TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009
DEPUTY PRESIDENT KOVACIC
DEPUTY PRESIDENT BULL
s.156 - 4 yearly review of modern awards
Four yearly review of modern awards
Common Issues – Transitional Provisions - District Allowances
9.31 AM, THURSDAY, 12 APRIL 2018
Continued from 11/04/2018
DEPUTY PRESIDENT KOVACIC: Morning, everybody. Mr Scaife.
MR SCAIFE: Morning, Deputy President. If I could commence by dealing with the three issues that were raised by the members of the Bench yesterday during submissions. The first was a request from Bissett C for the regional price index dating back further in time. We have emailed to your associates this morning the regional price index data sets 2000 to 2017. We became aware overnight upon making inquiries that those data sets existed, so I do seek to tender the WA Government Regional Price Index data sets 200 to 2017.
DEPUTY PRESIDENT KOVACIC: We might just deal with that formality later this afternoon once we've actually printed off the document.
MR SCAIFE: Yes, it's a fairly large spread sheet, so we'll see what your associate can do with it, Deputy President. I will just note for Bull DP's benefit that it appears that the WA Government collected data on Laverton up until 2015 and then discontinued doing so in the latest data set. That is a difficulty for the SDA including Laverton because obviously there's a requirement in making this application that we demonstrate that the change to the award is necessary at this point in time at the point that the Commission makes its decision. But, certainly, if the Commission was to take the view that there was sufficient data in relation to other regions and, obviously, the Commission is not obliged to make a decision in the terms proposed by the parties, then that is something which the parties may need to address in future if upon reviewing that data, the Commission comes to a different view to the proposal before it.
The second issue was the provision of a copy of the Coles Supermarkets Enterprise Agreement which is currently before the Commission for approval. We have also emailed that document to the associates this morning. By way of brief explanation at this stage, the SDA instructs that clause 5.3.6 of that document is a general savings provision. It defines a protected pay rate for existing employees and it also defines an agreement for pay rate prospectively for new employees and there's a table set out at clause 5.3.6 that provides that district allowances are included within the protected pay rate, but not within the prospective agreement pay rate. Then at clause 6.8, it includes a single location allowance for Broken Hill and not for any other locations.
The third issue was a request for an update in relation to the Woolworths Supermarket National agreement. The instructions that I am given by the SDA are that negotiations, while they've been ongoing for some time are still, for practical purposes, at an early stage. Part of the bargaining protocols is that nothing is agreed until everything is agreed and at the moment the position of the employer is that district allowances are not on the table, but it would be perhaps premature and potentially disruptive to bargaining for the SDA to provide a copy of drafts at this stage to the Commission, but we're certainly in the Commission's hands in that respect. But, unfortunately, the SDA's view is that it's perhaps not appropriate at this point in bargaining for it to be putting materials before the Commission.
DEPUTY PRESIDENT KOVACIC: Thank you for that update in respect of Woolworths, Mr Scaife. I think, with respect, the view is expressed by the SDA that it would be premature at this stage to not provide anything more than what you have said this morning, so we won't press that issue.
MR SCAIFE: Thank you, Deputy President.
DEPUTY PRESIDENT BULL: Mr Scaife, just before you move on, could I just ask, maybe it's part of the vicissitudes of bargaining, but you're making application to put district allowance in a number of awards, but on the other hand, you've negotiated out of an enterprise agreement for new employees with Coles' district allowance. How does that rationale sit?
MR SCAIFE: So this goes to the evidence of Mr O'Keefe where he talks about the practical difficulties that are faced in bargaining for district or location specific allowances in the context of national agreements. The point that Mr O'Keefe makes is that in regions that are difficult to organise, difficult to coordinate claims by workers and then difficult to press those claims in a national setting, district allowances are ill-suited to resolution through enterprise bargaining at least in these industries because the agreements tend to be on a national enterprise level rather than on a district or location enterprise level.
DEPUTY PRESIDENT BULL: I understand that, but it was already in the previous agreement.
MR SCAIFE: Yes, Commissioner, and the point that we drew the Bench's attention to yesterday is that the previous agreement was negotiated while the transition provisions existed in the modern awards and those transitional provisions preserved the district allowances in Western Australia and, therefore, were relevant for the purposes of assessing whether or not the agreement passed the BOOT upon approval.
DEPUTY PRESIDENT BULL: All right, thank you.
MR SCAIFE: Thank you, Deputy President. If I could move then to factor G in the section in the Modern Awards Objective and this is the need to ensure a simple and easy to understand stable and sustainable modern award system. This factor, essentially, goes to the method of specifying district allowances and the nature of the clause and, by and large, I have been over this territory with the Full Bench yesterday in questions. This goes to the issues that were canvassed yesterday about designing a clause which is sufficiently sensitive or precise to disabilities in different locations, but being expressed in a manner which is easy for employers and employees to understand. And it was the secondary criticism of the transitional provisions that was made by the Full Bench in deciding to delete the transitional provisions.
The proposal that the SDA has put is transparently based on the clause that already existed in the modern awards in relation to Broken Hill. That's been done because it's a clause which has been tested before the Full Bench and before the Full Court of the Federal Court and also because it's a clause that's been in operation for a number of years and we haven't been able to identify any challenges or difficulties experienced with the clause. So it's an established model in the award framework for dealing with district allowances.
The clause provides for 4.2 per cent of the standard rate in discrete regions which we have chosen to specify by local government areas. To go back to a question that was posed by Bull DP yesterday, why, sort of, regional areas rather than specific locations, the only additional observation that we would make is that that's also the approach taken by the Broken Hill allowance. It's perhaps improperly named "the Broken Hill allowance" because when the clause itself is read - and you'll have to excuse my pronunciation here, it's by reference to the County of Yancowinna rather than to Broken Hill and that, as we understand it, includes the town of Silverton in addition to Broken Hill. So it's by a cadastral land division. WA doesn't have a system of divisions like that. What it does have is a system of incorporated local government areas with specified boundaries and so we see that as being the relevant comparator region for the purposes of establishing district allowances in Western Australia.
I don't intend to go over the territory we covered yesterday. There is obviously a tension in the factors that need to be balanced by the Full Bench between the precision of assessing the disabilities and allocating the allowance and, on the other hand, making the allowance simple and easy to understand. We say that the clause proposed by the SDA achieves that balance. It applies a model which is already familiar to the modern award system. Annexure SDA3 of our submissions, which is the table setting out the comparison between the WA General Order district allowances and essentially the SDA's proposal in percentage terms demonstrates that a rate of 4.28 per cent falls within the range of allowances that exist at a state level.
We concede that there are some areas that will in a sense go forward compared to the state system. So, for example, Port Hedland, under the state system at the moment the allowance is about 3.77 per cent of the standard rate in the state award. So moving to 4.28 per cent means that the percentage that would be under the Federal modern award would be a slightly more generous percentage and, equally, there are regions that would go backwards to some extent, for example, Kununurra, it's rate under the state system currently at Coles is 7.23 per cent. So it would obviously be going back relatively substantially in the Federal system.
But the important part to note is that the comparison is there so as to guide the Commission in choosing what might be an acceptable rate, but because of the subjective nature of these types of disabilities and the disability allowances, we don't think that a precise definite figure can be put before the Commission. What we think the Commission can be satisfied of is that there is likely to be an acceptable range for an allowance of this type which goes some way towards addressing the disabilities without being overly generous in the sense of, perhaps, reflecting completely the cost of living pressures in the region.
You know, say, the cost of living pressures were 12 per cent. We are not seeking a 12 per cent allowance to fully remedy that issue. It's an allowance that just goes somewhere as part of the safety net towards addressing the exigencies and we say that while it is obviously possible to have a list of locations and each of them with a different rate, and that could be set out in a table in the modern award, that seemed to be a criticism made by the Full Bench of the transitional provisions. So we have accepted that criticism by the Full Bench and in reliance on factor G, we have attempted to design a system which falls within the acceptable range but which specifies one rate which is applicable across a variety of regions all of which reach a merits case, in our view, before the Commission for the allocation of a disability related district allowance. But we can't put it in any more scientific terms than that given the type of allowance that we're dealing with.
In that sense, it's important, we say, for the Full Bench to bear in mind that what is required here is a safety net and the Full Bench has said on a number of occasions that the safety net is not a minimum floor. That submission has been made by employer parties and rejected. It's a safety net which goes some way towards addressing different disabilities or providing minimum conditions to workers in different industries. It's not a floor that can be scientifically reached and you just go to the minimum standard and we say that the concept of a safety net which involves the types of value judgments that the Commission needs to make on a routine basis is consistent with our submission about an acceptable range for the district allowance.
At this point, I would like to address a criteria that was applied by the Full Bench in previous decisions and, particularly, by the Australian Industrial Relations Commission as it was going through the modernisation process. It expressed a need for a nationally consistent approach to district allowances and theorised that without a national and consistent approach that there would be, I think, consequent inconsistency and unfairness. On that point, we say that there is no requirement in the Fair Work Act for a nationally consistent approach to district allowances. There's a requirement for a national system of modern awards, but the Fair Work Act expressly contemplates that there would be allowances for disabilities associated with work in particular locations. So that contemplates that there may be variations between different locations at least in relation to district allowances.
We would query whether a nationally consistent approach is achievable in a real or a scientific sense. The issues that might justify a disability allowance in, say, Karratha may be different to the issues that justify it in Kununurra or if there were to be any future applications at a place like Weipa or, say, there are new industries or new settlements developed in the future and there was a merits case put up for district allowances in those locations, the factors may have different weight in the eyes of the Full Bench. But what we do say is that the Full Bench can be comfortable that there's a consistent approach in terms of weighing factors like cost of living, isolation and climate, in determining whether or not a merits case has been sufficiently met in order to justify the insertion of district allowances.
So the conclusion to that is that where a sufficient merits case exists, it would be open to the Full Bench to insert district allowances, bearing in mind, however, the caveats that the SDA placed on its submissions yesterday that the need to maintain a sustainable system of modern awards, in our view, would mean that any future applications would need to demonstrate a change in circumstances and satisfy the Full Bench that the application could not, in any way, have been made during this review for the purposes of protecting the stability of the safety net.
If I could move then to factor H which is the likely impact of the proposal on the national economy and it's important for the words in that factor to be given due weight. It's not a factor about local economies. It's a factor directed towards the national economy. As we have set out in our written submissions, our position is that the SDA's proposal is localised to regions where disabilities have historically been compensated through district allowances. They are not highly populated regions of Australia. They are targeted to the specific disadvantages that evidence has been led of before the Commission. The lack of disruption over the substantial history of district allowances coupled with the lack of disruption evident from Broken Hill which is currently subject to a similar allowance we say are all factors that mean in the absence of any evidence tendered by another party suggesting that there would be some gross impact on the national economy then the Full Bench can comfortably infer that the impact would be negligible to none at all.
That takes me to concluding remarks. What the SDA's application is premised on is that the safety net currently fails workers in the regions that we have identified. These workers, we say, have been improperly deprived of a longstanding industrial entitlement in the Kimberley, Pilbara and Gascoyne and the evidence of Mr O'Keefe is that that situation is only becoming worse over time. As the Full Bench has noted on a number of occasions, modern awards underpin the system of enterprise bargaining. Employees at the moment have been spared the worst effects of the removal of district allowances by negotiating, for example, savings provisions for existing employees in the Coles agreement and by negotiating agreements during the transitional period that preserved district allowances in full. But the evidence of Mr O'Keefe is that those are now being phased out because employers are no longer willing to bargain on them knowing the challenges that face workers in these regions in being able to bargain for district allowances.
There are two core criteria that need to be met by the SDA in order to justify the insertion of district allowances in mounting a sufficient merits case and those are demonstrating that the insertion of the allowances are both relevant and necessary to the safety net. The Full Bench has commented on a number of occasions, and it's set out in our written submissions, that relevance requires a temporal test. Are the conditions adapted to contemporary circumstances? We submit that these plainly are because we have demonstrated that the disabilities that have always historically justified these allowances persist now and have not radically changed since they were removed during the transitional period.
But we also say that relevance needs to be given more work to do in the context of the modern award review. Relevance shouldn't be read down to just being a temporal test. Relevance surely captures concepts such as ensuring that allowances are relevant to particular locations in the context of the express permission granted by the Fair Work Act for location and district allowances. It may also be that relevance has work to do in an industry specific sense in other circumstances as well that the modern award framework needs to be relevant to the work that is done in particular industries, for example, height allowances in the building and construction industry.
So we say that the concept of relevance is much more than just a sense of a requirement that something be relevant now. It's relevance in a much broader sense and our submission is that the modern awards are not currently relevant as a safety net for workers in these regions because their relative living standards have gone backwards and are substantially - when I say gone backwards, gone backwards as a result of district allowances being removed from the safety net during the modernisation process, but also that their relative living standards are plainly lower compared to people in other regions of the country.
The second criteria is fairness and this, obviously, centrally requires a balancing of the various factors set out in the Modern Awards Objective. They are broad policy considerations and they're not easily resolved. There are often tensions between the various factors. But the SDA's submission is that the factors either weigh strongly in favour of the inclusion of district allowances, particularly looking at their history and those factors such as the need to promote social inclusion and to consider relative living standards weighs strongly in favour of the SDA's claim. Other factors, as we have taken the Full Bench through, we say are either neutral, unlikely to have any significant weight or in the case of the need to maintain a simple system of modern awards, we say that the SDA has now put a proposal before the Full Bench which is appropriately adapted towards meeting that factor.
In those circumstances, the SDA's submission is that the Full Bench should make the variations that have been proposed by the SDA. As I alluded to earlier, it is always open to the Full Bench to make a decision or to put a proposal which is different to that put by the parties. in those circumstances, all the SDA would request is that, in line with the Commission's obligations to afford procedural fairness, that the SDA would be given an opportunity to consider it a proposal and to provide further submissions and assistance to the Full Bench. Unless there is anything further, those are the submissions for the SDA.
DEPUTY PRESIDENT BULL: Yes, Mr Scaife, can I just take you to paragraph 55 of your written submissions, and 56 for that matter. You make reference to Ms Churchill and Ms Brown's evidence and how their weekly grocery bill compares with the income they receive. I think, in fact, the reference to Ms Churchill spending about 300 to 400, actually if you have a look at her evidence, I think it's 400 to 500, but anyway.
MR SCAIFE: Yes.
DEPUTY PRESIDENT BULL: The comment is made 60 per cent of her income was taken up in food and Ms Brown says: "Sometimes I have to spend more money on food than I earn." But both of them only work 15 hours a week and it seems a bit strange to compare a weekly expenditure on food versus income earnt over two days approximately. Wouldn't it be a better comparison, I mean, if they only worked one day of week, the ratio would be more than 60 per cent. But if they worked five days a week, it'd be different again. So what do we make of that?
MR SCAIFE: Just to confirm that I follow the question, Deputy President, the rough calculations that we have presented there are based on the hours per week that the witnesses have given as their evidence.
DEPUTY PRESIDENT BULL: Yes. No, I understand that. What I'm saying is, is it a fair comparison to say someone who - you're saying what someone spends per week on groceries, but they only work two days a week, so one would expect that the percentage of that would be quite high. But if they worked five days a week or a 38-hour week it'd be different again.
MR SCAIFE: It might be useful here - I don't have the paragraph - sorry, I do have the paragraph reference for the penalty rates case. At paragraph 1464 of that decision, the Full Bench in that case set out certain findings that it made about characteristics of workers in the retail industry and so this applies to both Ms Churchill and Ms Brown. One of the findings that was made by the Full Bench there was that workers in this industry are underemployed. Now, I understand that Ms Churchill gave evidence in answer to questions from you, Deputy President, that she would like to work more hours, but the hours aren't available to her and that's consistent with the findings made by the Full Bench about underemployment in this industry.
There was also a finding made by the Full Bench that these industries were predominantly - the employees in these industries were predominantly women as well which is consistent with the lay witness evidence that the SDA has put on. So we'd say that in those circumstances, between those findings at an industry level made by the Full Bench and the lay witness evidence that has been put on, the appropriate comparison is between the guaranteed regular hours that the witnesses give evidence that they work per week and their weekly expenses when it comes to groceries and the like.
But I should also clarify, Deputy President, that we don't rely upon the lay witness evidence to a great degree in relation to the cost of living factor because we accept that there is going to be - that's a factor which is more easily quantified and it's a factor which is going to vary from - may vary from household to household depending on its needs and instead we rely in relation to cost of living primarily upon the regional price index data. The submissions that are made there are for the purposes of achieving, I think as you put it yesterday, Deputy President, a human voice in relation to cost of living. They're not there as an objective analyses of data on which the Commission should rest its findings.
DEPUTY PRESIDENT BULL: Thank you.
DEPUTY PRESIDENT KOVACIC: Mr Scaife, just one question. In talking about the effect on the national economy, do you have a sense - I mean, clearly the evidence that has been led is largely from employees of what might be characterised as large businesses or national businesses. To the extent that there are any areas of the awards that are the subject of the application by the SDA, do you have a sense of small businesses, whether they would fall within the state system in WA?
MR SCAIFE: I think it's a difficult question for me to answer from submissions. I think the latest estimates of employees in the state system - employers in the state system generally in Western Australia is about 25 per cent of total employers in all industries fall within the state system. I could say I don't think I could point to any evidence is the problem, Deputy President. I certainly think that there are likely to be some employers in the retail industry which are partnerships, family trusts, those types of entities which would fall within the state system, but I don't currently have to hand any figures that I think could assist the Commission in that regard. But if that is something the Commission desires, we're certainly happy to take it away and provide - see what we can provide to the Commission after the end of the hearing.
DEPUTY PRESIDENT KOVACIC: I suppose we're I'm coming from is in the sense of if ultimately the practical effect of the claims that are made by the SDA is restricted to those employees that we have heard evidence in respect of or, you know, that the witnesses are employed by, it's slightly different from if there's a broader impact. I suppose that's where I'm coming from.
MR SCAIFE: Based on the lay witness evidence, I mean, Ms Cheng gives evidence that - and I think she confirmed it in cross-examination, but at least insofar as the clothing stores, retail stores, in Hedland were concerned, outside of Kmart there was Ed Harry for men's clothing. There is no data that we have been able to find to put before the Commission about the structure of businesses in the regions, but given the sparse populations in these towns are not large, it tends to be the case, from what the lay witnesses say, that there is a presence from major chains such as Woolworths and Kmart which adequately services the needs of the towns and there's very little space, I think, for smaller competitors. But, as I say, that's really a submission from - you know, evidence from the Bar table, Deputy President, and I am loath to do that normally, but certainly we can see what we can find in terms of objective evidence for the Commission to rest on if that was deemed appropriate.
DEPUTY PRESIDENT KOVACIC: I might just reflect on that perhaps after we have heard from the other parties. I might come back to that issue when you doing your reply.
MR SCAIFE: Yes.
DEPUTY PRESIDENT KOVACIC: Thank you.
MR SCAIFE: Thank you, Deputy President.
DEPUTY PRESIDENT KOVACIC: Ms Knight.
MS KNIGHT: Thank you, Commission. The ASU just has a couple of corrections to deal with in our written submissions to begin with. If we could turn to paragraph 8 on page 4. The proposed variations are referred to as attachment B and these are actually attachment A.
DEPUTY PRESIDENT BULL: Sorry, can you just say that again? I didn't quite follow what you said.
MS KNIGHT: In the last (indistinct) at paragraph A we have referred to the proposed - - -
DEPUTY PRESIDENT BULL: Paragraph what?
MS KNIGHT: Sorry?
DEPUTY PRESIDENT BULL: Paragraph what, sorry?
MS KNIGHT: Paragraph 8.
DEPUTY PRESIDENT BULL: Eight, yes.
MS KNIGHT: We have referred to the draft determinations at attachment B, but these are actually at attachment A.
DEPUTY PRESIDENT BULL: Thank you.
MS KNIGHT: I might just move this forward. Sorry, thanks. If I can take you to paragraph 10, we have referred to the Federal Court decision which is referenced in this paragraph at the bottom of page 4 as attachment C and it was not actually attached to the submission. I will be relying on this particular decision from the Federal Court. I have copies with me if I need to provide any.
DEPUTY PRESIDENT KOVACIC: Ms Bhatt, is it included in the AiG authorities?
MS BHATT: Yes, it is. I'll find the number.
DEPUTY PRESIDENT KOVACIC: So probably in those circumstances there's need to hand up an extra copy.
MS KNIGHT: Thank you.
COMMISSIONER BISSETT: I think it's at tab 17 of the Ai Group authorities.
MS KNIGHT: That's the only corrections that I wish to make. In respect of the ASU's submission, I'll just give a quick summary. The ASU submission deals with a block application for seven awards where the ASU has coverage for those industries and occupations. The ASU also says in our submissions that we support and adopt the submissions of the SDA insofar as those submissions deal with the principal issues of whether a district allowance can and should be paid to compensate cost of living, climate and remote location work in order for the Modern Awards Objective to be met.
In respect of section 131(1)(a), the ASU usually directs the Commission to the SCHADS industry and the clerks industry to be singled out as industries where the lack of bargaining tends to provide evidence that these are industries that are traditionally low paid and I'll go into that a little bit later where I can. In respect of section 131(g), the ASU, in our submission, has put forward a composite of the Australian Defence Force model for compensation of district allowances in their terms and conditions of employment with local government areas.
