Industrial Relations Commission New South Wales Medium Neutral Citation: Application for Crown Employees (Public Sector – Salaries 2020) Award and Other Matters [2020] NSWIRComm 1044 Hearing dates: 18 June 2020 Date of orders: 22 June 2020 Decision date: 22 June 2020 Jurisdiction: Industrial Relations Commission Before: Chief Commissioner Constant, Commissioner Murphy and Commissioner Sloan Decision: To the question: Does the Government policy declared in clause 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 require the Commission to ensure that public sector employees be awarded increases in remuneration or other conditions of employment of 2.5% per annum? The answer is "No". Catchwords: EMPLOYMENT AND INDUSTRIAL LAW – Awards and enterprise agreements – Approval and creation – discretion of Commission to award increases – whether Commission required to award increases to salaries and salary-related allowances each year – s 146C Industrial Relations Act 1996 (NSW) – cl 6(1)(a) Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 Legislation Cited: Government Sector Employment Act 2013 (NSW) s 50 Health Services Act 1997 (NSW) s 116(3) Income Tax Assessment Act 1936 (Cth) s 46(3) Independent Commission Against Corruption Act 1988 (NSW) s 104(9) Industrial Relations Act 1996 (NSW) ss 10, 17, 146, 146C, 167 Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) cll 4, 5, 6 Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW) Interpretation Act 1987 (NSW) ss 5(2), 9 Landcom Corporation Act 2001 (NSW) Police Act 1990 (NSW) s 85 Proceeds of Crime Act 2002 (Cth) ss 92,102 Public Finance and Audit Act 1983 (NSW) s 33E Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 Baini v The Queen (2012) 246 CLR 469; [2012] HCA 59 Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 Commissioner of Police v Hart (2018) 262 CLR 76; [2018] HCA 1 Federal Commissioner of Taxation v Consolidated Media Holdings Limited (2012) 250 CLR 503; [2012] HCA 55 Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106; [1971] HCA 12 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales and Department of Education and Communities (2013) 233 IR 345; [2013] NSWIRComm 32 Public Service Association and Professional Officers' Association Amalgamated [Union] of New South Wales v Director of Public Employment (2012) 250 CLR 343; [2012] HCA 58 Re Crown Employees Wages Staff (Rates of Pay) Award 2011 & Ors (No 3) (2013) 240 IR 24; [2013] NSWIRComm 109 Secretary of the Treasury v Public Service Association and Professional Officers' Association Amalgamated Union (NSW) (2014) 89 NSWLR 688; (2014) 244 IR 44; [2014] NSWCA 138 SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 361; [2017] HCA 34 Taylor v Attorney-General (Cth) (2019) 93 ALJR 1044; [2019] HCA 30 Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 Thiess v Collector of Customs and Others (2014) 250 CLR 664; [2014] HCA 12 Texts Cited: Industrial Relations Amendment (Public Sector Conditions of Employment) Bill 2011 Category: Procedural and other rulings Parties: Applicants: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales New South Wales Nurses and Midwives' Association Health Services Union New South Wales Australian Salaried Medical Officers' Federation (New South Wales) Employer Respondents: Industrial Relations Secretary Health Secretary Commissioner of Police Chief Commissioner of the Independent Commission Against Corruption Landcom Auditor-General Union respondents: Australian Salaried Medical Officers' Federation (New South Wales) The Australian Workers' Union, New South Wales Health Services Union New South Wales Independent Education Union of Australia NSW/ACT Interveners: Unions NSW Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch Australian Education Union New South Wales Teachers Federation Branch Australian Services Union of NSW Fire Brigade Employees' Union of New South Wales New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union Representation: M Gibian SC with A Slevin of Counsel (PSA, NMA, HSU, AWU) I Taylor SC with M Easton of Counsel (Employer Respondents) S Crawshaw SC of counsel (Teachers Federation) A Holland (ASMOF) A Hioe (IEU) E Leverington (Unions NSW, AMWU, ASU, FBEU, USU) Solicitors: Maurice Blackburn (HSU) Hall Payne (ASMOF) Crown Solicitor (Employer Respondents) File Number(s): 2020/79899, 2020/141023, 2020/141054, 2020/141076, 2020/142592, 2020/143576, 2020/143834, 2020/143934, 2020/144112, 2020/144177, 2020/145080, 2020/145086, 2020/145184, 2020/145362, 2020/161502, 2020/161507, 2020/161511, 2020/161538, 2020/161544, 2020/161549, 2020/161557, 2020/161564, 2020/161568, 2020/161582, 2020/162841, 2020/162844, 2020/162849, 2020/162860, 2020/162861, 2020/163005, 2020/163048, 2020/163121, 2020/163146, 2020/163179, 2020/163193, 2020/163207, 2020/163241, 2020/163257, 2020/163272, 2020/163286, 2020/163927, 2020/168263, 2020/170775 Publication restriction: No Judgment 1. These proceedings concern 43 applications before the Commission, in which the Commission is asked to make new awards, or to vary existing awards. In each case the application calls on the Commission to confer on employees covered by the existing or proposed awards an increase of 2.5% to their salary and salary-related allowances to take effect from the first pay period on or after 1 July 2020. 2. The proceedings were commenced on 9 March 2020, when the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales ("PSA") filed an application in the Commission for the making of a new award to be known as "Crown Employees (Public Sector – Salaries 2020) Award". Those proceedings were assigned matter number 2020/79899. 3. On 12 May 2020 the PSA filed applications in the Commission for the making of the following further awards: 1. Service NSW (Salaries and Conditions) Employees Award 2020 (matter 2020/142592); 2. Crown Employees (SAS Trustee Corporation) Award 2020 (matter 2020/143834); 3. Local Land Services Award 2020 (matter 2020/143934); 4. Crown Employees NSW Department of Communities and Justice (Community Living Award) 2020 (matter 2020/144112); 5. Crown Employees (NSW Department of Communities and Justice) Residential Centre Support Services Staff Award 2020 (matter 2020/144177); 6. Independent Commission Against Corruption Award 2020 (matter 2020/145080); 7. Landcom Award 2020 (2020/145086); 8. Crown Employees (Audit Office) Award 2020 (matter 2020/145184); and 9. Crown Employees (Independent Pricing and Regulatory Tribunal) Award 2020 (matter 2020/145362) 1. We will refer to the applications referred to at [2]-[3] as the "PSA Applications". The new award sought in each of the PSA Applications would replace the award currently applying to the relevant employees; would have a nominal term of three years commencing on 1 July 2020; and, would provide for employees to receive a 2.5% increase to their salaries and salary-related allowances in each year of the nominal term, as adjusted in 2021 and 2022 for anticipated increases in the rate of compulsory superannuation contributions. 2. On 11 May 2020 the New South Wales Nurses and Midwives' Association ("NMA") filed in the Commission applications to vary the following awards: 1. Crown Employees (NSW Police (Nurses')) Award 2019 (matter 2020/141023); 2. Public Health System Nurses' and Midwives' (State) Award 2019 (matter 2020/141054); 3. Crown Employees Nurses' (State) Award 2019 (matter 2020/141076); and 4. what was described in the application as the "Nurses' (Department of Communities and Justice Services - Ageing, Disability and Home Care) (State) Award 2019" (matter 2020/141076). We note that the correct title of the relevant award is in fact the Nurses' (Department of Family and Community Services – Ageing, Disability and Home Care) (State) Award 2019. For present purposes this is not relevant. ("NMA Applications") 1. With one limited exception, the effect of the NMA Applications is to provide for employees covered by each of the relevant awards to receive a 2.5% increase to their salaries and salary-related allowances from the first full pay period to commence on or after 1 July 2020, and to amend the nominal expiry date of each award to 30 June 2021. The exception relates to the application in respect of the Public Health System Nurses' and Midwives' (State) Award 2019 (matter 2020/141054), in which, consistent with what is said to be an agreement between the parties, an increase of only 2.2% is sought in respect of particular allowances. That exception is not material for present purposes and it is not necessary to consider it further. 