Industrial Relations Commission of New South Wales CITATION : Public Hospital Nurses (State) Award (No 2), Re [2002] NSWIRComm 280 revised - 14/11/2002 APPLICANT New South Wales Nurses' Association PARTIES : RESPONDENT Health Administration Corporation INTERVENOR Minister for Industrial Relations FILE NUMBER: IRC 6802 of 2001 CORAM: Wright J President; Boland J; Patterson C CATCHWORDS : Award - Wage fixation - Application for variation re increased remuneration and new allowances - Public hospital nurses - Work value - Special case - Statement of Full Bench - Directions to parties to address on implications of claim, wage increases, pay comparability, nursing shortage, economic impact of claim LEGISLATION CITED : Health Services Act 1997 s115(3)(c) CASES CITED : Public Hospital Nurses (State) Award, Re [2002] NSWIRComm 100 (2002) 115 IR 183 HEARING DATES: 06/11/2002; 06/12/2002; 06/13/2002; 06/14/2002; 07/22/2002; 07/23/2002; 07/24/2002; 07/25/2002; 07/26/2002; 07/29/2002; 08/01/2002; 08/02/2002; 08/05/2002; 08/06/2002; 08/07/2002; 08/08/2002; 08/09/2002; 09/12/2002; 09/13/2002; 09/16/2002; 09/17/2002; 09/18/2002; 09/19/2002; 09/20/2002; 09/30/2002; 10/01/2002; 10/02/2002; 10/03/2002; 10/04/2002; 10/08/2002; 10/09/2002; 10/10/2002; 10/21/2002 DATE OF JUDGMENT: 10/21/2002 APPLICANT: Mr S J Howells of counsel with Ms C M Howell of counsel Solicitor: Ms L Doust R L Whyburn & Associates RESPONDENT: LEGAL REPRESENTATIVES: Mr R C Kenzie QC and Mr I Taylor of counsel Mr T Craft - Health Administration Corporation INTERVENOR: The Hon. J W Shaw QC with Ms E Brus of counsel Minister for Industrial Relations JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM: Wright J, President Boland J Patterson C Monday 21 October, 2002 Matter No IRC 6802 of 2001 PUBLIC HOSPITAL NURSES (STATE) AWARD (No. 2) Application by the New South Wales Nurses' Association for variation Re Increased Remuneration and New Allowances STATEMENT OF THE FULL BENCH [2002] NSWIRComm 280 1 The New South Wales Nurses' Association is the applicant in these proceedings and, by virtue of its statutory role pursuant to s 115(3)(c) of the Health Services Act 1997, the Health Administration Corporation (HAC) is the respondent. 2 The application seeks to vary the Public Hospital Nurses' (State) Award by: (a) Increasing rates of pay by 15 percent; (b) Introducing the following scale of allowances for registered nurses and enrolled nurses who hold the relevant qualifications: Hospital certificate or Graduate certificate $ 40.00 per week Post graduate diploma or degree (other than a nursing undergraduate degree) $ 60.00 per week Master's degree or doctorate $ 75.00 per week (c) Introducing a lump sum retention allowance of $10,000 for any nurse who completes two years' continuous service in the public health system and a further amount of $5,000 on the completion of each 12 months service thereafter. 3 These proceedings may properly be considered, in many respects, as in substance the continuation of proceedings in Matter No IRC 2000/3810, which involved a claim for a new Award in which the Nurses' Association sought extensive changes to a range of allowances and employment conditions. Those proceedings involved approximately 19 hearing days and concluded on 24 April 2002. A decision was handed down on 12 June 2002: see Re Public Hospital Nurses (State) Award [2002] NSWIRComm 100 (2002) 115 IR 183. 4 The current proceedings have now proceeded for over 30 hearing days before the Full Bench and 2 days before a single Member commencing on 11 June 2002. Evidence has been received from the following witnesses called by the applicant: 1) Kathleen Ann Needham, Nurse Manager, Intensive Care Unit, Westmead Hospital. 2) Professor John Michael Dwyer, Professor of Medicine, University of New South Wales, and Clinical Director of the Programs for Medicine and Oncology, Prince of Wales Hospital. 3) Professor Rita Creegan, Visiting Professor in the Faculty of Nursing, Midwifery and Health, University of Technology, Ku-ring-gai. 4) Dr Lynette Chenoweth, The Health and Ageing Research Unit, War Memorial Hospital, Waverley, Professor of Aged and Extended Care and Director of the Health and Ageing Research Unit for South Eastern Sydney. 5) Linda Gae Campbell, Nursing Unit Manager of the Neuromedical/Stroke Unit, Liverpool Hospital. 6) Christina Dorothy Game, Head of the School of Nursing and Health Care Practices, Division of Health and Applied Sciences, Southern Cross University. 