If you don't mind, I'll just get a glass of water. So I'll go, firstly, to the seven awards that they are subject of the ASU application and those awards are listed in the application on page 3 and similar to an approach taken by the AiG, I'll give a reference to those awards in the following way. I refer to Airline Operations Ground Staff as the Ground Staff Award. Then the Clerks Award, Legal Services Award, Local Government Award, Rail Industry Award, SCHADS Award, and Electrical Power Industry Award.
I would also like to take the Commission now to attachment B of our submission. Attachment B is a document that is research conducted and provided for this particular review into the history of the seven awards and the district allowances contained within the pre-reform industries. So I'll give you a quick overview of where the district allowances applied in WA, Northern Territory, Queensland and New South Wales. For ground staff in the airlines industry, WA, Northern Territory and Queensland, each contain a tropical zone or a tropical zone and district allowance that referred to Australian public sector regulations to determine the payment that would be made for those particular award covered areas.
In the Clerks Award, Northern Territory has consistently up until the 2014 decision paid a district allowance, a rate for north of the 20th parallel of latitude in Australia and a different rate for south, as well as a rate for Whyalla in South Australia. The legal services which AiG has pointed out did not have a district allowance named in its pre-reform instrument is actually inextricably - is a modern award that is inextricably linked to the Clerks Modern Award and we do concede that we haven't put on any evidence about the payment of district allowances in that particular industry. However, given the changing shift of this particular proceeding it is an area where we did seek it and we do know of it being paid. I also concede that's an assertion.
In respect of the Local Government industry district allowances have consistently been paid in WA, Northern Territory and Queensland, as well as Broken Hill area. It was referred to as the Broken Hill Area Allowance and that does encompass the Yancowinna County of New South Wales.
In respect of the Rail Industry Award, the locations are quite specific, but for New South Wales, they still refer - those modern awards do still show the history of the Broken Hill Area Allowance. The SCHADS Award is the modern award for which the ASU makes an application where there is an unbroken history of paying district allowances right up until the termination of the allowance in 2014.
Similar to the rail industry, the ASU concedes that a district allowance was never paid in WA, Northern Territory and Queensland, in the award safety net. However, it did always receive a Broken Hill area allowance.
DEPUTY PRESIDENT BULL: Now, Ms Knight, (indistinct) in respect of the West Australian awards - the location allowances were the same as the general order or something different?
MS KNIGHT: I'm sorry?
DEPUTY PRESIDENT BULL: In respect to the WA awards that you've taken us to, are they the state awards or federal awards?
MS KNIGHT: It was listed in the history.
DEPUTY PRESIDENT BULL: Yes - what were the rates they got paid? Were they the WA general order rates or something different?
MS KNIGHT: There is no consistent response so for each of the industries there is a different response. However, for local government it is the Western Australian general order for SCHADS it will be as well. I'm not sure I can offer a more precise response right now but I am happy to recollect that information. It's information that was attached to a previous submission that we made in 2015.
DEPUTY PRESIDENT BULL: Thank you.
MS KNIGHT: So the history of the modern awards, subject of the ASU application, we concede it shows a patchy application of the district allowance but it does clearly show a connection to public service operations that supplement the services and industries in remote communities. The allowance has been historically both an inducement and a compensation for disability. As shown in the Federal Court decision, as well as the witness evidence submitted by the ASU, it continues to be used as a compensation for the disability of living remotely.
If I go to the ADF model that the ASU has provided the Commission in our application at attachment A - - -
DEPUTY PRESIDENT KOVACIC: Just before you do, Ms Knight, just in terms of the awards that are subject of the application by the ASU, did they all contain transitional provisions?
MS KNIGHT: No, not all of those awards contain transitional provisions. The transitional provisions were not contained in the legal services award.
DEPUTY PRESIDENT KOVACIC: All right - that's the only one that didn't include a - - -
MS KNIGHT: That's correct.
DEPUTY PRESIDENT KOVACIC: Okay.
MS KNIGHT: So in respect of the ADF model attachment A, much has of course been said by the employers about the workability of this model and the applicability and the appropriateness of the model. The ASU has pressed in several of our submissions, both oral and written, that the model is a starting point for the Commission. It's an alternative approach that recognises the concerns raised in award modernisation but there must be a consistent and fair national basis for fixation and adjustment of district allowances.
This particular model has strong parallels with this model, with the argument that the Commission has made and the ADF model as a starting point is a unique - shows that the defence force as a unique area of employment but one which is federally - one which is a federally-recognised approach to compensating for the disability of cost of living, climate and remote living and remote working. This particular model reinforces the need in the modern award safety net in the ASU's view.
So I'll take you to the Federal Court decision - - -
DEPUTY PRESIDENT KOVACIC: In terms of the - when I look at the draft determinations, each of the locations has a grading. What is the rationale or how is that grading determined? Is that reflected in the draft determination? It doesn't appear to be, by my reading. But if I hadn't had a look at the APS enterprise award four-level grading and there are a range of factors in terms of isolation that go to how that's based on a points system and how the points are calculated, is that the sort of same methodology that underpins the ADF approach?
MS KNIGHT: Yes, I anticipate that question in the sense that the defence force remuneration tribunal is its own tribunal so its methodology the ASU would say is not something that we're proposing this particular Commission adopt. What we're proposing is that this particular model acknowledges that the Fair Work Commission has discretion around the construction of the model and as a starting point, this particular model proposed gives you flexibility to make a determination about how it is constructed.
DEPUTY PRESIDENT KOVACIC: There's got to be some rationale for how you actually grade locations, for instance if you use the city of Darwin, the city of Darwin 30 years ago may be have been graded completely differently to what it might be graded today and there has got to be some rationale as to how you judge whether these locations or other locations either where they come into the scale, if I can describe it that way, or alternatively where they stay within the scale.
MS KNIGHT: So the ASU's submission is that anything that is as or more remote than Broken Hill should definitely attract an allowance. But from that point, our submission is not necessarily to seek a particular rate of compensation but to ensure that the allowances are explicit in the modern award safety net.
DEPUTY PRESIDENT KOVACIC: Well, that is not what the effect of your determination is.
MS KNIGHT: It's not the effect of this particular determination but the ASU is open to an approach from the Commission that would allow us to amend the determination.
DEPUTY PRESIDENT KOVACIC: Is that a bit like buying a Tattslotto ticket and hoping for the best?
MS KNIGHT: You could say that. You could certainly say that. It's the model that was proposed as a starting point and in terms of what should be payable in regions the ASU hasn't made submissions about that.
DEPUTY PRESIDENT KOVACIC: You alluded to one of the comments that the Full Bench made earlier in respect of the transitional provisions and other Full Benches have made in the award modernisation process the need for a nationally-consistent approach. There is an end point here but what underpins it doesn't appear to be reflected in the draft determination, which you put forward. So I have no sense other than you're picking up a model that applies in the Australian Defence Force and plonking it into - proposing to plonk it into a number of awards. But how that operates in a practical sort of sense, in what weight is given to particular considerations just doesn't appear to be reflected in the draft determination.
MS KNIGHT: It is perhaps reflected in the witness evidence we've given for a specific area so perhaps if I go back to the areas of Western Australia where we've given evidence and the evidence we've given is particularly for the Kimberly region.
DEPUTY PRESIDENT KOVACIC: Well, it's Port Hedland in the sense of one witness. You have one witness - - -
MS KNIGHT: As well as relying on the regional price index that shows data for that region.
DEPUTY PRESIDENT KOVACIC: Okay.
DEPUTY PRESIDENT BULL: Port Hedland is in the Pilbara, isn't it?
MS KNIGHT: Hedland is in - as far as I'm aware - the Kimberley. It is Pilbara? Okay, my apologies, I've been advised that it's in the Kimberly. But it is Pilbara.
COMMISSIONER BISSETT: Yes, very much so.
DEPUTY PRESIDENT BULL: It's actually Port Hedland - there's no such place as Hedland.
COMMISSIONER BISSETT: We'll take the Deputy President's word on that one. He's spend more time there than the rest of us combined, I expect.
DEPUTY PRESIDENT BULL: Unfortunately.
DEPUTY PRESIDENT KOVACIC: So what mechanism would you be expecting in terms of adjustment of allowances as well?
MS KNIGHT: So if you were to take - if the Commission did agree that - did decide that a district allowance should remain a part of the national safety net, we have said that the proposed adjustment would be to treat this allowance as part of the minimum - to include this allowance in the minimum wage case and decide on whether or not it should be increased by the rates proposed for other allowances in that particular - - -
DEPUTY PRESIDENT KOVACIC: That kind of reinforces the point perhaps - on what basis does a minimum wage panel make a judgement call around that in circumstances where the criteria on which the various gradings exist isn't outlined? I mean, to the extent that for grade A it's primarily cost-of-living issues, or for E it's primarily isolation issues - there is no science that's reflected in this particular model.
MS KNIGHT: On behalf of the ASU I will concede that and I will just reiterate that the model that is put here provides a structure for a district allowance. It provides a definition. It notes that there are compensations for specific regions and regions that are identified as more or less remote. It does give rates but the way in which you identify those regions as more or less remote isn't something that the ASU has made submissions on in this particular matter.
It also gives you an example of how casuals and leave can be treated and it suggests that the method of variation for the annual rate increase be incorporated into the clause itself.
DEPUTY PRESIDENT KOVACIC: Please continue, Ms Knight.
MS KNIGHT: So in the ASU's submissions we have relied on the Federal Court decision in respect of section 139(g)(3) of the Fair Work Act. In their reply, the ACU submissions have conceded that this particular Federal Court decision permits that district allowances can be in the modern - in the system of modern awards. However, the ASU submits that this shouldn't be treated as any kind of understatement. In fact, don't understate the effect of this particular element of the Federal Court decision at all.
It does permit that district allowances are allowable and this is no longer disputed but the court has also said the following about Broken Hill from paragraphs 14 to 21. They have included in these paragraphs the history of the district allowance locality zone, isolation and climactic allowances, which have been features of federal and state awards for a long time and that the substance of the allowance is as a disability for work in a particular location.
In that particular case it is Broken Hill so the allowances have been commonplace, irrespective of their construction or jurisdiction and in substance they have always compensated for the disability of living and working remotely. On that basis the ASU has pressed that it only remains to be determined in this review what the rationale for where to pay and what to - and by how much to compensate for this disability. I think I've said this just a while earlier but if the case is made to have district allowances, the Fair Work Commission does have the discretion to propose how to construct the provision. The ADF model as an alternative keeps that discretion flexible. If they are appropriate there is sufficient discretion to determine a preferred model for the allowance.
So I'll just go to the regional price index and witness evidence. There is not a lot more to be said about the particular regional price index, other than it is also what the ASU has put forward as a useful method of surveying cost of living and a useful data set on which you can rely to track the special price fluctuations as a consequence of extreme cyclical changes in both the private and public sector areas in investment in these regions.
COMMISSIONER BISSETT: Ms Knight, the regional price index certainly provides a lot of information on WA but it doesn't tell me anything about Queensland.
MS KNIGHT: It doesn't tell you anything about Queensland.
COMMISSIONER BISSETT: No, so on what basis - how do I conclude that there are equally as forceful a set of factors as you say exist in WA or the other states?
MS KNIGHT: We're relying on - for Queensland, we're relying on the historical application of the allowances in our particular areas of coverage, on the basis that the history of those areas is through the various public sector agencies that have made direction to compensate for remote work whether it was as an inducement or for the disability of the remoteness.
COMMISSIONER BISSETT: But those issues - partially it goes back to the issue raised by the Deputy President - those things change over time so it may well be that when we or some other Full Bench comes along in five or 10 years' time and is asked to look at the regional price index for WA the figures are substantially different because populations shift and technology changes and accessibility changes. So to ask the bench to rely on historical decisions in states - in Queensland, for example - doesn't actually tell me anything, it doesn't tell the bench anything about what the circumstances are today because they may well have changed.
It used to be you got allowances for working in Cairns and I'm not quite sure that Cairns is classified as remote any more.
MS KNIGHT: The allowances - - -
COMMISSIONER BISSETT: It may well be, I don't know.
MS KNIGHT: - - - are - as I've said, they vary quite differently in their historical application. We are conceding that we have not put on any evidence for Queensland itself.
COMMISSIONER BISSETT: Well - - -
MS KNIGHT: So our evidence is WA and in particular the Pilbara region.
COMMISSIONER BISSETT: Okay, thank you.
DEPUTY PRESIDENT KOVACIC: So just given that there is a reliance on historical context or connections by the ASU, when was the last time these rates that you're proposing were reviewed in respect of the areas outside WA?
MS KNIGHT: In Queensland they were reviewed very recently, during the Queensland award modernisation process and they were terminated in that particular jurisdiction.
DEPUTY PRESIDENT KOVACIC: So when was that? That's - - -
MS KNIGHT: - - - in 2012, I believe, but I'll have to take the actual date of that review on notice.
DEPUTY PRESIDENT KOVACIC: Just to reiterate a point that Bissett C made, I mean, at one level you have conceded that there is no evidence in terms of the cost-of-living pressures that might exist to the extent that they exist in some of the locations in Queensland, but nothing in terms of isolation. In one respect it's for areas like Cairns and Townsville, both of which have international airports, it's arguable that isolation is there.
I accept that climate might be a factor for part of the year during the wet season but coming from the part of the world where I come from, it's arguably would be a godsend in the season we're just about to come into. There is just nothing there from my perspective to determine on any rational basis what might be appropriate if indeed it is appropriate for Queensland.
MS KNIGHT: The ASU's coverage is of course Australia-wide but the application of these particular modern awards is patch across each state, depending on how and where the services continue to fall in a federal or state jurisdiction. So the difficulty I have in collecting evidence for Queensland is simply that that particular jurisdiction and our coverage in that particular state relies on the state system and if I can be frank, have consistently utilised other avenues and approaches to remain out of the federal system. The exception I think in the ASU application is of course the SCHADS industry. The SCHADS industry in WA has always received a district allowance. It is an industry that we previously had witness evidence that we cannot refresh for this particular hearing into the impact of the loss of the district allowance.
The loss of the district allowance for Ms (indistinct) was evidenced as $1,500 per annum and her ability to refresh that witness falls both to her availability and the fact that she no longer works for that particular SCHADS service. That SCHADS service won't necessarily - the SCHADS service that she may go to work to won't necessarily not pay her the district allowance but the nature of the industry is that their funding is very volatile. They rely on funding for a whole range of areas. They are not for profit.
When the funding arguments are put to certain agencies, very often those funding arguments are made to pay the district allowance to employees in the service, simply so that the service can get to the remote locations in WA that require those SCHADS services. The main areas that the ASU will need to take you to in the regional price index were to support our submissions around the volatility of the regions, the volatile nature of the economies in those regions, in particular if you look at the comparison for housing in the Pilbara region in 2015 the index of 132.2 has fallen to an index of 120.6.
DEPUTY PRESIDENT KOVACIC: DO you have the pages references?
MS KNIGHT: I apologise. It's attachment D on page 6 of the price index. There is a summary of the items surveyed.
DEPUTY PRESIDENT BULL: Sorry, what were you saying again, Ms Knight?
MS KNIGHT: I'm taking you to the example of housing and pointing to the comparison of housing for the Pilbara region, which shows you a comparison of 2015 data and 2017 data. It does show that there has been a drop in the cost of housing but that the cost of housing hasn't moved that much closer to what the cost of housing would be in Perth for the period over which the survey was taken.
COMMISSIONER BISSETT: So while there's been a shift there is still a major difference?
MS KNIGHT: There is a still a significant cost in that particular area and the other areas are outlined in the data set.
DEPUTY PRESIDENT KOVACIC: One of the points that's made in the AiG's submissions is that when you look at where education has dropped out of the 2017 survey, I'm just looking at the numbers in terms of 2015. They bounce around a fair but what impact if any do you suggest that might have on the overall outcomes in terms of the index?
MS KNIGHT: I would have to take that question on notice and give it some consideration.
DEPUTY PRESIDENT KOVACIC: Perhaps if we come back to it in reply.
MS KNIGHT: So I'll just go now to - I'll just conclude with this statement; so the employers clearly intend to press submissions that the evidence shows that there are relative costs of living and we submit that for the particular areas covered by the regional price index it shows that there is significant difference between the urban area of Perth and the regional locations. Thank you.
DEPUTY PRESIDENT BULL: Ms Bhatt.
MS BHATT: Thank you, Deputy President. Ai Group has got comprehensive written submissions dated 4 April 2018 in opposition to both the SDA and the AUS's claim in relation to 10 of the 12 awards that the unions seek to vary. I note also for the record that we appear in these proceedings for Hair and Beauty Australia, who support and adopt our submissions to the extent that they relate to the SDA's claim to vary the Hair and Beauty Industry Award.
DEPUTY PRESIDENT BULL: Does your membership include anyone like Coles or Woolworths or K-Mart or any of those?
MS BHATT: Woolworths is a member of Ai Group and I was going to come to this later but perhaps I'll address now that the issue has been raised - in response to or in light of the question that fell from the bench yesterday regarding Woolworths negotiations in relation to its current enterprise agreement, I sought instructions overnight. My instructions are largely consistent with what Mr Scaife has put to you this morning - that is that negotiations are underway but at this stage no agreement has been reached in relation to the inclusion of district allowances and the enterprise agreement and the employer's position as of the date of today's proceedings is that they should not be included. I'll come later in my submissions to what that means and what this bench should make of information of that nature. But, Deputy President, to go to the other two retailers that you have mentioned, I don't have instructions as to whether or not they form part of our membership.
Needless to say, we continue to rely on the written submissions we've filed, which in a detailed way deal with both of the unions' claims and the submissions I make today should not be taken to limit the scope of the case that we've put in writing or to demur from any of that detail. I don't think I can do justice to all 87 pages on my feet but what I intend to do is to summarise the 10 primary propositions that we put against the unions' claim and for the Full Bench's reference they are listed at page 19 of our written submissions.
I note at the outset that there are of course issues that relate to the conduct of this review generally, the relevant statutory provisions, the preliminary jurisdictional issues decisions - these are the matters that are very well known to this Full Bench and so I won't trouble you with those today. They too are dealt with in our written submissions.
If I can deal with one other housekeeping matter, I have not yet had an opportunity to review the material that was filed this morning by Mr Scaife, regarding the regional price index. I understand that it will be tendered later today. We will seek an opportunity to say something about that in writing. There are others in my organisation who are far more able to access and interpret such data and might be able to assist the Full Bench and for that reason we would seek a period of two weeks to put something in writing, if we may.
MR TINDLEY: Deputy President, Mr Tindley in Melbourne - could I ask Ms Bhatt just to be mindful of the location of the microphone? It's just fading in and out a little bit.
MS BHATT: Of course, Mr Tindley, my apologies.
DEPUTY PRESIDENT BULL: Thank you.
MS BHATT: Now, the submissions I make of course are against the backdrop of the case that has been mounted by the unions - that is for the introduction of an additional weekly allowance for employees who work in various locations in Western Australia, the Northern Territory, Queensland and New South Wales on three bases: the cost of living in those locations, climatic conditions in those locations and the isolation of those locations.
I think it's important to remember that this case is not advanced in any serious way on the basis that district allowances were once upon a time introduced and that is to induce labour to work in certain regional locations nor has any serious case been mounted in support of a proposition that I understand Mr Scaife put yesterday, and that is that the allowances that are sought are of the nature expressly contemplated by section 139(1)(g)(iii) of the Act, and that is that they are allowances for disabilities associated with the performance of particular tasks or work in particular conditions or locations.
Now, I hadn't intended to deal with this but in light of the submissions made yesterday, I just wanted to step through it for a moment, if I can. The unions' submissions and evidence are advanced primarily on the basis that persons in certain locations experience alleged disabilities in their day-to-day lives by virtue of the fact that they are located in that area.
COMMISSIONER BISSETT: I don't think it's on the basis that they are alleged disabilities. I think it's on the basis that they say they are disabilities.
MS BHATT: That's their submission, yes. The nature of the disabilities relied upon by the unions are such that they are not directly related to the performance of work and I'm not sure that that is in any serious way being argued by the unions either. Indeed, some of the alleged disabilities that are referred to or pointed to might be experienced by persons who perform any type of work, whether award-covered or not, or indeed people who aren't performing any work at all - that is that they are not employed.
In my submission, in light of the evidence that we've heard, a more tenuous link can't be drawn either. The evidence doesn't establish that employees covered by many of the modern awards that are the subject of this claim, live in the relevant locations because of their work, such that it might be argued that in that way, disabilities are suffered and are associated with the performance of their work. There is certainly no evidence that they're required to live there by their employer. Indeed, you've heard considerable testimony to the contrary.
Various witnesses have said that they've moved to or continued to live in these locations because of reasons that are completely divorced from their employment.
COMMISSIONER BISSETT: So your premise is that given that there is no force or requirement by Coles, for example, or one of the witnesses, to work in Port Hedland, then that person's - that is in some way discounted, that we don't need to consider the disability of actually being in Port Hedland?
