Professor Harper, and that contains a section "Limitation of our work". Can you just explain to the Tribunal what the genesis of that provision is?---Commissioner, I'm not a lawyer as you'll appreciate. This statement here is what I understand to be a reliance statement. It is required to be appended to all of our reports by the firm's lawyers. The intent of this statement, as I understand it, is to ensure that the only party who could in principle take action against us for negligence or whatever would be our client, and that the report itself ought not to be relied upon by any other party apart from our client, at least in that legal sense.
PN1488
Now having said that, what do you say about the extent to which the Tribunal can rely on the materials contained in the report in this matter before it?
---Commissioner, as far as I'm concerned this report meets the professional standards that we attest. In other words it does represent the economic consequences, to the extent which they're able to be predicted, of the data that we have collected. So I believe it would constitute evidence that could be presented to the Tribunal in fairness as the Tribunal makes up its mind about these matters.
**** IAN ROSS HARPER XN MR FOLLETT
PN1489
Now just before we move on with the report can I take one step back and ask you whether you have a copy of your CV before you?---I do.
PN1490
Does the Tribunal have that? It's a - - -
PN1491
THE COMMISSIONER: Yes I do. Thank you Mr Follett.
PN1492
MR FOLLETT: Now is that your curriculum vitae of 29 pages most recently updated on 29 October 2012?---It is.
PN1493
Is that an accurate curriculum vitae?---I believe it is. There may be an omission of at least one directorship of which I've now become aware.
PN1494
All right, apart from that omission is it accurate?---I believe it is.
PN1495
I tender that, Commissioner.
PN1496
MR……….: You mean the CV?
PN1497
MR FOLLETT: Yes.
PN1498
THE COMMISSIONER: All right. I'll mark the curriculum vitae of Ian Ross Harper as exhibit AIJ 6.
PN1499
MR MOORE: Is that six, Commissioner?
THE COMMISSIONER: AIGJ 6.
EXHIBIT #AIGJ6 CURRICULUM VITAE OF IAN ROSS HARPER
PN1501
**** IAN ROSS HARPER XN MR FOLLETT
MR FOLLETT: Do you also have in your possession, Professor Harper, a letter from Deloitte Access Economics to the Australian Industry Group dated 30 October 2012?---I do.
PN1502
And that letter refers under the heading Survey of Smaller Fast Food Businesses on the first page to an attached letter of Sweeney Research?---It does.
PN1503
Do you also have before you the Sweeney Research letter dated 24 October 2012 which was appended to the Deloitte letter?---I do.
PN1504
Yes. Taking you back now to the principal report dated 4 April, having regard to what you've already said is the content of that report so far as you can give evidence about it true and accurate?---I believe it is.
PN1505
Yes, and are the contents of the subsequent letter dated 30 October 2012, which attaches the Sweeney Research letter, also true and accurate?---I believe they are.
PN1506
I'd seek to tender them individually, Commissioner, but I understand there's an objection to both of them. So perhaps that can be dealt with at this point in time?
PN1507
THE COMMISSIONER: Mr Moore?
PN1508
MR D MOORE: Thank you, Commissioner. Dealing with the Deloitte's report, the April report, Commissioner, first up.
PN1509
THE COMMISSIONER: Yes.
PN1510
MR MOORE: The first objection we make to that based upon the witness's evidence just given is that the only part of that report that the witness has affirmed to be true and accurate is section 6. The witness qualified his evidence that its contents were true and accurate, or at least his counsel did, by reference to the words "so far as he can give evidence about" it. The witness's evidence was that his dealings with the report were to read it for economic logic and coherency with a focus on section 6. There is no evidence that this witness is the author of the report.
**** IAN ROSS HARPER XN MR FOLLETT
PN1511
He is a reader of the report. A threshold that must be satisfied in order for a document to go in as evidence is that the author must attest that it is a true and correct document. This witness on his own evidence is unable to do that, save arguably in relation to section 6, and that brings into play other issues with which I will deal in a moment. So the first objection we take is to the report in its entirety on the basis that it has not been proved in the necessary way.
PN1512
This witness is not the author of the report and has not attested to it being true and accurate. It cannot be received, and this I might add, Commissioner, is an issue raised by my client in its submissions and in subsequent correspondence with the AiG. If there's any issue about that I can tender the correspondence, but it has been - the AiG is squarely on notice of the SDA's position in relation to this report, and the AiG has been told from the very start that we object to the reliance on that report.
PN1513
No witness statement was filed or has been filed by Professor Harper or anyone else to attest to it. This is the first occasion when we've had any statement made as to authorship, and when that statement is made what is apparent is that the witness is not the author, so it cannot be received absent a witness saying "This is my work and it is true and correct". So that's the threshold objection we raise, Commissioner.
PN1514
Moving to the next point - I'll come back to the letter of 30 October at the end, but just staying with the report for a moment, Commissioner. If you're against us on the primary objection I have just articulated, the next position we adopt is this, is that the Tribunal should exclude all of the report save for chapter 3 which is entitled Market Analysis. We don't have an objection to that going in but the rest of it is inadmissible for the reasons I'll now outline.
PN1515
To articulate the objection I need to take you, Commissioner, through some background about the report beyond what my friend has done. If I can ask you to look at the report and to look at the - you'll see after the contents page there's an executive summary, Commissioner. On page (i) you'll see under the heading Purpose of the Report - do you see that, Commissioner?
**** IAN ROSS HARPER XN MR FOLLETT
PN1516
THE COMMISSIONER: Yes.
PN1517
MR MOORE: It states that:
PN1518
The AiG engaged Deloitte Access Economics to conduct a survey and consultations with major industry operators to identify the impact of the Fast Food Industry Award 2010 on industry participants across Australia. The survey and consultations gathered evidence on the impact of the Fast Food Award as follows.
PN1519
The first dot point:
PN1520
The survey focussed on businesses directly covered by the Fast Food Award, typically smaller sized businesses not covered by collective agreement.
PN1521
The second dot point:
PN1522
The consultations focused on businesses indirectly affected by the Fast Food Award through the workplace bargaining process, typically larger sized companies and franchises that are covered by collective or other agreements.
PN1523
And then:
PN1524
The project also involved a market analysis of Australia's fast food industry.
PN1525
Now what I've read out to you, Commissioner, is a convenient short summary of the three components of the report and as indicated we don't have an objection to the market analysis going in. Dealing with the other two components they are the components to which we object. Looking at the survey, staying on page 1, the same page that you're on, Commissioner, you'll see that there is a summary on the second-last paragraph in the first sentence:
**** IAN ROSS HARPER XN MR FOLLETT
PN1526
The survey approach involved computer-assisted telephone interviewing and was undertaken by Sweeney Research.
PN1527
I'll stop reading the extract there. Then if I can ask you, Commissioner, to go to page 2 of the report proper, and there's a heading towards the top of the page called Survey and there's a re-statement under there under the second paragraph, a reference to computer-assisted telephone interviewing being undertaken by Sweeney Research. Then if I can take you briefly through the following paragraphs:
PN1528
Sample size and structure.
PN1529
You'll see it begins:
PN1530
For the purposes of this project Sweeney Research recommended a minimum sample size of 500 respondents.
PN1531
And then in the next paragraph:
PN1532
The sample structure was designed by Sweeney Research to ensure a representative sample was achieved based on ABS counts of Australia businesses.
PN1533
Over the page under the table in the first sentence:
PN1534
As indicated, Sweeney Research was able to achieve the required sample size overall.
PN1535
And then at the bottom of the page, the first sentence:
**** IAN ROSS HARPER XN MR FOLLETT
PN1536
Sweeney Research conducted a series of pilot interviews prior to the main field work.
PN1537
Then over the page on page 4:
PN1538
Sample source and recruiting. In determining contacts to the telephone sample Sweeney Research sourced potential participants from Sweeney Research's business database and a purchased list of businesses -
PN1539
et cetera. Now just stopping there, Commissioner, so what you can plainly see on the face of the document is that Deloitte Access Economics has not conducted the survey, certainly this witness hasn't. So the contents of the report in so far as it relates to the survey is not direct evidence of the survey. That is very important, Commissioner, because the SDA challenges the reliability of the survey. The SDA will be adducing evidence from Professor Ian Gordon, the director of the Statistical Consulting Centre at the University of Melbourne, and his evidence - excuse me a moment, Commissioner. Without reading his report in its totality the conclusion he reaches in relation to the survey in paragraph 35 of his report is this:
PN1540
In view of the several issues identified above, in my opinion the results of the Deloitte's survey cannot be regarded as reliable. Most notably the sample frame used and the apparently low responses rates mean that there is considerable potential for biases of unknown size in the percentages obtained. I believe that the figures cannot be regarded as a reliable indication of award impacts on Australian small businesses covered by the Fast Food Award.
PN1541
Now that will be the evidence that will be adduced on Thursday. Now in the face of that evidence what my friend seeks to do is to tender hearsay evidence through this witness which, as I indicated at the outset, hasn't even been attested to being true and accurate because all he did was read that part of the report; in circumstances where the SDA directly challenges that survey and where the AiG is squarely on notice of the SDA's position.
**** IAN ROSS HARPER XN MR FOLLETT
PN1542
The AiG has had every opportunity to get its house in order and to prove the survey in the ordinary way. To admit the evidence in those circumstances would be extremely prejudicial to the SDA, Commissioner, because it can't properly be tested. Professor Harper in his curriculum vitae does not say he is a statistician. He is an economist. He does not say he's a market researcher or holds any qualifications in the fields of statistics or market research. How can it the SDA test that evidence through Professor Harper? It cannot.
PN1543
So if the evidence comes in what you, with respect, Commissioner, will be left with is hearsay evidence about a survey which the AiG has been on notice it needs to prove in the ordinary way, with Professor Gordon coming along and saying it's unreliable. Now obviously there are submissions that could be made about that from this end of the bar table in due course and I acknowledge that. But putting first things first there is a need, as ventilated on previous occasions before you, Commissioner, for this Tribunal to have before it evidence.
PN1544
This is not evidence; it's hearsay assertions that this witness is unable to, and has not attested to. The end result would be that the survey evidence, if it's admitted, would get in without it being able to be properly tested, in circumstances where there will be direct independent expert evidence that says it's unreliable. So that deals with the survey component of the report, Commissioner. Might I turn to the second part of the report to which the SDA objects which is the consultations. If I can ask you, Commissioner, to look at page 4 of the report and I'll take you through the brief summary of these consultations.
PN1545
THE COMMISSIONER: Four did you say?
PN1546
MR MOORE: Page 4, yes Commissioner.
PN1547
THE COMMISSIONER: Yes I have it.
**** IAN ROSS HARPER XN MR FOLLETT
PN1548
MR MOORE: Under the heading Consultations the report states:
PN1549
As outlined above, the intent of the consultations was to gather evidence on Fast Food Award impacts from major franchise brands in Australia ie. those that are typically indirectly affected through the collective agreement bargaining process. In particular consultations were undertaken with the following major fast food operators, McDonalds, Yum! being KFC and Pizza Hut, Competitive Foods Australia, Hungry Jacks, Quick Service Restaurants, Red Rooster, Chicken Treat and Oporto.
PN1550
Jumping down to the next paragraph:
PN1551
The consultations themselves involved broad discussions on the views of participating major fast food operators regarding realised and potential impacts of the Fast Food Award including options for cost containment. In addition the consultations included a run through of the results of internal data gathering that was undertaken by each of the participating fast food operators prior to the consultation meetings. This was undertaken to ensure the information gathered through the consultations was as accurate as possible.
PN1552
Stepping down to the last paragraph before the next heading:
PN1553
The data gathering exercise involved a separate process for company-owned stores versus franchisee-owned stores, as explained below.
PN1554
And then under the next heading Gathering Data from Company-owned Stores the report states:
PN1555
For company-owned stores head office staff completed the questionnaire on behalf of all company-owned stores as a whole.
PN1556
**** IAN ROSS HARPER XN MR FOLLETT
I move to the next paragraph:
PN1557
Given that some operators have a larger number of company-owned stores than others, the questionnaire results from each operator were weighted using the number of each operator's company-owned stores as a share of the total.
PN1558
Then under the heading Gathering Data from Franchisee-owned Stores it states:
PN1559
For franchisee-owned stores head office staff were unable to complete the questionnaire on behalf of franchisees due to their ability for autonomous decision making in many areas. As such the questionnaire was completed by a sample of franchisees operating under each -
PN1560
I assume that means:
PN1561
- of the participating fast food operators brands. The process of sending out the questionnaires and compiling the responses was undertaken by head office staff from each of the participating operators with assistance from Deloitte Access Economics in designing the questionnaire tool and compiling survey responses. Feedback from each of the participating fast food operators suggests that responses rates of at least 10 per cent of all franchisees were achieved.
PN1562
Stepping down to the last heading Combining Data for Company-owned Stores with Franchisee-owned Stores:
PN1563
In order to draw conclusions across all stores ie. both franchisee and co-owned stores of the participating operators the aggregated results of the franchisee stores were merged with the aggregated results of the company-owned stores using a similar weighting approach.
PN1564
**** IAN ROSS HARPER XN MR FOLLETT
Now that is the nature of the consultations which are referred to in the report. What is apparent is that those "consultations" are hearsay and not direct evidence from the persons who provided responses. Extensive opportunity has been provided, and as you would be well aware, Commissioner, has been availed of by the industry generally, and including in particular the major companies with whom these consultations were undertaken. You've heard yesterday from Ms Taylor from McDonalds.