7) Susan Noelle Bunt, Nursing and Patient Services Manager in charge of the Division of Surgery and Clinical Care, St George Hospital, Kogarah. 8) Dr Caroline Susan Homer, Clinical Midwifery Consultant Grade 3, Division of Women and Children's Health, St George Hospital, Kogarah. 9) Helmut Obmann, Clinical Nurse Specialist in Mental Health, Maroubra Centre, Maroubra. 10) Brian William Grant, Clinical Nurse Specialist, Cardiology Unit, Liverpool Hospital, Liverpool. 11) Sandra Margaret Moait, General Secretary of the New South Wales Nurses' Association. 12) Janice Elizabeth Stow, Director of Nursing and Manager of Clinical Services, Westmead Hospital (retired). 13) Christine Helen Coombs, Director of Nursing, Tamworth Base Hospital. 14) Lorna Kay Abell, Clinical Nurse Specialist in Anaesthetics, Wagga Wagga Base Hospital. 15) Lynne Marie Rich, Enrolled Nurse and Community Nurse and Discharge Planner for Wellington Health Services, Wellington. 16) Dr Christine Margaret Manwarring, Programme Manager for Health and Aged Services, who is responsible for the monitoring, training and development of the Enrolled Nurse Education Programme State wide with the New South Wales Department of Education situated at TAFE, Meadowbank. 17) Frances Claire Monypenny, Director of Nursing, Royal Rehabilitation Centre, Sydney. 18) Carole Eva Penning, Deputy Director, Aged Care and Rehabilitation Services, Hunter Area Health Service. 19) Lynette Shirley Signor Day, Nursing Unit Manager, Paediatric Unit, Griffith Base Hospital, Griffith. 20) Jennifer Kay Morris, Clinical Nurse Consultant, Emergency Services, Liverpool Hospital, South West Sydney. 21) Pamela Brady, Acting Director of Community Nursing, Primary and Community Health Stream, Western Sydney Area Health Service. 22) Hanneke Chipperfield, Nursing Unit Manager Level 2, Carrawarra Centre. 23) Sandra Jean Hoot, Director of Mental Health Services, Fairfield and Liverpool, South West Sydney Area Health Services (based at Liverpool Hospital). 24) Dr George Andrew Skowronski, Senior Staff Specialist Intensive Care Unit, St George Hospital, Kogarah, Conjoint Associate Professor Critical Care, University of New South Wales 25) Dr John Duncan Anselan Buchanan, Deputy Director of Research, Australian Centre for Industrial Relations Research and Training, University of Sydney. 5 The respondent has, in response, called the following witnesses: 1) Trevor Craft, Assistant Director, Employee Relations, Employee Relations Directorate, New South Wales Department of Health. 2) Kenneth Edward English, Health Service Manager Level 5 and Acting Director Human Resources, South Eastern Sydney Area Health Service. 3) Dr Diana Horvath, Chief Executive Officer, Central Sydney Health Area. 4) Deborah Thomas, Director of Nursing, Community Development, South Eastern Sydney Area Health Service. 5) Dr Claire Maree Blizard, Director, Acute Medical Services, Western Sydney Area Health Service, Westmead Hospital. 6) Janne Maree Boot, Human Resources Manager, Northern Rivers Area Health Service, Lismore. 7) Neville James Bareham, Acting Director of Nursing, Allandale Aged Care Facility, Cessnock. 8) Sandra Joyce Strong, Health Service Manager, Gunnedah Health Service. 9) Peter Williamson, Director of Corporate Services, Royal Rehabilitation Centre, Sydney. 10) Lynette Maree Nancarrow, Director of Nursing and Manager of Clinical Operations, Griffith Base Hospital. 11) Dr Peter John Kennedy, Director of Health Services, Central Sydney Area Health Service. 12) Dr Martin Peter Mackertich, Director of Clinical Services, Prince of Wales/Prince Henry Hospitals. 13) Kenneth Reginald Barker, Chief Financial Officer, New South Wales Department of Health. 14) Dr Paul Kenneth Tridgell, Deputy Chief, Information Office, New South Wales Department of Health. 15) Mark Anthony Ronsisvalle, Acting Secretary of the New South Wales Treasury. 