2. On 28 and 29 May 2020 the Health Services Union of New South Wales ("HSU") filed in the Commission applications to vary the following awards: 1. Health and Community Employees Psychologists (State) Award 2019 (matter 2020/161502); 2. Health Employees' Administrative Staff (State) Award 2019 (matter 2020/161507); 3. Health Employees' Computer Staff (State) Award 2019 (matter 2020/161511); 4. Health Employees; Conditions of Employment (State) Award 2019 (matter 2020/161538); 5. Health Employees' Engineers (State) Award 2019 (matter 2020/161544); 6. Health Employees' General Administrative Staff (State) Award 2019 (matter 2020/161549); 7. Health Employees' Interpreters' (State) Award 2019 (matter 2020/161557); 8. Health Employees' Medical Radiation Scientists (State) Award 2019 (matter 2020/161564); 9. Health Employees' Pharmacists (State) Award 2019 (matter 2020/161568); 10. Health Employees' (State) Award 2019 (matter 2020/161582); 11. Health Employees' Technical (State) Award 2019 (matter 2020/162841); 12. Health Managers (State) Award 2019 (matter 2020/162861); 13. Public Hospital Medical Officers (State) Award 2019 (matter 2020/163005); 14. Public Hospital Career Medical Officers (State) Award 2019 (matter 2020/163048); 15. Health Professional and Medical Salaries (State) Award 2019 (matter 2020/163121); 16. NSW Health Service Allied Health Assistants (State) Award 2019 (matter 2020/163146); 17. NSW Health Service Health Professionals (State) Award 2019 (matter 2020/163179); 18. Hospital Scientists (State) Award 2019 (matter 2020/163193); 19. Public Hospital Medical Physicists (State) Award 2019 (matter 2020/163207); 20. Public Hospital (Training Wage) (State) Award 2019 (matter 2020/163241); 21. Public Hospitals (Professional and Associated Staff) Conditions of Employment (State) Award 2019 (matter 2020/163257); 22. Public Hospitals Professional Engineers' (Bio-Medical Engineers) (State) Award 2019 (matter 2020/163272); 23. Teachers' (NSW Health Early Childhood Services Centres) Salaries and Miscellaneous Conditions Award 2019 (matter 2020/163286); 24. Public Hospital Residential Services Assistant (State) Award (matter 2020/163927); 25. Operational Ambulance Managers (State) Award 2019 (matter 2020/168263); and 26. HealthShare NSW Patient Transport Officers' (State) Award (matter 2020/170775). ("HSU Applications") 1. The effect of the HSU Applications is to provide for employees covered by each of the relevant awards to receive a 2.5% increase to their salaries and salary-related allowances from the first full pay period to commence on or after 1 July 2020. 2. On 29 May 2020 the Australian Salaried Medical Officers' Federation (New South Wales) ("ASMOF") filed in the Commission applications to vary the following awards: 1. Staff Specialists (State) Award 2019 (matter 2020/162844); 2. Public Hospital Career Medical Officers (State) Award 2019 (matter 2020/162849); and 3. Public Hospital Medical Officers (State) Award 2019 (matter 2020/162860). ("ASMOF Applications") 1. The effect of the ASMOF Applications is to provide for employees covered by each of the relevant awards to receive a 2.5% increase to their salaries and salary-related allowances from the first pay period to commence on or after 1 July 2020. 2. The HSU and ASMOF have filed separate, but largely consistent, applications in respect of the Public Hospital Career Medical Officers (State) Award 2019 and the Public Hospital Medical Officers (State) Award 2019. Each union is consequentially a respondent to the application filed by the other. For completeness we note that ASMOF is also a respondent to the HSU's application in respect of the Health Professional and Medical Salaries (State) Award 2019 (matter 2020/163121). 3. The employer to which the proposed Landcom Award 2020 (matter 2020/145086) would apply is Landcom, a statutory corporation constituted under the Landcom Corporation Act 2001 (NSW). In respect of all of the remaining awards proposed to be varied or made by the PSA Applications, the NMA Applications, the HSU Applications and the ASMOF Applications the employer is the Crown, represented in these proceedings as follows: 1. the Industrial Relations Secretary [1] (matters 2020/79899, 2020/142592, 2020/143834, 2020/143934, 2020/144112, 2020/144177, 2020/145362 and 2020/143576); 2. the Health Secretary [2] (all of the HSU Applications and matters 2020/141054 and 2020/141076); 3. the Commissioner of Police [3] (matters 2020/79899 and 2020/141023); 4. the Chief Commissioner of the Independent Commission Against Corruption [4] (matter 2020/145080); and 5. the Auditor-General [5] (matter 2020/145184). ("Employers") 1. The position of the Employers can be summarised as contending that the Commission should award no increases to salaries and salary-related allowances, whether by making a new award or varying an existing one. Further, to the extent that an application calls for the making of a new Award (a submission limited to the PSA Applications), any award made by the Commission should have a nominal term of one year and contain a no extra claims clause. 2. By orders made by the Chief Commissioner at various stages of the proceedings, the PSA Applications, the NMA Applications, the HSU Applications and the ASMOF Applications were joined. For ease of reference, we will refer to the applications collectively as the "Joined Applications". Threshold Question 1. On 15 May 2020 the PSA filed an outline of submissions in matter 2020/79899. In short, the PSA contended that: 1. the Commission is required to award increases of 2.5% per annum. It has no discretion to award any lesser amount. This was said to be the consequence of s 146C of the Industrial Relations Act 1996 (NSW) combined with cl 6(1) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) ("2014 Regulation"); and 2. in the alternative, if the Commission retains a discretion, there is no basis on which it would depart from either the assumption underlying the 2014 Regulation that salaries or conditions of employment will increase by 2.5% per annum, or the invariable practice of the Commission since 2011 of increasing salaries of relevant public sector employees by 2.5% per annum. 1. Submissions to the same effect were filed by the NMA on 29 May 2020 in support of the NMA Applications and by the HSU on 12 June 2020 in support of the HSU Applications. 2. If the contention referred to at [15(1)] above is accepted by the Commission this will largely dispose of each of the Joined Applications. For this reason, at a directions hearing before the Chief Commissioner on 10 June 2020 the contention came to be described as the "Threshold Question". We will adopt the same terminology. 3. The directions made by the Chief Commissioner on 10 June 2020 included the following: "1. All of the matters listed in Order 1 of the Orders made on 10 June 2020 are listed for hearing on 18, 24 and 25 June 2020. 2. On the first day of the hearing referred to in Direction 1 (i.e. 18 June 2020), the Full Bench will hear from the parties on the 'Threshold Question', the terms of which will be provided in writing to the Commission by the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (PSA) by 4pm on 12 June 2020." 1. On 16 June 2020 the Registry received an email from the PSA which contained the following: "The parties have conferred and wish to put the following question for the Full Bench to consider on Thursday 18 June 2020: Q. Does the Government policy declared in clause 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 require the Commission to ensure that public sector employees be awarded increases in remuneration or other conditions of employment of 2.5% per annum?" (Italics in original) Hearing of the Threshold Question 1. At the hearing of the Threshold Question on 18 June 2020 Mr M Gibian SC appeared with Mr A Slevin of counsel for the PSA, the NMA and the HSU. Mr Gibian also mentioned the matter for the Australian Workers' Union, New South Wales ("AWU"). [6] Mr A Holland appeared for ASMOF. Ms A Hioe appeared for the Independent Education Union of Australia NSW/ACT ("IEU"). [7] 2. Unions NSW, represented by Ms A Leverington, intervened in the proceedings, in accordance with its rights under s 167 of the Industrial Relations Act. Ms Leverington applied for and obtained leave to intervene on the Threshold Question for the Australian Services Union of NSW ("ASU"), the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch ("AMWU"), the Fire Brigade Employees' Union of New South Wales ("FBEU") and the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union "(USU"). 3. Mr S Crawshaw SC of counsel appeared for the Australian Education Union New South Wales Teachers Federation Branch ("Teachers Federation"). He applied for and obtained leave for the Teachers Federation to intervene on the Threshold Question. [8] 4. The PSA, the NMA and the HSU relied on the submissions referred to at [15]-[16] above. They also relied on an Outline of Submissions in Reply filed for the three unions collectively on 16 June 2020. The PSA, the NMA and the HSU tendered a limited amount of evidence which was said to provide relevant context to the enactment of s 146C of the Industrial Relations Act and the making of the 2014 Regulation. 5. ASMOF and the remaining union participants – respondents and interveners – supported the submissions of the PSA, the NMA and the HSU. Neither ASMOF or any of the remaining union participants made additional or alternative submissions. 6. For ease of reference, we will refer to the submissions referred to at [23] above, as supplemented by Mr Gibian in oral submissions at the hearing, as the "Union Submissions". We will refer to the PSA, the NMA, the HSU, ASMOF, the IEU, Unions NSW, the ASU, the AMWU, the FBEU, the USU and the Teachers Federation collectively as "the Unions". 7. The Employers relied on a written outline of submissions that was filed with the Commission on 4 June 2020, supplemented by Mr Taylor in oral submissions. 