PN1565
You've heard from people from Yum! including Ms Burnell, and you've heard from franchisees from KFC and Pizza Hut. So, Commissioner, you have the benefit of direct evidence that has been adduced from those persons, and those who have not filed any evidence or given any evidence in this proceeding, they had an opportunity to do so. That, with respect, is the appropriate course because it can be tested. You will see, Commissioner, from the previous day's hearing how that evidence is able to be tested.
PN1566
There are all sorts of questions that arise when fast food franchisees and franchisors make the assertions that they do in their witness statements, and I've sought to probe and identify those issues. Now I won't have that opportunity if these so-called consultations which are said to be expressly an evidence-gathering exercise come in through this witness. We say that's most prejudicial for the obvious reason, and it's unnecessary because they've had an opportunity to put on evidence in the normal way.
PN1567
You will again be left with what is aggregated evidence - aggregated claims, I'm sorry, Commissioner. So you have an aggregation of claims by franchisors, the majors and the company-owned stores for these consultations, and you have an aggregation of claims of franchisees, and then you have an aggregation of the aggregation, "There you are. There's the evidence". Now that doesn't come within a bull's roar of being admissible evidence and there's an appropriate way of adducing such evidence, and the AiG has sought to do that in other instances.
**** IAN ROSS HARPER XN MR FOLLETT
PN1568
THE COMMISSIONER: Just to be clear, Mr Moore.
PN1569
MR MOORE: Yes.
PN1570
THE COMMISSIONER: You're not suggesting that the Tribunal should have before it the particular individuals consulted. You're saying it should be the author or those who carried out the consultations so that you can test the methodology; is that correct?
PN1571
MR MOORE: I think - - -
PN1572
THE COMMISSIONER: Otherwise no survey results would ever be admitted.
PN1573
MR MOORE: Yes.
PN1574
THE COMMISSIONER: Yes.
PN1575
MR MOORE: Yes. Yes, well perhaps your question, Commissioner, as I understand it is directed at the survey.
PN1576
THE COMMISSIONER: Yes.
PN1577
MR MOORE: The consultations are a different beast with respect to the survey. The consultations are this rather mysterious and opaque process of - I think the words used which I just read out before are "that consultations involve broad discussions". That's said on page 4, "and involved a run through of the results of internal data gathering". Now that is - I don't know what that means. Certainly survey evidence can be proved in the normal way. These consultations don't even purport to be a survey so we're not in that ball park, as it were, in relation to the consultations.
**** IAN ROSS HARPER XN MR FOLLETT
PN1578
So, Commissioner, to recap if I may, we object to the receipt of the report in its totality for the reason I gave at the start; namely that the witness has not been able to attest to its truth and accuracy, is not the author of it, is a mere reader of it. Secondly, if you're against us on that we say strike it all out save for chapter 3. The reason that it all needs to be struck out in that alternative is because, as I've sought to explain, the report is built around three limbs; consultations, market analysis and survey. My objections are directed to the chapters which relate to consultations and the survey.
PN1579
However if those objections are upheld by you, Commissioner, the objection necessarily carries through with the remainder of the paragraphs - chapters, I'm sorry - because those chapters other than chapter 3 are a bringing together or an outline of the very matters with which we object. Now I think that's all I have to say at the moment in relation to the receipt by the Tribunal of the report proper. But if I can turn now to the letter of 30 October 2012 which my friend skipped over fairly quickly. If I can ask you to look at that, Commissioner.
PN1580
That is a letter that the witness has not attested to being true and accurate. He is not the author if it, a Mr Robert Southern is the author of it. I can't recall if his evidence was that he read it or not, Commissioner. Now on 31 October 2012 my instructors wrote to the AiG Group and said - and I can hand up a copy of this letter if necessary but I don't - I'm happy to if it is of assistance, Commissioner. But my instructor said this:
PN1581
For the avoidance of any doubt we confirm that we will object to the tendering into evidence or the receipt by the Tribunal via submissions of the Deloitte report, the letter from Mr Southern dated 30 October 2012 and the letter from Sweeney Research dated 24 October 2012 unless the authors of those documents are identified and available for cross-examination.
PN1582
**** IAN ROSS HARPER XN MR FOLLETT
Now Mr Southern is not here. We've not been given any notice that he's coming along to give evidence so one assumes he's not. The only evidence sought to be adduced is from this witness, and significantly Sweeney Research - the letter from Sweeney Research is signed by Adeline Ong and David Bama. Now this is a document which - these are the people - Sweeney Research is the organisation which conducted the survey and in this letter there's an attempt to answer the criticisms that Professor Gordon makes of the research.
PN1583
It's extraordinary that faced with an expert report from Professor Gordon there's an attempt just to slip this in as evidence in this proceeding without calling the people who conducted the survey. The reliability of the survey, as I've indicated, is in hot contest. It can't be tested without the relevant people from Sweeney Research giving evidence, and it should not be received, that is the correspondence should not be received for the same reason. Those people aren't here. The AiG has been on notice of that requirement.
PN1584
So in conclusion then, Commissioner, we say that in relation to the 30 October letter from Mr Southern, it shouldn't be received. It has not been proved in the normal way. The Deloitte report is in contest. AiG has been on notice that the maker of that letter, the author of the letter is required. This witness has not proved it, and nor for the same reasons, if anything worse, most definitely worse, should the attachment to that report - to that letter be received. If the Tribunal pleases.
PN1585
THE COMMISSIONER: Thank you. Mr Follett, before you begin I must say some time ago, sadly only a month but it seems some time ago, we had a directions hearing, a joint one with Commissioner Gooley, myself and Commissioner Hampton, and at that hearing my recollection is that the AiG asked leave for leave to file further witness statements from the authors of the Deloitte report. In the directions issued by me following that hearing on 22 October 2012 order 1 provides that:
**** IAN ROSS HARPER XN MR FOLLETT
PN1586
Leave is granted to the AiG to file a statement from the authors of the Deloitte's report and response witness statements in relation to the expert reports filed by the SDA.
PN1587
Perhaps if you can assist me, is Mr - sorry, Doctor - - -
PN1588
MR FOLLETT: Professor.
PN1589
THE COMMISSIONER: Mr Southern? Professor Southern?
PN1590
MR FOLLETT: Mr Southern, yes.
PN1591
THE COMMISSIONER: Professor Southern. Is Professor Southern an author of the report?
PN1592
THE WITNESS: I'm sorry, it's not Professor Southern.
PN1593
MR FOLLETT: This is Professor Harper.
PN1594
THE COMMISSIONER: Yes I know Professor Harper by reputation.
PN1595
MR FOLLETT: Mr Southern - - -
PN1596
THE COMMISSIONER: There's a Robert Southern. Is he - - -
PN1597
MR FOLLETT: Yes.
PN1598
THE COMMISSIONER: - - -an author of the report?
PN1599
MR FOLLETT: He's an author, yes.
PN1600
THE COMMISSIONER: An author?
**** IAN ROSS HARPER XN MR FOLLETT
PN1601
MR FOLLETT: Yes.
PN1602
THE COMMISSIONER: Okay, and obviously the individuals - - -
PN1603
MR FOLLETT: He's the author of the letter.
PN1604
THE COMMISSIONER: What?
PN1605
MR FOLLETT: He's the author of the subsequent letter.
PN1606
THE COMMISSIONER: Yes, I'm able to grasp that. Thank you. So do you have any instructions as to whether Mr Southern was an author of any part of the report? Which parts of the report was Mr Southern - perhaps Professor Harper can help us on that, but do you have instructions on that?
PN1607
MR FOLLETT: I'd have to take some instructions. I don't have instructions, nor do I have instructions immediately to hand as to what our response to those directions was, which I think - - -
PN1608
THE COMMISSIONER: Well, your response was the filing of this material presumably.
PN1609
MR FOLLETT: Right. Yes.
PN1610
THE COMMISSIONER: Yes.
PN1611
MR FOLLETT: I don't have those instructions but I can shortly get them.
PN1612
THE COMMISSIONER: Yes. Well, you see, I am concerned to get the authors of the - leave was granted I have to say, on the basis that because the material wasn't put in, in the first place, that is the report was filed but there was no witness statement from any author - - -
**** IAN ROSS HARPER XN MR FOLLETT
PN1613
MR FOLLETT: Yes.
PN1614
THE COMMISSIONER: It seemed a sensible course to have the author or authors file witness statements so that the material could be proved.
PN1615
MR FOLLETT: Yes.
PN1616
THE COMMISSIONER: If Mr Southern is in fact an author of the report or part of the report - and I assume that Dr Ong and Mr Bama are authors of the survey ones, then I have to say I'm considering whether I should direct, pursuant to section 590(2)(a), the attendance of these individuals.
PN1617
MR FOLLETT: I take it - - -
PN1618
THE COMMISSIONER: Because it does concern me - you of course want your submissions now, but it does concern me that we don't actually have the authors of certain parts of the report although we clearly have the expert evidence that Professor Harper will give on his reading and quality assurance of section 6 of the report, and that of course is receivable from my point of view. So what I'd appreciate in the course of your submissions - and I will give Mr Moore an opportunity because it affects the timetabling. I want to know why the authors of the report are not here. There may be a good reason. They may be out of the country. But it was certainly an expectation that there would be the authors of the report filing witness statements.
PN1619
MR FOLLETT: Can I take those instructions immediately?
PN1620
THE COMMISSIONER: Certainly.
PN1621
MR FOLLETT: I don't think it's necessary - or it might be necessary for you to adjourn shortly. Can I ask for five minutes? I appreciate of course that Mr Harper has got his timeframes. Perhaps if we could propose it's only for two to three minutes, Commissioner?
**** IAN ROSS HARPER XN MR FOLLETT
PN1622
THE COMMISSIONER: Sure.
Mr Harper, you're still on oath but you may certainly step down from the witness box?---Thank you Commissioner. Thank you.
<THE WITNESS WITHDREW [10.53AM]
<SHORT ADJOURNMENT [10.53AM]
<RESUMED [11.03AM]
<IAN ROSS HARPER, ON FORMER OATH [11.03AM]
MR FOLLETT: Commissioner, can I just start by making some general observations about the manner in which this issue has arisen, and I think it's important to look at what the Tribunal is actually doing here. This is a modern award review exercise. It is consistent with the process adopted in the award modernisation approach - process. It is consistent with the - or similar to the manner in which minimum wage reviews are conducted by this Tribunal. This is not a traditional adversarial exercise where there is one party versus another and we need to be concerned of puttage in cross-examination and prejudice and the like.
PN1625
The Full Bench of this Tribunal will need to consider all of the available material that it can have before it, in determining whether or not the modern award objectives are being met by this award and, in particular, consistent with the manner in which these matters are conducted. In other areas all sorts of material is relied upon by the tribunals, all sorts of reports, all sorts of documents. The Tribunal itself commissions its own research, and not in a single one of those cases can I ever identify where any person has had to be called upon to produce an author of some report to come in to testify as to the veracity of the report; nor is it done in this Tribunal.
PN1626
Mr Moore just before referred to a letter that he could hand up from his instructors. Now what he's urging upon the Tribunal is that if there was any question about the letter the person who wrote the letter - and it might be two people because it might be a junior lawyer and then a partner who signed off on it - have to come in here to this Tribunal, or be directed into this Tribunal, sit in the witness box and say, "Yes, I signed off on that letter" or "Yes, I wrote that letter". So that some notion of cross-examination or fairness or prejudice can be dealt with. It's not what we're doing here.
**** IAN ROSS HARPER XN MR FOLLETT
PN1627
So having regard to that overall approach, turning now to the particulars of the report, Deloitte Access Economics was commissioned to provide the report. My instructions are there are six people involved in the authorship of the report. Like any report produced by a partnership or perhaps a company or any other publication there could be many people involved. This Tribunal receives annual reports, financial data from corporations and companies in matters before it all the time. There's never any question about how many people were involved in the authorship if that annual report, and whether or not the particular page that someone wants to rely to - - -
PN1628
THE COMMISSIONER: Mr Follett, please move on from the criticism of the approach taken and deal with the issue as to the admissibility of the report. Thank you.
PN1629
MR FOLLETT: Turning to the admissibility, Commissioner, there seems to be two streams. One is this technical objection based upon the author and then there are some submissions made about reliability, which are not really evidential objections rather than reliability objections. They're put as hearsay, and I can understand how they're put on that basis but can I just deal with them in turn?
PN1630
THE COMMISSIONER: Yes.
PN1631
MR FOLLETT: I think I've dealt with the initial objection which was that unless and until the author of the report is called to give evidence it shouldn't be received. Of course my learned friend as he quite rightly pointed out is free to make as much submissions and noise about the reliability of all of this material to the Full Bench when the time comes. It's said that the Sweeney material is inadmissible because it's hearsay and it's not direct evidence. Well that's of course true, but as you quite rightly pointed out, Commissioner - and this extends to the consultation as well.
**** IAN ROSS HARPER XN MR FOLLETT
PN1632
My learned friend tried to get around it but this Tribunal receives surveys, petitions in majority support determinations, other documents of that type purporting to represent the views of a group of people, and those individuals are never called upon to provide that material. And it's said that the material - it's unfair to receive it because it can't be properly tested. Well, what's actually happening is we put up the report. It stands as it is and there is criticism of that report from Professor Gordon. Professor Gordon's evidence will be received, he will be subject to cross-examination and ultimately the Tribunal will have to make an assessment of what weight, if any, they can put on the conclusions in the report.
PN1633
THE COMMISSIONER: It would be a question of the best evidence in the end, submissions made on that.
PN1634
MR FOLLETT: Absolutely. Absolutely, and by us not providing the people who might be able to best answer the questions that my learned friend might like to ask is a matter that affects us.