MS BHATT: The objection that we take is to the manner in which the unions appear to have sought to characterise the claim. Can I put it this way, Commissioner - it seems to us on the evidence - or rather, the evidence does not demonstrate that persons moved to or live in Carnarvon to work for Woolworths or that Woolworths requires people to move to Carnarvon to work for them. The evidence is that they live there for some other reason and they happen to be employed by Woolworths. All that turns on this is that the allowances can't be said to be of the nature expressly contemplated by section 139(1)(g)(iii). Now, I'm not arguing this as a jurisdictional point. I don't say that this means that the allowances are not permitted matters for the purposes of section 139(1) but it's simply an issue of the manner in which the unions have sought to characterise their claims.
COMMISSIONER BISSETT: So you say that 139(1)(g)(iii) only applies if the employer requires the work to be done at a particular location, so it doesn't apply to work done in a particular location and it only applies to work required to be done in a particular location?
MS BHATT: That's not the submission I'm advancing, Commissioner.
COMMISSIONER BISSETT: Okay, well, I think I'm misunderstanding what you're saying, Ms Bhatt.
MS BHATT: I probably haven't been clear. I think that's a limb of the submission that we put. But the central contention is that the allowance that is proposed here is not advanced on the basis that there are disabilities that are suffered and are associated with the performance of work. This isn't a case about the performance of work. Indeed, there has been very little evidence or attention paid to the work or the tasks that these employees undertake or engage in.
COMMISSIONER BISSETT: That's a question of construction of how 139(1)(g)(iii) should be read, isn't it?
MS BHATT: Well, if there is disagreement about that, then yes, that's right. At the end of the day, even if my submissions on this are not accepted and the unions' characterisation of its claims is, I don't know that that necessarily resolves the issue because I think it's trite to observe that just because a clause is expressly permitted by section 139 does not establish that it should be included in the modern awards system.
If I can give an example - - -
COMMISSIONER BISSETT: I don't think there's an argument about that.
MS BHATT: No, but section 139(1)(f) contemplates the inclusion of annualised wage arrangements but I think there are only 19 awards of the 122 that include such a clause.
DEPUTY PRESIDENT BULL: Ms Bhatt, just so I can understand what you're saying, there doesn't seem to have been a concern of the full court of the Federal Court in the case that you've got at tab 17 in Broken Hill but in any event, when you say the performance of a particular task or work, you're talking about allowances like heat money or working at heights or something, are you?
MS BHATT: That would be a type of allowance that would be expressly contemplated by that provision, yes, because it would be - - -
DEPUTY PRESIDENT BULL: But it's not a disability associated with performing that work. It's that you've got to live in the town, go home there every night, spend the weekend there. Is that associated with performing that work?
MS BHATT: I don't understand the unions' case to have been advanced on that basis. I might be wrong about that and the unions will tell me in reply. IN our submission, the unions have for various reasons articulated in our written submissions and what I propose to put today the unions have comprehensively failed to make out a case for the allowances that they've proposed, and I will turn then to the propositions that we advance against its claim.
The first one is that the unions have not established that the cost of living in the relevant locations warrants the introduction of the allowances proposed. We've dealt with this issue at pages 58 to 63 of our written submissions. I think there are three elements to this proposition. The first is a consideration of the material that is before the Full Bench. The second is a recognition of the material that is not before the Full Bench. The third is whether having regard to those factors and in any event the allowances proposed are warranted by reference to cost of living.
So I if turn firstly to consider what is before you, I think this material falls into two categories. The first is a report titled, "The Regional Price Index", which as the Full Bench has today observed deals exclusively with Western Australia. It's relied upon by both the SDA and the ASU. In our submission the relevance of that report is undermined upon a closer examination of what it in fact conveys. That report draws a comparison between the cost of a basket of goods in Perth versus various regional areas in Western Australia. What the report doesn't do is explain how the cost of goods in Pilbara compares to the cost of goods in Sydney or Melbourne or Hobart or Cairns or Albury or anywhere else, nor is there any comparison to some sort of national aggregate or average. We say that the report therefore leaves open the distinct possibility that if the cost of a basket of goods in Carnarvon was compared to the cost of a basket of goods somewhere else - take for example Sydney - that that might in fact paint a very different picture.
Indeed, arguably because Perth has been selected as the relevant comparator or is the comparator for the purposes of that report, the results might be somewhat skewed and I'm not suggesting that that is intentional, that's just what the report does. It may in fact be the case that if the cost of a basket of goods in a regional area of Western Australia is compared to another capital city, that it might be proven that the cost is in fact lower. We just don't know.
DEPUTY PRESIDENT BULL: Does that information exist?
MS BHATT: I have endeavoured to try to locate information of that nature that could readily be handed up from the bar table and I've - time has got the better of us and I haven't been able to present such information. I know there is information available about how CPI figures compare in different capital cities which is very readily available but CPI is a measure of how cost increases or decreases over a period of time. It's trend data, it doesn't tell us what the cost of a basket of goods is at a particular point in time. I decided not to hand it up because I didn't think it was going to assist the Full Bench.
COMMISSIONER BISSETT: What does that show in terms of - I appreciate what you say but what does that show in terms of - at least at a comparative level - changes in CPI from Perth compared to Sydney, for example?
MS BHATT: Commissioner, the data that I reviewed compared - it used 2011 to 2012 financial year as the base year and compared up from that. It showed that CPI had increased to the greatest extent in Sydney first. I think Melbourne was after that and Perth was the second-lowest increase.
DEPUTY PRESIDENT KOVACIC: Is that largely on the strength of housing costs?
MS BHATT: I don't know the answer to that. I don't know what the underlying factors are.
COMMISSIONER BISSETT: Housing might have been a big factor - - -
MS BHATT: I would expect so.
COMMISSIONER BISSETT: - - - for those who live in Sydney in Melbourne.
MS BHATT: Yes.
DEPUTY PRESIDENT KOVACIC: Ms Bhatt, I acknowledge that CPI data does capital cities. Does it also - I can't recall, it's been a long time since I've looked at ABS CPI data - does it also compare some regional locations as well or is there any breakdown within, beyond those sorts of national and capital city levels?
MS BHATT: Deputy President, I think that that information is not publicly available. But I think that there may be - I was in my organisation who have access to that sort of data.
DEPUTY PRESIDENT KOVACIC: Yes.
MS BHATT: If it's of assistance to the Commission we can make enquiries as to whether or not that can be obtained. But on my admittedly rudimentary review of the information publicly available, it did not appear to be there.
DEPUTY PRESIDENT KOVACIC: Well, it might be something you might want to conflate in the context of any response to the RPI data that the SDA provided this morning.
MS BHATT: Yes.
DEPUTY PRESIDENT KOVACIC: And you indicated you had wanted a couple of weeks to perhaps comment on it.
MS BHATT: Yes well there's - - -
DEPUTY PRESIDENT KOVACIC: And to the extent that you do do that, I'd probably foreshadow that the SDA would want an opportunity, and perhaps the ASU, to respond to anything that you might put in that regard as well.
MS BHATT: Yes of course. I understand from reading this report that is relied on, the Regional Price Index, that the Western Australian Industrial Relations Commission relies on the report for the purposes of adjusting district allowances that apply within the state system. And whilst that Commission may have deemed appropriate a comparison between regional areas in Western Australia and Perth, being the capital city of the state in which those instruments apply, consideration must be given to whether that necessarily means that that report is an appropriate basis upon which this Commission is moved to introduce district allowances into a nationally applying modern award system.
In our submission quite clearly it isn't, or at the very least the unions have not explained why Perth is the appropriate comparator. The second category of material that is before you regarding cost of living is the witness evidence of a handful of witnesses about the cost of certain goods and services, and in our submission the evidence is deficient in various respects. Firstly it's limited only to five locations, Hedland, South Hedland, Carnarvon, Karratha and Broome, and it says nothing of the numerous other places and areas that would be impacted by the unions' claims. I think observations of this nature have been made in respect of the ASU's claim this morning.
Secondly the evidence provides approximations about how much certain individuals in certain locations pay for certain goods and services. In some cases the evidence relays the subjective perceptions of witnesses as to the comparative cost of living with other places. But in no instance is the witness evidence based on a robust comparative exercise that might establish that the cost of a representative basket of goods is more or less than in some other part of Australia. So it doesn't fill the void that has been left by the Western Australian report.
Nor does any of the evidence take account of the very simple fact that the expenses that the witnesses say they incur are subject to a range of variables, and I'll just give a few quick examples. Foon Meng Cheng estimates the average amount she spends each year on phone and internet bills but of course this is a matter that is subject to the telecommunications provider that she selects and the type of plan and service that's selected, and the evidence does not demonstrate that in the same circumstances the cost incurred by someone in Melbourne for example would be any less. Ms Brown says - - -
COMMISSIONER BISSETT: So you're not suggesting - - -
MS BHATT: I'm sorry.
COMMISSIONER BISSETT: - - - that she should have to make - worse is the wrong word, but choices for her internet provider that artificially keep that cost low because she lives in Carnarvon or Port Hedland? I mean she should have, shouldn't she, the same options for her telecommunications as people who live in Melbourne and Sydney and Perth do?
MS BHATT: I'm not seeking to advance a submission that goes to her choices or criticise her choices in any way. The submission I'm seeking to make is that the unions appear to rely on this evidence to establish that the cost of living in these areas is higher than somewhere else, and for the reasons that I've just explained I don't think the witness evidence gets them there.
COMMISSIONER BISSETT: Is that the basis on which the witness evidence was put though? I mean doesn't the Regional Price Index tell us that it costs more to live in Port Hedland or South Hedland than it does in Perth?
MS BHATT: It draws a comparison between those areas and Perth and as I said it doesn't go any further than that.
COMMISSIONER BISSETT: No, I appreciate it goes no further than that but it does tell us that much, doesn't it?
MS BHATT: Well, on the face of the document, yes it does.
COMMISSIONER BISSETT: On the depth of it does it not?
MS BHATT: I haven't gone behind the material that underpins the report so I can't comment on that. Mr Carter says at page - sorry, at paragraph 15 of his statement that clothes are expensive at the local stores. So evidence of this nature establishes that subjectively Mr Carter considers that - I think he gives an example of a T-shirt that costs $30. So that evidence might establish that subjectively he perceives that to be expensive. All I'm trying to get to is that the evidence does not establish that as a question of fact clothes in Carnarvon cost more than comparable clothing that's available somewhere else.
As I said earlier it's also important to appreciate the paucity of the material that's before the Commission in relation to cost of living. There's no material before the Commission that goes to the cost of living in a significant proportion of the locations in which the unions' proposed allowances would be payable, and I think the most stark example of this is a number of locations in the Northern Territory and Queensland that are identified in the ASU's draft determination, and in such circumstances in our submission there is no basis upon which the Commission could conclude that the cost of living in those locations warrants the introduction of the allowances proposed.
And for all of the reasons that I've just articulated, in our submission the unions have not established that the cost of living in the relevant locations warrants the allowances sought. Before I move on from this I should note that even if it were established as a question of fact that persons in the relevant locations face a higher cost of living than in some other location - and I think this is coming back to Bissett C's point - in our submission the Commission should not exercise its discretion to grant the claim. In the context of a national modern award system it is not appropriate that the minimum safety net require employers to pay additional amounts to employees in specific locations, and this is a matter about which the AIRC expressed some hesitation when the modern awards were made, and we say respectfully that that hesitation was appropriate.
In our submission the introduction of district allowances would render the modern award system susceptible to claims for enhancement in respect of any number of geographic areas. So for example it might be argued that the very cold climate in Tasmania or parts thereof warrant the introduction of a new allowance for employees located there. Someone with as little resistance to the cold as me might argue that a similar allowance should be payable in Canberra or that the ever increasing real estate prices in Sydney justify a Sydney allowance. I'm loathe to use this term generally but in our submission the grant of the claim potentially opens the door to what is so often referred to as a slippery slope.
I think the SDA has sought to allay any concerns that we and/or the Commission might have about this issue by putting that any party that subsequently seeks the introduction of a district allowance would have to establish a material change in circumstances and explain why a case could not have been run in this review. I might be paraphrasing the submission that was put. There is no statutory basis for that submission. There's nothing that can be found in the Act that respondent parties might later be able to point to in support of any such proposition.
In the context of this review the SDA made an application for a judicial review of the penalty rates decision in which it agitated this very issue about whether there needs to be a material change in circumstances and the application was dismissed by a Full Court of the Federal Court. And in our submission the Commission should not take comfort, or we don't take comfort in the submissions that have been put by the SDA. I should also say that dealing with district allowances in such a piecemeal way in our submission is not consistent with the maintenance of a stable system or a simple and easy to understand system, and in our submission district allowances are a matter that are more appropriately left to enterprise bargaining and we've explained that in greater detail at paragraphs 250 to 252 and 259 to 264 of our written submissions, and I won't go through that now.
I can deal with our second and third propositions together. The second is that the unions have not established that the climatic conditions in the relevant locations warrant the introduction of the allowances proposed, and the third is that the same can be said in respect of the alleged isolation of the relevant locations, and we deal with these issues at paragraphs 192 to 196, 244 to 245 and pages 64 to 69 of our written submissions. Now in essence we say that to the extent that that consequences of climatic conditions or any alleged isolation have historically been relied upon as justification for district allowances, there's no evidence that those factors continue to prevail in the twenty first century and indeed in our view many of them don't.
This is a proposition that we put in our written submissions and it hasn't been dealt with orally by the unions, so I don't anticipate that it's controversial that factors that mitigate geographic distance such as telecommunications or transportation or climatic conditions such as the prevalence and effectiveness of air conditioning have advanced and improved since the decisions of the 1920s, the 1950s and 1984 upon which the unions appear to rely. We also note - - -
DEPUTY PRESIDENT BULL: I'm not sure there was any air conditioning in the 1920s.
MS BHATT: Right.
SPEAKER: I think it was (indistinct) of air.
SPEAKER: It was opening the window.
MS BHATT: Yes, that's right, and hope for some breeze. We also note that there's no evidence about the climatic conditions or isolation experienced by persons in a significant proportion of the locations identified in the unions' draft determinations. I again come back to the example of the ASU's draft determination. The unions now seek to hide behind the proposition that the disabilities associated with climatic conditions and isolation are inherently difficult to reduce to a formula or to a monetary value, and therefore a level of imprecision or arbitrariness are inevitable.
And they also say that for this reason the evidence led regarding the subjective perceptions of employees should be given greater weight. With respect this is simply a submission of convenience to the unions and it doesn't explain their failure to bring any objective evidence or data or information about for example the extent to which persons in each of these locations or areas have access to various amenities, medical facilities, educational facilities. There has been no comprehensive analysis of these sorts of factors, nor has there been any rigorous analysis of the financial consequences flowing from climate and isolation.
I think, Kovacic DP, you referred yesterday to the price of electricity bills which has been referred to by various witnesses, but there has been no other information that has been put on about that. In our submission the fact that any imprecision has not deterred other tribunals or commissions from requiring the payment of district allowances is respectfully irrelevant, because what is central to this Full Bench's consideration of the unions' claim is whether the provisions proposed are necessary in the sense contemplated by section 138 of the Act, and in our submission the Full Bench can't be satisfied that a clause that arbitrarily or imprecisely selects a quantum for the allowance payable is necessary in that sense.
I'll turn then to the fourth proposition which is that the history of district allowances does not lend support to the grant of a claim, and we've dealt comprehensively with the prevalence of district allowances in pre-modern awards and the extent to which that's indeed relevant at pages 27 to 32 of our submissions, and it also deals with the SDA submission put yesterday that the bar is somehow lower when regard is had to that history. And at pages 33 to 51 we carefully wade through prior consideration given to the issue of district allowances which I don't intend on repeating, but there's just a few points that I want to highlight.
The first one I've earlier touched on. To the extent that the unions rely on early decisions of state Tribunals there's no basis for concluding that the contextual factors upon which those decisions were based continue to prevail, and I'm talking there about the cost of living, isolation and climate. Bissett C, I think you earlier made the observation that cost of living may change over time. I don't know, but I anticipate that some of that movement in Western Australia may have something to do with mining activity as well. Further, the relevant Tribunals were of course operating in a very different statutory scheme to the current Fair Work regime, and specifically their power to introduce district allowances was not constrained by section 138 in the way that it is now.
Secondly, the decisions demonstrate the paucity of the material that has been put before the Commission as compared to the very extensive exercise that was undertaken by some of those Tribunals, and the evidence and other material that was put before it by the parties. And finally, over the decades in our submission the relevance of district allowances has been put in doubt and I would refer the Commission specifically to the decision of the Australian Conciliation and Arbitration Commission regarding Northern Territory allowances which were frozen in 1984, and the award modern award process which was conducted by the AIRC, and we've summarised those decisions in our submissions.
The fifth proposition that we advance is that the unions have failed to propose a fair, rational and consistent basis to fixing and adjusting the allowances proposed, and I refer to our submissions at pages 52 to 57 which we continue to rely on, which includes our treatment of what we say is the blatantly inappropriate reliance that the ASU places on the Australian Defence Force allowances. If I can just amplify a few of the points that we have made. In our submission it is essential that there is a fair, rational consistent basis for determining where district allowances are payable and the unions have failed to do so.
As I said earlier the absence of such a basis leaves open the prospect that the Commission and employer parties will over time be met with union proposals for the introduction of special allowances in a range of locations for various reasons. I think it's also relevant to note that, as the Commission knows, section 134(1) of the Act requires the Commission to ensure that modern awards provide a fair and relevant minimum safety net and that it might be argued at the relevant time that the notion of fairness applies not just between employees and employers but between groups of employees, and I say that because we've recently been met with a similar argument from the SDA in other common issues proceedings in this review.
So it might later be argued that it is unfair that an employee in a particular location receives an allowance but an employee in another location who allegedly faces comparable disadvantages or disabilities is not entitled to an allowance. The absence of a fair, rational and consistent basis for fixing the allowances proposed I think is demonstrated most blatantly by the differences in the locations and the quantums that are proposed by the unions, and whilst one union argues that the cost of living, climatic conditions and isolation warrant the payment of an extra $35 approximately to employees in the Shire of Shark Bay, the other argues that those same factors warrant the payment of an extra hundred dollars per week.
Quite clearly there is no rational, consistent or fair basis for fixing the allowances that is before you, and we've dealt with this issue in our written submissions at paragraph 177. And the final point I want to make about this issue is that it relates to the Broken Hill allowance that is in four of the modern awards that are the subject of the SDA's claim. It seems that both unions hang their hats on the existence of that allowance to varying degrees, but that can be dealt with in short order. Shortly after those four modern awards were made as part of the award modernisation process applications were filed by the SDA to vary those awards to insert a Broken Hill allowance and the decisions dealing with those applications record that the applications were not opposed by any interested party.
It seems based on a review of those decisions that there was no detailed consideration given to the merits of including such a provision in those awards, and indeed that such material was not put before Fair Work Australia as it was at the time. And we say that this is relevant to the extent to which the Full Bench should have regard to that decision in its consideration of this claim, or rather to the existence of Broken Hill allowances in its consideration of this claim. Since that time the Commission has not given any serious consideration to the merits of a Broken Hill allowance and as set out in our written submissions that includes the proceedings earlier in this review, which is of course well known to this Full Bench, and proceedings before the Federal Court.
In our submission the existence of the allowance in those four awards therefore can't be relied upon as establishing the necessity for the allowances proposed in the modern awards or providing a justification for their inclusion. The sixth proposition we advance relates to the evidence and that is that the evidence advanced by the unions falls well short of establishing the factual propositions upon which they seek to rely, and we've dealt with that at pages 64 to 69 of our written submissions.
The only other matter I wanted to add as I foreshadowed earlier in the week is that in many instances the evidence given by the witnesses is in the nature of hearsay and for various reasons, some of which were articulated by Mr Izzo earlier this week, there are inherent difficulties associated with testing such evidence, and the matters for which that evidence can be relied upon is limited and so, in our submission, that goes to the weight that can necessarily be attributed to any of that evidence.
COMMISSIONER BISSETT: When you make that submission is that just in respect to those areas of objection that you've already taken to the evidence; or you're saying we should apply that more generally across the witness evidence?
MS BHATT: The submission I make is not confined to the three or four objections that were expressly identified by Mr Izzo. There are other paragraphs of the witness evidence which we say are in the nature of hearsay. As identified earlier this week - - -
COMMISSIONER BISSETT: You didn't raise those as objections. You didn't take objection to that evidence, did you?
MS BHATT: I didn't, and as I explained at the time we elected not to do so because of the approach that has typically been taken in this review, and that is that evidence will generally be admitted subject to submissions that are made about the weight, and I had foreshadowed that I would seek to make such submissions.
COMMISSIONER BISSETT: I appreciate that but you've not identified which parts of the evidence you make that submission with respect to, so should the Bench sort of apply that principle to all of the evidence or are there particular paragraphs in the evidence of particular witnesses that we should apply it to?
MS BHATT: I wouldn't be submitting that that applies to all of the witness evidence. I think some elements of the evidence - certain elements of the witness evidence were highlighted as being hearsay during cross‑examination. If it assists the Full Bench and if there's no objection - which I suspect there might be - then we can identify what those paragraphs are. I can't take the issue any further than that on my feet.
Criticism has been made by the unions of the employer parties for not having advanced any evidence in these proceedings. But as the SDA submitted yesterday afternoon, no adverse inference can or should be drawn from that. We've dealt with this issue in our written submissions but the central point is that this review is different to an inter-party dispute and as such respondent parties don't bear an onus per se. In our submission as was outlined in the preliminary jurisdictional issues decision, it is for the moving party to advance material that enables the Commission to take into account all of the matters that are listed as section 134(1), and in this instance we say that they have not done so.