8. The Threshold Question is of significance to all of the Joined Applications. The answer provided by the Full Bench will have a material bearing on the further hearing of the Joined Applications on 24 and 25 June 2020. For these reasons, the Full Bench undertook to expedite the delivery of this decision. As a practical consequence we have not sought to summarise the procedural history of this matter. Our decision has not sought to canvass all of the issues raised in the submissions. We have, however, considered fully and carefully all of the submissions made. The legislative context 1. To comprehend the arguments made by the parties, it is necessary to understand the legislative context in which each of the Joined Applications is made. The Industrial Relations Act relevantly provides as follows: 10 Commission may make awards The Commission may make an award in accordance with this Act setting fair and reasonable conditions of employment for employees. … 17 Variation or rescission of award (1) The Commission may vary or rescind an award. … 146 General functions of Commission (1) The Commission has the following functions— (a) setting remuneration and other conditions of employment, (b) resolving industrial disputes, (c) hearing and determining other industrial matters, (d) inquiring into, and reporting on, any industrial or other matter referred to it by the Minister, (e) functions conferred on it by this or any other Act or law. (2) The Commission must take into account the public interest in the exercise of its functions and, for that purpose, must have regard to— (a) the objects of this Act, and (b) the state of the economy of New South Wales and the likely effect of its decisions on that economy. … 146C Commission to give effect to certain aspects of government policy on public sector employment (1) The Commission must, when making or varying any award or order, give effect to any policy on conditions of employment of public sector employees— (a) that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission, and (b) that applies to the matter to which the award or order relates. (2) Any such regulation may declare a policy by setting out the policy in the regulation or by adopting a policy set out in a relevant document referred to in the regulation. (3) An award or order of the Commission does not have effect to the extent that it is inconsistent with the obligation of the Commission under this section. … (7) This section has effect despite section 10 or 146 or any other provision of this or any other Act. … 1. The 2014 Regulation relevantly provides as follows: 4 Declarations under section 146C The matters set out in this Regulation are declared, for the purposes of section 146C of the Act, to be aspects of government policy that are to be given effect to by the Industrial Relations Commission when making or varying awards or orders. 5 Paramount policies The following paramount policies are declared— (a) Public sector employees are entitled to the guaranteed minimum conditions of employment (being the conditions set out in clause 7). (b) Equal remuneration for men and women doing work of equal or comparable value. ... 6 Other policies (1) The following policies are also declared, but are subject to compliance with the declared paramount policies— (a) Public sector employees may be awarded increases in remuneration or other conditions of employment, but only if employee-related costs in respect of those employees are not increased by more than 2.5% per annum as a result of the increases awarded together with any new or increased superannuation employment benefits provided (or to be provided) to or in respect of the employees since their remuneration or other conditions of employment were last determined. (b) Increases in remuneration or other conditions of employment can be awarded even if employee-related costs are increased by more than 2.5% per annum, but only if sufficient employee-related cost savings have been achieved to fully offset the increased employee-related costs beyond 2.5% per annum. For this purpose— (i) whether relevant savings have been achieved is to be determined by agreement of the relevant parties or, in the absence of agreement, by the Commission, and (ii) increases may be awarded before the relevant savings have been achieved, but are not payable until they are achieved, and (iii) the full savings are not required to be awarded as increases in remuneration or other conditions of employment. … Principles of construction 1. The answer to the Threshold Question lies in the construction of cl 6(1)(a) of the 2014 Regulation and more particularly in determining the meaning to be given to the words "may be awarded increases in remuneration or other conditions of employment". The Employers contended that the clause confers a discretion on the Commission to award an increase of up to 2.5%, or indeed no increase at all. It does no more than impose a cap or a limit on the Commission's jurisdiction. The Unions disputed that the Commission has any discretion. They contended that the clause requires the Commission to award increases of 2.5% per annum. 2. The principles of statutory construction are well known. They were summarised by the Full Bench of the Commission in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales and Department of Education and Communities (2013) 233 IR 345; [2013] NSWIRComm 32 as follows: "24. There are three recent High Court authorities which provide guidance as to the correct approach to statutory interpretation, namely, Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Thelander [2012] HCA 56; (2012) 293 ALR 412, Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 285 ALR 27 and Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32. Key principles, relevant to the present proceedings, can be distilled from these authorities: (1) The legal meaning of a provision of a statute is to be ascertained by processes of statutory construction: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J. Thus, the fundamental object of statutory construction is to ascertain legislative intention: Certain Lloyd's Underwriters at [88] per Kiefel J. However, the use of the metaphor 'legislative intention' must not mislead. This expression must be understood as the intention that the courts will impute to the legislature by a process of construction: Certain Lloyd's Underwriters at [88] per Kiefel J. The duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J (applying Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355; (1998) 72 ALJR 841; (1998) 153 ALR 490 at [78] per McHugh, Gummow, Kirby and Hayne JJ); (2) Ordinarily, the legal meaning of a provision of a statute will correspond with the grammatical meaning, but not always: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J and at [68] per Crennan and Bell JJ (applying Project Blue Sky at [78] per McHugh, Gummow, Kirby and Hayne JJ). [Nonetheless], the process of statutory construction must begin with a textual analysis of the words of a provision - that is, a consideration of the ordinary and grammatical meaning of the words: Australian Education Union at [26] per French CJ, Hayne, Kiefel and Bell JJ; Barclay at [41] per French CJ, Crennan, Gummow and Hayne JJ; Certain Lloyd's Underwriters at [23] per French CJ and Hayne J. Although that initial step may involve the construction of the words of a provision in question when read in the context of the statute as a whole: Certain Lloyd's Underwriters at [88] per Kiefel J. Thus, the legal meaning is ascertained by reference to the language of the statute viewed as a whole: Certain Lloyd's Underwriters at [26] per French CJ and Hayne J and [88] per Kiefel J. The purpose of the statute resides in its text and structure: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J; (3) Context may also be considered 'in a broader sense as including the general purpose and policy of the legislation, in particular the mischief to which the statute is directed and which the legislature intended to remedy': Certain Lloyd's Underwriters at [88] per Kiefel J; (4) The context and purpose of a provision are important to its proper construction. Legal meaning may be ascertained by reference to general purpose, consistency and fairness: Certain Lloyd's Underwriters at [24] per French CJ and Hayne J; (5) The determination of the purpose of a statute or a particular statutory provision may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, if appropriate, reference to extrinsic materials: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J. Whilst consideration of extrinsic materials should not displace the clear meaning of the text of a provision, the purpose of a provision may be elucidated by appropriate reference to them: Certain Lloyd's Underwriters at [70] per Crennan and Bell JJ; (6) It is conceivable that the context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with their literal or grammatical meaning: Certain Lloyd's Underwriters at [68] per Crennan and Bell JJ quoting Project Blue Sky at [78] per McHugh, Gummow, Kirby and Hayne JJ; (7) Determination of a statutory purpose neither permits nor requires some search for what those who promoted or passed the legislation may have had in mind when it was enacted: Certain Lloyd's Underwriters at [25] - [26] per French CJ and Hayne J and [70] per Crennan and Bell JJ. In construing a statute it is not for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose: Australian Education Union at [27] - [28] per French CJ, Hayne, Kiefel and Bell JJ." 1. The principles relating to the interpretation of Acts of Parliament are equally applicable to the interpretation of delegated legislation: Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 398. 2. We will apply these principles in answering the Threshold Question. Submissions Union Submissions 1. The Unions submitted that the construction of cl 6(1)(a) advanced by the Employers "is to ignore the context and purposes of the Regulation". [9] Significant emphasis was placed on the need to interpret the provision in the context in which it was made, and not in a purely abstract and literal manner. The Unions drew the Commission's attention to SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 361; [2017] HCA 34 at [14] and [35]-[40], Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 at [65]-[66] and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69] and [78]. 