PN1635
THE COMMISSIONER: It does.
PN1636
MR FOLLETT: Yes, and we're well and truly aware of it. I think that deals with the consultation component as well and I think that deals with the letter about Sweeney Research. Again it's the same point. I mean, at the end of the day these are answers given to certain questions asked by people unidentified and as many submissions can be made about the reliability of that material as the SDA wants, and the Tribunal will give consideration to that and then ultimately give such weight as to the report and the letters and everything else contained in it as is appropriate. But in our submission it's not appropriate to rule the material as inadmissible or not receivable by the Tribunal merely because there might be questions as to its reliability. Evidence doesn't become inadmissible because it's arguably unreliable.
**** IAN ROSS HARPER XN MR FOLLETT
PN1637
THE COMMISSIONER: And the answer to my question of where are these individuals who signed the letters?
PN1638
MR FOLLETT: Well, as I said, Commissioner, there are six people involved in the authorship of the Deloitte's report, the principal report. I'm presently not in a position to identify which sections of which page were written by each of those six people but the structure - - -
PN1639
THE COMMISSIONER: Well, Mr Southern purports to respond to questions. I presume he was in some position to respond.
PN1640
MR FOLLETT: Yes, so the engagement was with Deloittes.
PN1641
THE COMMISSIONER: Yes.
PN1642
MR FOLLETT: Mr Southern is what's called an engagement partner and my best analogy is he's like a partner in a law firm that might have received a telephone call to take instructions to provide advice. There is a project director immediately below the engagement partner, say perhaps a senior associate who has the day to day conduct of the preparation of the report. There is a manager below that and then there are at least two other analysts who were involved in various aspects of the drafting of the report.
PN1643
Then over the top of that, given that this is a Deloitte's document, there is a quality assurance partner who has ultimate responsibility for the document that is released by Deloitte Access Economics to the client. That partner is Professor Ian Harper. He has ultimate responsibility for quality assurance of the product delivered and it's in that context that Professor Ian Harper is here. Of course Professor Ian Harper wasn't involved in the consultations directly so he can't attest to whether or not the contents of the Southern letter about what happened in the consultations are accurate.
**** IAN ROSS HARPER XN MR FOLLETT
PN1644
But in those circumstances, Commissioner, if you were minded to issue some form of direction the reality is that that would in theory have to be directed to all six people or some distinguishing discriminant as between them, and there's also a question about the circumstances in which those persons are authorised to speak on behalf of Deloittes. So I think our position is, Commissioner, that if that's the process that you're thinking of engaging in, it can happen and it's going to require some delay.
PN1645
THE COMMISSIONER: Yes, well there has already been an opportunity provided. Look, Mr Follett, I understand your submissions. I've heard them and from your submissions it's clear to me that you are aware, but I do put you on notice of course that in the absence of persons called to prove a document, the two letters for example, parts of the report, then the risk is that the Full Bench may place no weight on the evidence at all. But you're clearly aware of that risk and you've indicated in the course of your submissions that that is a risk that the AiG is prepared to take.
PN1646
MR FOLLETT: Well, yes, I think - - -
PN1647
THE COMMISSIONER: All right, I'll let Mr Moore respond. Thank you.
PN1648
MR MOORE: Thank you Commissioner. Commissioner, in relation to your positing the possibility of issuing an order for attendance, we would oppose that course. The AiG is not a novice in this jurisdiction and on the last - well not the last occasion but when the matter was here for directions on the occasion to which you referred at an earlier time, it was the AiG who sought the order to be given an opportunity to file evidence answering, and my client's notes of that occasion refer to evidence from the author of the report. So that's what we were proceeding on, on the basis that that's what we were going to get, and that has not been provided. So we wrote to them, my instructors wrote to them, and if I could hand up the letter.
**** IAN ROSS HARPER XN MR FOLLETT
PN1649
THE COMMISSIONER: I don't need that evidence. I don't think it's disputed.
PN1650
MR MOORE: We wrote to them saying the witnesses are required, and if you were to issue an order for these witnesses, the six persons involved in the preparation of the report, that's going to derail the proceeding in terms of the time. It's also going to prejudice the SDA as to what are these six people going to say about their role in the composition of this document, and the power in section 590, we say with respect, ought not be exercised where the party is represented by experienced practitioners - an experienced organisation, I'm sorry, and where they're the parties who sought the order in the first place. They have elected not to put on what they said they wanted, which is a rather extraordinary state of affairs.
PN1651
THE COMMISSIONER: Yes.
PN1652
MR MOORE: So we say that about the possibility of that course, that we'd urge you not to take that course of issuing an order for the six people to attend. In relation to what Mr Follett said, what he, with respect, overlooks is the centrality with which this Deloittes report plays in the AiG's case. If one looks at their submissions, their submissions are constructed nearly in totality around this report. It is at the heart of their case and we have taken issue with that in our submissions.
PN1653
So in that circumstance it's for that reason of that central controversy that there is a need to apply some rigour in the admission of evidence. It's not a free for all. This is a central controversy in the case of which the AiG has been well on notice. So it's not an unduly technical approach or an inappropriate approach in the circumstances of this case and the AiG's application. It's quite reasonable and appropriate having regard to the nature of this case. We of course refer too, and remind you, Commissioner, of the decision of the Full Bench in an award variation application to which I refer - - -
PN1654
THE COMMISSIONER: The presiding member was Lawler.
**** IAN ROSS HARPER XN MR FOLLETT
PN1655
MR MOORE: Yes.
PN1656
THE COMMISSIONER: Yes. No, I know that one.
PN1657
MR MOORE: I can't recall that.
PN1658
THE COMMISSIONER: Yes.
PN1659
MR MOORE: But where the Bench referred to the need for there to be evidence.
PN1660
THE COMMISSIONER: Expert evidence that could be properly tested. Not speculative - - -
PN1661
MR MOORE: Yes, that's right, in the context of whether the - - -
PN1662
THE COMMISSIONER: Yes, I recall that.
PN1663
MR MOORE: Yes, you recall that. And the other matter to bear in mind, Commissioner, is the decision, the Full Bench jurisdictional decision which I think off the top of my head was dated 29 June this year, but I may be wrong in that regard. But that is the decision in which the Full Bench dealt with certain jurisdictional objections to the modern award review process. And I don't have the decision at hand but the central statement, one of the central statements identified by the Full Bench there was that there needs to be cogent reasons to be advanced to make out a case for a variation to an award; cogent reasons. I think the phrase is "a significant change of circumstances or other cogent reasons".
PN1664
Now cogent reasons connotes, subject to the particular issue at hand, that could require - and in this particular case does require - evidence properly proved, and I won't repeat what I've already said. I understand that if you're against us, well there are sorts of submissions that can be made about weight, and of course they will be made in due course. But we say that properly speaking the material should not be admitted and we should not get to that place, because of the reasons I've outlined and the nature of the particular controversy which is before you, on which the AiG is well on notice. Thank you Commissioner.
**** IAN ROSS HARPER XN MR FOLLETT
PN1665
MR FOLLETT: Can I just say, Commissioner, whilst my friend was speaking my instructions seem to have changed. My understanding of my instructions now is that we would seek an opportunity to call as many people as was necessary to verify the accuracy of the contents of the report and the letter, and would seek an opportunity to do that, appreciating of course - - -
PN1666
THE COMMISSIONER: Well that's all very well, but as the AiG representative here is fully aware, we have a timetable. When are you going to - and the AiG was given leave - - -
PN1667
MR FOLLETT: Yes.
PN1668
THE COMMISSIONER: - - -on 22 October 2012 to do that. We're now on 13 November 2012, so when are you going to be producing it?
PN1669
MR FOLLETT: I'm taking instructions on that matter at the moment, Commissioner, and I would be hopeful that that can happen in the next 48 hours.
PN1670
THE COMMISSIONER: Forty eight hours would be too long from my point of view. We really have a tight timetable. The dates for the hearing of the Full Bench have been set. The report has - - -
PN1671
MR FOLLETT: And the reports are due on the (indistinct) - - -
PN1672
THE COMMISSIONER: - - - to go - - -
PN1673
MR FOLLETT: - - -of December.
PN1674
THE COMMISSIONER: There are certain directions about findings.
**** IAN ROSS HARPER XN MR FOLLETT
PN1675
MR FOLLETT: I think in those circumstances what we might do, Commissioner, is perhaps propose some form of halfway house which is that we simply be given leave - and I know it's probably the second time to - - -
PN1676
THE COMMISSIONER: It is the second time.
PN1677
MR FOLLETT: - - -to call people to verify those documents, and as and when we receive instructions as to our ability to do that we would obviously have to approach the Tribunal consistent with the existing timeframe, and see whether those people can be squeezed in. If as it turns out we're not in a position to do that immediately or within the next 24 hours, then obviously we won't take up that leave. But I think given the circumstances if we could just leave that option open to us and call upon the Tribunal's good graces at some later point in time, perhaps in the next 24 hours to the extent that we're capable of doing so.
PN1678
THE COMMISSIONER: All right, thank you Mr Follett. Now Mr Moore I'm pretty confident that you're opposing that and I understand the issue is delay, and I'm also cognisant of the fact that we're now 20 past 11, through no fault of anyone's. But what I propose at this point in time to do is - and i don't want to be seen to be cutting you off unnecessarily, and please make submissions - is this, that I will allow the material in. As it is, it is material that has the status it has which is that - - -
PN1679
MR MOORE: I'm sorry, I missed that, Commissioner.
PN1680
THE COMMISSIONER: As it is, as it stands, it is material that has the status it has which is that the authors are not present here in the Tribunal to prove the document. In those circumstances Mr Follett is right, the Tribunal regularly allows material in and it's a question of submission as to weight subsequently. For example, Professor Gordon or Dr Gordon's analysis may remain the best evidence in the absence of other evidence which can be tested as to the survey results, for example. I will allow the AiG 24 hours to make an approach, which is to make an approach. I haven't made a decision. The timetable has been long set. You are in difficult circumstances, I understand that. All next week you are before Commissioner Hampton, is that correct?
**** IAN ROSS HARPER XN MR FOLLETT
PN1681
MR MOORE: Three days next week.
PN1682
THE COMMISSIONER: Yes.
PN1683
MR MOORE: And I think there's a directions hearing tomorrow.
PN1684
THE COMMISSIONER: Yes, and you have then to - each party has to provide written findings. So there is a very tight timetable. But having made the objection and given this is a tribunal I'm going to allow the AiG the opportunity to bring those persons forward if it so chooses. But it would have to be within the timetable and I'd have to look at that at the time as purely speculative. I can't make any decision at this point. If they're not able to do so within the timetable then that just is the circumstances that remain.
PN1685
MR MOORE: Commissioner, I might be heard on that.
PN1686
THE COMMISSIONER: Yes, of course.
PN1687
MR MOORE: I note your ruling, Commissioner, in relation to the admission of the report.
PN1688
THE COMMISSIONER: Yes.
PN1689
MR MOORE: And I won't say anything further about that. I do want to say something about what you've indicated as your current thinking, Commissioner, in relation to what has just emerged from Mr Follett as to an opportunity to put further material on. We do oppose that, Commissioner.
PN1690
THE COMMISSIONER: Not to put further material. Can I just be clear? It is to have the witnesses - the authors of the report, that is the Deloitte report, and it may well be that there is a - what do they call it? The engagement partner can speak, having been responsible for the oversight of the project, or the project director, and the Sweeney survey report, the survey component of the report authors attend. It is to attend to be cross-examined on the report. It's not to provide further material. I won't allow that. There's simply not time to do that.
**** IAN ROSS HARPER XN MR FOLLETT
PN1691
MR MOORE: So the possibility is for persons determined by the AiG to attend to give evidence, to be cross-examined in relation to the Deloitte report and the Sweeney Research letter?
PN1692
THE COMMISSIONER: Yes, there's no further evidence-in-chief other than to say what they did in relation to the report, other than to prove that they were the authors. It may be that Mr Southern appears.
PN1693
MR MOORE: Well, Commissioner, just to follow through that line of thought, I can indicate that if that was to occur there could well be lengthy cross-examination.
PN1694
THE COMMISSIONER: Yes.
PN1695
MR MOORE: It's not - I wouldn't want the Commission - I know I don't want to be held to this either, but I wouldn't want the Tribunal to proceed on the basis that that could be dealt with expeditiously.
PN1696
THE COMMISSIONER: No, I'm not.
PN1697
MR MOORE: It may not be.
PN1698
THE COMMISSIONER: No.
PN1699
MR MOORE: There could be lengthy questioning about that. We could have up to six witnesses, depending upon the decision the AiG might make in the next five minutes as to what course it wants to take. But taking a step back from that, Commissioner, this is not some sort of interlocutory argument done on the run dealing with an urgent situation where some scope is properly provided to the parties in the conduct of their case. This has been programmed for months.
**** IAN ROSS HARPER XN MR FOLLETT
PN1700
THE COMMISSIONER: It has.
PN1701
MR MOORE: And it is, with respect, intolerable for my client to be subjected to the whims of the AiG and their inability, with respect, to make a proper decision about the conduct of their case. Here they are within five, 10 minutes, changing their tune, and my client has to put up with that without knowing whether we're going to be looking at another one witness or six witnesses. Now we say that that is, in the circumstances of a modern award review, which is proceeding under a very compressed timeframe and which has been programmed out for months, completely unacceptable.