The seventh proposition is that the grant of the claim would be unfair to employers, and in our written submissions we've identified seven such reasons why, and I won't go through them. I just wanted to pick up on a point that was made by Kovacic DP, or a question that was asked by Kovacic DP yesterday of the SDA and it went to the extent to which the Commission should deal with - I think they were referred to as public policy issues such as access to health care which might otherwise be considered a matter for relevant governments. We've made a very similar point in our written submissions.
We have referenced some schemes that are available to persons living in these locations that are in the form of tax offsets, allowances and assistance provided to those who need to travel because they require medical care or treatment, and as we've said there, to the extent that there is any contention that those schemes are deficient then that is not a matter for this jurisdiction. It's not the forum for it, and be extension in our submission it would be unfair to impose on employers a new financial obligation in respect of matters that are in fact issues that are properly to be dealt with by other stakeholders.
I think it was in response that question that Mr Scaife referred to the domestic violence leave decision as an example of a public policy issue or a social issue in relation to which the Commission has recently issued a decision. But in my submission that decision or those proceedings are distinguishable from what you have before you now. In that case the Commission accepted that there was an intersection between employment and a person's experience of domestic violence, and by extension found that employers have a role to play in enabling employees to remove themselves from such relationships and from such situations.
But here, in our submission, on the evidence for reasons that I've dealt with earlier today that intersection is not necessarily made out, and in any event I think Mr Scaife made this point himself yesterday, that the payment of an allowance does not necessarily erase the disabilities. The payment of an extra $35 a week doesn't mean that there will suddenly be a hospital down the road or that the medical facilities will necessarily be upgraded. I think it's also trite to observe that the circumstances of someone suffering from domestic violence is not at all analogous to a person who chooses to live in a particular regional area because her husband is employed or her partner is employed by Rio Tinto and is on an annual salary of 180,000. I think the circumstances are very different and I'm sure I don't need to say anything more about that.
The eighth proposition is that the grant of the claim will increase employment costs. The unions' claims would impose a significant new financial obligation on employers, remembering that the proposed allowance would be payable to all of the employees in the relevant locations of that employer. The quantum of the allowances sought range from misleadingly benign 17.69 per week through to just over a hundred dollars per week, or expressed differently, a full‑time employee under the unions' claims would be entitled to between $920 to $5,285 per annum. A full‑time employee covered by the SDA's clause would be entitled to an additional $1,800.
Now if the ASU's proposition that employees with a dependent should be entitled to twice the allowance then of course that comes to up to $10,500 per year extra per employee. And once that's multiplied by the number of employees employed by an employer the additional employment costs that would be imposed on an employer speak for themselves. It's a self-evident proposition and we've dealt with it in our submissions. The only additional point I want to make is about the coverage of enterprise agreements which has been the subject of some discussion in these proceedings.
In our submission the fact that some employers currently pay their employees a district allowance pursuant to an enterprise agreement cannot be relied upon as a mitigating factor. That some employers in the context of bargaining have reached a compromise involving district allowances does not mean that the claim will not have any bearing on their employment costs. At the very least if district allowances are inserted into the modern awards the provision of district allowances in an enterprise agreement would no longer be a wholly above award benefit, which is necessarily relevant to the practical application of the better off overall test.
Now we've dealt earlier with this example of Woolworths and in our submission that example establishes firstly that these are matters about which parties engage in bargaining, and in our submission given its apparent importance to the unions, may incentivise parties to bargain - its absence in the awards may incentivise. But it also establishes that the claim would have an impact on an enterprise agreement covered employee. They are by no means shielded from the impact of any award variation that this Commission might decide to make and, importantly, it certainly doesn't diminish the potential impact of the claim on small or medium enterprises who are not covered by such an enterprise agreement, and this is of course particularly relevant when regard is had to the objects of the Act that make special reference to the needs of such businesses.
COMMISSIONER BISSETT: Ms Bhatt, this question was asked of Mr Scaife earlier, particularly in the WA situation do you know what the breakdown is of employers covered by the federal system, so who would be subject to this in those regions?
MS BHATT: I don't, Bissett C. I was about to take the Commission to a paragraph in our written submissions which unfortunately doesn't answer that question but may nonetheless be relevant to the Commission's consideration of this issue, and that is the extent to which employers in the relevant locations are award reliant. I'll just note it for the record, at paragraph 275 of our written submissions we refer to a research report that was prepared in the context of the 2013 to 2014 annual wage review conducted by the Commission. It contains some information about the proportion of employers in regional or rural areas that are award reliant compared to those in metropolitan areas, and I think it also has some relevant information about the extent to which their costs are made up of employment costs or costs associated with labour. But that doesn't - it won't answer - - -
COMMISSIONER BISSETT: Yes, because in terms of the SDA's claim.
MS BHATT: Yes.
COMMISSIONER BISSETT: WA is in its own unique position.
MS BHATT: Yes.
COMMISSIONER BISSETT: In terms of who's in and not in the federal system.
MS BHATT: Yes.
COMMISSIONER BISSETT: So that issue of the impact on award reliant or employers who aren't bargaining or don't have enterprise bargaining is quite a different picture in WA than it might be in Queensland for example, or I was going to say in Victoria but we don't have anywhere remote in Victoria, do we?
MS BHATT: Well, it might be depending on what the breakdown is between state system and non-state system.
COMMISSIONER BISSETT: Yes, and that's the question. Yes.
MS BHATT: But I don't know the answer.
COMMISSIONER BISSETT: Yes. Yes. No, I appreciate that.
MS BHATT: And I'm not aware of any material that I could point the Commission to.
COMMISSIONER BISSETT: Yes. Thank you.
MS BHATT: The ninth proposition is that the grant of the claim would be inconsistent with the maintenance of a stable award system, and we've dealt with this in our written submissions. The central point is that in the absence of a proper evidentiary case and a proper basis for fixing and adjusting the proposed allowances, for all the reasons we've already articulated the grant of a claim would be inconsistent with the maintenance of a stable system. And finally, the provisions proposed are not necessary, in our submission, to ensure that the relevant awards provide a fair and relevant minimum safety net of terms and conditions. I won't go through the various factors of section 134(1) of the Act. They're dealt with in detail in our written submissions. I simply note that in our submission the unions have failed to overcome this very fundamental legislative threshold. Unless there are any questions, those are my submissions.
DEPUTY PRESIDENT KOVACIC: Thank you, Ms Bhatt.
MS BHATT: Thank you.
DEPUTY PRESIDENT KOVACIC: Can I suggest we might just take a short five minute adjournment and we'll resume at 20 to 12.
SHORT ADJOURNMENT [11.36 AM]
RESUMED [11.44 AM]
DEPUTY PRESIDENT KOVACIC: Mr Izzo?
MR IZZO: Thank you, Deputy President. Deputy Presidents and Commissioner, I have three folders that I've given to the associate. They contain a variety of authorities. Now I do note that some of them will overlap with authorities you've been given but simply for the purposes of making oral submissions, because I'll be taking you to various tabs, I think it would be convenient to hand it up because there's a number of cases I intend on taking you to.
DEPUTY PRESIDENT KOVACIC: Yes please.
DEPUTY PRESIDENT BULL: Thank you.
MR IZZO: I can always take them back at the end of the submissions if that's more convenient.
DEPUTY PRESIDENT KOVACIC: Thank you.
MR IZZO: I know that you tend to get buried in paperwork sometimes by the parties. Your Honours, there's six matters broadly that I wish to address but before I come to them I thought I would start off by addressing section 139 of the Fair Work Act and a controversy that seems to have arisen in relation to how that provision is to be construed with respect to disability allowances.
DEPUTY PRESIDENT BULL: Mr Izzo, I'll just ask you the same as I did with Ms Bhatt. Do any of your members - are you representing any of the large supermarkets or anyone like that?
MR IZZO: Not that I'm aware of. No large supermarkets or Kmart, no.
DEPUTY PRESIDENT BULL: Thank you.
MR IZZO: The controversy seems to be that the union parties are saying that the type of clause they are seeking to insert into the awards is of a type expressly contemplated by the Fair Work Act. Like Ms Bhatt we take no issue with the fact that this is an allowance and so, generally speaking, it may be included and therefore there's no jurisdictional bar to it being included. But when we talk about what's expressly considered by the Fair Work Act if we look at subsection 139(1)(g)(iii) the plain and ordinary meaning of the language used, it talks about:
allowances for disabilities associated with the performance of particular tasks or work in particular conditions or locations.
Now our construction of that is that the disability needs to be associated with the performance of such tasks or work and therefore one is looking at the performance of work, how it is performed and whether there is any disability associated. A hot or cold allowance where you're working in a freezer room would be one example, an extreme heat example is another kind of disability allowance expressly contemplated because it attaches to the performance of the work.
DEPUTY PRESIDENT KOVACIC: But Mr Izzo, picking up a point that Bull DP made earlier, isn't this an issue that was considered by the Full Federal Court?
MR IZZO: And this, your Honour, is where we come to the unfortunate dilemma of form versus substance. If I can take you to that Federal Court decision it is behind tab 3 of your materials that I've handed up. Now if I take you to - it's page 4 of the decision, which is certainly more than four pages in but page 4 is the actual commencement of his Honour Buchanan J's decision.
DEPUTY PRESIDENT KOVACIC: Yes.
MR IZZO: And his Honour commences his judgment by outlining the Broken Hill allowance and the Broken Hill allowance states that it is paid:
for the exigencies of working of working in Broken Hill of 4.28 per cent
Now if I put to one side that that's the language the unions have sought to use as well in their allowance, the allowance was about "the exigencies of working in Broken Hill". If we then go forward to paragraph 15 on page 8 - I apologise, it's paragraph 27 on page 11 and, sorry, the page 10 just before it his Honour starts talking about section 139 and says that an allowance can be included. He then turns on page 11 "This requirement is clearly met." So he's saying it's an allowance. Indeed it was described by the Commission as a Broken Hill allowance. But then he asks "Is it, however, a disability allowance?"
He goes on to talk about the fact that just because "at some stage" there was "an element of inducement" that doesn't make it a disability allowance. Then he goes on to say:
In my view, a reference to the "exigencies" of working in Broken Hill, for which an extra amount is payable, is adequate and apt to convey that, in substance, the allowance is a disability allowance for work in a particular location.
Again he's focussed on the work:
A more classical reference to dictionary definitions would suggest that it was compensation for the demands of working in Broken Hill
Again it's focussed on the demands of actually working. At all times it is linked to the performance of work. He ultimately concludes that therefore it is disability allowance. Equally if we go further on to - - -
DEPUTY PRESIDENT BULL: Just on that, Mr Izzo, it says at paragraph 30 it's a disability allowance for a particular location. It's not a disability allowance for particular work.
MR IZZO: In that paragraph it says it's a disability allowance for a particular location within the meaning of 139(1)(g), yes. But, your Honour, I would say that statement there is taken within the context of what has come before it and what the court has expressly considered is that this is about the work being conducted in a particular location, being Broken Hill. Now you need to remember that the context in which this whole case has arisen is that the Australian Chamber of Commerce and Industry has said that a Broken Hill allowance, whether it's attached to the work or not, is not permissible because it's determined solely by reference to stable territory boundaries, and in dealing with that the Federal Court has said "Well, hang on. A disability allowance for work in a particular location is expressly contemplated by the Act therefore even if it is only applicable in one state, it's not jurisdictionally barred".
So that's why he's focussed on the concept of location there, but at no time do they seem to disavow or detach this concept of the disability needing to be attached to the performance of work, and part of the reason for that quite understandably is that when you look at the way the clause is drafted it's open to be interpreted that it's about the exigencies of working in Broken Hill. It's apt. The way it's drafted it could easily attach to the work and that's the basis upon which the Federal Court has proceeded. The distinction - - -
DEPUTY PRESIDENT BULL: But everyone understands that the allowance is for the remoteness of Broken Hill and the cost of living there, don't they? They don't understand it to be anything to do with the particular work there, do they?
MR IZZO: Your Honour, I think that's a more difficult question to answer because traditionally the Federal Court said a lot of it was about inducement and that was about attraction to a remote area. But as we will submit shortly, inducement has no role to play in the current statutory safety net. It's just not apparent - I mean all that's apparent is that they looked at the drafting of that clause and were satisfied, and as we've heard from Ms Bhatt's earlier submission there wasn't a great deal of a case mounted at all in the Tribunal below in the Fair Work Commission when this went up to the Federal Court.
So it's a very distinguishing feature to what we have today, which is today we have the same clause being put forward but not on the basis of anything attaching to the work. They are putting forward this allowance on the basis that living in a particular area confronts certain difficulties and it's the living in that space that is problematic, and we say that in substance it's - - -
COMMISSIONER BISSETT: Work is part of living in the area though isn't it?
MR IZZO: Apologies, Commissioner, did you say working is part of living in the area?
COMMISSIONER BISSETT: Yes. Isn't it? I mean for the people, and given that it is an award clause that is sought then surely by virtue of that it says work is part of the exigencies of Port Hedland, wherever it might be.
MR IZZO: I think the difficulty we have with that is the reference to the performance of the work. The use of the word "performance" in section 139(1)(g)(iii) really starts to direct the intention of this particular provision to actually the carrying out of the work, not just being there. It's actually performing it, and that's why we say when we talk about what this clause is expressly talking about, it's talking about the working conditions.
COMMISSIONER BISSETT: But that's not what the Full Court of the Federal Court said.
MR IZZO: The Full Court of the Federal Court was looking - - -
COMMISSIONER BISSETT: They said, as Bull DP pointed out, the conclusion was:
I ... have no difficulty in concluding that the Broken Hill term is a disability allowance for a particular location
MR IZZO: But Commissioner, that's within the context - - -
COMMISSIONER BISSETT: Not for particular work. It's the work is in the context of the location. The location isn't in the context of the work.
MR IZZO: I think, Commissioner, that conclusion, it cannot be divorced from paragraphs 27 and 28.
COMMISSIONER BISSETT: But isn't it an issue of what is the bigger pie? So the big picture is the location. It's then what you do in the location. If you're working then you get the allowance.
MR IZZO: But the reason the location is the big picture in this though is because it was argued in the Federal Court that just in New South Wales is prohibited from being included in a modern award because of section 154.
COMMISSIONER BISSETT: Yes. No. Yes.
MR IZZO: So that's why they've focussed on location.
COMMISSIONER BISSETT: But you can't then just say "Well, we'll just ignore what the Federal Court says of location".
MR IZZO: That's not my submission at all, Commissioner. My submission is that if one reads par 27, 28, 29 and 30 as a whole it is quite clear that they are talking about this being a disability allowance which is talking about disabilities associated with working in that location. They used the phrase "working" and they use - they talk about "exigencies" of working and that's because of how the Broken Hill allowance was drafted. And indeed the way the SDA have drafted their allowance, it neatly falls into the same bucket. The problem is the case that's advanced doesn't actually align and so all I'm saying - there's no prohibition on putting this term in because we know it's an allowance, but to say this is exactly or expressly the type of thing the legislature were contemplating, we don't accept that proposition.
DEPUTY PRESIDENT KOVACIC: But isn't the language at the end of paragraph 27 of the Federal Court decision where there's a reference whilst there may have historically been an element of inducement "does not signify that" the allowances "do not compensate for real disabilities or disadvantages"?
MR IZZO: But I think that comment is saying, your Honour, that what they're talking about there is just because historically there was inducement doesn't mean that this Broken Hill clause isn't compensating for real disabilities or disadvantages.
DEPUTY PRESIDENT KOVACIC: Well, they talk there in terms of "allowances of this kind" which seems to suggest that it's not restricted solely to Broken Hill allowance.
MR IZZO: to the extent that it starts saying that "an inducement" the difficulty with that is if we start accepting that a clause which its sole purpose is inducement is somehow compensating for a disability, I think if the reason for the inducement is that there is some disability associated with the work then you can get back to the fact that it's a disability allowance. But at all times we're focussed on the disability attaching to the work.
DEPUTY PRESIDENT KOVACIC: I think the word is just the argument you - or your submissions. I mean the interpretation by the Federal Court on one reading of it - and I agree it's arguable - is that allowances of this sort compensate for real disabilities or disadvantages of living and working in a particular location.
MR IZZO: And I think, your Honour, again I mean my response to that is probably equivalent to my responses to Bissett C and I suppose when I read that whole first part of page 11 in total, what I would submit is that they are focussed on the terminology as a whole and the fact that it is attached to the working. They then break it down. They break it down into disability and they break it down into location, and equally the judgment of Flick J I think does the same thing. It starts with the concept of disability, breaks that down, it doesn't talk about work or it doesn't talk about location, just disability and then it starts to talk about location as well. So, yes, there are some sentences that talk about just disability but I don't think that necessarily means that they're not talking in total about a disability associated with the work.
DEPUTY PRESIDENT BULL: Have a look at paragraph 50 of Flick J's decision on page 18. He says:
conclusion that the term is to be construed as a reference to the "disabilities" confronting any particular worker by reason of either the nature of the work ... or the peculiar difficulties confronting workers in "particular conditions or locations."
Using the words of the Act. So he's making two distinctions; the nature of work or the particular conditions or location of the work itself.
MR IZZO: And, your Honour, again I think that is ably or certainly able to be construed as talking about the nature of the work itself or the fact that there are difficulties confronting the workers, again in working in that location. So the difficulty might be the climate et cetera. So what is being distinguished there is either the nature of the work itself is difficult or actually performing the work in a particular location which makes it peculiar or difficult. So again, I don't think that necessarily leads us to a conclusion that this isn't actually looking at the way in which the work is performed and the conditions in which the work is performed. And if I can take you further down, your Honour, because I was aware of that passage but then even if we look at the bottom of paragraph 51 his Honour starts to talk about the Macquarie Dictionary definition and he defines:
defines this phrase as "an amount of money paid for working under certain unpleasant conditions".
And that's sought to reinforce his view about peculiar difficulties confronting workers. So it's for that reason I don't think the Federal Court decision can be taken as far as the SDA wish to take it, and because the Federal Court did not have before it a substantive case to which they reviewed, they just reviewed the clause effectively in a vacuum albeit they're aware of the industrial history. There wasn't a substantive merit case they were reviewing. One can easily understand why they say "Yes, well, it's about exigencies of working". But that's a very different type of case, we say, that's being mounted here.
Now all of this - because we're not mounting a jurisdictional objection there's a little bit of - it's not critical to either party's case but we do say that over the last two days there has been this suggestion that what we're talking about is something expressly contemplated by the Act. That's something we have some difficulty accepting and it sounds like that's the same for AiG. Are there any further questions on that particular point?
COMMISSIONER BISSETT: The issue is whether it's precluded by the Act, isn't it?
MR IZZO: Yes, and which it's not.
COMMISSIONER BISSETT: Which is a slightly different side of the coin.
MR IZZO: Yes and we accept it's not precluded from being inserted. I think it just colours what's to come and so what is to come? The six things that I wish to talk about; the history of disability allowance and allowances and the traditional rationale behind them. Whilst I don't intend to cover ground that's already been covered there's a few key things that I do wish to draw your attention to. I'd like to focus on the evidence that we've heard in this case and then conclude as to whether the evidence actually provides a substantive basis to introduce district allowances.
Fourthly, there's some comments that I have specific to each of the SDA and ASU claims. Fifthly I'm going to very briefly address two or three limbs of the modern awards objective and lastly there may be some miscellaneous matters that I just wish to respond to, to the SDA and ASU. So the first matter I wish to address is the history of district allowances and the traditional rationale behind them. The first element of this is to say that there has been no assessment regarding whether there should be as a matter of general merit district allowances in modern awards.
That's my first proposition and the starting point for that is the AIRC decision during the award modernisation process. Now I won't take your Honours to it because I think it's referred to in all the submissions and it seems to be in the contemplation of the Bench that that decision, which is  AIRCFB 717, it effectively reserved judgment on the issue. It talked about the fact that if district allowances are to be included then it would need to be - and I think it goes on to talk about it would be a matter for discussion, you'd need to ensure it's a fair and consistent basis.
So we know in the award modernisation process there was no decision made, and the paragraph reference is 28 but it's littered throughout the various parties' submissions. So that's the starting point. We know that then this matter came before a slightly differently constituted Full Bench during the four yearly review and we know that most of the district allowances, whilst preserved transitionally, they ceased operating after five years. We then have the decision that was made by the Full Bench as part of the 2014 review in relation to Broken Hill, and if I can just take you to tab 6 of the materials in front of you and paragraph 59 which is on page 12. There's just a few key passages I'd like to identify. The opening of paragraph 59; having dealt with the other areas, the Bench moves to Broken Hill:
There was little put by way of submission in the proceedings as to what should be the position regarding the Broken Hill allowance.
The beginning of paragraph 60 then says:
Little or no attention was given to this matter by most parties to the proceedings.
There is then the bottom of paragraph 63 which starts on page 13:
On the basis of the limited material before us we are satisfied that the maintenance of the Broken Hill allowance in the awards is appropriate having regard to the modern awards objective and other relevant considerations.