2. The PSA, the NMA and the HSU led evidence which was said to provide historical context to the 2014 Regulation. In their Outline of Submissions in Reply those unions described that evidence, and its significance, as follows: "18. The context of the enactment of s 146C and the making of the initial Regulation in 2011 is critical in understanding the nature of the 'policy' to which the Commission is required to give effect. The NSW Government first introduced a wages policy in 2007 which was contained in Premier's Memorandum M2007-12. The 2007 Premier's Memorandum recorded as follows: … It is intended to maintain real wages by allowing for increases of 2.5 per cent per annum. Additional increases are available where employee-related cost savings are achieved. Since wage agreements are set in a forward looking manner, forecasts for inflation need to be utilised to maintain the real value of wages. The Reserve Bank of Australia (RBA) has an agreement with the Federal Government to maintain CPI increases within a range of 2-3 per cent. That is, on average, the CPI will increase by 2.5 per cent. While increases in the CPI may exceed, or be less than 2.5 per cent in the short-term, the RBA actively pursues monetary policy to achieve the target range. Therefore, in multi-year wage agreements, a 2.5 per cent Sydney CPI inflation rate is the best available forecast. This is also NSW Treasury's medium- term inflation parameter as published in the Budget papers. 19. In 2011, the Industrial Relations Amendment (Public Sector Conditions of Employment) Act 2011 was enacted amending the Act by inserting s 146C. At the same time the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 ('the 2011 Regulation') was made. At or around the same time the NSW Government issued the 2011 Wages Policy ('the Wages Policy'). The 2011 Regulation was designed to ensure that the Commission applied the fundamental tenets of the Wages Policy and to continue key aspects of the 2007 Wages Policy, but to require the Commission to comply with the policy. 20. As set out in the earlier submissions filed on behalf of the PSA, NSWNMA and the HSU, in parliamentary debates associated with the introduction of s 146C and the making of the 2011 Regulation, the relevant Minister asserted repeatedly and unequivocally that the Regulation would 'ensure that wage increases of 2.5 per cent are available each year to our hard-working public sector employees'. Furthermore, the Wages Policy expressly indicated that the policy was designed to maintain the real value of public sector wages in line with the mid-point of the Reserve Bank's target range for inflation. Those aspects of the statutory history and the underlying policy are ignored by the Industrial Relations Secretary. 21. There are additional statements made in Parliament which make clear the object and purpose of the Regulation. On 2 June 2011, for example, Mr Greg Smith in a speech to the Legislative Assembly stated (New South Wales Parliamentary Debates (Hansard), Legislative Assembly, 2 June 2011, p 2145): We will provide 2.5 percent wage rises across the public service, and rises above that level will have to be offset by productivity gains… 22. On 3 August 2011, the responsible Minister, the Hon. Greg Pearce stated, in a speech to the Legislative Council in relation to the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (New South Wales Parliamentary Debates (Hansard), Legislative Council, 3 August 2011, p 3483): Despite the scaremongering from the Opposition, our policy is more transparent than Labour's 2007 policy by clearly guaranteeing the 2.5 per cent increase and minimum conditions. It allows unions, as representatives of the workforce, the flexibility to decide what they determine to be conditions of employment they are willing to put on the negotiating table for increases above the guaranteed 2.5 per cent. If they are happy with the 2.5 per cent increases and their current conditions of employment then nothing changes. 23. It could not have been more clearly stated that the government's policy was that a wage increase of 2.5% would be guaranteed for public sector employees under the Regulation: Re Crown Employees Wages Staff (Rates of Pay) Award 2011 (No 3) (2013) 240 IR 24 at [84]. That guarantee is consistent with the underlying policy of the Regulation, namely, that real wages and fiscal responsibility would be maintained by providing for increases in remuneration each year by reference to the mid-point of the Reserve Bank's target range for inflation. 24. The 2011 Regulation was repealed by Schedule 5 to the State Revenue and Other Legislation Amendment (Budget Measures) Act 2014 and replaced by the text contained in sub-schedule 5.2 of the Budget Measure Act which is referred to as the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014. The Regulation continues the purpose and structure of the 2011 Regulation other than to address, in clause 6(1)(a), the relevance of changes in superannuation entitlements to the constraint on the Commission's jurisdiction. Interpretation of the Regulation 25. The interpretation proposed by the Industrial Relations Secretary and other employers is inconsistent with the scheme created by the Regulation and would produce an incoherent and unfair result which would not have been intended by the legislature or the drafters of the Regulation." (Emphasis in original) 1. In its submissions referred to at [15] above, the PSA stated: "11. The stated rationale for the policy is to provide for maintenance of the real value of public sector salaries over the medium term by linking wage increases to the Reserve Bank target range for inflation. The NSW Public Sector Wages Policy 2011 ('the Wages Policy'), upon which the Regulation is based, sets out its purpose as follows: 1.1 The primary aim of this policy is to ensure better services and value for the public. In this context, the Government is committed to a policy of fair working conditions and allowing increases in remuneration and other conditions of employment that do not reduce services and are consistent with maintaining fiscal sustainability. 3.2. Since 1997 real average wage increases in the NSW public sector have increased by 21.9 per cent. The policy is designed to maintain the real value of public sector wages over the medium term in line with the mid-point of the Reserve Bank of Australia's target range for inflation over the cycle. 4. The Wages Policy, as reflected in the Regulation, does not purport to ensure that the real value of wages is maintained every year. Nor does it permit increases in salaries based upon improvements in productivity or changes in work value except where the stringent requirements for savings in 'employee-related costs' to be realised for the purpose of clause 8 of the Regulation are met. Rather, the Government has determined that 'fiscal sustainability' and 'fair working conditions' will be achieved 'over the cycle' by linking increases in employee­related costs that can be awarded by the Commission to the midpoint of the Reserve Bank target range for inflation." (Emphasis in original) 1. The same submissions were contained in the submissions of the NMA and the HSU referred to at [16] above. 2. The "scheme" said to be "created by the Regulation" can be discerned from the following extract from the Outline of Submissions in Reply: "16. The effect of s 146C(7) of the Act is to subordinate the requirement on the Commission set out in ss 10 and 146 to set fair and reasonable standards, to take into account the public interest, including the state of the economy or the economic or fiscal effect of any decision of the Commission, to the dictates of any identified government policy: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Director of Public Employment (2012) 250 CLR 343 at [17]. The Commission is not permitted to make its own assessment of the public interest or of the economic consequences of its decision. Those judgments have been taken away from the Commission and are to be determined by government policy." 