PN1702
The AiG has made the choices it has made about the conduct of its case and it should be held to account for those. To start shifting goal posts on the run at this late hour is very prejudicial. It's prejudicial because I'm going to be effectively flying blind cross-examining up to six witnesses. That would we say be tantamount to a denial of procedural fairness, Commissioner, in circumstances where witnesses have put on their evidence as to what they have to say - I don't know whether Joe Blow is going to say, "Well I did this paragraph and this is what I did with the consultations".
PN1703
I could be days with these people, Commissioner. So my client is going to be at a serious disadvantage in not knowing what is going to come out of the lips of these six people potentially. That is going to occur within a timeframe which sees I think the date for the filing of the report at some point in the next - the 23rd, 23 November, and it is now the 12th - 13 November. So we have 10 days. I don't understand - it won't be possible to deal with the potential scope of what's at hand here. I can tell you, Commissioner, that yesterday my instructors were provided with 1000 pages from McDonalds and no agreement for my client to look at it. When, I ask rhetorically, are we going to deal with that?
**** IAN ROSS HARPER XN MR FOLLETT
PN1704
I'm in the Tribunal - there's a directions hearing tomorrow. We have the SDA experts who have all been programmed in the proper way, full notice to the AiG about what they're going to say, all due in - all filed in the required timeframe. We've got a full day of evidence on Thursday. Mr Higgon - because of his inconvenience we're accommodating that in ways which we don't yet understand, "We'll try and squeeze him in on Thursday". It's intolerable. Three days next week I'm running the case in retail.
PN1705
Somewhere in my spare time - it's not about me but my client needs to work up some proposed findings of fact. I can tell you it's not going to be possible, Commissioner. So there is a difference between giving a party an adequate opportunity to be heard and letting a party make it up on the run, and that's what the AiG is saying. They want to deal with it on the run in circumstances where they have known since the SDA filed its submissions what our problem is with the central part of their case.
PN1706
So with respect, Commissioner, we'd ask you not to entertain any further provision for the AiG to give notice that they're going to be calling further witnesses. That opportunity has come and gone and it will have seriously prejudicial effects on my client in ways that I cannot fully identify at the moment, other than the general way I have. Thank you Commissioner.
PN1707
THE COMMISSIONER: Thank you.
PN1708
MR FOLLETT: I can't take it any further, Commissioner.
PN1709
THE COMMISSIONER: No. All right, I've made a ruling about the material being allowed. As to the opportunity that the AiG wants to have authors attend, if you bring six for one report then that is seriously prejudicial and I won't allow it. I expect that the AiG will look at bringing the two individuals who wrote the letters.
**** IAN ROSS HARPER XN MR FOLLETT
PN1710
MR FOLLETT: Two.
PN1711
THE COMMISSIONER: Thank you very much, and you - - -
PN1712
MR FOLLETT: With (indistinct) - - -
PN1713
THE COMMISSIONER: - - - and you are to advise me by close of business today.
PN1714
MR FOLLETT: Yes.
PN1715
THE COMMISSIONER: And as to the issue you raise about the 1000 pages, I presumes that was Ms Taylor's response?
PN1716
MR MOORE: Yes.
PN1717
THE COMMISSIONER: All right, we'll deal with this at the end of the day.
PN1718
MR MOORE: Yes.
PN1719
THE COMMISSIONER: And I'll sort it out. Thank you very much.
PN1720
MR MOORE: On that point, Commissioner, can I also ask?
PN1721
THE COMMISSIONER: Yes.
PN1722
MR MOORE: In light of your indication Commissioner, that the AiG have until the end of the day to indicate whether they're going to be calling any additional witnesses.
**** IAN ROSS HARPER XN MR FOLLETT
PN1723
THE COMMISSIONER: Yes.
PN1724
MR MOORE: Can they also be required to provide us by the end of the day with a short summary of the evidence each of those will give, those persons will give? Otherwise I'm just going to be turning up cold with these witnesses.
PN1725
THE COMMISSIONER: Okay. They should - - -
PN1726
MR MOORE: If the AiG wish the indulgence they should be put to that word.
PN1727
THE COMMISSIONER: Yes. No, I agree. All right, are we understood on that?
PN1728
MR FOLLETT: That's fine, Commissioner.
PN1729
THE COMMISSIONER: All right. Okay, now I think on that basis Professor Harper, I will mark the reports and letters as exhibits, Mr Follett?
PN1730
MR FOLLETT: Yes, I think there are just the two documents.
PN1731
THE COMMISSIONER: I've done the report, have I?
PN1732
MR FOLLETT: No, so the CV - so the report will be one, I think, and I think in fairness the letter with the attached Sweeney Research should be - - -
PN1733
THE COMMISSIONER: Yes, okay.
PN1734
MR FOLLETT: - - -a collective exhibit.
THE COMMISSIONER: All right, thank you for that. I'll mark the Deloitte Access Economics report entitled Industry Impacts of Provisions of the Fast Food Industry Award Final Report 4 April 2012 as exhibit AIGJ 7.
**** IAN ROSS HARPER XN MR FOLLETT
EXHIBIT #AIGJ7 DELOITTE ACCESS ECONOMICS REPORT ENTITLED INDUSTRY IMPACTS OF PROVISIONS OF THE FAST FOOD INDUSTRY AWARD FINAL REPORT 4 APRIL 2012
THE COMMISSIONER: And as a composite exhibit, combining the letter from Mr Southern, director Deloitte Access Economics, dated 30 October 2012 and the letter from Dr Ong and Mr Bama of Sweeney Research dated 24 October 2012 as exhibit AIGJ 8.
EXHIBIT #AIGJ8 LETTER FROM MR SOUTHERN, DIRECTOR DELOITTE ACCESS ECONOMICS, DATED 30/10/2012 WITH LETTER FROM DR ONG AND MR BAMA, SWEENEY RESEARCH, DATED 24/10/2012
MR FOLLETT: Thank you Commissioner. There's nothing further.
<CROSS-EXAMINATION BY MR MOORE [11.35AM]
MR MOORE: Professor Harper, when was the report, the Deloittes report dated 4 April this year, when was it commissioned by the AiG?---I don't know the answer to that, Commissioner.
PN1739
Over what period of time was the work undertaken which resulted in the production or publication of that report?---Again, Commissioner, I don't know the answer to that.
PN1740
Do you know the answer to the question of approximately how many hours of work across all staff members was expended on producing that report?---I do not.
PN1741
How many hours did you directly, personally, spend working on the report?
---About four hours, Commissioner.
**** IAN ROSS HARPER XX MR MOORE
PN1742
And that was reading it? You just need to speak your answer, Professor?
---Mm'hm.
PN1743
You just need to speak your answer for the transcript?---Yes.
PN1744
Thank you. That was reading it and preparing chapter 6?---Reading through the document.
PN1745
Yes?---And editing the text.
PN1746
Yes?---Focussing on chapter 6.
PN1747
Thank you. Someone else wrote chapter 6, did they?---That's correct.
PN1748
Who were the six staff members who worked on the report?---I can't name them all, Commissioner. The engagement partner is Mr Southern. The project director is my colleague, Mr Graham, and the other four would include - well, at least another David whose second name escapes me, and the three junior parties I couldn't mention. I don't know them.
PN1749
Professor Harper, you didn't have any personal involvement in the design and the conduct of the survey?---I did not.
PN1750
You had no personal involvement in the conduct of the consultations?---I did not.
PN1751
Your professional expertise is in the area of economics?---That's correct.
PN1752
You don't hold any qualifications in the area of statistics?---I do not.
PN1753
Or market research?---That's correct. I do not.
**** IAN ROSS HARPER XX MR MOORE
PN1754
I think you described your role earlier as being the quality assurance partner?
---That's correct.
PN1755
Yes, so that involves ensuring in short that the documentation produced by Deloitte meets Deloitte's professional standards?---That's correct.
PN1756
And in discharging that role in relation to the report, in relation to the surveys you just acted on and relied on the results of those surveys?---That's correct. The surveys were subcontracted to Sweeney Research.
PN1757
Yes, and so you assumed that the survey results were reliable?---That's correct.
PN1758
Thank you, and you likewise just assumed that the consultation results were reliable?---That's correct.
PN1759
The disclaimer in your report that Deloitte Access Economics gives no assurances as to the accuracy of any information in the report, I take it by that statement Deloittes is saying to the world at large other than its client, "We cannot assure the accuracy of the information contained in it", is that right?---Commissioner, again it's a legal form of words and the legal construction on those words I'm not competent to judge. My layperson's understanding is that it is a statement which is to say to the world, "You cannot rely upon these statements made in the report for whatever purposes you might have". The report has been drawn up for a specific purpose for our client. They of course, we would attest, should rely on these data but the world at large should not rely on it for whatever purposes they might have of which we are unaware.
PN1760
Thank you, Professor. Does it follow from that that Deloitte's position would be that this Tribunal should not rely upon the contents of the report?---No it does not follow from that.
**** IAN ROSS HARPER XX MR MOORE
PN1761
Thank you. The production of the report was overseen by an AiG steering group, yes?---Yes, that's correct.
PN1762
And that steering group was comprised of representatives from the AiG, Competitive Foods, McDonalds, Quick Service and Yum!?---I believe that's the case. Yes.
PN1763
Do you know who the actual persons were?---I do not.
PN1764
Were you on it?---I was not.
PN1765
Do you know if there were meetings of the steering committee?---I believe there were but I never attended any.
PN1766
What's the basis of your belief?---Simply the attestation in the report.
PN1767
So simply by reading the report?---Yes, that's correct.
PN1768
In the lead up to the finalisation of the report did you have any communications from the steering committee?---No I did not.
PN1769
And you don't know if the steering group had any role to play in the preparation and conduct of the survey?---No I do not.
PN1770
Nor in relation to the consultations?---I beg your pardon?
PN1771
I'll withdraw that last question?---Thank you.
PN1772
Thank you, Commissioner.
**** IAN ROSS HARPER XX MR MOORE
PN1773
THE COMMISSIONER: All right, thank you. Mr Follett?
<RE-EXAMINATION BY MR FOLLETT [11.42AM]
MR FOLLETT: Mr Harper, you were asked a question about that you assumed the results of the consultations and the surveys were reliable; do you have any basis for that assumption?---Well, the competence of my colleagues, Commissioner.
PN1775
In terms of your knowledge of the manner in which Deloittes is asked to provide reports of this nature, are there any other assumptions you've relied upon in forming the view that the materials provided are reliable?---The sort of advice we've been asked to give in this instance, Commissioner, is very similar to advice on the impact of regulations, regulatory changes in particular, that we are often asked to give to other authorities. One obvious example is the Victorian Competition and Efficiency Commission here which regularly conducts reviews of regulatory changes within the jurisdiction of Victoria. The Victorian Government publishes a manual, the regulatory change measurement manual. The Office for Best Practice Regulation at the Commonwealth level has a similar handbook, Commissioner, and those handbooks generally speaking lay out the guidelines which groups such as ourselves ought to follow in preparing evidence to go before these groups that make recommendations to government. And in this instance I referred to or relied upon my own professional familiarity and experience in that area in assessing the value of this document that you have before you.
PN1776
What can you say about the consistency of the process that was used and the assumptions made in this report with the contents of those manuals and handbooks?---I believed them to be fully consistent, Commissioner. In particular the document I referred to published by the Victorian Government makes it clear that evidence which is to be provided, investigating the impact of changes in regulations, ought not to be considered of a statistical nature. That it ought to be considered indicative of - the type of evidence which these bodies require is indicative evidence. It doesn't need to meet a tougher test than that. Naturally if there were statistical evidence that could be adduced then it would be adduced. But that's not what's intended, at least not by the Victorian jurisdiction and, as I say, the Office of Best Practice Regulation makes the same point.
**** IAN ROSS HARPER RXN MR FOLLETT
PN1777
You gave some evidence that Deloittes is often asked to provide reports in relation to these matters. What can you say about the extent of the consultations or surveys that are conducted in those matters, as compared to the consultations and the surveys conducted in this matter?---Again, Commissioner, I would answer that it's of a piece. The use of survey material and consultations of the type that we have conducted in this instance at the request of our clients is very similar to that which is conducted in other instances where one's looking at the impact of regulatory change. In particular, again the two documents I referred to make the point that consultations with likely affected parties are an essential part of the process of informing the public policy-making machinery. No statistical test is required and the evidence that's brought before the public policy bodies is taken on its merits. Naturally enough consultations aren't formal statistical evidence and people know that, but nevertheless the evidence comes forward and, as I say, is assessed on the merits of the case.
PN1778
No further questions, Commissioner.
PN1779
THE COMMISSIONER: Thank you.
PN1780
All right, thank you very much, Professor Harper?---Thank you.
You're now excused.
<THE WITNESS WITHDREW [11.46AM]
MR FOLLETT: Commissioner, I think it's unlikely that we'll be able to produce any further witnesses today. I don't know what the Commissioner's calendar is like late this afternoon but we'll obviously be making attempts, consistent with your constraints about 24 hours, and obviously we'll be coming back to the Commissioner's chambers and my learned friend as soon as is possible.
PN1783
THE COMMISSIONER: Okay.
PN1784
MR FOLLETT: With an indication of where we get to with that process and when might be a suitable time for that process to take its course.
PN1785
THE COMMISSIONER: All right.
PN1786
MR FOLLETT: And at the time of identifying that, to the extent we do identify any more additional witnesses, up to two, we will certainly provide a statement which, to placate my friend's concerns, will simply identify the extent to which they were involved in the authorship of the documents that have already been admitted into evidence.
PN1787
THE COMMISSIONER: Okay. You may not be able to answer this but I had on my list for today a Miss Toth or Professor Toth?