Having regard to that context in which the claim was brought and the fact that it was attached to some much larger proceedings relating to accident pay and district allowances in Western Australia and the Northern Territory, I don't think we can say that that decision assessed at large the merit of district allowances, and assessed at large their relevance or justification in the modern awards system or whether as a matter of general principle they are the type of term that should be included in modern awards. And having regard to that, we say that this proceeding today, this week, presents the first substantive opportunity for the Commission to consider whether district allowances are terms which should be included in modern awards.
And so that being the case the question then arises, well, when should you include a district allowance, if so where, how much, what are the principles that will guide the Commission in inserting a district allowance? And in that sense we really then start to search for some guidance. The first thing I draw your attention to in terms of guidance is actually the Federal Court decision again behind tab 3, and effectively at paragraph 15 of that decision his Honour Buchanan J states:
District, locality, zone, isolation and climatic allowances have been features of the federal ... award landscape for a long time. They were variously justified as a means of compensation for additional difficulty or discomfort associated with particular work, or as a legitimate means of inducing employees to work in particular areas.
So he talks about the discomfort associated with the work or inducing people. He then goes on to quote Drake‑Brockman of the Commonwealth Court of Conciliation and Arbitration at paragraph 16:
"Historically they appear to have been granted for the purpose of inducing labour to go to remote localities during the pioneering period ... These allowances being sums deemed sufficient to attract labour, they naturally have varied from time to time and from place to place.
And that's then reaffirmed again at paragraph 17. So we know that a huge justification was to attract people. We say that forms no part of the modern award safety net within the prism of section 134, and I will come back to that when I deal with the modern awards objective. But to reinforce that point for present purposes can I just give you a reference to a five member Full Bench decision of 2017 in the penalty rates case. In the penalty rates case the five member Full Bench considered the role of attraction and they had this to say. I haven't given you the judgment just because it's so long but it's paragraph 879 of that decision. They say:
We note that the hospitality employers also submit that the Sunday penalty rates should be set having regard to the need to attract labour. We do not accept that submission. Modern awards provide a minimum safety net of terms and conditions. A modern award penalty rate must be fair and relevant and having regard to the applicable provisions in the Fair Work Act. Considerations associated with the need to attract labour are best addressed through collective bargaining or the payment of over-award wages.
So our submission is that the first stumbling block is that the first traditional rationale does not appear to be available in the current legislative context, and that's a very important point. We then say "Well, what else do we look for?" and the SDA has urged that the Bench look at the two key Western Australian decisions in relation to this matter. In relation to both of those decisions I'd have an overarching comment and that is in neither decision was the need for a district allowance, the merit for a district allowance, ever contested.
The parties did disagree on what the rate should be but at no point was there a contest as to whether this is the type of thing that should be included in an award, and indeed to the contrary. Your Honours, the 1958 case is actually an insert on the inside sleeve of the folder I've handed up. If you go to page 687 - sorry, 685 of that decision, the second column if we go halfway down there's a reference to the paragraph starting "In the course of these proceedings". The Bench in this case a little bit further down starts to congratulate:
the careful and thorough manner in which the cases by the applicant and respondent Ministers were prepared ... The parties have placed before the court everything possible ... Both parties joined in asking the court that should its reasons for judgment show how the allowances the court prescribed were allocated, such allowances' allocations would considerably aid the parties in reaching agreement on any alterations so they could be assisted moving forward.
There is nothing in this decision nor the 1980 decision that follows it that suggests that at any time the Ministers - and the government I think was involved in both - had any objection to district allowances going in. There was certainly objection about the rate and the way it was to be calculated. So that's the starting point. Whilst we're on the 1958 decision and whilst you've got it here, there's three key factors. We know this. At the bottom of the page that I've taken you to they say:
I now turn therefore to a consideration of the various factors. The first and probably most important of these is the cost of living.
And as we know from the SDA, they then went on to talk about isolation and climate. So that's the 1958 decision, and I'll have something to say about isolation and climate shortly. But that's essentially one bit of guidance we have from the Western Australian jurisdiction over 50 years ago - I think 60 years ago, sorry 70 years ago. If I can now take you to the 1980 decision which is behind tab 9. The 1980 decision is the same in terms of the rationale but it actually has a glaring error, in our submission. It is an error which infects the 1980 decision and actually which infects the SDA's approach to the proceedings that have been before the Commission this week.
If I can take you to page 1150 of the 1980 decision. On one page the Western Australian Commission has neatly actually got all of the factors. You'll see at the top left corner in italics it says "Prices" then on the second column towards the top in italics it says "Housing". Then it says "Isolation" and then it says "Climate". Now we know about the prices, we know about the isolation, we know about the climate. That comes from 1958 and the 1958 decision - before I take you to this one - it also talked about the cost of housing as part of assessing cost of living. But the passage about housing is particularly interesting here. Before they get to housing they land on a decision about prices to set an allowance for prices, to set a value for cost of food and other goods. They then turn to housing and they say that:
The relevant report indicates that in the towns surveyed expenditure on this component is either equal to or less than in Perth.
They go on to say that it's substantially so in the closed mining towns. So some of these towns where mining is no longer operative, housing costs are substantially less. They then go on to just set out the data they relied on to get to that conclusion and their concluding comment is:
Accordingly there is no apparent need to compensate for this factor.
DEPUTY PRESIDENT BULL: Sorry, where are you reading that from, Mr Izzo?
MR IZZO: That's just before the - so it's just before the word "Isolation" they conclude about housing.
DEPUTY PRESIDENT BULL: I see. Yes. Thank you.
MR IZZO: So what they have done quite remarkably is they have divided the cost of living into two. They've said "We'll look at goods and services and we'll see if there's a disability there". "Oh there is. We'll give you an allowance for it". "Now we'll look at housing. Is there a disability there?" "No, there's not. Actually it's much cheaper". "Oh, we won't worry about that then and we won't give you an allowance for that". By doing that they haven't taken into account the holistic cost of living. They've divided it into two and then only looked at one part.
It's as simple as this analogy; if we were to talk about the cost of living in Port Hedland and you were to be told that fruit and vegetables are very expensive and you said "Well, fruit's 10 per cent more than in Perth, vegetables are 10 per cent less. Well, rather than saying the employee is no worse off we'll just give you an allowance for the fruit and make your circumstances financially better". But that hasn't taken into account the total cost of living and nor did this decision, and that's a fundamental error in the decision and it's interesting because it actually aligns with the way the SDA case has been presented today, because housing is barely there mentioned and I intend to talk about housing a bit.
DEPUTY PRESIDENT KOVACIC: But isn't housing included in the Regional Price Index?
MR IZZO: That's the one element of that document that I have concerns about for two reasons. I'm happy to come to that now, Deputy President.
DEPUTY PRESIDENT BULL: But, Mr Izzo, where they say there's no excess of rent in country areas over the metropolitan area so on that basis there's no need - - -
MR IZZO: Apologies, Deputy President, where is that?
DEPUTY PRESIDENT BULL: In the second paragraph under the heading of "Housing", the last sentence. They don't say it's cheaper, they just say there's no access - excess, sorry, so they don't have to discount.
MR IZZO: I think, Deputy President, what I'd say about that is two things. One, they talk about north western country and to the extent that they identify that, I'm just looking at their table to see what they have set out.
COMMISSIONER BISSETT: The paragraph above it explains the table.
MR IZZO: Well, I'm trying to I suppose align that with the opening comment says that it's either equal to or less than in Perth. They say substantially so in closed mining towns.
DEPUTY PRESIDENT BULL: I mean closed mining towns, the accommodation is provided by the mining company for free normally.
MR IZZO: The basis upon which I have understood it is that they have essentially thought it was either equal or less than and so haven't afforded it any attention. To the extent that - and I'm just looking at the other figures in the table to just see if I can - - -
COMMISSIONER BISSETT: What they say in the paragraph above is that the data as at 2 October '79 confirms that on an average of the three types of housing, so they looked at different types of housing, for a house of three bedrooms there is no excess of rent in country areas and the north west area over the metropolitan area. So it would appear to be that there was no major differential.
MR IZZO: And to the extent that that's the case, if that's the case then although the approach would still - to the extent that that's the case then the first paragraph to the extent of which it offends - it may not have offended substantially because I mean they talk about some being less but if it hasn't been infected then that's not a concern. But the overriding problem still is you can't divide cost of living and you can't say "I'm going to look at it separately" or "I'm only going to look at part of it". Now if that decision is saved by that because there was no substantial difference well, then that effectively means that we don't have a disproportionate outcome at that time.
That still doesn't mean that when we run this case we shouldn't be looking at cost of living in totality, and that's certainly what we urge the Commission to look at, not to divorce price of goods from housing. It has got to all be considered together, and I suppose that then comes to your Honour's question which is doesn't the Regional Price Index do that? I have difficulty with that for two reasons, Deputy President. One is that we don't know - or sorry, the first and most basic is it only looks at rent. It doesn't look at mortgage costs, so it looks at some of the cost of living but not all of it.
DEPUTY PRESIDENT KOVACIC: What would you consider to be - if you look at page 4 which describes the basket of goods of the Regional Price Index report.
MR IZZO: Yes.
DEPUTY PRESIDENT KOVACIC: Under "Housing", "Rates and charges, rents, costs of utilities, credit charges" which would presumably be an indirect way of saying interest on mortgages.
MR IZZO: I think all I've taken from housing is rents. I haven't taken that to be mortgages. So I mean credit charges - - -
DEPUTY PRESIDENT KOVACIC: And insurance?
MR IZZO: Insurance, well, it's possible. It's not clear, Deputy President.
DEPUTY PRESIDENT KOVACIC: I take the point that it's not entirely clear.
MR IZZO: Yes.
DEPUTY PRESIDENT KOVACIC: But you know one interpretation is the credit charges would be mortgage rates.
MR IZZO: Look, that's possible. I suppose then the second difficulty I have is we don't have the basis upon which the weights have been placed in this average basket. What we will come to when we talk about the evidence filed by ABI and the New South Wales Business Chamber is that the best we can assess, housing costs is about 30 per cent of the total expenditure of an average household, and if that is the case you're talking about it being a very significant component.
Now to the extent that housing is significantly less than the housing costs in metropolitan areas we query the extent to which that has been properly reflected in this document. So except for goods and services it seems to have been that an exercise has been conducted about the basic cost of such matters. But to the extent that which housing has been factored in, we're going to take in the Census data which obviously has the advantage of being much more comprehensive than a representative survey, and it seems we have a differing outcome.
DEPUTY PRESIDENT KOVACIC: In terms of the issue that you raised about weight can I take you page 5 and on the left‑hand side column, the middle paragraph:
The weights used in this project are based on those used for the CPI.
MR IZZO: CPI. So that tells us - I suppose if one looks we'll be able to find out that's right, that the weights - the difficulty I have is that when we look at the Census data, which I intend to take the Commission to, it leads to a very different outcome than when we look at this. So the question is "Well, is this sample not properly representative? Is it that there's something in the weighting? Why is it that it seems that the way the housing has been dealt with comes to a different outcome when it deals with the WA report than what Census data shows us?" Now as we know, Census is holistic.
The beauty of a Census is that it surveys the entire population, not a representative sample. This purports to survey a representative sample. So we have a distinction in the costs and a marked distinction, and we would say the Census data is far more reliable in relation to that. So it has either got to be a weighting issue or it's a representational data issue. Seeing we're on it, I'm happy to take you to this point now. If I can take you to the annexure to our submissions, which if I could take you to the back of our submissions. If I could take you to Annexure B.
DEPUTY PRESIDENT KOVACIC: That's the CoreLogic report.
MR IZZO: No, so just before the CoreLogic. That should be Annexure C.
DEPUTY PRESIDENT KOVACIC: Yes. Yes.
MR IZZO: Annexure B which is exhibit 16. So that is the commencement of we have filed this Census data for each of the towns in which a district allowance is sought, as well as each of the metropolitan capitals. So there's no need to look at them all but you'll see Brisbane, Burdekin et cetera, and what's reported is the median monthly mortgage repayments and the median weekly rent and that is reported for each of them.
We have then extrapolated that in Annexure A, to set out the median rents and the median monthly mortgage, and what becomes evident very quickly if we start with rent, the rent in Brisbane is 355. There's nothing that comes close to that in the regions. If we put - we're going to put Weipa to one side for a moment, but the others, they're more than 30 per cent less. If we go to Western Australia Perth is the highest and all the others are significantly less, perhaps other than Karratha which gets up to 290, but again that's still at least more than 10 per cent less. If we go to Darwin it's 418 - - -
COMMISSIONER BISSETT: Yes, but where is Shire of Ashburton that the rent is only $32 a week?
MR IZZO: The Shire of Ashburton. Let's look at the Census.
COMMISSIONER BISSETT: In the Western Australian group.
MR IZZO: I suspect we will find from the Census that there must be so few people in Ashburton - so we should have the Census data for it.
DEPUTY PRESIDENT BULL: So that's the town of Onslow I think.
MR IZZO: So Ashburton, well it's interesting they've got 13,000 people from the Census. So it's in Annexure B. They've got 13,000 people. They've got three and a half thousand private dwellings and they've got a median weekly rent of $32.
COMMISSIONER BISSETT: Someone is making absolutely no money out of their rental properties in Ashburton.
MR IZZO: As I said, Commissioner, the beauty of the Census - I mean unless it's a typo, the beauty of the Census data is that it's - - -
COMMISSIONER BISSETT: It seems a bit strange.
MR IZZO: It does but - - -
COMMISSIONER BISSETT: So it may be that - and I ask the question seriously because it may be that there are other forces at play in these centres that affect the rent that the individual is paying. So I'm paying $32 a week rent for my house in Ashburton but government subsidies or other - or the mine who owns the house for example is not requiring me to pay more than $32. So it's not a true reflection of the actual rental value.
MR IZZO: And look, that's entirely possible for Ashburton and indeed it's what they have declared but I suppose - and I know I've said this but the beauty - you're always going to have with statistics, you're going to have some issue with representation. But at least with the Census we know every single person or 99 per cent of them have filled it out and sent it in so it's the best statistical evidence we can get. So in any event going back to Annexure A and putting Ashburton - and Upper Gascoyne might be in the same basket - aside, and then you've got a corporation which might fit into - the last one in the Northern Territory I think probably feeds into your point as well, Commissioner. Putting them aside you have significantly lower rental costs. We don't get that from the Western Australian Government data - or I shouldn't say Western Australian Government but the RPI report which is exhibit 12. We prefer the Census data.
COMMISSIONER BISSETT: I'm sure you do.
MR IZZO: But also because it is Census data and so that causes us to doubt the reliability of the exhibit 12, I believe it is, in respect of housing costs. Now I'm willing to make some concessions when it comes to price of goods and services but with respect to housing I'm not so convinced, because of the conflict with the Census data.
DEPUTY PRESIDENT KOVACIC: What about in respect of mortgage charges? I mean when you look at, using Western Australia, there are a number of cities that would be in the regions that are subject to the SDA's applications where the mortgage repayments are at least similar if not above I think those in Perth.
MR IZZO: And, Deputy President, I think the three in particular are Karratha, Broome and - well, Karratha and Broome are the big one that are above and I think we've got the town of Port Hedland as well interestingly. So three that we've heard witnesses from. So there's a couple of things I'd say about that. The first is, if we put those three aside for one moment, generally the mortgage prices are much lower. But if you talk about those three, well, firstly the SDA's claim extends beyond those three places. Secondly, the data is 2016. We've heard evidence from both Ms - I think she goes by Manu, it's Ms Makere I believe, and Mr Malcolm Parker that the value of housing costs since 2016 has dropped as well significantly due to the reduction in investment in the mining boom. I think Ms Makere talked about the value of her property dropping by half. Mr Parker talked about rents dropping by a similar amount. So the Census data is 2016. I think exhibit 12 is 2017 so there's a year there in difference. I'm not sure exactly when the Census data was collected. I just know that it's titled 2016.
DEPUTY PRESIDENT KOVACIC: September. September or August.
MR IZZO: It's always September or August I take it. So what I'd say about that is three things. One, it's only three towns it's not all of them. It's not the whole region. Two, that may well have dropped back closer to the Perth levels in any event since - - -
COMMISSIONER BISSETT: But Perth has dropped as well. I mean the anecdotal data is that - - -
MR IZZO: Yes, and perhaps due to the same factors although the question is has it dropped the same amount.
DEPUTY PRESIDENT KOVACIC: But I just make a point that, you know, sort of the fact that property values may have declined doesn't necessarily impact on the amount of loan that you've taken out. You know, if you bought a place and you have a mortgage of $200,000, it's still a mortgage of $200,000 irrespective of whether the place is worth a million dollars or $500,000.
MR IZZO: I think that's quite right. I don't think it's possible to argue with that, Deputy President. Having said that, I mean this is the difficulty when we start talking about the mining boom and the extent to which this Commission starts to compensate for anything consequentially derived from that. Because it is so fixed at a point in time if that's going to be a driving factor of setting allowances in just a few of these towns it's going to need a very thorough review at a very periodic level because of the volatility associated with investment, and I mean certainly anecdotally the idea is that the investment of the past in the construction phase is not going to be what we see in the future.
Yes, there may be upticks but it's not going to be what it was five years ago. So we would say we'd expect these property prices to come down and so that means on an ongoing basis the need to compensate for housing costs in those three towns is not what it once was, and that's in terms of the fair and relevant and safety(sic), that that needs to be your focus. If the concern of the Commission is "Well, what about current employees now who bought five years ago who are under some strain?" we get into the problem that you're compensating for some, you might be disproportionately creating effects elsewhere.
DEPUTY PRESIDENT KOVACIC: Does that go to in a sense that if the Bench was convinced of the need to include a district allowance in the awards as sought, how you adjust to deal with the swings and roundabouts that might sort of go to the factors?
MR IZZO: That's one way of dealing with it. That is one way of dealing with it, and it may address some of that concern. It would need to be, particularly given that the status of the reviews of modern awards is a matter which is a bit vague in terms of how they'll be done in the future. At the moment they're meant to be done every four years. I think it's all on the public record that there seems to be the ACTU and ACCI and AiG are all seeking to - and there's legislation in Parliament to actually amend that.
So I think if the Commission is going to put something in it needs to ensure that it doesn't somehow become locked and fixed in a point in time if that's the case. But I think the problem is that right now when we're talking just about mortgage costs it's only three towns in WA. The rest in the mortgage costs still fall significantly below Perth as well. So we need to be careful. I mean if anything, that's just data that supports a concern about three towns only in WA and at a fixed point in time. So we don't think there's an overarching concern there about housing costs generally being higher.
DEPUTY PRESIDENT KOVACIC: That's about one element of the basket that sort of is relied upon in the RPI.
MR IZZO: That's right. But one very significant element, and the reason I say - that's where the CoreLogic data comes in. So Annexure C, CoreLogic just by way of background, from what I have been able to gather, is - - -
DEPUTY PRESIDENT KOVACIC: A well regarded forecaster.
MR IZZO: Is well regarded. I actually had - I may as well say it because I had my phrase ready - - -
DEPUTY PRESIDENT KOVACIC: I saw the article in the newspaper the other day and they referred to them as being recognised as some world best.
MR IZZO: I'll give you the exact quote, your Honour. It is - I can't find it but anyway it's effectively the largest collector of data globally in relation to property information and its data in the report that we have filed is derived from each of the state governments.
COMMISSIONER BISSETT: Who are they?
MR IZZO: "They are the largest property data and analytics company in the world". There's the phrase.
COMMISSIONER BISSETT: No, I don't want to know what the PR says about them. I'm just wondering who - - -
MR IZZO: They're a global company. All I can talk is about their market position, 20,000 customers, 150,000 end users. They essentially provide real estate property advice services.
COMMISSIONER BISSETT: Yes.
MR IZZO: In terms of the value of property.
COMMISSIONER BISSETT: Yes, and that's why I'm thinking - I was just wondering who owns them.
MR IZZO: But I can't tell you who owns them. I can't tell you that although I may be able to find out. So the reason we refer to that is because if I take you while you're at our submissions, your Honours, to page 30 of the submissions there's actually a table that we have compiled from the CoreLogic data which shows the percentage of household income that is required to service a mortgage. It probably doesn't come as a surprise to some that Sydney is the highest by far at 44.5 per cent. But then it compares regional New South Wales and you'll see it goes down to 35. Rents is 28 and 29 in Sydney and regional New South Wales.
If we go to Perth 30 per cent of your income is required to service a mortgage, 26.9 in regional WA. Again I would say probably reflective of the fact that the property prices are lower. But in any event that's not why we tendered this particular material. Perth rent, 22. Regional WA, 26. And overall it's about 35 per cent of household income is required or 25 per cent in the case of rent in relation to capital cities, and you'll see the figures for regional areas. But the reason we have filed that data and the reason we've compiled that table is to make one point only.
That point is the household income - sorry, the expense of putting a roof over your head is one of the biggest expenses that employees have. It's at roughly 30 per cent of all of their expenses so it's a huge factor, and that's the point we're trying to make. So all of that I think derived from a discussion about what you're to assess when it comes to cost of living. I had cast doubts on what they had done in 1980. To the extent that I'm proved wrong, that's probably a good outcome. But the methodology was still concerning, to say "Well, we'll look at one part and we'll look at another". You really need to look at it holistically and form a view "Is the cost of living greater?" and that's the approach we would commend if you're going to take anything from those WA decisions. That's what we say about cost of living. You then have climate and isolation. All I would say about those two is if I can take you to the 1958 decision which was an insert.