1. Having regard to these matters, the Unions' contentions included the following: 1. it would be inconsistent with the stated intent and function of s 146C to adopt a construction of cl 6(1)(a) that confers on the Commission a discretion as to whether to award an increase, and to permit it to have regard to economic and similar considerations in determining the quantum of any increase; 2. the construction advanced by Employers does not reflect that the figure of 2.5% contemplated "swings and roundabouts" "over the cycle". A construction that would permit the Commission to award an increase of less than 2.5% in any year, but not to award increases above 2.5% in other years, "would represent an unbalanced and incoherent outcome inconsistent with the stated intention, government policy, and with the statutory context"; and 3. the powers of the Commission have been circumscribed such that it is required to give effect to the policy enunciated in the 2014 Regulation. That policy is that, to address the asserted need for "fiscal discipline" and "fiscal restraint", there will be increases of 2.5% per annum. Because it is required to give effect to that policy, it is not open to the Commission to award lower increases in a particular year. 1. The Union Submissions further contended that an interpretation of cl 6(1)(a) consistent with this outcome can be accommodated within the wording of the provision: "34. In a statutory provision which confers a power, the word 'may' can be used in more than one sense: Commissioner of Police v Hart (2018) 262 CLR 76 at [104]. The question of whether a discretion is conferred does not depend on the abstract meaning of the word 'may' but on 'whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the "may" becomes a "must"': Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106 at 134-135 and see also Ward v Williams (1955) 92 CLR 496 at 507." Employers' submissions 1. The Employers' Outline of Submissions contended as follows: 9. …The policy expressed in clause 6(1) of the Regulation does not require a 2.5% increase. It provides that there not be an increase in employee-related costs of more than 2.5%. It sets a cap. It says nothing to constrain the Commission's discretion as to whether to award an increase of less than 2.5%, or no increase at all. … 13. The word 'may' when used in an Act to confer a power indicates that the power may be exercised or not, at discretion (in this case, subject to a cap). 14. No contrary intention is apparent arising from the text. The word 'may' in clause 6(1)(a) is clearly permissive, not mandatory. Read in context '… may be awarded increases …, but only if … are not increased by more than 2.5%' the word clearly conveys that the Commission retains a discretion to award an increase (or not), as long as the outcome is not more than 2.5%. 3. This view is confirmed by the phrase 'can be' in clause 6(1)(b). If clauses 6(1)(a) or 6(1)(b) were intended to refer to a mandated 2.5% increase then the drafters would have used the word 'must' rather than 'may', and the phrase 'must be' rather than 'can be'. It is also confirmed by the reference to the date of the Commission's decision in 6(1)(e), since if the PSA was right and clause 6(1) mandated annual 2.5% increases there would be little purpose for such a provision." (Emphasis in original, footnote omitted) 1. The Employers disputed that the Unions could properly invoke the context in which the 2014 Regulation was made so as to allow cl 6(1)(a) to be read other than in accordance with its ordinary and grammatical meaning. They referred the Commission to Taylor v Attorney-General (Cth) (2019) 93 ALJR 1044; [2019] HCA 30 at [87]; Thiess v Collector of Customs and Others (2014) 250 CLR 664; [2014] HCA 12 at [22]; Baini v The Queen (2012) 246 CLR 469; [2012] HCA 59 at [14] and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 at [47]. 2. The Employers further challenged the assertion in the Union Submissions that the effect of s 146C of the Industrial Relations Act was to displace entirely ss 10 and 146. Rather, s 146C does no more than qualify those provisions. The Employers contended that nothing in Public Service Association and Professional Officers' Association Amalgamated [Union] of New South Wales v Director of Public Employment (2012) 250 CLR 343; [2012] HCA 58 ("Director of Public Employment"), on which the Unions relied, gave rise to a different view. 3. The Employers also drew the Commission's attention to Secretary of the Treasury v Public Service Association and Professional Officers' Association Amalgamated Union (NSW) (2014) 89 NSWLR 688; (2014) 244 IR 44; [2014] NSWCA 138 ("Secretary of the Treasury"). It was submitted that, in that case, the Court of Appeal had read cl 6(1)(a) as doing no more than imposing a limit or cap on any increase that might be awarded. Consideration 1. Both the Unions and the Employers referred us to the decision of Boland P in Re Crown Employees Wages Staff (Rates of Pay) Award 2011 & Ors (No 3) (2013) 240 IR 24; [2013] NSWIRComm 109 ("Re Crown Employees"). The matter for determination in that case was described by his Honour in these terms: "1. This decision concerns the amount of increase that may properly be awarded by the Commission in salaries and allowances in public sector awards from 1 July 2013 to apply for a period of 12 months. The matter arises because the Secretary of the Treasury ('the Secretary'), on economic and fiscal grounds, opposes any increase to award rates of pay beyond 2.27 per cent, whereas public sector unions claim the increase should be 2.5 per cent in accordance with what they contend is available to be awarded under s 146C of the Industrial Relations Act 1996 ('the Act') and the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 ('the Regulation')." 1. His Honour summarised the submissions of the parties as follows: "32. There were two principal limbs to the PSA's opposition to the Secretary's position: (1) It is not open to the Commission to award increases of less [than] 2.5% on the basis of economic or fiscal considerations. The policy to which the Commission is required to give effect dictates that 'fiscal restraint' and 'fiscal discipline' is to be maintained by ensuring the Commission awards increases that increase employee-related costs by 2.5% each year. (2) In any event, if the Commission retains a discretion, no basis has been established by the Secretary of the Treasury upon which the Commission would award increases in salaries of less than 2.5% this year. 33. As to the first limb, the PSA's submissions may be summarised as follows: (1) Section 146C of the IR Act limits the jurisdiction of the Commission to make or vary awards it otherwise possesses under sections 10 or 17 of the Act. The Commission is no longer able, so far as public sector employees are concerned, to set fair and reasonable conditions of employment for those employees. (2) The explicit purpose of s 146C and the Regulation is to deprive the Commission of the 'broad-ranging discretion' it previously possessed to fix wages and conditions of employment insofar as public sector employees are concerned. (3) The stated rationale for the Government's Wages Policy as reflected in the Regulation policy is to provide for maintenance of the real value of public sector salaries over the medium term by linking wage increases to the Reserve Bank target range for inflation. (4) The Wages Policy does not purport to ensure that the real value of wages is maintained every year. Nor does it permit increases in salaries based upon improvements in productivity or changes in work value except where the stringent requirements for savings in 'employee-related costs' to be realised for the purpose of clause 8 of the Regulation are met. Rather, the Government has determined that 'fiscal sustainability' and 'fair working conditions' will be achieved 'over the cycle' by linking increases in employee-related costs that can be awarded by the Commission to the midpoint of the Reserve Bank target range for inflation. (5) The policy enunciated in the Regulation is that there will be guaranteed increases of 2.5% per annum. Because it is required to give effect to that policy, it is not open to the Commission to discount salary increases in a particular year having regard to the type of economic and fiscal considerations now relied upon by the Secretary. The policy required to be given effect to by the Commission has determined that the asserted need for 'fiscal discipline' and 'fiscal restraint' is met by ensuring the Commission awards increases in wages of 2.5% per annum. (6) The reliance by the Secretary upon the requirement otherwise imposed upon the Commission by s 146(2) of the Act to have regard to the public interest, including the state of the economy of New South Wales and the likely effect of its decisions on that economy is misplaced. Section 146C expressly excludes the application of s10 and s 146 of the Act. (7) It is not open to the Commission to award an increase in salaries and allowances of less than 2.5% on grounds that it is necessary to achieve 'fiscal restraint' or as a result of economic considerations. The policy to which the Commission is required to give effect by s 146C dictates that 'fiscal restraint' and fair wages are to be achieved by ensuring the Commission awards increases in remuneration or other conditions of employment that increase employee-related costs by 2.5% each year. … 45. The Secretary's submission in reply may be summarised as follows: (1) The Commission does in fact maintain a discretion to award increases in remuneration or other conditions of employment that increase employee related costs by less than 2.5%: Re Crown Employees Wages Staff (Rates of Pay) Award 2011 & Ors [2013] NSWIRComm 53 at [10] and [41]; Re Crown Employees (Public Sector - Salaries 2011) Award (No 3) [2011] NSWIRComm 104 at [34]; The Public Service Association and Professional Officers' Association Amalgamated of NSW v Director of Public Employment [2012] HCA 58; 293 ALR 450 at [17]. …" 1. His Honour went on to observe: "58. A real issue, therefore, arises in the present proceedings as to whether the Commission's power is limited to the extent it may not award increases of less [than] 2.5 per cent per annum on the basis of economic or fiscal considerations as contended for by the Secretary." 