PN1788
MR FOLLETT: I think I've just been corrected, Commissioner, that there are two other witnesses to come today.
PN1789
THE COMMISSIONER: Yes. All right, so you're not involved in that, Mr Follett?
PN1790
MR FOLLETT: I'm not involved.
PN1791
THE COMMISSIONER: Okay.
PN1792
MR FOLLETT: Could I take a five minute adjournment whilst I clear out - - -
PN1793
THE COMMISSIONER: Yes. No, that's fine. We'll just take a five minute adjournment.
<SHORT ADJOURNMENT [11.48AM]
<RESUMED [11.57AM]
PN1794
MS SALEWICZ: Commissioner, can I call Ms Julie Toth.
PN1795
THE COMMISSIONER: Yes, who I see is in the witness box already.
PN1796
THE ASSOCIATE: Please state your full name and address.
MS TOTH: Julie Toth. Work address or - 20 Queens Road, Melbourne.
<JULIE TOTH, AFFIRMED [11.57AM]
<EXAMINATION-IN-CHIEF BY MS SALEWICZ [11.58AM]
PN1798
MS SALEWICZ: Ms Toth, can you please tell the tribunal your full name and your position?---Julie Toth, chief economist at the Australian Industry Group.
PN1799
Ms Toth, have you prepared a report in these proceedings?---Yes, I have.
PN1800
And have you got a copy of that report?---Yes, I have.
PN1801
Does that report include a copy of your CV, Ms Toth?---Yes, it does.
PN1802
Ms Toth, how did that report come into being?---I wrote it.
PN1803
Ms Toth, what caused you to write the report?---I was asked to write it by the legal team representative of Australia Industry Group.
PN1804
Commissioner, I haven't had a chance to speak to my learned friend about whether or not there are any objections to Ms Toth's report.
PN1805
MR MOORE: No objections.
PN1806
MS SALEWICZ: I seek to tender that document.
THE COMMISSIONER: I will mark the document entitled Expert Report Prepared by Julie Toth, Chief Economist, Australian Industry Group, as exhibit AIG-J9.
EXHIBIT #AIG-J9 EXPERT REPORT PREPARED BY JULIE TOTH, CHIEF ECONOMIST, AIG
<CROSS-EXAMINATION BY MR MOORE [11.59AM]
PN1808
**** JULIE TOTH XXN MR MOORE
MR MOORE: Ms Toth, you're an employee of the AIG?---Yes.
PN1809
And you were asked to produce this report in October?---Yes.
PN1810
And you've provided it in support of the AIG's case in this proceeding?---Yes.
PN1811
Ms Toth, you made some criticisms of some of the expert reports relied upon by the SDA in this proceeding and I just want to ask you firstly about what you say in your report about the report that SDA is relying on by Dr Woodman. You criticised Dr Woodman's report on the basis that he cites only six interviews out of 50 and you say that he does not give information about the other 44 interviewees and it's not clear how typical the concerns expressed by those six employees are. That's the substance of your criticism?---Yes.
PN1812
But you understand, don't you, Ms Toth, that he expressly states in his report that the six interviewees that he refers to in his report were not chosen to be representative?---Yes.
PN1813
You understand from Dr Woodman's report that the six interviewees he refers to were chosen merely to highlight the different means by which weekend and evening work impact on young people?---Yes, I understand.
PN1814
Turning to Assoc Prof Charlesworth's report, you criticised Prof Charlesworth's report on the basis that it was only in the smaller VicWAL Survey that there was a statistical difference in the AWALE score between retail workers who work weekends and other workers more generally?---That's a fact that was in the Charlesworth report.
PN1815
In looking at Prof Charlesworth's report, did you appreciate that the VicWAL Survey in fact contained a significantly larger number of retail workers than in the AWALE Survey?---They are both about retail workers, yes.
**** JULIE TOTH XXN MR MOORE
PN1816
No, that's not my question?---Sorry.
PN1817
In reading Prof Charlesworth's report, did you understand that the number of retail employees in the VicWAL Survey is in fact greater than the number of retail employees in the AWALE Survey?---The proportion of retail workers in the total is greater in the VicWAL, yes.
PN1818
Yes, the proportion is and the absolute number is greater. Do you understand that?---Yes.
PN1819
So would you agree that holding everything else constant, that would make the VicWAL Survey a more reliable indicator about work life interference for retail workers than the AWALE Survey?---For retail workers, yes.
PN1820
Do you understand that Prof Charlesworth found that, by reference to the responses in the VicWAL Survey, that whether a worker was in the retail sector or not had no effect on the average AWALE scores when compared to whether they worked in other sectors?---Yes, that was their finding for retail workers.
PN1821
Given the higher number of retail workers in the VicWAL Survey, as you've acknowledged, both absolutely and proportionately, there's no basis to suggest that that survey indicates industry specific factors might be at play. Do you agree with that?---They didn't find any in the study from the variables that they looked at.
PN1822
And from your professional opinion, given that the VicWAL Survey had a greater preponderance of retail workers, there's no basis to suggest that there are industry specific factors that are at play?---The study did find differences between retail and other workers that weren't reflected in the other characteristics.
**** JULIE TOTH XXN MR MOORE
PN1823
But the characteristic of what sector an employee works in, retail or elsewhere, there's no basis, in looking at the survey results, to conclude that the VicWAL Survey indicates that there are other industry specific factors at play. Do you agree with that?---That was Charlesworth's findings.
PN1824
And I'm asking, do you agree with that?---No, I don't.
PN1825
You don't identify anything else in the VicWAL Survey which provides a basis for your disagreement with that proposition?---No, I haven't.
PN1826
In relation to Prof Lyn Craig, you say that the research cited by her and also Dr Strazdins focuses on the work life experience of parents, would you say?
---Yes.
PN1827
You acknowledge though, do you, that in relation to Prof Lyn Craig that her report that focuses on the effect of weekend, night and evening work are not so confined to the effects on parents?---It does look at other issues, yes, but the main focus was on parents.
PN1828
Why do you say "the main focus"?---Most of the evidence in there was about family life.
PN1829
You read the executive summary of Prof Craig's report dated 12 September 2012 I take it?---Yes.
PN1830
And do you recall that paragraph 1 of that executive summary stated that, "This report reviewed existing research and found it supported a conclusion that the performance of work by employees on weekday evenings and nights or on Saturdays or on Sundays has adverse effects on the employees concerned, their families and the community"? Do you recall reading that?---Yes, I did read that.
**** JULIE TOTH XXN MR MOORE
PN1831
Do you recall reading how Prof Craig then identified separately the adverse effects for families, separately the adverse effects on employees, and thirdly the adverse effects on the community? Did you read that?---Yes, I did her report.
PN1832
Do you agree with me that Prof Craig's report is not confined to working parents in terms of her identification of adverse effects of weekend and evening work?
---I agree they don't look at that exclusively.
PN1833
In relation to Dr Strazdins, you note that the population referred to in the research she cites is working parents?---Mm.
PN1834
You just need to speak your answer?---Yes.
PN1835
Thank you. You make the point or you say that that's not the same as the population predominantly employed in fast food?---Yes, that's correct.
PN1836
Your examination of ABS data though would lead you to agree with this proposition though: that the data shows a significant proportion of employees employed in accommodation and food services, which includes fast food, are employees of child-bearing age. Would you agree with that?---They may be of child-bearing age but they're not in an age group where they are highly likely to have children already.
PN1837
But you're not an expert on when people have children, are you?---I have been looking at the data and looking at the workforce in this population and the child care issue is not so much about being of child-bearing age but whether the probability is there that you would have child care responsibilities. The average in Australia at the moment for women having their first child is around 29 years old.
**** JULIE TOTH XXN MR MOORE
PN1838
The average age of a woman having a child is 29?---Around 29 years old.
PN1839
So if you could look at page 4 of your report, please?---Yes.
PN1840
You will see at the top of page 4 you've set out a table entitled Australian Industry Employment by Age Group. The row which is in bold Accommodation and Food Services, that's the descriptor which takes in fast food?---Yes.
PN1841
I'm just checking my arithmetic for a moment. Excuse me for a moment. Do you agree that looking at accommodation and food services 34.2 per cent of employees would be aged or are aged between 25 and 44?---Yes, that's correct for the total workforce.
PN1842
Yes?---We also have these numbers by part-time and full-time, which is in the text.
PN1843
So for the total workforce 34.2 per cent of employees in accommodation and food services are aged between 25 and 44?---Yes, that's correct.
PN1844
I take it that in the time that you had to prepare your report you didn't have an opportunity to read any of the research Dr Strazdins has authored that she cites in her report, or did you?---I only read the report that she has submitted.
PN1845
One of the references that Dr Strazdins cites in her report is an article which she co-authored in 2006 called Voting With Their Feet, Family Friendliness and Parent Employment in Australian Industries 1981-2001, published in the Australian Bulletin of Labour, 32 (for page 381 to 400). Have you ever read that article before?---No.
PN1846
**** JULIE TOTH XXN MR MOORE
You're not aware then that that research shows that in the period of 1981 to 2001 the industries, with some of the greatest declines in workforce by employees who were parents, were retail, hospitality and personal service workers.
PN1847
MS SALEWICZ: Commissioner, I'm objecting to that question. The witness has provided the answer that she hasn't read the article Voting With Their Feet authored by Prof Strazdins. It has no relevance as to whether or not this witness - - -
PN1848
MR MOORE: No, that's fine. That's fine, I won't press it. It was a question of ensuring that I don't get a complaint when Dr Strazdins might be asked about that research, Commissioner. But if my friend - - -
PN1849
THE COMMISSIONER: I've taken that onboard and I'm sure the AIG is now on notice. Thank you.
PN1850
MR MOORE: You make the point in your report, Ms Toth, that accommodation and food services employees - that sector has the largest number of 15 to 19-year-old employees?---That's right, the ABS data does show that it has the youngest profile of any industry or major industry group.
PN1851
I think it says there's 24.9 per cent of employees in that sector who are aged 15 to 19?---Yes.
PN1852
The next highest industry sector, according to this classification, is retail trade?
---Yes.
PN1853
With 15.9 per cent?---Yes.
PN1854
So the next age cohort between 20 and 24, accommodation and food services, 18.4 per cent of employees are in that age group?---Yes.
**** JULIE TOTH XXN MR MOORE
PN1855
And in retail trade, 16.7 per cent?---Yes.
PN1856
And the difference narrows a bit further I think on my sums at the next age group, between 25 and 34?---Yes.
PN1857
I suggest to you that of all the industry sectors looking at the industry sectors from a demographic perspective according to age of employees, the retail sector is the closest comparator to accommodation and food services. Would you agree with that?---It is similar, yes.
PN1858
If you could just look at page 5 of your report, Ms Toth. Do you have page 5 there?---Yes.
PN1859
If you look at the last dot point on that page, Ms Toth?---Yes.
PN1860
Do you see in that paragraph you deal with the indications given by ABS data about employees' control over their own work hours?---Yes.
PN1861
The data that you there summarise isn't industry specific though, is it?---No, it isn't. That particular survey wasn't published at that level of detail.
PN1862
So in light of that, looking at the data, you are unable to say that employees in fast food have rising levels of control over their hours of work as they age?---This is about workers across all industries, not about fast food per se. It's just - - -
PN1863
So the answer is "No"?---No.
PN1864
Question 2 that you set out at the top of page 6 of the report says, "Do these studies provide a representative picture of the socioeconomic characteristics of the current fast food industry workforce?" and you express the belief that the focus in some of these studies on the effects of weekend working arrangements on older people and parents is not appropriate to this industry. You agree, don't you, that in none of the expert reports that you read in preparing this statement is there any specific focus on "older people"?---I meant older in the sense of not in that specifically that 15 to 24 year age group, which makes up the majority of this industry. So I - - -
**** JULIE TOTH XXN MR MOORE
PN1865
So you're saying - sorry?--- - - - should have specified older than 24, yes.
PN1866
So to reverse the proposition, what you're saying is that the focus isn't on the younger demographic of under 19s?---Yes.
PN1867
Except for Dr Woodman?---Yes.
PN1868
Thank you?---That one is.
PN1869
In that same sentence you refer to, after the words "older people", "and parents". Do you see the word "parents"? You accept and acknowledge, don't you, that Prof Charlesworth's report doesn't focus on parents as such?---It is broader but it does contain a lot of information about parents.
PN1870
But her report is about this thing called the AWALE index, isn't it?---Yes.
PN1871
And that's the measure which posits can be used to gauge the level of work life interference by work?---I'm sorry. I beg your pardon, I will have to take that back. I think I'm getting the two studies mixed up.
PN1872
Certainly?---Charlesworth is AWALE and VicWAL, yes.
PN1873
Prof Charlesworth is about AWALE?---Yes.
PN1874
I'm just suggesting to you that in her expert opinion about AWALE, that's not about parents as such; it's about the measure of work life interference in relation to the employees in respect of whom the measure is applied?---Yes.
PN1875
And do you acknowledge that Prof Craig's report is not confined to parents?
---Yes.