6 The evidence in these proceedings before the Full Bench has provided detailed information, in a substantial way, as to the work and working conditions of nurses in the public health sector in New South Wales both at present and for a substantial part of the last decade. For practical purposes, it may be observed that the evidence has been directed to assisting the Commission to determine the issues before this Full Bench. These issues may be broadly stated as: 1) Whether the claimed wage increases are justifiable on the ground of changes in the work value of nurses, including enrolled nurses and assistants in nursing; 2) What is the datum point for the assessment of changes to work value for nurses, noting that the datum point for enrolled nurses may be different to that for registered nurses and assistants in nursing; 3) Whether there is a nursing shortage and, if so, whether the shortage provides the grounds for wage increases on the basis that a special case exists for granting such increases; 4) Whether the rates of pay for graduate nurses have declined relative to rates for comparable professional employees and, if so, whether a special case exists for adjusting salary rates; 5) The significance in these proceedings of the differential in wage increases gained by nurses in 1996 compared to those achieved by other employees; whether the rationale stated for the differential was justified at the time and/or by the actions taken subsequently on the basis of the rationale; 6) Whether the claim for qualification allowances is justifiable on work value and/or special case grounds; 7) Whether the claim for retention allowances is justifiable on special case grounds; 8) Whether increases to the rates of pay for assistants in nursing are justifiable under the Equal Remuneration Principle; 9) What is to be done with the outstanding issues from the proceedings in Matter No. IRC 3810 of 2000. 10) The impact of the claim in the context of the Commission's duty to have regard to the state of the economy of New South Wales and the likely effect of its decision on that economy (the "economic impact" issue); 11) The implications for the Nurses' Association's claims of the Memorandum of Understanding (MOU) entered into between the Nurses' Association, other public sector unions, the Labor Council of New South Wales and the New South Wales Government on 2 March 2000 (due to expire on 30 June, 2004) and which provided for the following increases for public sector employees, including nurses, on the premise that "there will be no new salaries or conditions claims arising from negotiation of productivity and efficiency improvements covered by this agreement": Date of Effect Percentage Increase I January 2000 2% 1 January 2001 2% 1 January 2002 3% 1 January 2003 4% 1 July 2003 5% 7 With the benefit of the evidence of two witnesses in particular, the Full Bench has decided that at this stage of the proceedings an appropriate course may be to identify a number of principal issues that we require the parties to address before we make a decision as to whether it is necessary or appropriate to proceed to deal at this stage with all of the issues set out in the previous paragraph. 8 The evidence we refer to in particular is that of: (a) Professor John Michael Dwyer, Professor of Medicine, University of New South Wales, and Clinical Director, Programs for Medicine and Oncology, Prince of Wales Hospital; and (b) Dr Diana Horvarth, Chief Executive Officer, Central Sydney Health Area who were called, respectively, by the applicant and the respondent. 9 Each of these witnesses has had a long and distinguished career in the public health system in this State. As such, their experience in the field extends to other health sectors and cognate areas; for example: · Professor Dwyer is: currently co-chairman of the Greater Metropolitan Transitional Taskforce implementing 169 recommendations for improving the quality of hospital services in New South Wales; chairman of the New South Wales Staff Executive Council, an organisation of doctors from more than 200 public hospitals involved in advocacy for the public hospital system; a Board member of the Institute of Clinical Excellence, a ministerial committee reporting directly to the New South Wales Minister for Health; · Dr Horvath has undertaken numerous roles in national and international health service arenas, including nine years as a member of the National Health & Medical Research Council; as an independent member of the Australian Health Ministers' Advisory Council; as Commissioner of the Health Insurance Commission; and, as President of the Australian Hospitals Association. 