DEPUTY PRESIDENT KOVACIC: It's a pre-climate change decision.
MR IZZO: That's right. That's right, Deputy President. I'll have to say I noted the submissions of the SDA about making assumptions that it wasn't getting any warmer, and I'm happy not to object to that submission. It's probably the same now, if not warmer, than it was 20 years ago. We don't seek to contest that. But in relation to the 1958 decision, page 690, we already know and I already drew your attention to the fact that they say the primary factor is cost of living. If you actually look at what they ultimately awarded, it's the second-last table down the bottom from what I've been able to glean. They've got four areas and they've got some tentative allocations they've made, and if you look at it they've got - and don't ask me to explain what this is in real terms, but they've got 25 shillings in area 4 for cost of living to two shillings for climate and three for isolation.
In area 5 it's 41 shillings for cost of living, 10 for climate, 10 for isolation and area 6, 44 shillings cost of living, 15 and 15. So the only point I seek to make there is clearly it's a much lesser concern than cost of living. Cost of living is what is driving these allowances as well as what the Federal Court pointed towards which was inducement to work in the area. They're the big factors. Climate and isolation are ancillary type concerns that seem to have been dealt with. So where does all of that take us? Where do we land? I think we land here because I think the Bench needs to understand what's going to drive - if it was to be minded to entertain these claims what are the principles that guide you?
We say there is no express guidance in the Act. We say that one of the big factors which was attraction is no longer relevant within the meaning of section 134, and if you look at what's left, climate and isolation are minor motivations. So we're kind of left with historically they looked at cost of living and okay, well, that might be a factor you look at and then we need to talk about what the evidence says about all of that, and that's where I really landed; the framework that should guide you in trying to determine this case.
Which brings me to the evidence, and I can assure you as I go through my six points that I spend less time on each as we go through. I just want to dispense with something off the bat and that's about internet and phone costs. To the extent that any of the witnesses gave evidence about internet and phone costs as a standalone matter, some of them seemed to be entirely unexceptional. Ms Nolan talks about a phone bill of $60 a month, internet of $60 a month. Ms Cheng spent $70 a month on both phone and internet. Ms Giltrap has phone internet costs of about $40 per month each. We've not got the benefit of any comparative data that has been filed by the SDA, but none of that seems to me to be remarkable and any search of publicly available services, telco services in metropolitan areas, will probably reveal amounts higher than that.
I think there's no real inferences that can be drawn from the witness evidence on that phone cost, internet cost material. The only one that ever caused me any concern was the witness who had $1,200 for internet a month and we've since been informed that that was a typo. So I don't think there's anything more that needs to be said about any of that. Just without the benefit of any comparative analysis it just doesn't seem that remarkable, what they have deposed to. We then turn I think to the SDA's best evidence and that is the - and when I say SDA, the ASU as well - that is exhibit 12, and I hope I'm referring to its number correctly. Yes, exhibit 12.
I've already gone through our view on that in detail. Effectively we are willing to accept that there is a level of increased price in relation to some goods and services in relation to regional areas. I can't say it's all goods and services. We know that the report doesn't go - a comprehensive look at every good and service so I can't make that concession. But I know that a weighted basket of what one presumes are a sample of simple household goods has been looked at, and it appears that at least on the analysis conducted there that there is some additional cost in the regions. The report says 12 per cent in the Kimberley. I'm not going to say it's exactly 12 per cent but I'm willing to concede that, yes, there is some increased cost.
The reason I can't just concede flat out that all of the numbers are the same - are exactly correct is really the concern I've identified about housing. I've a real concern there's some error when it comes to the housing data, so that error may affect or infect some of the other data. So all I want to say is though I think we broadly accept that freight is going to add to the cost of goods and I don't think there's anything remarkable about that. To the extent that the individual witnesses have given evidence to corroborate that, I think all that could be at best is I think we talked about a face or a voice on what is - their best data is that report.
The witnesses take it no further. They don't actually give us evidence that's beyond the general sense that there is a level of higher cost. It isn't extreme. The highest that this report brings it is in the range of 10, 12 per cent. But yes, there is it appears some heightened cost in relation to some goods. I accept that. That's about as high as the evidence gets. The next thing when it comes to cost of living is rental and housing costs. Because of the exchange we've already had I don't need to go through this in any great detail other than to say that I commend you to Annexure A of our submissions. The rental costs are all at least 30 per cent less.
The mortgage costs are all significantly less and we do have serious doubts as to whether Broome, Karratha and Port Hedland, I think are the three, there's still an ongoing level of property prices the way they once were and as I mentioned, we rely on Mr Malcolm Parker and Ms Makere, who goes by Manu, who refer to the fact that property prices are coming down. So where we land on housing is it's significantly less and we would say given it's such a significant contributor to your actual household expenditure, that means that really we cannot conclude that their costs of living are significantly more.
Because even if the costs of goods is 10 per cent more, if 30 per cent of what they're paying is about 30 per cent less that's going to cancel out, and this is the problem with the evidence filed by the SDA. There's just a lack of comparative good data analysis to actually convince us that there is a higher cost of living on aggregate, and our view is that if the costs of housing are significantly less it will cancel out a 10 per cent increase in the cost of goods and we're back to a net even distribution or net even position in respect of costs. And once we're at that point well then your only other big justification for a district allowance has just fallen away.
There's been no attempt to engage with materials that we've filed by either the SDA or ASU, and so on that basis we do say that the materials we have filed cast serious doubt on whether there is a higher cost of living. If I then turn to climate, I'm ready for another concession. Yes, it's hot up there and yes, particularly in the three summer months I think it is it would be extremely hot and extremely unpleasant. There's no doubt about that. There's a few things to say about that. I think Mr Tindley was keen to point out in his cross‑examination that in winter they probably don't have to deal with heating and in fact the climate is probably quite pleasant in winter. But that's a smaller part of the (indistinct) but I think the bigger issue is we're talking about when is it oppressive and, yes, it's really hot at some point in time.
DEPUTY PRESIDENT BULL: I think you'll find, Mr Izzo, that people from Perth travel up to those areas in the Perth winter.
MR IZZO: Yes.
DEPUTY PRESIDENT BULL: For the benefit of the climate.
MR IZZO: I'm not surprised. But I think the other issue when we start to talk about climate, if I can take you to that 1980 decision which is tab 9 again, and if I could take you to paragraph one - sorry, page 1151 because this identifies the difficulty with the SDA's approach of just a standard allowance. So already we're talking about a lesser factor, but if we then look at page 1151 they give scores in relation to the climate in each of the areas and you will see that the scores vary quite remarkably. Kalgoorlie, which I believe is still within the SDA claim - it's not?
MR SCAIFE: No.
MR IZZO: Okay Kalgoorlie's not, but you'll see a number of them. The worst is Kununurra, gets a score of 99, but others vary down as low as 61. Carnarvon gets a score of 18. Now Carnarvon is not in your claim line either? It is?
MR SCAIFE: Yes.
MR IZZO: Sorry, I apologise, Carnarvon is in the claim and it has got a score of 18. So there's a huge spread, and this is when they actually went and did the task of analysing what the climate's actually like, and having regard to that huge spread it's very difficult to say "Okay, well we're just going to give you a standard amount" because it varies so remarkably, and that's before we factor in the fact that it is quite pleasant in winter.
Also we need to start thinking about those regions which are extremely cold. Now there are regions in Australia, Tasmania is one, the Snowy Mountains is another, where employees are subject to extremely adverse weather conditions. The Snowy Mountains in particular, not only are they subject to extreme cold, there's blizzards, there's high wind, there's all sorts of conditions that can make it impossible to travel and yet there is no disability allowance afforded to those employees. So we need to be very careful about the weight we afford to climate because of those matters and the variation has just not been taken into account by the ASU and SDA claims.
If I then come to isolation there's a few things that we'd say about that. The first is that almost all the witnesses talk about having internet access and phone access. This Commission has to accept that the internet is a development in the connectivity of the world in a way that was entirely unknown in 1958 and 1980. There can be no doubt that we are all connected in a significantly greater way than we ever were. In that sense the isolation has been reduced dramatically because isolation feeds into a lot of things. It feeds into seeing one's family. Well, yes, if you're in Port Hedland and your family's in Perth it's going to be difficult to see them.
But in 1958 you certainly couldn't be on Facebook with them. I don't know if you could call them, maybe you could, maybe you couldn't. Maybe it would be difficult. You certainly wouldn't be Skyping them. There's a whole range of connectivity measures that have increased unfortunately connection to an almost infuriating level in the age of social media, and some may wish to take it back. But what that means is the isolation is not what it once was, and we've heard there's been other developments as well. We heard the NBN is either in a lot of these areas or on its way. That's not surprising. We heard about a new health campus at Karratha.
We heard contested views about a tourist development at Port Hedland. I think it was conceded that it's slated, it's a proposal to have funding. It seems there's different views on whether it's a good thing for the area or not, but it's a tourist development there. I think Mr Tindley talked about the Karratha Leisureplex and its expanded facilities and in his cross‑examination of the relevant witness it was conceded that the Leisureplex had been introduced and the facilities were expanded. There's obviously been development. To the extent there isn't evidence about how much there has been, but again there would have been developments since these 1958 and 1980 decisions.
And the reality is that as the world develops more and more this becomes more and more of an arcane allowance and in support of that I'd say two things. There is the decisions in relation to the Northern Territory. I won't repeat them. They're I think page 39 of the AiG submissions where you'll find them extracted. They paint a particularly irrelevant picture of district allowances and I became aware for the first time this morning that they've been terminated in the Queensland jurisdiction as of 2012. Now that's a matter I certainly wasn't aware of, but if that is the case I think that's quite an interesting and relevant consideration.
That then brings me to assessing the disability as a whole, because we're still talking about what's the evidence telling us. Before I come to my conclusions on the evidence I'd say this. One other factor you should take into consideration is commuting times. In metropolitan areas it is becoming an increasingly frustrating part of a daily worker's life is the long commute. Now the members of the Bench - again we don't have data of commuting but members of the Bench I think are sufficiently experienced in metropolitan areas to know that traffic can be more and more of a frustrating and time-consuming concern for employees, particularly in Sydney and Melbourne.
Ms Makere Brown talks about the fact that her commute in regional areas is 15 to 20 minutes. There's no parking, no tolls. In Auckland it was 30 minutes. Ms Churchill has a 10 minute commute. In Brisbane it was 30 to 60 minutes, and I think what's just telling is her comment, she said "It should be a 10 minute drive in Brisbane" was her view on the commute, but she said "It takes me 30 to 60" and that's just a reference to traffic. Mr Lenton's commute was less than 15 minutes. Ms Rankin's commute is 15 to 20 minutes. I think it's clear from the witnesses that any inconvenience associated with commuting, well there is none and that's very different to metropolitan areas. No witness disclosed more than a 20 minute commute. I know I say this from the Bar table and we don't have evidence, but the reality is in metropolitan Sydney a one hour commute can be the norm for many workers, if not longer.
DEPUTY PRESIDENT BULL: Mr Izzo, can I just take up a point that Ms Bhatt raised earlier. Do you accept or otherwise for example for Western Australian towns you'd be comparing them with Perth or Sydney? Because I know in Perth there are no tolls for example.
MR IZZO: They have to be compared I think, Deputy President, on the national basis because these people are being remunerated under conditions that are the same as the entire eastern seaboard. So if you look at the minimum wage that's going to be set each year by the minimum wage panel it is taking into account conditions across the country, and you would then need to be satisfied that the conditions in this regional area are so different and so much more unfortunate that they, compared to the whole of the country covered by the award, deserve special recognition. So the comparison does have to be done with - it's not necessarily Sydney but it's the population that is covered by the award as a whole, would be our submission. And again that's a deficiency of the SDA claim because it seems to focus on Perth and we don't have the data of Sydney, Melbourne, the entire eastern seaboard which is the greater population covered by these awards.
My final point on the evidence I think is my most important and that is to ask is there actually a disability suffered by these employees when they are working, when they are located in - even if we take the - if we move beyond the jurisdictional points, we're just talking about living in these regions right now. Are they suffering from a disability worthy of compensation? And the cross‑examination of each of the witnesses put forward I think has revealed that each employee's circumstances are deeply complex and deeply personal to them, and there are a myriad of push and pull factors which have explained why they have ended up in a regional area.
For some they simply love it. Ms Brown loves the heat. She's going to have a windfall gain when we talk about a climate allowance because she loves it there. That's not the case for all of them but for some of them they love it. For others they are drawn there because their partner has been drawn there by a lucrative job for what is likely a lucrative large mining or other company operating in the area, and I'm going to go through the evidence of each one just to make this point. But what we see in aggregate is that they are overall very satisfied with the quality of their life. That was almost undisputed in the cross‑examination.
They are content with the quality of their life in the place in which they work and they see no reason to leave and that's because if - and the best I can explain it is living in this regional area right now for these people works for them. It just works. It works because of where they've come from, where they're going to, what they want to do. But right now none of them are seeking to move jobs and into a different location because it fits well for them and their needs right now. So they're not suffering a disability. If they really were finding it difficult in the context of their actual relative living standard in the section 134 you would think one of them would be desiring to leave but that's not the evidence that we were given, and I'd now like to go through the evidence. I won't - it will be quite brief because I've only got my scant notes.
Mr Malcolm Parker - and obviously the transcript will further support this - Mr Malcolm Parker talked about being satisfied with his lifestyle, happy to stay until retirement. He said he likes Port Hedland. Ms Rankin said "I love living in Port Hedland". Her husband has a job which pays more. It works for them both to be there. She is there because of his job but she's happy there. Mr Lenton has spent his whole life in Broken Hill. He has never had any desire to leave and I want to come back to Mr Lenton, but ultimately the money became too good for him, he has never looked elsewhere, he's not likely to look elsewhere.
Ms Cheng enjoys Port Hedland. She moved there because of family but then her family left Port Hedland and moved to Perth. But she "likes it here" was her evidence, so she decides to stay. Now you'd think it a considerable pull factor at that point to move with the rest of her family but obviously there's an equally or more compelling pull factor to stay on Port Hedland. She then says - and she's not the only one, I think there's one other of the witnesses - she says she has concerns about retirement. She says she wants to retire - sorry, she says two things. One, she wouldn't want to retire there because of the distance to the hospitals and she says that - I think there might have been a comment about the cost.
It's very important that we talk about what you do with that type of evidence. The job of the Commission is to look at the living conditions for the people that are working and subject to these awards now. Your job is not to intervene and improve the social security safety net for retirees, so her situation in retirement if she is to retire. And if it is indeed that there aren't close by hospital facilities or that the cost of living is high, that is a matter for the social security network to pick up. That is a matter for the Department of Human Services to look at its pension payments and however - and what they should be.
But it's not a matter that should concern the Commission. What's reinforced by Ms Cheng's evidence is it works for her now but it might not later when she retires. Mr Carter's evidence "I like it up here". Ms Gillian Nolan loves it in Karratha, no desire to go back, but she's not sure if she can afford to retire in Karratha. Again it works for her now, it works for her as an employee but as a retiree the social security system might be failing some people, and I don't accept that as a point but I'm saying that's not a matter for the Commission to now intervene in.
Ms Giltrap moved due to her husband's work. She has no intention to leave. Ms Sunserae Churchill is probably the witness who gives the most negative evidence, if I can put it that way, about the regional place in which she lives. But she has moved because of her husband's work. He's on $180,000 a year. Clearly there is a significant pull factor, again explaining why it works for her right now to be in that region. On an overall basis for her life and lifestyle there isn't a disability. She's there because the household, the family, is being supported significantly by a very significant wage and I must say it's quite interesting that there's been some discussion about her costs of groceries.
I mean it may be the case that she's up for the $300 a week in groceries but at the end of the day there's a contributing member of the family unit who has got a salary that appears to be far more significant than the wage she's earning so I'd be surprised if there's not some contribution to that cost going on. And then the last one is Ms Makere Brown. She moved from New Zealand, "loves it up here", no intention of leaving. So we have on the one hand the SDA saying that living and working in this location there's this intense disability that warrants the Commission taking the extraordinary step of awarding extra money, and yet all of the witnesses tend to say the opposite.
They say "It works for us. Being there right now is the best thing for me. I haven't sought to look for working elsewhere because there's been no driving factor". So we say that is very compelling evidence and it is evidence which demonstrates that there is no need for a district allowance, and that was my third - the third issue I wish to address is having regard to the evidence - - -
DEPUTY PRESIDENT KOVACIC: Just before you perhaps go there. Have you got a sense of how much longer you might be, Mr Izzo?
MR IZZO: Probably 20 minutes.
DEPUTY PRESIDENT KOVACIC: Okay.
MR IZZO: But I could probably finish this third point in a minute so we can - - -
DEPUTY PRESIDENT KOVACIC: If you finish the third point and then we might take the luncheon adjournment. I'll let you finish your point and then I will just ask the others how long they might be likely to be, just so we've got some sense of how this afternoon might play out.
MR IZZO: Yes. So the third point was is there a need for district allowances based on the evidence presented to the Bench? We say no and that is because of what I just said. There actually doesn't appear to be a disability for these witnesses. On the contrary, living there works for them. Secondly, if we go back to the factors that I talked about as to why you might be guided to award an allowance, cost of living is the only probative one left and there has just been no comparative analysis of costs at a comprehensive level between these regional areas and metropolitan areas. There has been some comparison to Perth but nothing to the eastern seaboard and right now - and I'm going to repeat, but not because I want this to happen, but I'm going to repeat a comment Ms Bhatt made.
Right now you would have many Sydney based employees saying "Well, why isn't there a Sydney allowance for the stratospheric living costs that I have in terms of property prices and rental prices in Sydney? Why shouldn't I get a Sydney allowance?" The AFL gives the Sydney Swans an allowance for living in Sydney compared to all the other AFL teams. They can spend more money on their place - - -
DEPUTY PRESIDENT KOVACIC: I didn't hear Buddy Franklin looking for a district allowance.
MR IZZO: And I'm not saying, well, that's what we should do but what I am saying is there's just been no attempt to engage with that, and so at a comparative level you're at a considerable disadvantage.
COMMISSIONER BISSETT: But that has always been an issue. I mean at two levels. One, people in Sydney have always thought that they should have higher pay because they live in Sydney. I say that from many years of experience. But two, the existence of district allowances have always allowed that argument to occur and it has always occurred. So my engagement in the system over the years prior the modernisation of awards suggests that people have always engaged in that, "Well, why don't we get an allowance in Sydney" or in Hobart. You know, people in Hobart want to suggest to me they should get an allowance for living in Hobart.
MR IZZO: I agree, Commissioner, but I think the difficulty now is that we've moved to the national system.
COMMISSIONER BISSETT: But it's not a reason for not doing it.
MR IZZO: I think though that the reason for not doing it weren't there as much in the past. I mean, as you've seen, a lot of it's about attraction and retention. Attraction just simply does not form part of section 134 and so the rationale that traditionally justified it is not there any more. There's an element of it. There's the cost of living but the cost of living alone, that is equally shared by some other areas. You don't need an attraction payment in Sydney. You did in these other areas, but attraction should not form part of the Commission's consideration. So it's the transition to the federal system that has caused I think a shift in the way the Commission should look at district allowances.
That's the point I wanted to make, to say we conclude that there is no need for district allowances, full stop. And to the extent that having heard all of this that warrants - if you agree with that and if you agree that the SDA and ASU claims should fail for that reason, I think there is nothing wrong with revisiting the issue with Broken Hill now that you have much proper(sic), more substantive consideration of the issue. But that can be done in the fullness of time and with procedural fairness accorded. That's all I would have - so I've got a few more matters to raise after lunch but they're not as long.
DEPUTY PRESIDENT KOVACIC: Sure, it's about 20 minutes.
Can I just ask the other employer representatives how long they anticipate their submissions might be?
MS LIGHT: Not more than five minutes, Deputy President.
DEPUTY PRESIDENT KOVACIC: Not more than five minutes. Thank you.
MS SOLIVEN: I'm the same, not more than five minutes.
DEPUTY PRESIDENT KOVACIC: Thank you. Mr Tindley, I think you mentioned yesterday probably about half an hour?
MR TINDLEY: That is diminishing as we move through the other employer parties' submissions. I only have one matter that I'm going to raise and that should take no more than three to four minutes.
DEPUTY PRESIDENT KOVACIC: Okay then, so any sense at this stage, Mr Scaife, in terms of the reply?
MR SCAIFE: At this stage I've got to whittle down my basket of issues to the ones that really need to be dealt with. But I would say I would expect to be 30 to 45 minutes in reply.
DEPUTY PRESIDENT KOVACIC: All right. Thank you. Ms Knight?
MS KNIGHT: I would probably add a few things about what's been said to our witness evidence so under 15 minutes.
DEPUTY PRESIDENT KOVACIC: Yes, all right. Well, I think we'll adjourn for lunch and we'll probably - the reason I asked the question is whether we have a shorter luncheon adjournment. I have a matter listed at 4.30 this afternoon but I think given what everyone has said we should be able to accommodate that pretty easily. So we'll now adjourn and we'll resume at 2 pm.
LUNCHEON ADJOURNMENT [1.05 PM]
RESUMED [2.02 PM]
DEPUTY PRESIDENT KOVACIC: Mr Izzo, thank you.