**** JULIE TOTH XXN MR MOORE
PN1876
What I want to do now, Ms Toth, is to tell you some evidence that Prof Charlesworth will give at the hearing which is not in the expert report, it's evidence that arises from your report and I want to tell you what that evidence will be in summary and ask you a question about it. So it will just take a while to explain to you the evidence and then I will ask you a question. Her evidence will be that in relation to the AWALE Survey 13 per cent of the employees who were sampled who were asked about unsociable hours of work were aged between 18 and 24 and that the same proportion in relation to the VicWAL Survey was 16 per cent. Her evidence will also be that in relation to both the surveys the people aged between 18 and 24, those surveys indicate that employees in that age group who work on weekends were statistically more likely to experience worse work life interference outcomes than those who do not work on weekends. Her evidence will also be that 57 per cent of the employees sampled in the AWALE Survey who were asked about unsociable hours had no dependant children and that 40 per cent of such employees had no dependant children in the VicWAL Survey and that the analysis of the surveys indicates that employees who do not have dependant children, for employees in that group who work on weekends, they were statistically more likely to experience worse work life interference outcomes than those who did not. In light of that evidence, if Prof Charlesworth was to give evidence to that effect, would that lead you to acknowledge that the AWALE and VicWAL Surveys have a greater applicability to the fast food industry than you otherwise acknowledge in your report?---I would need to see some more detail or have the opportunity to look at that data to see how it matches up.
PN1877
If the survey results as analysed by Prof Charlesworth, and if otherwise accepted by this tribunal, establish what I've just outlined to you in relation to younger employees, would you acknowledge that that would make those survey results more applicable to the fast food industry than you have indicated in your report?
---It sounds like it would be a better match to the demographic of what we know about workers in food and accommodation services.
**** JULIE TOTH XXN MR MOORE
PN1878
Thank you, Ms Toth. A key criticism that comes through of the reports relied upon by the SDA that you advance, reading your report, is that you're critical of them insofar as you say, "Well, those reports focus upon the impact of work on people with children and families, that they have a principal focus on those matters." That's the general thrust of one of the opinions you express in your report?---One of them, yes.
PN1879
That criticism that you advance stems from your view that work life interference is a concept which only has particular significance in relation to workers who have child care responsibilities, such as family - - -?---No, that's not my view.
PN1880
Can I suggest to you that your report is flawed because you have wrongly assumed that young people, university students, do not suffer or suffer diminished work life interference from work?---No, that's not my view.
PN1881
You acknowledge then, do you, that employees aged 15 to 19, including secondary and university students, can and do suffer work life interference?
---Yes, I do acknowledge that.
PN1882
And they suffer it particularly, you would agree, when they have to work on weekends?---No.
PN1883
So when do they suffer it?---The work life balance for that age group is different to older people in that what they're balancing is generally study and work rather than family care responsibilities and work. So the trade-off is between a different set of options to those with child care responsibilities.
PN1884
So the trade-off being the different set of options to which you refer are around the particular aspects of young people's lives that make up their social and family world, whatever they might be?---That's right.
**** JULIE TOTH XXN MR MOORE
PN1885
Do you accept that work in evenings has the capacity to interfere with the work life balance of young people?---All work interferes with work life balance. It's always a trade-off between when you do the work, when you earn the income and when you do your other activities.
PN1886
All work interferes with the rest of one's life; I think we can all readily agree with that. But you don't dispute the proposition, do you, that just as working in the evenings has the capacity to interfere with the work life balance of employees who have family responsibilities, it has the capacity to interfere with the work life balance of employees who don't have family responsibilities such as typically young people?---Yes, in their case it would be interacting with their study commitments rather than their family commitments.
PN1887
And their social commitments?---That's true for everyone, regardless of whether they have family or study.
PN1888
The nature of weekends and how people spend their time on weekends in non-work activities is not purely within the domain of people with families. You're not going to dispute, are you, that for young people without children weekends can be periods where they engage in social and family activities?
---Yes, of course that's true.
PN1889
And you make the point I think in your report that adopting the language or the analytical tools of an economist, if you like, that food consumption can't be hoarded. Yes?---Yes.
PN1890
You say out of what that means, by way of illustration, is that one can't eat two dinners on Tuesday night and skip the Sunday dinner?---Yes.
PN1891
**** JULIE TOTH XXN MR MOORE
You can't hoard it, you can't hoard the dinners. That's because food consumption is time sensitive?---Yes.
PN1892
You accept, through adopting that analytical methodology about hoarding and time sensitivity, that there are many types of social or family activities which are also time sensitive?---Yes.
PN1893
A sporting fixture on the weekend for a young person, where you play your game of cricket on a Saturday afternoon, you can't hoard it and play it on Tuesday. Yes?---Yes. That would be true if the cricket is scheduled on a Saturday, yes.
PN1894
But it's time sensitive?---Yes.
PN1895
And Sunday lunch is a time sensitive activity?---On a Sunday, yes.
PN1896
Young people going to see a concert with their friends that scheduled on a Saturday night, that's a time sensitive activity?---Yes.
PN1897
You can't hoard that, can you? You can't hoard that?---Well, no, all of those examples are correct, yes.
PN1898
Reading to your child before the child goes to sleep at night, you can't hoard that, can you?---You can't move it to another time slot, no.
Nothing further, Commissioner.
<RE-EXAMINATION BY MR SALEWICZ [12.34PM]
PN1900
MR SALEWICZ: Ms Toth, a proposition was put to you that Prof Charlesworth found no sector differences when she was conducting her VicWAL research and the question was asked, "Do you agree with that proposition?" and you said, "No, I don't." Can you please explain why?---The Charlesworth result - her finding is correct for the data that she was looking at, in that she didn't find any difference statistically for the variables and the characteristics that were in that survey, but like all data it's possible that there were some other characteristics that weren't able to be captured in that research that might be able to explain some of those differences.
**** JULIE TOTH RXN MS SALEWICZ
PN1901
Ms Toth, it was put to you, after looking at the table contained on page 4 of your report, that the retail industry is the closest comparator to the accommodation and food services report and your response was, "It's similar, yes." Can you please explain what you meant by that?---The age profile is similar but not identical, and this table does only look at age profile, not other characteristics but accommodation and food services is a younger cohort again. Retail trade tends to have more workers spread across the age spectrum than does accommodation and food services. I think to me what stands out with the food services area in particular is the very skewed demographic towards those younger age groups.
PN1902
Nothing further, Commissioner.
THE COMMISSIONER: You may be excused, Ms Toth. Thank you for your evidence?---Thank you.
<THE WITNESS WITHDREW [12.36PM]
PN1904
THE COMMISSIONER: Ms Salewicz, what I'm going to do now is we will leave Mr Dimas till the afternoon but I want to sort out this issue that Mr Moore referred to, which is the production of - I think I heard correctly - a thousand pages - - -
PN1905
MS SALEWICZ: Correct, Commissioner.
PN1906
THE COMMISSIONER: - - - by Ms Taylor - - -
PN1907
MS SALEWICZ: Correct, Commissioner.
PN1908
THE COMMISSIONER: - - - which ought to have been produced some time ago.
PN1909
MS SALEWICZ: Commissioner, I wasn't providing advice to McDonald's on production but I do accept that a lot of documents have been produced.
PN1910
THE COMMISSIONER: A thousand is a lot of pages.
PN1911
MS SALEWICZ: A thousand is a lot of documents. Out of those documents, it would appear from my initial review of them about 80-odd pages actually contain what would be relevant information and the other 900-odd contain basically hours data, time worked, and things like that, which went to populate the survey. We have been in touch with Ms Taylor to see whether or not there is a way which she could actually sit down with Ms Burnley of the SDA and actually explain the model directly to her. Alternatively, the other option which we put is that we could potentially get Ms Taylor to black-out those sections of the thousand pages which she believes are commercially sensitive - which, as I understand it from her, does not form a large proportion of those pages, in which case they could be provided to Ms Burnley.
PN1912
Obviously the preferred approach and the quickest approach would be for Ms Taylor to explain that model directly, however we don't have instructions at this time.
PN1913
MR MOORE: Commissioner, we're obviously very concerned about being dumped with a thousand documents. My friend's right, there have been some communications with my client about trying to find a way through that morass. My position at the moment is this: that it's oppressive and burdensome for my client in the circumstances to have to wade through a thousand pages and that if that's where we get to and we're left with a thousand documents to look at - redacted or otherwise - that's an unsatisfactory position and that should bring an end to that chapter of Ms Taylor's evidence and no further evidence should be adduced from her.
PN1914
The only way around it, as I'm presently instructed, which could be tenable would be if Ms Taylor sat down with my client and explained them to her - not my instructor but with Ms Burnley and explained them to her - and did that very soon. Absent that sort of direct explanation and assistance, otherwise the situation is not tenable.
PN1915
MS SALEWICZ: Commissioner, we're going to do our best to try and accommodate the - - -
PN1916
THE COMMISSIONER: No, it's not about doing your best; that's not good enough, from my point of view. I am directing you to make Ms Taylor available to discuss those documents with Ms Burnley and that is to be done - today is Tuesday - you're to work out a satisfactory time that is as early as possible. Ms Burnley, do you intend to go to Sydney?
PN1917
MR MOORE: We appreciate that direction, Commissioner. Can we say that you should also direct that Ms Taylor do that in Melbourne, unless otherwise agreed.
PN1918
THE COMMISSIONER: Yes.
PN1919
MS SALEWICZ: I understand Ms Taylor is currently in Brisbane today so it may be possible that she can come down to Melbourne. The alternative obviously is that it could be done by telephone.
PN1920
MR MOORE: No.
PN1921
THE COMMISSIONER: No, it would have to be - if you're talking about looking at documents, it really is a bit unworkable. I direct that you make Ms Taylor available in Melbourne to meet with Ms Burnley within the next few days.
PN1922
MS SALEWICZ: Thank you, Commissioner.
PN1923
MR MOORE: The other issue there in terms of the timing of it is Ms Burnley needs to be here to hear the evidence on Thursday.
PN1924
THE COMMISSIONER: Yes.
PN1925
MR MOORE: So that won't be a day that that meeting, if you like, could occur.
PN1926
THE COMMISSIONER: Yes. What's today; Tuesday, is it? Yes.
PN1927
MR MOORE: I think the windows for the rest of this week for such a meeting to occur are tomorrow afternoon because Ms Burnley is going to be here in directions in retail I believe, or else on Friday.
PN1928
THE COMMISSIONER: All right.
PN1929
MR MOORE: So that's really what it comes down to I think.
PN1930
THE COMMISSIONER: Okay. You've heard the availability of Ms Burnley. She is involved in this. If you can make Ms Taylor available either on - did you say - - -
PN1931
MR MOORE: Tomorrow afternoon.
PN1932
THE COMMISSIONER: Yes, Wednesday afternoon or Friday.
PN1933
MS SALEWICZ: We will do, Commissioner.
PN1934
THE COMMISSIONER: Thank you. We will adjourn. We will resume at - hang on, Mr Feltrin is not available - we will have Mr Dimas, that's right.
<LUNCHEON ADJOURNMENT [12.41PM]
<RESUMED [2.11PM]
PN1935
THE COMMISSIONER: Ms Salewicz?
MS SALEWICZ: Commissioner, I call Mr Spiros Dimas.
<SPIROS DIMAS, CALLED [2.11PM]
PN1937
THE COMMISSIONER: Mr Dimas, would you like to go into the witness box?
THE ASSOCIATE: Would you state your full name and address?---Spiros Dimas, (address supplied).
<SPIROS DIMAS, AFFIRMED [2.11PM]
<EXAMINATION-IN-CHIEF BY MS SALEWICZ [2.12PM]
PN1939
MS SALEWICZ: Can you, please, repeat your full name and your address?
---Spiros Dimas, (address supplied).
PN1940
Mr Dimas, have you prepared a statement in these proceedings?---Yes.
PN1941
And do you have a copy of that statement in front of you?---Yes, I do.
PN1942
Mr Dimas, if I can, please, turn you to paragraph 13 of that statement, in particular I draw our attention to sentence 6 and sentence 7 in that statement beginning on line 5 with, "They work weekends because they go to school and study during the week. They work nights because they play sport during the weekend days," with "they" referring to your employees. Can you, please, tell us the basis by which you say that you know the contents of both of those sentences?
---Yes. I work at my store predominantly full-time. I have hired and trained most of my staff. I know them very, very well. There may be a couple who I don't know as they're quite new, but most of the ones I know very well. Now, when I say that I know that they can work that, it's because they've actually told me as such and I've also communicated with their parents. That's part of the recruitment phase to discuss things with their parents and they've also agreed with those particular things as well.
PN1943
Mr Dimas, if I can now draw your attention to the last sentence in that paragraph beginning "Some of these individuals", can you, please, tell us the basis by which you say that you know that some of these individuals would not be able to work at all if these times, referring to other shifts during holidays, were taken away from them?---Yes, can I give you some examples?
PN1944
If that's the way you can best answer the question?---One of my employees whose name is Ul-Meer Roshan - he's a Pakistani national. His English is not the best. We've had him working with us since 2009. He's currently studying an associate diploma - associate degree, sorry, at NMIT so he's unable to work during the weekdays because he's at university studying. The other thing is he prefers not to work Fridays because his faith - he's Islamic in faith so he doesn't work Fridays so as a result, he prefers to work on Saturday and Sundays. I can tell you about another employee of mine. His name's Andrew Hobbs. He's currently studying media and accountancy at Swinburne in Hawthorn. It was at Lilydale but now it's at Hawthorn. He's got an autistic sister so during the weeknights he prefers to stay home with his sister. His parents work quite late so he has to stay home with his sister; pick her up after uni. He also teaches karate on Tuesday and Thursday nights. Now, if he wasn't able to work the weekends, Saturday, Sunday, he wouldn't be able to work at all. I can also tell you about Ashley Skews. He's one of my cooks. He's studying teaching at Deakin University. Now, during the weekdays he's usually in placement and at university. He's from the country. He's actually moved down to Melbourne from the country and during the weekdays his parents come and visit him as well. If he couldn't work weekends, he wouldn't be able to work at all as well.