1. The Full Bench is being asked to determine the same arguments that were advanced before his Honour. It is apposite to consider the approach taken by the President to the matter: "67. In 2011, the parliament removed the Commission's wide discretion to fix fair and reasonable conditions of employment for employees in the public sector. In doing so, the Minister responsible for the Industrial Relations Amendment (Public Sector Conditions of Employment) Bill 2011, which introduced s 146C into the Act, made it clear that the very purpose of the bill was to remove what he described as the Commission's 'broad-ranging discretion when it comes to wage fixing.' This was 'the mischief to which the statute is directed and which the legislature intended to remedy.' … 68. It is abundantly clear that as a consequence of the 2011 amendments to the Act and the promulgation of the Regulation that the Commission is no longer able to apply the test of 'fair and reasonable' in s 10 to the task of public sector wage fixing according to the Commission's assessment of what that test entails. Instead, the Commission is required to give effect to the Government's wages policy as declared under the Regulation, which for all practical purposes limits any increase in remuneration to 2.5 per cent per annum. 69. This effect was described by the then Minister in his second reading speech as providing 'New South Wales public sector workers with fair and reasonable wage increases.' In these circumstances, there is no scope to apply a 'fair and reasonable' test that is in any way inconsistent with what is required under s 146C and the Regulation. To that extent the award making power under s 10 is qualified by s 146C. … 72. As is the case with s 10, s 146C and the Regulation have qualified the public interest test in s 146(2) of the Act insofar as public sector awards are concerned. However, I am unable to agree with the PSA's submission that s 146C and the Regulation wholly displaces s 146(2). … 80. If I could commence in dealing with this aspect of the PSA's submission by referring to the decision of the High Court in Public Service Association and Professional Officers' Association Amalgamated [Union] of NSW v Director of Public Employment at [17], where French CJ stated: [17] Sections 10 and 146 of the IR Act are expressly subordinated to s 146C by operation of s 146C(7) and thereby to any declared policy upon conditions of employment. That is to say, the constraint imposed on the award-making power by s 10, that it relate to 'fair and reasonable conditions of employment', may be displaced or qualified. So, too, may the requirement, in s 146, to have regard to the objects of the IR Act, the state of the economy of New South Wales and the likely effect of the Commission's decision on that economy. In effect, a policy declared by a regulation made under s 146C may pre-empt judgments by the Commission of those matters. … 81. The PSA's submission would have it that s 146C and the Regulation 'displaced', that is, replaced or rendered inoperative s 10 and s 146, rather than qualified those provisions. That cannot be so because to adopt that construction would render s 146(1) nugatory, which cannot have been the legislature's intention given that provision identifies the general functions of the Commission. 82. However, I think the main flaw in the PSA's submission is that it relied too heavily on extrinsic material, namely parliamentary statements, instead of the words of the legislation, to contend s 146(2) had been displaced. 83. I referred earlier to the second reading speech where it was said the government would ensure 'wage increases of 2.5 per cent are available each year to our hard-working public sector employees.' In August 2011, in a debate regarding a motion to disallow the Regulation (Hansard, Legislative Council, 3 August 2011), it was stated by the then Minister for Industrial Relations in opposing the motion: We have guaranteed minimum conditions in relation to annual/eave (sic), sick leave, long service leave, public holidays, parental/eave, superannuation and part-time work entitlements. The regulation also makes clear that existing conditions of employment in excess of the minimum conditions can only be reduced with the agreement of the relevant parties in the proceedings. Labor's 2007 wages policy had no protections for conditions of employment. Despite the scaremongering from the Opposition, our policy is more transparent than Labor's 2007 policy by clearly guaranteeing the 2.5 per cent increase and minimum conditions. 84. Nothing could be stated more clearly about the government's intentions, namely that a wage increase of 2.5 per cent per annum would be guaranteed for public sector employees, as would minimum conditions, including superannuation. That such a guarantee might be made is not surprising given that price increases may vary within the Reserve Bank's target range of 2-3 per cent over the medium term (or even outside the range), thus creating losses and gains in real wage movements. So that whilst public sector employees might be better off with a 2.5 per cent increase where inflation is running at less than that figure and real wages may increase, the employees will be worse off if inflation runs above 2.5 per cent. In choosing the midpoint of the Reserve Bank's target range as the basis upon which wages might increase, presumably it was considered an appropriate amount given that prices were likely to fluctuate above and below this amount, although I note in the past seven years CPI increases have averaged 2.8 per cent per annum. 85. However, the guarantee of an annual increase of 2.5 per cent wage increase did not find its way into the legislation. In interpreting legislation the courts must determine what parliament meant by the words it used, not what parliament intended to say: Re Bolton & Others; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518; Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410 at 459; Harrison v Melhem [2008] NSWCA 67 per Spigelman CJ at [14] and [16]. 87. The Regulation does not guarantee an annual wage increase of 2.5 per cent. It states public sector employees 'may be awarded increases in remuneration...that do not increase employee-related costs by more than 2.5% per annum.' 88. The Commission cannot award more than 2.5 per cent (subject to cl 6(1)(b) of the Regulation), but it is open to it to award increases in remuneration of 2.5 per cent or less. Within that narrow scope it seems to me the Commission is bound to apply the provisions of both s 10 and s 146(2) of the Act and there is nothing in s 146C or the Regulation that would make it inconsistent for the Commission to apply those provisions. … 92. In those circumstances the government's Wages Policy is merely aspirational and subordinate to the statute and Regulation. That does not mean it is unimportant because as a matter of public interest the Commission should have regard to the objective of maintaining real wages over the medium term in line with the mid point of the Reserve Bank's inflation target of 2 to 3 per cent over the cycle, within the parameters set by the Act and Regulation. 93. I find that s 146 and, in particular s 146(2), is not displaced by s 146C. Further, that in determining whether there should be an annual increase of 2.5 per cent or less the Commission, in exercising its wage fixing function, is required to take into account the matters in s 146(2) of the Act, subject to the provisions of s 146C and the Regulation." (Emphasis in original) 1. During oral submissions Mr Gibian set out what he described as "three errors in the reasoning process that his Honour followed". [10] We do not propose to recite those submissions. Suffice it to say, the effect of the submissions was to urge the Full Bench to accept the case being presented by the Unions, rather than the approach adopted by his Honour. We have considered those submissions and find no fault in his Honour's reasoning or conclusions. 2. In particular, we concur with his Honour that s 146C of the Industrial Relations Act qualifies, rather than displaces, ss 10 and 146. To the extent that the Union Submissions contended that Director of Public Employment at [17], reproduced in Re Crown Employees at [80] above, was support for the proposition that ss 10 and 146 had been displaced entirely, we disagree. The reasoning of the Court in Director of Public Employment makes it clear that while ss 10 and 146 are expressly subordinated to s 146C by operation of s 146C(7), the constraints imposed on the Commission by ss 10 and 146 may be displaced or qualified. 3. The order made by Boland P in Re Crown Employees was the subject of appeal, ultimately to the Court of Appeal: Secretary of the Treasury. Although the Court of Appeal quashed the order, it did so for reasons unrelated to the analysis set out above. That analysis was not the subject of comment by the Court of Appeal. 4. Relevantly, the Court of Appeal in Secretary of the Treasury approached cl 6(1)(a) in a manner consistent with the construction advanced by the Employers. Bathurst CJ, with whom Beasley P and Meagher JA agreed, described the question before the Court as follows: "1. This application essentially involves the interpretation of cl 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW) (the Regulation). The issue is the manner in which the cap on the Industrial Relation Commission's power to award increases in remuneration or other conditions of employment in cl 6(1)(a) (the clause) is to be calculated." (Emphasis added) 1. The Chief Justice at [38] made reference to "the 2.5% limit". Meagher JA similarly and repeatedly made reference to cl 6(1)(a) imposing "a limit": see for example [77]-[79] and [82]. Meagher JA observed: "66. The text of cl 6(1) makes clear that its purpose is to impose a limit on the exercise of the power of the Commission to make or vary an award that increases the remuneration or other conditions of employment of 'public sector employees'. …" 1. As was the case before Boland P in Re Crown Employees, the Unions placed significant emphasis on extrinsic material. It is necessary to construe legislation in context, as the Full Bench stated in the passage quoted at [31] above. In particular, as the Full Bench observed, "it is conceivable that the context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with their literal or grammatical meaning". 