MR IZZO: Thank you, Deputy President. The fourth matter which I wish to address is some comments specific to the actual SDA, ASU claims themselves, their form and the way in which they seek the provisions to be introduced. The first thing I'll say about the SDA is that it is effectively a sporadic and we've heard the phrase patch job or patches used before. This is itself a patch job. It seeks to impose an allowance for some remote parts of Australia but not all and I think we can take it as a given that there are some locations that are equally remote in states and territories that are not listed in the SDA claim, and so that then starts to affect the original concern of the Australian Industrial Relations Commission which talked about providing a consistent and fair national basis for the fixation and adjustment of district allowances.
It talked about a rational system so that allowances could not lead to inconsistency and consequent unfairness. I think the nature of the SDA case is to lead to an inconsistent method of addressing remote locations, and that is an inherent difficulty with their claim. The second problem with the SDA claim is that it applies a standard percentage across the board. What that means is that it doesn't take into account the cost of living and isolation of each of the different regions. Now the SDA concede that in their submissions they say at paragraph 145:
The SDA accepts that by applying a uniform rate across the SDA regions there will be some inconsistencies in the benefit gained by workers in different locations. For example the rate of 4.28 per cent accounts for half of the increased cost of living in the Gascoyne while accounting for a third in the Kimberley.
The difficulty we have with this is it runs headlong into section 138. The moment we start to provide an allowance in an award that goes further than is necessary to meet the modern awards objective you have an inconsistency with section 138 of the Fair Work Act. And it seems self‑evident that if the allowance is sufficient to substantiate or to address increased costs of living let's say in the Kimberley, which is only a third of the costs, then it is probably doing more than it needs to in the Gascoyne where the allowance accounts for half of the increased costs.
And it doesn't matter which examples you take, you're going to end up with the same problem. Some regions are going to be compensated too much or receive some kind of windfall gain compared to the disability, some may be undercompensated and you end up effectively with a provision which in some circumstances will do more than is necessary to achieve the modern awards objective insofar as we're talking about relative living standards et cetera.
COMMISSIONER BISSETT: But isn't that true of any allowance or any penalty that's applied across the board, that in some areas it will overcompensate and in other areas undercompensate?
MR IZZO: I think that's right in one sense. I think take a penalty rate for Sunday all night work, there's a qualitative assessment of the nature of the disability and it will be different for different employees, and in that sense you have to reach a level of satisfaction on an aggregate basis and so if you take a penalty rate on Saturday or Sunday or at night time, some people it probably won't do enough for the personal impact on them, for others it will do more, but the Commission is forced to make an overall assessment. I think the difficulty we have here is - and again it goes back to the overarching framework - what is the guiding principle here?
If it's not attraction, if climate and isolation are quite minor considerations, if really we're talking about costs of living, well, there is surely quantifiable data that could be used. It hasn't been presented. There hasn't been any comparison so it's not really the qualitative assessment that might be made for a weekend penalty, for a heat allowance, those kind of things which it's more of a sense of feel. The cost of living, it's a numeric thing and surely if the SDA was serious about its claim it would be looking at an allowance that tries to address the varying costs in the varying jurisdictions. So I think there is some distinction.
COMMISSIONER BISSETT: Yes, that only stands if we accept your other arguments about isolation and climate, that they - - -
MR IZZO: Not being as significant, yes, I think - - -
COMMISSIONER BISSETT: That they're minor parties.
MR IZZO: Yes, and that's our world view.
COMMISSIONER BISSETT: Yes.
MR IZZO: Yes. And I think just to make good on this point the final thing I'd do is just draw your attention to SDA3 which shows the district allowance percentages of the various state award provisions expressed as a percentage of the standard rate. In a number of jurisdictions that percentage, the Shire of Ashburton 3.51, Karratha 3.79, Hedland 3.77, Carnarvon 2.23, Exmouth 3.97, they're all below the standard rate being sought here. So effectively we'd be looking toward an allowance that is more than at least the Western Australian Industrial Relations Commission thought was necessary, but in others the allowance isn't as much.
But my main concern from a statutory framework perspective is more about where you overcompensate I think you run into a section 138 problem. Where you undercompensate, well yes, there might be section concerned about the relative living standards of well paid. But I think there's additional concern about section 138 that you need to be cognisant of.
COMMISSIONER BISSETT: That depends on whether the safety net is the flaw or not, isn't it?
MR IZZO: It's an interesting - yes, there's no doubt that it's a minimum safety net because that's the actual wording in the Act. So I think we have to accept it's a minimum safety net of fair and relevant terms and conditions. I think the usage of the phrase "minimum flaw", I'm not sure that's necessarily helpful and I think that was the finding of the Commission in the penalty rates decision. But it's a fair and relevant - I mean the concept of a safety net itself, it's something through which people are to be protected, their rates should not go below that.
I think at some point there's a level that you're satisfied that "This is sufficient to address relative living standards. Beyond that we need go no further" and that's where 138 steps in. But I mean we do say that it is a minimum safety net because that's the language of the Act. I'd shy away from the phrase "minimum flaw" because I think that has received some critical comments in the past.
COMMISSIONER BISSETT: It gave it publicity.
MR IZZO: Yes. I think the last issue with the SDA claim, I had a point here there's no attempt to quantify the extent of the disability. I think that's been traversed sufficiently but the last issue I want to identify is I want to identify something that was raised by Bull DP I think during submissions or cross‑examination. The Deputy President queried about employers that currently pay air conditioning subsidies or rent or accommodation or travel for the regional areas because of their remote location and the climate. There is nothing in the SDA claim that contemplates those additional payments being able to satisfy the allowance prescribed by the award.
As the award currently stands there is an obligation to pay an allowance. Now employers can try and be creative and try and enter into some contractual arrangements that seek to offset those things. I think it's going to depend on what the employee is doing. If you're actually subsidising an air fare that might not be as helpful as actually giving someone money. There's a whole heap of contractual questions about the extent to which a payment of some kind for something different can be said to be attributable to an allowance. But that problem is going to inherently arise and the less sophisticated the employer, the more likely that they pay something over here for air conditioning, travel, flights, and may still be up for the district allowance over there. And if this is a practice then there is a concern that the SDA claim does not address that in any way, and so that's the last issue with the SDA claim that we'd like to specifically draw out.
In relation to the ASU claim, I mean our starting point is that there's just simply no evidence. There's no evidence about Queensland, New South Wales, the Northern Territory. It's very difficult for the Commission to make findings about the need for allowances in those regions when no evidence has been put forward and indeed this seems to have been conceded by the SDA. The SDA effectively identified that it hasn't pursued a broader scheme of allowances because it saw that without evidence it would not succeed, and we think that's a proper assessment and without evidence it should not succeed.
The other issue is that the ASU allowance is simply based on the ADF structure. We have no information regarding how the ADF allowances were calculated. The ADF is a workforce that is remunerated for working in very unique conditions. It's a military force. The notion that the remuneration provided to the ADF equates to what should be the minimum safety net we do not think that is a like for like comparison. By way of for example firstly the ADF, I mean one of its concerns is attraction. It's a huge element. I mean there's advertising, there's all sorts of things they do to try and attract the right level of skills to their workforce.
And there is no doubt that the remuneration that they offer is in part designed towards that notion of attraction, which as we've said before has no role in the minimum safety net under 134. So we suspect that the ADF generally are above award pay when you compare it to the award system and without any explanation of how the rates are arrived it, it is very difficult to derive any sense of guidance from the ADF rates. And the only other thing, and again this is anecdotal and it's a submission but the ADF is probably more likely to be posting employees to remote locations, that is relocating them from their home base than sourcing local labour.
Now the awards will apply to employees in both of those categories but perhaps to a different proportion than the ADF. So that's some concerns we have about the ASU claim. I'd now like to turn to the modern awards objective. I don't intend to address each of the individual elements. They're addressed in our submissions. I want to deal though with two fundamental misconceptions that I believe affect the SDA case, and I think they are critical and they're important to go through. The first relates to the need to encourage collective bargaining. Now the Commission has been urged to take account of the Peter O'Keeffe statement and in particular paragraphs 20 to 27 which talk about the difficulties in negotiating district allowances since the allowances came out of the awards.
And I say this with the greatest of respect but to the extent that any reliance is placed on 20 to 27 by the Bench, my firm view is that that would lead the Bench into error and the reason I say that is this. The modern awards objective talks about the need to encourage collective bargaining. It is focussed on encouraging employers and employees to reach - to bargain through an enterprise agreement process and to make enterprise agreements. The evidence of Mr O'Keeffe is not that Coles does not intend to bargain for an enterprise agreement as a result of changes to the award system.
The evidence of Mr O'Keeffe is not that there has been any impact whatsoever on bargaining, and when I say bargaining that is the propensity to bargain between Coles or Woollies or anyone else. What he says is that "We've had more trouble putting a district allowance in the EA". Well, that's about the terms that go into the enterprise agreement but that's not the concern of section 134. Section 134 wants the Commission to encourage collective bargaining. It does not want you or it does not in any way suggest the Commission should be dictating which terms end up in the enterprise agreement.
That's the whole point of a collective bargaining. It's to be determined by the parties and so the reality is - and Mr O'Keeffe has not been cross‑examined and for very good reason. His evidence is simply not relevant because nowhere does it say the removal of the district allowances in any way had an impact that prevented or discouraged Coles from bargaining at all. We've heard that there's a Woollies agreement being bargained and the Coles one has been lodged, so there wasn't any disinclination to bargain. So that's what we'd say about that limb of the modern awards objective and we think that's a fundamental issue that needs to be taken into account.
The next one, and again I also suspect there's some misconception about this modern awards objective and that is about the need to promote social inclusion through increased workforce participation. Now I have to confess, based on the oral submissions I've struggled to fully understand where the SDA has said that this objective fits in. But at various points I have sensed that there's some suggestion that providing the allowance will somehow either improve people's ability to engage in activities outside of work or something to do with promoting their social inclusion by granting the allowance.
In our view one needs to be very careful about this subsection. It is solely concerned with increasing social inclusion through one measure and one measure only and that is workforce participation. What we say that's about is the creation of jobs and that view has been reinforced by the Full Bench in the penalty rates decision, and I will give you the excerpt. At paragraph 179 of the penalty rates decision the Full Bench said as follows:
Section 134(1)(c) requires that we take into account the need to promote social inclusion through increased workforce participation. The use of the conjunctive "through" makes it clear that in the context of section 134(1)(c) social inclusion is a concept to be promoted exclusively through increased workforce participation. That is, obtaining employment is the focus of section 134(1)(c).
So what it's say is when you set your safety net it needs to be done so as to promote jobs, to promote opportunities for jobs. If the Commission is going to increase the nature of the safety net in terms of the costs associated with it by imposing the allowance, in our view that will not increase workforce participation. If anything it will decrease it. It makes the cost of employment higher. But certainly I don't think the SDA case, if we just look at their case, don't think there's any way they can argue it promotes social inclusion through workforce participation. If anything, as I said, it decreases it. So I think the Commission should bear that in mind.
I've said before that inducement has no role to play in section 134(1)(a) or any of the other limbs. I don't actually think that - I'm not sure if that is in contest and I'm happy to take questions on that, but our submission is simply any of the sections (1)(a) through (h) do not have as their focus the need to attract workers to particular locations. If I could conclude on this basis; the SDA concluded by saying the safety net is failing workers and I suppose that takes us to relative living standards, which is a core concern for the Commission.
Our simple proposition is this, there is no evidence that these workers are being failed. There is no evidence of a higher cost of living when considered in total and indeed the evidence of the actual witnesses who gave testimony in these proceedings is such that actually they are quite content with the living standards, given the various push and pull factors that relate to their personal circumstances in working in this region. So right now none of them are being failed. That's why none of them are looking to leave and so on that basis there is simply no justification for including the district allowances.
Unless there are any questions, those are our submissions.
DEPUTY PRESIDENT BULL: Mr Izzo, I assume that you had some members in Western Australia who were paying this WA General Order transitional rate?
MR IZZO: I can't answer that question definitively, your Honour.
DEPUTY PRESIDENT BULL: Well, maybe I can ask Mr Scaife, but I was wondering whether the fact that when it came to an abrupt halt, whether employers actually stopped paying it or whether they continued to pay it or not?
MR IZZO: I can make enquiries but I can't answer that at present unfortunately.
DEPUTY PRESIDENT BULL: I was just wondering if for some people it may be partial reinstatement or something other than what they were paying previously. That's all.
MR IZZO: And that's a possibility, yes.
DEPUTY PRESIDENT BULL: Because I note that the way the WA General Order reads - and it's not reflected in the SDA's application, it is in the ASU's - is that if an employee has a dependent partner then they receive the allowance as well.
MR IZZO: Yes, well I was conscious that the ASU had that. I have to confess I didn't realise that was in the WA General Order. So I'm probably not in a position to address whether that type of payment is still being made by national system employers, notwithstanding the cessation of the allowance. But I can make enquiries and come back to the Bench in writing.
DEPUTY PRESIDENT BULL: Thank you.
DEPUTY PRESIDENT KOVACIC: Thanks Mr Izzo.
MS LIGHT: I will keep it very short this afternoon. The Guild has filed written submissions in relation to this matter on 4 April. Probably unsurprisingly the Guild's interests in these proceedings is limited to the SDA claim to vary the Pharmacy Industry Award and I'd just like to make a few comments that relate specifically to the nature of the pharmacy industry and the lack of evidence currently before the Commission in relation to that industry. The SDA has not filed any witness statements in relation to anybody employed in community pharmacy.
Mr Izzo did explore with those witnesses that the SDA does rely upon what their career histories were, and I note that none of those witnesses had indicated that they had previously been employed in the community pharmacy industry. The reason that this is an important distinction to make to perhaps those other awards that are subject to the SDA claim is that retail and community pharmacy are quite different. In the award modernisation process the SDA did propose a general retail award that would cover those employees who are now covered by the Community Pharmacy Award.
Then the AIRC considered those submissions and ultimately agreed with the Guild's view that it is a distinct industry. It does have its own quirks in the way that industries do. It does have a different nature of employment. Specifically the SDA relies upon the submission with respect to the modern awards objective that there can be no doubt that employees in the retail industry are low paid employees. That's simply not a submission that can be made in relation to or should be made in relation to those covered by the Pharmacy Industry Award.
The meaning of low paid is ascribed a particular meaning. As I understand it is those who are paid below the C10 rate in manufacturing amongst other things. The minimum rates in the Pharmacy Industry Award cover employees who may be doing work aspects of which is similar to those of retail but this award also covers degree qualified pharmacists who are frontline health professionals effectively. The minimum rates in the award do go up to $1,247.20 per week and these workers can simply not just be characterised as low paid workers.
It's also relevant to say with respect to the SDA claim that those significant points of difference are relevant, not just to the relative living standards and needs of the low paid but they're also relevant to considerations of the likely impact of any exercise of a modern award power on businesses including productivity, employment costs, the regulatory burden and also the need to ensure a simple to understand, sustainable and stable safety net. The evidence that the SDA has put before you relates to employees of very, very large corporations.
I don't think that there can be any doubt that the likes of McDonald's, Coles and Woolworths is quite different from your average local pharmacy which tends to be a sole proprietor-run small business that doesn't employ people to the scale that the businesses that the SDA has brought to your attention do. So we say that to the extent that there are practices undertaken by those employers, that shouldn't simply be ascribed to community pharmacy because the nature of those employers are distinctly different.
DEPUTY PRESIDENT KOVACIC: Ms Light, just given what you've said in terms of the description of pharmacies, do you have a sense in the areas that are covered by the SDA's claim whether the pharmacies that might operate in those areas would be part of the national system or alternatively would they still be part of the state system?
MS LIGHT: There is a mixture as I understand it. So, some are covered by the state system and some are covered by the federal system. Pharmacy is quite a unique business structure I suppose in that they are also subject to location and ownership rules. So the places in which pharmacies can be set up and run are to a degree dictated by those location rules.
DEPUTY PRESIDENT KOVACIC: Thank you.
COMMISSIONER BISSETT: So you might have though then two pharmacies in Port Hedland, I don't know, or maybe one in Port Hedland and one in South Hedland, one of whom is in the state system and is therefore paying the allowance, and one in the federal system who is not?
MS LIGHT: That may be the case, yes.
COMMISSIONER BISSETT: And the state system award has the range of rates in it that you - - -
MS LIGHT: There are as I understand it two state system awards that would apply to community pharmacy, the Retail Pharmacists Award which applies just to pharmacist classifications and then there are classifications in the General Retail Award that do apply to pharmacy assistants. Both do have a scale of district allowances, yes.
COMMISSIONER BISSETT: Yes, okay. Thank you.
DEPUTY PRESIDENT KOVACIC: Thank you, Ms Light. Ms Soliven?
MS SOLIVEN: Thank you. So the MTA organisations made a joint submission in relation to this matter on 4 April 2018 and we continue to rely on these submissions in these proceedings. In our submissions we oppose the inclusion of district allowances in the Vehicle, Manufacturing Repair, Services and Retail Award as well as the Clerks Private Sector Award. We submit that the assessment of the inclusion of a district allowance should be dealt with on an individual award basis. Now our basis of our opposition is based on a lack of probative evidence that would reflect a hardship since losing the entitlement to a district allowance in 2014 where applicable.
In the case of the Clerks Award no evidence has been provided to support why employees covered by the Clerks Award should receive district allowance in Queensland generally, so those Queensland areas, as well as Parks New South Wales. While the ASU relies on the history, we do submit that Parks was never in receipt of a district allowance in any predecessor awards and also that the Queensland allowances had never been adjusted since they were included, as far as I'm aware, and there is no evidence that the Queensland allowances are relevant today is our submission there.
One factor that should be considered in these proceedings as well when deciding on additional employment costs is the nature of the vehicle industry itself. In our submissions we did outline that the vast majority of businesses in the vehicle industry are small businesses with very modest annual turnover and we believe that this should be taken into account. So the SDA evidence that they state is relevant to the vehicle industry was a witness statement from an employee employed by Woolworths Petrol. But we submit that this isn't really indicative of the industry where the majority of businesses in our industry are small businesses, as we put it.
Now I guess our last concluding statement is that if it were decided that the district allowances are to be a permanent fixture in the vehicle and clerks awards, then the MTA organisations do put forward that occupational awards such as the clerks award should be consistent with an industry award entitlement to ensure that there's a consistent and fair entitlement between employees employed in the one business.
DEPUTY PRESIDENT KOVACIC: Thank you.
MS SOLIVEN: Thank you.
DEPUTY PRESIDENT KOVACIC: Thank you Ms Soliven.
Mr Tindley in Melbourne?
MR TINDLEY: Thank you, Deputy President. Deputy Presidents, Commissioner, the ARA and MGA adopt and support the submissions of ABI and AiG. We don't intend to traverse the same areas. There are two short points. I know I said there was one short point, there are two short points that I would like to make. One of the criticisms that the SDA consistently made in the penalty rates case was there was an opportunity for the moving party to conduct a natural experiment. So there had been a shift in the safety net and there was an opportunity to assess the impact of that shift.
Well, that criticism comes back to the SDA now. So there has been a shift in the safety net in the regions that are the subject of this application. I presume there are award-reliant employees in those regions who have seen an allowance removed from their employment. The SDA had the opportunity to assess how that removal impacted on the needs of these low paid employees. Now for whatever reason, the SDA elected not to conduct any analysis of that and that leaves the Commission with no real understanding of how the allowance did meet those needs and how the removal of the allowance has, as the SDA asserts or we presume the SDA asserts, meant that those need are no longer being or are not being met at a satisfactory level.
And I take up Bissett C's point on that. So Bissett C raised the prospect that there may be a pharmacy in Port Hedland, there might be two pharmacies in Port Hedland, one of them operating under the state system, one of them operating under the federal system. One of those pharmacies with one cohort of employees is no longer, or we presume is no longer paying an allowance to a group of employees. An opportunity arises there to assess how one group of employees' needs are being met against the others. The SDA hasn't done that. This is only one of the numerous failings that we say exist within the evidentiary case mounted by the SDA.
The only other matter which I wish to raise, and I raise it with some hesitancy given in our view and as articulated by Mr Izzo, that it is essentially irrelevant. But there seems to be - and I'm sure Mr Scaife will correct me if I'm incorrect - there seems to be an assertion or an inference that Coles has negotiated its way out of district allowances in the regions subject to this application, and it relies it would appear on the statement of Mr O'Keeffe in that regard. Well, Mr O'Keeffe's witness statement says nothing of the type. Mr O'Keeffe says that district allowances were grandfathered for existing employees within the Coles agreement.
He doesn't give any evidence about how that was achieved. He doesn't give any evidence as to whether the SDA even pursued the full retention of district allowances. He doesn't give any evidence about the position that the employer took in relation to district allowances. So whilst we say our primary position is that it is irrelevant, Coles has bargained. The requirement is to consider the need to promote collective bargaining so, nothing has shifted in that regard that is in any way relevant to district allowances. It is erroneous we say to suggest that on the evidence provided there has been a move by an employer to remove district allowances. Unless there are any questions?
DEPUTY PRESIDENT BULL: Mr Tindley, do you know whether your members ceased paying the transitional location allowance when it was abolished?
MR TINDLEY: I do not, your Honour.