**** SPIROS DIMAS XN MS SALEWICZ
PN1945
Thank you, Mr Dimas. If I can refer you to paragraph 14, in paragraph 14 you give an example about an employee of yours who is named Helena?---Yes.
PN1946
Can you, please, tell us the basis by which you say you know the details in that example?---Yes, look, once again I mentioned that I try to get to know the parents as well. Helena - she's currently studying VCE. She does - obviously goes to school during the days. She prefers to work Saturday nights and one of the reasons for it is during Saturday mornings she actually has tutoring. She has a tutor for maths. On Sunday mornings her family either goes to church or sometimes she goes swimming so her father actually prefers to work - for her to work on Saturday nights. He's also told me tacitly that he prefers that rather than her going out because at least our environment is actually safe. She can socialise a bit and gain some experience.
PN1947
In respect to the evidence that you've just given, how is it that you say that you know these things about Helena?---Because I know her personally and her family - her father.
PN1948
If I can refer you now to paragraph 25 of your statement, Mr Dimas, starting "Losing this time", can you, please, tell us the basis for your knowledge of the contents of that paragraph, including in particular how you say , "Losing that time will have no benefit on the other staff"?---Well, I say that because my staff are employed to gain some experience and earn a little bit of pocket money. Now, if weekend work was taken away, they will lose - they will lose pocket money and their ability to gain experience so for them that'd actually be taken away from them.
PN1949
If I can take you backwards in your statement now, Mr Dimas, to paragraph 11, are there any amendments you would like to make to that paragraph?---Yes, one of my 19-year-old staff members has now had a birthday. She is 20, so reducing 19 to two and 20 to one.
**** SPIROS DIMAS XN MS SALEWICZ
PN1950
Thank you. Commissioner, I do understand that my learned friend has a number of objections. Before he gets to his feet there are a number of items that we have come to a consent position on. We can make the amendments by agreement.
PN1951
THE COMMISSIONER: Sure.
PN1952
MS SALEWICZ: In respect to paragraph 20 we seek to delete the words in the first line "at least an additional 2 per cent", in paragraph 21 we delete the words in the first line "to 1 per cent or less profit" and then delete the start of the third sentence which reads "My business will no longer be a going concern and" and then in paragraph 22 delete everything up until the third-last line where it reads "I have no means to mitigate these costs".
PN1953
THE COMMISSIONER: Thank you.
PN1954
MR MOORE: Just two other objections, Commissioner. I was going to object to paragraph 13, or aspects of it, but in light of the evidence my friend has adduced from the witness and in light of your previous approach to that in relation to other witnesses I won't press that objection. Paragraph 14 - I intended to object to that. I accept in light of the approach you have adopted, Commissioner, that some foundation has been provided for most of that paragraph, but no foundation has been provided in relation to the last sentence. The witness's evidence was confined to the employee Helena. He didn't say anything about how it's said that Helena's circumstances or experience is typical of the type of employees who work on a Saturday and Sunday so in light of that we object to that sentence on the basis that it's conclusionary and opinion and without any foundation. Do you want to deal with them as we go, Commissioner?
PN1955
THE COMMISSIONER: I may as well. Ms Salewicz?
**** SPIROS DIMAS XN MS SALEWICZ
PN1956
MS SALEWICZ: We don't press that sentence, Commissioner.
PN1957
THE COMMISSIONER: Then on that basis I'm just striking out the last sentence of paragraph 14.
PN1958
MR MOORE: Thank you. Paragraph 25 - we object to that paragraph on the basis that it's an opinion based on generalised and unattributed hearsay. The witness was asked to provide the basis for the paragraph and his response was directed to what appears in the first line. It did not extend to the objectionable part of the paragraph which is why it's said that these employees like working Saturday nights, to get away from their parents, and the reference in the last sentence to a staff member wanting to avoid a family outing so we press those.
PN1959
THE COMMISSIONER: That's going a bit extreme to actually work to avoid a family outing. I must remember that when my child says something like that. Ms Salewicz?
PN1960
MS SALEWICZ: Commissioner, I may have led the witness into the wrong area for explanation. However, I do say that the evidence that he has given in respect to the other paragraphs, and particularly in respect to paragraph 13, do provide an appropriate basis for leaving those two sentences in. Mr Dimas has said that he works in the store. He's given some very specific evidence about the lives of the employees whom he works with and obviously has a close - I take that back. There's no evidence of that. He knows these employees personally. He has a small group of employees and he has provided an appropriate basis for those two paragraphs to remain, so those two sentences, Commissioner.
PN1961
THE COMMISSIONER: Yes, I will allow that paragraph. I think that Mr Dimas provided a sufficient foundation in his response to paragraphs 13 and 14 which is his communication with his staff who he has hired and trained and general discussions. Anything else?
**** SPIROS DIMAS XN MS SALEWICZ
PN1962
MR MOORE: If the commission pleases.
PN1963
THE COMMISSIONER: All right.
PN1964
MS SALEWICZ: I seek to tender the statement.
THE COMMISSIONER: I will mark the statement of Spiros Dimas exhibit AIG J10.
EXHIBIT #AIG J10 STATEMENT OF SPIROS DIMAS
<CROSS-EXAMINATION BY MR MOORE [2.23PM]
PN1966
MR MOORE: Mr Dimas, you indicate that the trading times that your store operates are dictated by the franchisor. I take it it's also the case that the franchise agreement also specifies the prices at which you can sell the menu items?---Yes, that is correct.
PN1967
Thank you. So it's the franchisor who controls the price structure?---Yes, that's right.
PN1968
I take it then in light of what you've just said the first sentence in paragraph 15 of your statement is wrong?---I disagree with that.
PN1969
You pay to the franchisor royalties calculated on the basis of net sales?---Yes, that's correct.
PN1970
And what's the percentage?---The royalties are at 6 per cent. There are other fees as well.
PN1971
Other fees you pay the franchisor?---Yes, in total there's Adco fee which is 5 and a half per cent; a purchasing fee which is .5 per cent; the royalty is 6 per cent. In total it's 12 per cent.
**** SPIROS DIMAS XXN MR MOORE
PN1972
Out of interest, what's the Adco fee?---The Adco's a marketing fee.
PN1973
I see; and do you own the land upon which your business is located?---No, unfortunately.
PN1974
Does the franchisor own the land?---No.
PN1975
The fees that you've just told the tribunal about, the 6 per cent, the 5 and a half per cent and the 0.5 per cent - have those percentages changed since when you commenced operating the business?---No, they haven't.
PN1976
And the franchise agreement stipulates the suppliers from whom you are to purchase supplies?---Yes, that is correct.
PN1977
In light of the complaints you make about the impact - excuse me for a moment. I will just clarify something. In light of the complaints you make in your statement about what you anticipated to be the impact of the award on your business and in light of the 12 and a half per cent of your net sales that you pay to the franchisor, have you - - -
PN1978
MS SALEWICZ: I don't mean to interject, but 12 per cent I believe was the amount, not 12.5.
PN1979
THE COMMISSIONER: I think Mr Moore just said that, didn't you, 12 per cent on net sales?
PN1980
MR MOORE: I think I said 12 per cent.
PN1981
MS SALEWICZ: I apologise.
**** SPIROS DIMAS XXN MR MOORE
PN1982
MR MOORE: In light of the complaints you make about the impact, as you anticipate, of the award on your business and the 12 per cent of net sales that you pay to the franchisor, have you approached the franchisor about reducing the fees that it charges you?---No, I haven't.
PN1983
Now, you give evidence that under current arrangements you don't pay penalties on weekends or after 9 pm?---That's correct.
PN1984
Now, do you understand that the agreement which regulates the wages and conditions that are provided to your employees was the result of an agreement reached between KFC and the SDA?---Yes, I do.
PN1985
And that there were previous agreements before that?---Yes, there were.
PN1986
And do you understand that the flat rates, the flat hourly rates, provided for in that agreement and its predecessors were negotiated by removing evening and weekend penalties in return for a higher base flat rate?---It's not really my area of expertise.
PN1987
If you don't know, you don't know?---No, I don't know that.
PN1988
When you commenced operating your business in 2009, I take it you made inquiries about the likely income and expenses of that business?---Yes, that's correct.
PN1989
Was it already operating when you started?---No, it wasn't.
PN1990
So it was a fresh new business?---The previous owner had decided to stop operating so it didn't have any staff or anything like that so I took it over. Yes, it was effectively a fresh business.
**** SPIROS DIMAS XXN MR MOORE
PN1991
I see; so there had been a KFC there but it wasn't operating when you took over?
---That's right.
PN1992
I see; and in relation to the expenses that you - sorry, I withdraw that. In relation to the inquiries you made about the expenses that you would likely incur in running the business, I take it you found out what instruments applied to the wages and conditions of the employees you anticipated to employ in the future?
---Yes.
PN1993
Who did you make those inquiries of?---From the franchisor.
PN1994
I see; so you contacted Yum?---Yes, the franchisor.
PN1995
So that was in 2009, was it?---That's correct.
PN1996
Did the representatives from Yum tell you at that time that there was underway a process for the making of a modern Fast Food Industry Award which might affect your business?---No.
PN1997
No?---No.
PN1998
You say in your statement that under the award it would be cheaper to employ adults?---Yes.
PN1999
Why don't you employ them now?---The adults - because the current award makes it more economical to employ younger people.
PN2000
It's cheaper to employ juniors?---Effectively it is cheaper, yes.
**** SPIROS DIMAS XXN MR MOORE
PN2001
You pay significantly less than the adult rate for employing the juniors?---We have the KFC National Agreement so we pay as per that.
PN2002
Yes. When you say in your statement that you would have to reconsider the training you provide to your staff, in saying that, did you take into account that you pay lower rates to the junior staff that you employ?---Yes.
PN2003
And if you had to employ or if you decided to employ adults instead of juniors, they would need to be trained as well?---Yes.
PN2004
Thank you. Weekends are a busy time for your business?---Fridays and Saturday are our busiest days.
PN2005
I see. Is Sunday a busy time too?---It's actually a very quiet day.
PN2006
Is it?---Yes.
PN2007
And you do training on Saturdays?---Currently, yes, we do.
PN2008
You understand that under the award you could provide training to your employees on weeknights before 9 pm without having to pay penalties?---I understand that, but it's a matter of availability.
PN2009
In relation to the training that you provide to your staff, do you get subsidies or payments from the franchisor or government?---I've had one staff member who I have received a traineeship for. She is a full-time staff member.
PN2010
In relation to the training that you provide to casual employees as you engage them and get them up to speed, do you get subsidies from Yum or from government for that?---No.
**** SPIROS DIMAS XXN MR MOORE
PN2011
Now, your profit and loss statement for 2011 and 2012 hasn't been finalised?
---That's correct.
PN2012
So I take it that you prepared your statement by reference to your 2010 to 2011 profit and loss?---Look, yes, that is correct. However, I have - although I don't have the statement finalised, I think the trends for this year will be continuing, the trends that we see in the 2010 and 11 statement.
PN2013
So I take it from that though that aside from impressions you might have about the trends of your business, the objective facts upon which you've based your statement are the 2010-2011 profit and loss?---That's correct. They're the only documents I have available.
PN2014
Thank you. Looking at your profit and loss statement, the sales recorded for 2010 and 2011 were almost identical. If you need me to show you the profit and loss, I will?---Yes, if I could have it in front of me, if I can have a reference, that would be really handy, thank you.
PN2015
Certainly?---Thank you.
PN2016
Sometimes, Mr Dimas, individuals in your position know these numbers like second nature, but I'm sorry for presuming that. Would you look at page 2?
---Mm'hm.
PN2017
Sorry, Commissioner, do you have a copy of it?
PN2018
THE COMMISSIONER: Yes, I do, thank you.
PN2019
MR MOORE: So this is the annual report for the Dimas Family Trust comprised of a balance sheet and a profit and loss statement?---Yes, that's correct.
**** SPIROS DIMAS XXN MR MOORE
PN2020
I just ask you to look at page 2, as numbered at the bottom. You'll see under the heading "Income" there's the subheading "Sales". Do you see that?---Yes, I do.
PN2021
So do you agree with me that between 2010 and 2011 your dollar value of sales were nearly identical?---2011 had an extra trading week as well.
PN2022
I'm just asking you - - -?---Yes, I agree; yes, they are nearly identical.
PN2023
Thank you. So the statement you make in your witness statement that you're seeing a sharp decline in sales is just wrong, is it not?---Based on the 2011 and 2010 data on that line you would say that, yes.
PN2024
Thank you. Still looking at that same page of the annual report, under the heading "Less Cost of Sales" you'll see there's a subheading "Purchases"?---Yes.
PN2025
Between 2010 and 2011 that shows that your business's cost of purchases fell by about $40,000?---Yes, that's what the report shows.
PN2026
Thank you. It's about an 8 per cent reduction?---Yes.
PN2027
Thank you; and that fall in your cost of purchases translated into a healthy increase in your gross profit margin from 62.35 per cent to 65.45 per cent. That's correct?---Yes, it contributed.
PN2028
And it also fed through into a turnaround in your profit before income tax which is recorded on the final page of the documents of a loss of just under $[redacted] to a profit of $[redacted]?---Yes, that was a contribution.
PN2029
Thank you. In light of what I have just shown you about - the questions I've just asked you about your statement, in particular the fall in the expenditure on purchases, your claim in your witness statement that costs are constantly increasing due to increased costs in purchasing goods is also wrong?---I would disagree with that.
**** SPIROS DIMAS XXN MR MOORE
PN2030
GST doesn't have any particular impact on your business. It comes and it goes?