2. At the outset, we observe that at [83] in Re Crown Employees Boland P referred to the second reading speech to the Industrial Relations Amendment (Public Sector Conditions of Employment) Bill 2011, and evidence from a debate in August 2011 to disallow the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW). The Full Bench was provided with no evidence contemporaneous with the making of the 2014 Regulation. 3. The Union Submissions drew our attention to several authorities said to support the use of the extrinsic material on which they relied. In SZTAL v Minister for Immigration and Border Protection Gageler J observed: "38. The constructional choice presented by a statutory text read in context is sometimes between one meaning which can be characterised as the ordinary or grammatical meaning and another meaning which cannot be so characterised. More commonly, the choice is from 'a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural', in which case the choice 'turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies'." (Footnote omitted) 1. In Taylor v Owners – Strata Plan No 11564 Gageler and Keane JJ observed: "65. Statutory construction involves attribution of legal meaning to statutory text, read in context. 'Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning ... But not always.' Context sometimes favours an ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words. Implicit words are sometimes words of limitation. They are sometimes words of extension. But they are always words of explanation. The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair. 66. Context more often reveals statutory text to be capable of a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural. The choice between alternative meanings then turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies." (Footnotes omitted) 1. The Employers relied on several authorities which caution against allowing extrinsic material to displace statutory text. In a passage quoted in Thiess v Collector of Customs at [22], to which the Employers referred us, the High Court in Federal Commissioner of Taxation v Consolidated Media Holdings Limited (2012) 250 CLR 503; [2012] HCA 55 observed: "39. 'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text'. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself." (Footnote omitted) 1. In Taylor v Attorney-General Nettle and Gordon JJ observed: "87. It is true, as the Solicitor-General contended, that the Explanatory Memorandum to the War Crimes Amendment Bill stated that the effect of s 12 of the War Crimes Act is that proceedings for an offence against that Act may be brought only by the Attorney-General or the Director of Public Prosecutions. But that can hardly be regarded as a sufficient indication of its meaning. For the reasons given, s 12 of the War Crimes Act is not ambiguous or obscure. Nor could it be said that its natural and ordinary meaning, supported by centuries of experience, leads to any manifestly absurd or unreasonable result. Hence, s 15AB of the Acts Interpretation Act 1901 (Cth) supplies no basis for considering this extrinsic material, much less attaching dispositive weight to it. And, although this Court has acknowledged a role for context in the first instance, it has also steadfastly maintained that the meaning of the statutory text cannot be displaced by legislative history and extrinsic materials, much less one without the other. The function of the Court is to give effect to the will of the Parliament as expressed in the law, not to bend it to accord to what an officer of the executive may have conjectured to be its meaning." (Footnotes omitted) 1. In Baini v The Queen the majority stated: "14. Whether there has been a 'substantial miscarriage of justice' within the meaning of s 276(1)(b) requires consideration of the text of the statute. As the Court said in Fleming v The Queen, '[t]he fundamental point is that close attention must be paid to the language' of the relevant provision because '[t]here is no substitute for giving attention to the precise terms' in which that provision is expressed. Paraphrases of the statutory language, whether found in parliamentary or other extrinsic materials or in cases decided under the Act or under different legislation, are apt to mislead if attention strays from the statutory text. These paraphrases do not, and cannot, stand in the place of the words used in the statute." (Footnotes omitted) 1. We have reached the same conclusion as that expressed by Boland P, that the Unions' case relies too heavily on extrinsic material, namely parliamentary statements, instead of the words of the 2014 Regulation. The Unions' purported reliance on extrinsic material would "displace the clear meaning of the text of a provision" contrary to the principles of construction summarised in the passage quoted at [31] above. The interpretation of cl 6(1)(a) pressed by the Unions would not involve a harmonious construction of the Industrial Relations Act and the 2014 Regulation in so far as they confer and constrain the Commission's award-making powers. 2. In particular, we do not regard cl 6(1)(a) as offering a "choice between alternative meanings". It is convenient at this point to address the Unions' submission that in context, the use of "may" in the clause may be read as imposing an obligation on the Commission as opposed to conferring a discretion. The Union Submissions referred in this regard to Commissioner of Police v Hart (2018) 262 CLR 76; [2018] HCA 1 ("Hart") and Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106; [1971] HCA 12 ("Finance Facilities"). 3. In Hart property had been forfeited to the Crown under s 92 of the Proceeds of Crime Act 2002 (Cth) ("POCA"). A number of parties, claiming to have an interest in some of that property, applied under s 102 of the POCA for orders to recover their respective interests, or an amount equal to the value of their interests. The version of s 102 being considered by the Court was in these terms: 102 Court may make orders relating to transfer of forfeited property etc. (1) If property is forfeited to the Commonwealth under section 92, the court that made the *restraining order referred to in paragraph 92(1)(b) may, if: (a) a person who claims an *interest in the property applies under section 104 for an order under this section; and (b) the court is satisfied that the grounds set out in subsection (2) or (3) exist; make an order: (c) declaring the nature, extent and value of the applicant's interest in the property; and (d) either: (i) if the interest is still vested in the Commonwealth—directing the Commonwealth to transfer the interest to the applicant; or (ii) declaring that there is payable by the Commonwealth to the applicant an amount equal to the value declared under paragraph (c). (2) An order under this section may be made if: (a) the applicant was not, in any way, involved in the commission of the offence to which the forfeiture relates; and (b) the applicant's *interest in the property is not subject to the *effective control of the person whose conviction caused the forfeiture; and (c) the applicant's interest in the property is not *proceeds of the offence or an *instrument of the offence. (3) An order under this section may also be made if: (a) the property was not used in, or in connection with, any *unlawful activity and was not derived or realised, directly or indirectly, by any person from any unlawful activity; and (b) the applicant acquired the property lawfully; and (c) the applicant is not the person convicted of the offence to which the forfeiture relates. 1. The passage in Hart relied by the Unions comes from the judgment of Gordon J, with whose "factual and legal conclusions" the plurality agreed (at [2]). Her Honour observed: "104. As the application of s 102(3) to the assets in issue in these appeals will demonstrate, assessing an application for an order from a court under s 102 is a process which requires the exercise of judgment. That is why the court 'may' make the order. As has been recognised, in a statutory provision which confers a power, the word 'may' can be used in more than one sense. It may be used to indicate that a court or other decision-maker has a discretion. Alternatively, it may be used to indicate that a decision-maker has authority to exercise a power, which they are obliged to exercise if statutory criteria are met. In the present case, 'may' in s 102(3) falls in the latter category. The criteria specified in s 102(3) are stringent; but their stringency also demonstrates that they are intended to be exhaustive. If the court is satisfied that the applicant has established that those criteria are met, an order must be made." (Footnote omitted) 1. In the footnote omitted from the above passage, her Honour cited Finance Facilities. That case concerned the interpretation of s 46(3) of the Income Tax Assessment Act 1936 (Cth), which provided as follows: 46(3) Subject to the succeeding provisions of this section, the Commissioner may allow a shareholder, being a company that is