DEPUTY PRESIDENT KOVACIC: Thank you, Mr Tindley.
MR TINDLEY: Thank you, Deputy President. I'd also seek to withdraw from the proceedings at this point, as much as I'd like to hear the responses.
DEPUTY PRESIDENT KOVACIC: Certainly. By all means. Thanks again for your participation, Mr Tindley.
MR TINDLEY: Thank you.
DEPUTY PRESIDENT KOVACIC: Mr Scaife?
MR SCAIFE: Thank you, Deputy President. Just six short issues in reply. Before I get to those I do just want to make a comment about the objections that were generally raised by Ms Bhatt to the evidence, and that has also become apparent during Mr Izzo's address that there's an objection taken to Mr O'Keeffe's statement as being generally irrelevant. We adopt the same approach as the Commission ordinarily does, that the Commission will look at the evidence and make a decision about how much weight to attach to it. But particularly in relation to Ms Bhatt's objections where she said there were various paragraphs, it's not for us to go through the witness statements and do Ms Bhatt's job for her and identify, guess at which of the paragraphs that she says are hearsay and to then provide submissions on those.
We haven't been afforded any sort of procedural fairness in relation to those assertions made by Ms Bhatt and we would submit that in those circumstances certainly the Commission will make its own mind up when it's reviewing the evidence in its deliberations, but absolutely no regard should be had to Ms Bhatt's and even Mr Izzo's general criticism, that we were not on notice of when the evidence was being tendered. In relation to the six issues that I'd like to deal with in reply, the first is to briefly go over the issue of the construction of section 139.
That issue I want to traverse because it is actually a significant issue to the parties in the proceedings because several submissions have been made by Ms Bhatt and Mr Izzo today in particular to the effect that district allowances as a general proposition are not appropriate under the modern awards framework. Those submissions have been put not just in relation to the particular areas but that the concept of district allowances itself is somehow archaic and inappropriate. But that just simply cannot be a submission that is maintained in the face of the plain wording of section 139 and the decision of the Full Court in the Broken Hill case.
The paragraphs that I was going to take the Bench to are the paragraphs that arose during questioning of Mr Izzo in particular, so I don't propose to take you to them again. But the cherry picking of the Broken Hill case by Mr Izzo does not do justice to the decisions of Buchanan and Flick JJ. They are quite clear in saying that location allowances, allowances based on the disabilities associated with working in particular locations are expressly contemplated by that provision of the Fair Work Act. And that approach is consistent with an orthodox approach to statutory interpretation.
The provision is drafted in broad terms. It plainly refers to disabilities associated with work in particular locations. So associated with, it's very broad, reference to locations, and it also needs to be borne in mind that when the Fair Work Act was created by Parliament, Parliament should be presumed to be aware of the industrial history behind these types of clauses, and the industrial history in relation to district allowances is notorious particularly in relation to Western Australia.
So the submissions that have been put forward in relation to the Broken Hill case, our submission is absolutely cannot be maintained and the Broken Hill case fundamentally underscores the SDA's claim that there isn't a hurdle to jump over here for the SDA in establishing that district allowances as a general proposition are appropriate. That has been established. The only question before the Bench is, is there a sufficient merits case for district allowances in relation to the regions the subject of the SDA's proposal.
The second issue that I'd like to deal with is the criticisms that have been put of the Regional Price Index and which was the subject of some questioning from the Bench. We concede and we've conceded in our written submissions and our oral submissions that cost of living fluctuates from year to year. That's not something we take issue with. We have provided now a long term data set to the Commission, and I appreciate that my friends haven't had a chance to properly respond to that but that data set demonstrates that while there are these short term fluctuations, the cost of living in the Kimberly, Pilbara and Gascoyne has always been significantly higher relative to Perth.
This is where the concept of the safety net is so important. It's not a minimum flaw as has just been discussed in questions from the Bench. It has to be relevant, we say, to disabilities associated with working in particular locations and there's a concept of it's not a rigid - the safety net is not a rigid concept. As alluded to by Bissett C, there are always going to be some level of inconsistency in how these allowances apply. We might find that there's somebody who works in building and construction who really enjoys being at heights.
It doesn't change the nature of the disability, it doesn't change their entitlement to the disability, it doesn't mean they're being overcompensated, it equally doesn't mean that someone else is being undercompensated. It is not a precise measure. These measures never have been but what they do is they seek to establish a fair and relevant safety net and we say that district allowances are essential in these regions in order to achieve that.
In relation to Perth, the question of whether or not Perth is the proper comparator, it plainly is by virtue of the history of district allowances, by virtue of labour mobility within the state, but also simply by virtue of the data that is available. The proposal from ABI was essentially to the effect that - and I think this was walked back in oral submissions over time, but essentially that maybe Sydney should be the comparator, or is it Canberra. It seems to be that the submission is that there should be some kind of amalgamated imaginary average capital, non‑remote capital city and we do the comparison with that type of concept.
But it doesn't exist as a concept. The best that we have is the comparison to Perth. It's a major capital city. Obviously there are differences to some extent between housing markets in different states and different capital cities, but that doesn't detract from the basic acceptable inference that the Commission can draw that Perth is an acceptable large metropolitan area that has all of the services and access to goods that are associated with that kind of area. It's plainly a relevant comparator. In relation to the criticism made by ABI of the way the basket of goods is put together in the Regional Price Index, with respect to my friend, the SDA found those submissions difficult to follow.
It's plain on a reading of the Regional Price Index how the basket of goods is put together, what is in the basket of goods, the weighting is specified. I was going to take the Bench to the page and the paragraph that was pointed out by Kovacic DP. It's clear that it's based on a weighting exercise undertaken by the Australian Bureau of Statistics when it comes to CPI. It's transparent. It's based on data. It's based on an established approach to weighting things when it comes to concepts like price indexes.
The further criticism that was made was what was essentially an assertion from the Bar table that Mr Izzo thinks that the Government of Western Australia hasn't properly accounted for housing. It beggars belief that the Government of Western Australia in developing an instrument which is specifically adapted to estimating cost of living overlooked the contribution or the significance of housing costs to total cost of living. There's no suggestion of that in the document. Instead what there is, is there's an assertion on the part of ABI to the extent that "We've looked at some ABS data. We've looked at CoreLogic report and we just think that maybe they haven't got this right".
That is not a credible submission that undermines the Regional Price Index and we think that little to no weight should be given by the Commission to that submission. And on the topic of the CoreLogic report, we only reiterate the criticisms that appeared - that we considered making in written submissions, if we'd had the opportunity to make written submissions that we would have put then, which is essentially that we don't know who CoreLogic is. It's not any established kind of entity. The best we could be told is that they were a market leader in providing property valuations.
I even understand that it was said by Mr Izzo that they get their data from state governments which leads to an absurdity in the submission itself, because essentially the CoreLogic report which gets its data from the state government is being used to undermine a report produced by a state government specifically for estimating regional prices. We don't say that that goes anywhere near the level that ABI says it does in terms of undermining the Regional Price Index.
The third issue that I'd like to deal with is this controversy over the case that's been put on by the employer parties or the lack thereof. As we said during oral submissions there are no onuses on parties in these types of matters but there is a requirement for a merits case to be advanced. We take no objection to the employer parties coming to this hearing and poking holes in the case that is put by the SDA. That is a function that ably assists the Commission. But what the employer parties are seeking to do is also to put on a positive case from the Bar table without any kind of evidence.
We've had assertions that say that there will be unfairness to business, that there will be some kind of unquantifiable impact on business. The submissions that the SDA has made is that given the history of district allowances and the existence of the Broken Hill allowance there is sufficient material on which the Commission can infer that any disruption caused by district allowances is minimal. In the face of all of that material, in the face of that very substantial history, we do say that it was incumbent on the employer parties if they wanted to run arguments to the contrary, if they wanted to put on submissions saying that there would be unfairness to business or increased labour costs beyond what might reasonably be inferred, then they did need to put on material.
We're not asking for any adverse inference to be drawn but we do say that those submissions just cannot be sustained based on the essentially threadbare evidence that has been filed by the employer parties. And there was a comment made essentially that the decision to include the Broken Hill allowance in the awards shouldn't be taken as a presumption in favour of district allowances because it wasn't objected to at the time. That submission just cannot hold water. We have stepped the Commission through cogent reasons why the decision to delete the WA district allowances was in error, based on the decision of the Full Court in the Broken Hill case, based on the issues that we have addressed in relation to framing a simple, easy to understand clause for the Commission's consideration.
But the employer parties, the only reason they say that Broken Hill shouldn't have any attention paid to it as a presumption in favour of district allowances is because nobody objected to it at the time. That's not an error of reasoning. It's not a cogent reason to depart from the presumption created by the inclusion of the Broken Hill allowance. We accept that that doesn't create a presumption in favour of a district allowance in the Kimberley, Pilbara or Gascoyne regions but it does create a presumption in favour of the inclusion of district allowances as a concept where a sufficient merits case can be mounted before the Commission.
The fourth area is a submission that was made by ABI in relation to two issues which I think are related. The first is the concept of isolation and then the second was a submission about how contented the witnesses, the lay witnesses, felt about their circumstances. Isolation is not just about access to Facebook. It is about access to services, it's about being able to order or use the range of goods and amenities that are available to people in major regional centres and in capital cities. And the fact that we can now Skype people whereas in 1980 we could only call people, we say is really not a factor that in any kind of magnitude diminishes the impact of isolation on these very remote communities.
And certainly there has been no - the only change that we could find that the ABS had made to its remoteness structure since 2011 relevant to these regions is that the ABS moved I believe Carnarvon from the category of being remote to very remote. It actually went backwards and no evidence has been put on by the employer parties except for general assertions about essentially the NBN. And this secondary issue about the fact that several of the lay witnesses didn't express some sort of unhappiness with the town that they lived in, this might be trite to submit but the district allowance is not a hate where you live allowance. It doesn't require you to have some kind of dissatisfaction with your town.
People are still entitled to have a sense of pride and even affection for their community but that doesn't change the nature of the disabilities, the real disabilities that they face in terms of cost of living, isolation and climate, and the fact that people get by and find something to be proud of in their local community really takes the employers' submissions nowhere. Two concluding remarks. The first is just briefly in relation to a submission made by Mr Tindley. Mr Tindley said that the SDA could have done an assessment of the change of position by virtue of the deletion of the transitional provisions, and that was a criticism made by the SDA against the employer parties in the penalty rates case.
I'm certainly happy to be corrected but I don't believe that criticism was taken up as a fundamental finding or reason of the Full Bench in that case. So to the extent that the SDA's criticism comes back to it, I guess if we were in a beauty contest that might be relevant but that seemed to me to just simply be sniping between a union and an employer association. It didn't seem to be based on any actual findings or reasoning engaged in by the Full Bench in the penalty rates case. And the final issue is an issue that was highlighted by Ms Light in her submissions about the pharmacy award which is that we are dealing with five different awards in the SDA's claim, and we accept that.
We accept that the case that we have put is not about particular tasks. It's not about that limb of section 139. It is about work in particular locations, disabilities associated with work in particular locations. So we say that the evidence that we've provided is, especially in relation to the Regional Price Index, the Relative Strain Index and the remoteness structure, evidence that is generalisable across the industries covered by these awards. But we do accept that there are differences between the circumstances of each award that may justify the Commission making different findings in relation to different awards.
Each of the five awards have precursor NAPSAs that included the WA General Order. So they are all alike in that respect but there are the following differences in terms of their structure and in terms of their application. We accept that the vehicle award does not include the Broken Hill allowance and so any presumption that might be taken in favour of district allowances in modern awards that include the Broken Hill allowance arguably couldn't be made in relation to the vehicle award. And secondly we accept that the retail and fast food industry awards, there are cogent recent findings of the Full Bench which establish that those awards cover predominantly low paid workers and that the evidence however doesn't rise to that in relation to the other awards, and that can be partly as Ms Light alluded to by the fact that an award such as the pharmacy award extends to skilled classifications and not merely to less skilled lower paid classifications.
So the modern awards review requires the Commission to consider awards on an individual basis. It has been established that the Commission can deal with awards together in hearing at the same time, but we accept based on the submissions that have been put by the employer parties that it is possible for the Commission to make a different decision in relation to each of the five awards based on the factors that we have just outlined and its opinions on the state of the evidence. But just if the Commission was to, say, make a finding that there wasn't sufficient evidence or it wasn't satisfied in relation to the pharmacy award, that conclusion wouldn't necessarily flow to the retail award or to the fast food industry award because in relation to those awards the Commission might be persuaded to attach more weight to the needs of the low paid and that factor within the modern awards objective in coming to a decision about the inclusion of district allowances. Those are our reply submissions, but I'm certainly happy to answer any further questions from the Bench.
DEPUTY PRESIDENT BULL: Mr Scaife, look I just want to make sure I'm clear on this. Your application excludes, if I look at the Regional Price Index, the Mid West area and the Goldfields Esperance area?
MR SCAIFE: That's right.
DEPUTY PRESIDENT BULL: Which most towns previous or towns in that area in addition to the ones that they used for the index are mentioned in the WA General Order.
MR SCAIFE: Yes, there's also the town of Southern Cross within the Wheatbelt region which receives an allowance under the General Order.
DEPUTY PRESIDENT BULL: I see. All right. So just taking up the point about fairness and equity and so forth, so people who are employed in a shire or a local shop who work in Telfer who were previously getting $50 a week, or Nullagine about the same amount, they don't get anything under your application?
MR SCAIFE: Nullagine is included within the Pilbara region.
DEPUTY PRESIDENT BULL: Sorry, no that's my fault. Yes.
MR SCAIFE: And so would be. That's correct.
DEPUTY PRESIDENT BULL: Norseman. I meant to say Norseman, sorry.
MR SCAIFE: That's correct, Deputy President, and I think that - I'm not sure that I can take this issue any further than we have over the last two days. The issues with that, the reasons we've come to that conclusion are because the WA Government provides a data set that it feels is generalisable for the purposes of estimating regional cost of living where plainly the Kimberley, Pilbara and Gascoyne have quite significant imposts upon cost of living. The same cannot necessarily be said about those regions as a whole in relation to the Wheatbelt, the Mid West and Goldfields Esperance, even though there may be some data from some periods of time that relate to locations such as Laverton. We adopted the view that to produce a list of towns with varying rates would run into the criticism made by the Full Bench as its secondary criticism of being overly complicated.
DEPUTY PRESIDENT BULL: Yes. No, I understand the reasons you've done it but I'm just trying to talk about the fairness, that's all. The people in Leonora or Leinster, Kalgoorlie, they all don't get a guernsey in your application?
MR SCAIFE: We don't think that that is unfair in circumstances where the merits case can't be mounted in the same way for those areas.
DEPUTY PRESIDENT BULL: Well, if it's a merits case can you say it's just too complicated to - is that what you said?
MR SCAIFE: The submission is that the data is not available to support - we could certainly come in here with that proposition and I think that the SDA would happily embrace a larger application of district allowances, but we didn't feel that we had the evidence available to satisfy the Commission and didn't therefore want to devote the Commission's resources to that consideration. The other issue is that there are certainly some towns such as Laverton that receive quite substantial allowances under the WA General Order, but then there are other towns such as Southern Cross which, yes, they receive an allowance under the WA General Order but it's a very small allowance. Kalgoorlie for example receives an allowance under the General Order but compared to the standard rate it's an allowance of about point 77 per cent when we ran the analysis. And so by virtue of not having the evidence in relation to cost of living in particular, not having a historical justification for an allowance of some significant magnitude - - -
DEPUTY PRESIDENT BULL: But there must be - - -
MR SCAIFE: - - - that it was difficult to make a case out.
DEPUTY PRESIDENT BULL: If I look at the Regional Price Index, the Kimberley has got four towns. There must be more than four towns in the Kimberley that would receive the allowance under your application?
MR SCAIFE: Yes, that's right but - - -
DEPUTY PRESIDENT BULL: There's no evidence about what the cost of living of those towns is.
MR SCAIFE: No, but the WA Government has made a decision that a representative sample from those four towns is sufficient to make an estimate about the Kimberley region.
DEPUTY PRESIDENT BULL: I understand that but I don't understand why you say that you can't do the same for Leinster, Laverton, Leonora, because there has only been - - -
MR SCAIFE: Because the generalisation for the Goldfields Esperance region is about 1.3 per cent. That's why without specific - - -
DEPUTY PRESIDENT BULL: Yes, but don't - - -
MR SCAIFE: - - - for those locations - - -
DEPUTY PRESIDENT BULL: But that's only taking into consideration those key towns that they put in the bucket.
MR SCAIFE: That's right.
DEPUTY PRESIDENT BULL: Yes.
MR SCAIFE: And so without specific data about the key locations all we are left with is the generalisable data for the region, and the generalisable data for the region has an increased cost of living of 1.3 per cent.
DEPUTY PRESIDENT BULL: Yes, I understand that. Yes.
MR SCAIFE: We also make the point, Deputy President, that we understand that it would be desirable if there was a process by which to gather up absolutely every regional and remote area in Australia. The SDA requested inspections as part of this process. Previous decisions of industrial tribunals have gone to a great deal of effort to collect the resources and the evidence to support a decision in the case of the WA Commission across the whole of Western Australia. It doesn't seem that the resources are available to the Commission or to the parties to undertake that sort of exercise.
But the fact that there are holes in the data in relation to towns that you may be familiar with, Deputy President, and that I may be familiar with and know are towns that may very well be deserving on an anecdotal level for an allowance, the failure to be able to furnish the evidence doesn't lead to unfairness in allocating a district allowance to regions where there plainly is a merits case. That is not unfair. It is just a consequence of the state of the evidence that is able to be raised before the Commission.
DEPUTY PRESIDENT BULL: Yes. Thank you.
DEPUTY PRESIDENT KOVACIC: Mr Scaife, before you sit down do you want to actually tender that document?
MR SCAIFE: Yes. Yes, so if I could formally tender the - I believe it's the Regional Price Index Data Set 2000 - 2017 produced by the WA Government.
DEPUTY PRESIDENT KOVACIC: We'll mark it as exhibit 24.
EXHIBIT #24 REGIONAL PRICE INDEX DATA SET 2000 - 2017 PRODUCED BY GOVERNMENT OF WESTERN AUSTRALIA
MR SCAIFE: And if I could also tender the Coles Supermarkets National Enterprise Agreement 2017?
DEPUTY PRESIDENT KOVACIC: I'm wondering whether that might be marked as a matter for information as opposed to an exhibit?
MR SCAIFE: For information, yes.
DEPUTY PRESIDENT KOVACIC: I'll mark that as matter for information number 1.
MFI #1 COLES SUPERMARKETS NATIONAL ENTERPRISE AGREEMENT 2017
MR SCAIFE: Thank you, Deputy President.
DEPUTY PRESIDENT KOVACIC: Thank you.
MR SCAIFE: And thank you, Deputy Presidents and Commissioner.
DEPUTY PRESIDENT KOVACIC: Ms Knight?
MS KNIGHT: I won't add anything further. Thank you.
DEPUTY PRESIDENT KOVACIC: Nothing further? Okay.
Just a couple of housekeeping issues. Ms Bhatt this morning in terms of exhibit 24 now, I think you indicated you'd appreciate an opportunity of two weeks to consider the material and make any further submissions. That's open to any of the employer representatives. What I suggest, Mr Scaife and Ms Knight, is that to the extent that you wish to provide any further response to the additional material provided by the employers in respect of this, if I was to give you both a week would that be sufficient?
MR SCAIFE: If I could request two weeks only because we're not sure what we may receive in response? If we receive some sort of analysis of the data it may take longer than a week for us to look at it, and can I just clarify that the additional submissions and material that have been provided by the parties are solely in relation to the two exhibits that have been tendered just now?
DEPUTY PRESIDENT KOVACIC: Exhibit 24.
MR SCAIFE: Exhibit 24.
DEPUTY PRESIDENT KOVACIC: Yes.
MR SCAIFE: But yes, if I could request a two week period.
DEPUTY PRESIDENT KOVACIC: And I think, Ms Knight, did you also suggest that you might want to make some enquiries about was it Coles or - I'm not sure if it was Coles or Woolworths, or whatever?
MS KNIGHT: I think I've dealt with the issue in relation to Woolworths.
DEPUTY PRESIDENT KOVACIC: Woolworths, yes. Okay, so it's just restricted to exhibit 24.
DEPUTY PRESIDENT BULL: Sorry, Mr Scaife, I don't know whether you didn't have an answer to that question. Do you have any anecdotal evidence about whether your members stopped getting the district allowance once the transitional provisions were abolished?
MR SCAIFE: I'm instructed that we don't have any information on that question, Deputy President.
DEPUTY PRESIDENT BULL: Thank you.
DEPUTY PRESIDENT KOVACIC: All right, we'll reserve our decision. If I can take this opportunity and thank the parties for their submissions both oral and written, and we'll look to hand down our decision as quickly as we can.
ADJOURNED INDEFINITELY [3.08 PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
EXHIBIT #24 REGIONAL PRICE INDEX DATA SET 2000 - 2017 PRODUCED BY GOVERNMENT OF WESTERN AUSTRALIA............................................ PN2094
MFI #1 COLES SUPERMARKETS NATIONAL ENTERPRISE AGREEMENT 2017............................................................................................................................... PN2098