---Agree.
PN2031
In your witness statement you refer to increases in waste disposal costs?---Yes, that's right.
PN2032
Can you tell the tribunal, looking at the accounts in front of you, what was the increase in the waste disposal costs between 2010 and 2011?---There was actually a decrease of $70.80.
PN2033
On waste disposal?---Yes.
PN2034
The waste disposal - if you look at page 3 of your accounts, the second item from the bottom is headed "Waste Disposal". Do you see that?---That's correct.
PN2035
And that shows, unless I'm misreading this, that in 2010 you spent $35.32 on waste disposal?---Waste disposal - yes, you're correct.
PN2036
And your waste disposal costs for $405 in 2011?---That's what the statement says.
PN2037
Yes. You're not suggesting that that increase has of itself any bearing on your business's capacity to meet the award?---From this statement, no.
PN2038
Thank you. Would you look at paragraph 15 of your statement?---Yes.
PN2039
On the second line you say, "Our margins on our product at usually as follows for my store," and you've got six items set out?---Yes.
PN2040
Now, it seems to me, Mr Dimas, that what you have there set out in the table are not margins but the proportion that each item corresponds to your total expenses. Is that right?---You'd be correct, yes.
**** SPIROS DIMAS XXN MR MOORE
PN2041
I'd be correct?---Yes, they're proportions.
PN2042
Thank you. So what you're saying is that, for example, labour costs represent 25 per cent of your total expenses?---That's correct.
PN2043
Thank you. So 25 per cent of total expenses your business has sustained?---I'm sorry, what was that question?
PN2044
For 2010-2011 - I withdraw that. What you're saying is that your percentage of your total expenses referable to labour costs are 25 per cent?---Yes, that is.
PN2045
And you're able to continue to operate your business obviously under that particular situation?---Currently, yes.
PN2046
Thank you. Now, in working out the labour costs, I'm just trying to get a fix on what items you count. On my review of your profit and loss statement under the heading "Expenditure" on page 3 the items that would fall under labour costs would be training, superannuation, uniform, wages and WorkCover?---Yes.
PN2047
I haven't missed anything, have I?---What is not in the profit and loss statement is my own wages so this is everyone but myself because I draw, so in my statement where I suggest 25 per cent that's including my wages as well.
PN2048
I see; so labour costs are your employees, plus your own wage?---That's right.
PN2049
What wage do you draw on the business?---I draw - I try to draw about 4 per cent which is about $[redacted], but really I draw what I can.
PN2050
So you try and draw $[redacted]?---I do.
**** SPIROS DIMAS XXN MR MOORE
PN2051
Did you draw $[redacted] in the 2010 and the 2011 years?---2011 I did. 2010 I did not draw that from my business, no.
PN2052
So, broadly speaking, if one was to exclude the wage you pay yourself, your labour costs, that is, for everyone else, would be about 21 per cent?---That's correct.
PN2053
Looking at page 3 of your accounts again, there's an item under "Expenditure" called "Contract work"?---Yes, that's right.
PN2054
That increased between 2010 and 2011 from $347 to over $12,000?---Yes, that's right.
PN2055
What's that a payment in relation to?---That was for contract cleaning and other maintenance. We had a handyman on for a while to see if they could improve cleanliness and also we started getting our gardens professionally maintained.
PN2056
I see; so they weren't payments to you or your family?---Not at all, no.
PN2057
The "Director costs" item on page 3 of your accounts - - -?---Yes.
PN2058
Do you see that? It increased between 2010 and 2011 from nearly 24,000 to 27,000?---Mm'hm.
PN2059
Do you see that?---Yes.
PN2060
Who are the directors?---I am one of the directors and my wife is a director.
PN2061
So is that a payment to - the $27,000 - I withdraw that. So you accept that between 2010 and 2011 the director costs increased by about $2000 from $23,000?---Yes.
**** SPIROS DIMAS XXN MR MOORE
PN2062
Sorry, from $24,000 just about; and that amount of $27,058.75 - that was paid as directors' costs in 2011. Did that go to your wife or to you?---Those amounts are associated with things like our mobile phones and other work expenses. They also include conferences that we have to attend. That's why we have an increase in 2011. We actually attended the 2011 conference and did not for 2010.
PN2063
I see; so what was the conference that you attended?---The National KFC Conference.
PN2064
Where was that?---That particular year it was at Twin Waters at the Sunshine Coast.
PN2065
How much did that cost approximately? You both attended, I take it?---Yes, we both attended it. I can't remember.
PN2066
$20,000?---No, I'm not saying that the total amount of 27,000. I'm saying that the difference between would be associated with the conference.
PN2067
I see?---The other amounts are things like mobile phones, fuel and other costs that occur.
PN2068
So the increase of about $2000 - sorry, $3000 was referable to the conference?
---That's correct.
PN2069
There are mobile phones. I take you don't spend $23,000 on mobile phones a year?---No.
PN2070
And there's petrol?---Yes.
**** SPIROS DIMAS XXN MR MOORE
PN2071
What other expenses does this 23,000 go towards?---Yes, sometimes I'd actually buy things for the store such as petty cash, equipment through my own cash and then I'll be reimbursed through a director's cost.
PN2072
So it's a whole host of personal expenses that are recompensed to you under the heading "Director costs"?---I wouldn't call them personal.
PN2073
MS SALEWICZ: I - - -
PN2074
THE COMMISSIONER: He is going to be given a chance to disagree or agree?
---I wouldn't call them personal. I mean, I'd get no benefit from a broom.
PN2075
MR MOORE: I'm just trying to work out where you get $20,000 of reimbursement of expenses. So far we've got mobile phones; conference for about $3000; petrol - how much you and your wife be paid for petrol?---Maybe $150 a week. That's each.
PN2076
That's about $15,000 a year?---Yes.
PN2077
Any other expenses?---Not that I can remember, no.
PN2078
So those directors' costs that the company pays you and your wife are in addition to the wage of $60,000 that you drew in 2011?---Those director costs would be, yes, expenses paid so, yes.
PN2079
You have got 35 employees, Mr Dimas?---Approximately, yes.
PN2080
Some of those employees are unable to work on weekends?---Let me just think about that. No, they're all able to work weekends. We usually have a rule of thumb that if they're not available for the weekends, we usually don't hire.
**** SPIROS DIMAS XXN MR MOORE
PN2081
Just one moment, Mr Dimas. Did you participate in a survey in relation to the impact of the Fast Food Industry Award? Perhaps I'll be a bit more specific. The survey might have come to your attention under the name or as a survey being coordinated by the AIG or by Deloitte Access Economics or by Sweeney Research. Do you recall participating in a survey or consultations about the Fast Food Industry Award earlier this year or perhaps last year?---I really don't recall.
Nothing further, Commissioner.
<RE-EXAMINATION BY MS SALEWICZ [2.51PM]
PN2083
MS SALEWICZ: Mr Dimas, it was put to you that the first sentence in paragraph 16 of your statement - I take that back. Paragraph 17 of your statement - my apologies, Commissioner, I'll start again.
PN2084
It was put to you, Mr Dimas, that the first sentence in paragraph 15 of your statement reading, "The marketplace controls our price structure and the capacity does not exist to increase prices," was incorrect and you said, "I disagree." Can you, please, explain why?---Yes. Commissioner, all the things that we, I guess, sell at the store has some sort of elasticity that comes from - has a price elasticity so a consumer won't be willing to pay more for a burger, for example. Now, last year we actually - KFC conducted some research. That was the Bread and Butter Research and it showed that our consumers believed that our prices were already very, very high so in a sense KFC and Yum took the stance that if we needed to do anything, we needed to reduce prices and that was one of the reasons why they believe our transactions have been dropping over the years as well because of that price elasticity.
PN2085
Mr Dimas, you were asked whether or not you had approached the franchisor, being Yum, to reduce the fees that they charged to you and your response was, "No, I haven't." Can you, please, explain why?---Yes, the franchise agreement is quite a lengthy document and the franchisor guards it very well. You could almost say that some things such as the royalties and other things that are set out in the franchise agreement are sacrosanct according to the franchisor. I wouldn't personally ask the franchisor to amend my franchise agreement to allow me to do things.
**** SPIROS DIMAS RXN MS SALEWICZ
PN2086
Mr Dimas, it was put to you based on your statement that you say it's cheaper to employ adults and your response was, "Yes." Can you, please, explain why?
---Now, the statement refers to under the new fast-food award it would be cheaper to employ adults and this is from my experience. The reason for this would be on average it takes a young person, 15-year-old person - usually takes the about eight months to pick up the job. They usually stick around for - they usually stick around for about two years so we actually have productivity of around 14 months, so we actually have productive individuals working. An adult under the new award - even though they will be earning a little bit more money, one would hope that they would be able to pick up the job quicker, therefore be able to be more productive quicker. The other thing is that adults would also be able to maybe work during the weekdays and the weekday nights where the new penalty rates won't apply. Most of - in fact all of my training usually occurs during the weekends and these will be now susceptible to penalty rates under the new award if it goes ahead.
PN2087
Mr Dimas, if I can turn you now to your profit and loss about which you were asked a number of questions, it was put to you that the sales figures in 2010 and 2011 were the same and you said that 2011 had an extra week in it. Can you, please, explain what effect that extra week has?---Yes. What I can say is in 2011 we had an additional week which means that there's approximately an additional $26,000 in revenue because of the fact that that financial year had an extra seven days associated to it. Also when I started that there's been a sharp decrease in sales, the decrease in sales actually began in 2009 which unfortunately is not in this data so the sharp decrease - - -
PN2088
MR MOORE: Commissioner, the witness is not answering the question now. He was asked a question about sales, not about costs.
**** SPIROS DIMAS RXN MS SALEWICZ
PN2089
MS SALEWICZ: Commissioner, the witness is answering the question - - -
PN2090
THE COMMISSIONER: Actually he was asked a question about the extra week in sales, that's true, but I'm satisfied that he is generally addressing himself to the question.
PN2091
Go on?---Yes, I'm just trying to put it into perspective. My statement said that there's been a sharp decrease in sales and that occurred in 2009 so we'd see the sharpness of that decrease occur then and it's obviously still continuing and 2011 - once again I reiterate that actually had an extra week associates with it so an extra week of revenue is in that line.
PN2092
MS SALEWICZ: Mr Dimas, it was put to you that your claim in your statement that costs are increasing is wrong in the context that purchases in your 2011 - sorry, 2010-2011 years fell by $40,000 and you said you disagree. Can you, please, explain why?---I do disagree. The costs of things like bread, chips, chicken, predominantly most of the things that we sell - they've all increased. However, there has been a decrease on my statement and that's due to better management so we're trying to manage our waste better, our ordering better, and that's a direct response to the actual increase in food costs.
PN2093
Mr Dimas, you said in the 25 per cent labour cost which is contained in the table at paragraph 15 that that includes your own wages. To whom are you referring when you say your own?---To myself and to my wife.
PN2094
Nothing further, Commissioner.
THE COMMISSIONER: All right, thank you, Mr Dimas, for your evidence. You may be excused.
<THE WITNESS WITHDREW [2.58PM]
PN2096
MS SALEWICZ: Commissioner, we have no further witnesses for today.
PN2097
THE COMMISSIONER: I thought we had someone. All right. That ends today. Is there anything I need to address?
PN2098
MS SALEWICZ: Nothing from our side, Commissioner.
PN2099
THE COMMISSIONER: That's a relief.
PN2100
MR MOORE: No, we will wait for the next instalment.
PN2101
THE COMMISSIONER: That's all right. It's very exciting.
<ADJOURNED INDEFINITELY [2.59PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
PROFESSOR IAN ROSS HARPER, SWORN PN1475
EXAMINATION-IN-CHIEF BY MR FOLLETT PN1475
EXHIBIT #AIGJ6 CURRICULUM VITAE OF IAN ROSS HARPER PN1500
THE WITNESS WITHDREW PN1623
IAN ROSS HARPER, ON FORMER OATH PN1623
EXHIBIT #AIGJ7 DELOITTE ACCESS ECONOMICS REPORT ENTITLED INDUSTRY IMPACTS OF PROVISIONS OF THE FAST FOOD INDUSTRY AWARD FINAL REPORT 4 APRIL 2012 PN1735
EXHIBIT #AIGJ8 LETTER FROM MR SOUTHERN, DIRECTOR DELOITTE ACCESS ECONOMICS, DATED 30/10/2012 WITH LETTER FROM DR ONG AND MR BAMA, SWEENEY RESEARCH, DATED 24/10/2012 PN1736
CROSS-EXAMINATION BY MR MOORE PN1737
RE-EXAMINATION BY MR FOLLETT PN1773
THE WITNESS WITHDREW PN1781
JULIE TOTH, AFFIRMED PN1797
EXAMINATION-IN-CHIEF BY MS SALEWICZ PN1797
EXHIBIT #AIG-J9 EXPERT REPORT PREPARED BY JULIE TOTH, CHIEF ECONOMIST, AIG PN1807
CROSS-EXAMINATION BY MR MOORE PN1807
RE-EXAMINATION BY MR SALEWICZ PN1899
THE WITNESS WITHDREW PN1903
SPIROS DIMAS, CALLED PN1936
SPIROS DIMAS, AFFIRMED PN1938
EXAMINATION-IN-CHIEF BY MS SALEWICZ PN1938
EXHIBIT #AIG J10 STATEMENT OF SPIROS DIMAS PN1965
CROSS-EXAMINATION BY MR MOORE PN1965
RE-EXAMINATION BY MS SALEWICZ PN2082
THE WITNESS WITHDREW PN2095