a private company in relation to the year of income and is a resident, a further rebate in its assessment of the amount obtained by applying the average rate of tax payable by the shareholder to one-half of the part of any private company dividends that is included in its taxable income if the Commissioner is satisfied that – … 1. The question for determination was whether, if one or more of the criteria in the subsection was met, the Commissioner of Taxation retained a discretion not to allow a rebate. Windeyer J, with whom Barwick CJ agreed, observed: [11] "…The right of a taxpayer to a discount or rebate arising from facts objectively determinable is quite properly called an entitlement. A claim to a discount or rebate dependent upon the Commissioner being satisfied of certain fact is equally properly called an allowance, something to be allowed. In some contexts the word 'allow' in the phrase 'may allow' might enhance a discretion said to be embodied by the word 'may'. But not, I think, in this context. The Act is filled with provisions about allowable deductions which are mandatory. The contrast in language in s 79B(1A) between what is allowable and what a taxpayer is 'entitled to' is significant. The question, which comes back to the words 'may allow', is not to be solved by concentrating on the word 'may' apart from its context. Still less is the question answered by saying that 'may' here means 'shall'. While Parliament uses the English language the word 'may' in a statute means may. Used of a person having an official position, it is a word of permission, an authority to do something which otherwise he could not lawfully do. If the scope of the permission be not circumscribed by context or circumstances it enables the doing, or abstaining from doing, at discretion, of the thing so authorized. But the discretion must be exercised bona fide, having regard to the policy and purpose of the statute conferring the authority and the duties of the officer to whom it was given: it may not be exercised for the promotion of some end foreign to that policy and purpose or those duties. However, that general proposition is irrelevant in this case. Here the scope of the permission or power given is circumscribed. Conditions precedent for its exercise are specified as alternatives. The question then is, must the permitted power be exercised if one of those conditions be fulfilled? This does not depend on the abstract meaning of the word 'may' but of whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'. … … I consider that to be directly applicable to the present case. If the Commissioner, having considered the matter, is satisfied of facts out of which the power to allow a rebate arises, he cannot nevertheless refuse to allow it." 1. During oral submissions Mr Gibian stated: [12] "Here, the statutory criteria are clear in the second part of clause 6(1)(a), that the increases in remuneration or other conditions of employment for public sector employees do not increase employee-related costs by more than 2.5%. That is the condition on the exercise of the power. If that condition is met, the Commission is empowered, that is may, and we say, in the same sense as the Commissioner of Federal Police v Hart, must exercise the power to award those increases. That is the only interpretation which is consistent with the policy and rationale for the regulation. And would be [with] all of the extrinsic materials, with respect. That is the condition. We understand the purpose of that condition. But if that condition is met then the parliament, and indirectly the parliament through the regulation, has pre-empted the judgment of the Commission. Now we don't say it was right to do so. You know that the unions were all opposed to 146C in the regulation, and they continue to be so opposed. But that is what parliament has decided to do. It has pre-empted the judgment of the Commission. If that condition is satisfied then the power must be exercised, in our view." 1. We do not consider that the 2014 Regulation falls to be considered in the same way as the provisions under consideration in Hart and Finance Facilities. The requirement that remuneration or other conditions of employment do not increase employee-related costs by more than 2.5% is not a condition precedent to the awarding of an increase, the satisfaction of which guarantees the increase, but a limit on the quantum of increase that may be awarded. 2. For completeness we observe that the Employers further relied on the Interpretation Act 1987 (NSW), which relevantly provides as follows: 9 Meaning of may and shall (1) In any Act or instrument, the word "may", if used to confer a power, indicates that the power may be exercised or not, at discretion. … 1. The Unions questioned whether s 9 was applicable in the present case, as cl 6(1)(a) does not confer a power on the Commission. Rather, that power is conferred by ss 10 and 17 of the Industrial Relations Act. They also noted that s 5(2) of the Interpretation Act makes it clear that that Act is subject to any contrary intention appearing in the Act or instrument concerned. 2. Based on the conclusions we have otherwise reached, it is not necessary that we further explore or seek to resolve this difference. Conclusions 1. We do not accept that the effect of s 146C(7) of the Industrial Relations Act is to subordinate ss 10 and 146 to the extent that, within the constraints of the 2014 Regulation, the Commission is not permitted to make its own assessment of the public interest or of the economic consequences of its decision. 2. We do not consider that cl 6(1)(a) of the 2014 Regulation is "capable of a range of potential meanings" so as to require resort to the extrinsic material on which the Unions relied. To rely on that extrinsic material to adopt the construction of the clause urged by the Unions would "displace the clear meaning of the text of a provision". The interpretation of cl 6(1)(a) pressed by the Unions would not involve a harmonious construction of the Industrial Relations Act and the 2014 Regulation in so far as they confer and constrain the Commission's award-making powers 3. Further, to the extent regard is had to the extrinsic material, it supports the conclusion reached by Boland P in Re Crown Employees as follows: "67. …In doing so, the Minister responsible for the Industrial Relations Amendment (Public Sector Conditions of Employment) Bill 2011, which introduced s 146C into the Act, made it clear that the very purpose of the bill was to remove what he described as the Commission's 'broad-ranging discretion when it comes to wage fixing.' This was 'the mischief to which the statute is directed and which the legislature intended to remedy.'" 1. There is no basis on which cl 6(1)(a) should be construed other than in accordance with its ordinary and grammatical meaning. 2. The Commission cannot award more than 2.5% (subject to cl 6(1)(b) of the 2014 Regulation), but it is open to it to award increases in remuneration of 2.5% or less. Within that "narrow scope", as it was described by Boland P in Re Crown Employees, the Commission is bound to apply the provisions of both ss 10 and 146(2) of the Industrial Relations Act. There is nothing in s 146C or the 2014 Regulation that would make it inconsistent for the Commission to apply those provisions. 3. In answer to the question: Does the Government policy declared in clause 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 require the Commission to ensure that public sector employees be awarded increases in remuneration or other conditions of employment of 2.5% per annum? The answer is "No". ********** Endnotes 1. By s 50 of the Government Sector Employment Act 2013 (NSW) the Industrial Relations Secretary is, for the purposes of any proceedings relating to Public Service employees held before a competent tribunal having jurisdiction to deal with industrial matters, taken to be the employer of Public Service employees 2. By s 116(3) of the Health Services Act 1997 (NSW) the Health Secretary may, subject to this and any other Act or law, exercise on behalf of the Government of New South Wales the employer functions of the Government in relation to the staff employed in the NSW Health Service. 3. By s 85 of the Police Act 1990 (NSW) the Commissioner of Police is to be the employer of non-executive officers for the purposes of any proceedings relating to non-executive officers held before a competent tribunal having jurisdiction to deal with industrial matters. 4. By s 104(9) of the Independent Commission Against Corruption Act 1988 (NSW) the Chief Commissioner of ICAC is, for the purposes of any proceedings relating to staff employed under s 104 held before a competent tribunal having jurisdiction to deal with such matters, taken to be the employer of the staff. 5. By s 33E of the Public Finance and Audit Act 1983 (NSW) the Auditor-General is, for the purposes of any proceedings relating to members of staff of the Audit Office held before a competent tribunal having jurisdiction to deal with industrial matters, taken to be the employer of the staff. 6. The AWU is a respondent to matters 2020/79899 and 2020/143934 7. The IEU is a respondent to matter 2020/163286 8. An application by the Teachers Federation to intervene generally in the proceedings was adjourned for later determination. 9. Outline of Submissions in reply at par 12 10. Tcpt, 18 June 2020, p 42(18) 11. (1971) 127 CLR 106 at 133-134 12. Tcpt, 18 June 2020, p 39(24-41) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 June 2020