10 The first of the principal issues to raise for the parties' consideration is the MOU. Unless there are special or exceptional circumstances, the MOU may represent an insurmountable obstacle to any additional wage increases being granted by the Commission prior to the expiry date of that MOU. In this regard we refer to what the Full Bench said recently in Re Broken Hill Commerce and Industry Consent Award [2002] NSWIRComm 252 where, after referring to the respondent employer having acted inconsistently with an agreement to which it was a party, the Full Bench observed at par [8]: Parties should, as a matter of principle, consider their situation very carefully and deliberately before conducting themselves in such a manner. It is extremely important in industrial and employment relations that parties adhere to considered agreements entered into by them. 11 The adherence by industrial parties to their agreements has been a cornerstone of the system of industrial relations since the advent in this country of the statutory system of conciliation and arbitration over a century ago. The importance of this fundamental obligation should not now require any emphasis or reference to its practical and legal significance as was deemed necessary in the Broken Hill case. However, we consider that the observation by the Full Bench in Broken Hill is entirely apposite to these proceedings. Consequently, in light of an agreement that provides for significant wage increases and which is based on the premise that there would be "no new salaries or conditions claims arising from negotiation of productivity and efficiency improvements covered by this agreement", any claim to increase wages based on changes in work value might not, of itself, provide sufficient reason for the Commission to grant additional increases on work value grounds during the currency of the MOU. 12 The Nurses' Association has claimed in these proceedings that, over a substantial part of the last decade, there has been a significant net addition to work requirements for nurses. The Association has sought to support this claim with extensive evidence. The HAC has submitted that many of the changes identified by the Association have been changes brought about by productivity improvements for which nurses have already been compensated and that the effect of the alleged work value changes on nurses has been largely ameliorated by other changes such as those brought about by new equipment and technology, which have made the work of nurses easier. 13 Without passing judgment on the respective merits of the parties' cases, and as we have already observed, in light of the MOU there may be a substantial obstacle at this stage to the Commission countenancing across the board wage increases for nurses on work value grounds. 14 Notwithstanding the significant reservations there must be about the work value aspect of the claim, there remains the question of whether a special case exists for increasing nurses' rates of pay on grounds associated with, for example: · Any anomaly or inequity arising out of the contention that nurses' rates of pay have fallen behind those of comparable professionals; and/or, · Any nursing shortage. 15 We require the parties to address this special case aspect, with a focus on the MOU issue, the pay comparability issue, the nursing shortage issue and the economic impact issue, although it may not be feasible to deal with the last issue with the other issues, because of the involvement of the Minister, as intervenor, in that aspect. As to the question of pay comparability, prima facie, it would appear that nurses' rates have not maintained an earlier relationship they had with rates for comparable professionals. One of the reasons why this may have occurred is because of an agreement struck by the Association in 1996 whereby it agreed to forego part of the across the board productivity based increases that were taken up by other public sector employees in return for significant work value increases for Nurse Unit Managers. 16 The circumstances of the 1996 agreement and its outcomes will need to be examined but an important question, nevertheless, is whether it is in the public interest for nurses' rates of pay to be at levels relatively lower than their professional counterparts, especially given the current nursing shortage. It seems common ground between the parties that this situation is likely to send a "negative message" to any person contemplating a career in nursing, that is, the value of the work of nurses in terms of rates of pay, even having proper regard to the requirements of the different undergraduate degree courses, is considered to be relatively less than other health professionals. 17 As for the nursing shortage, the evidence suggests that there is, indeed, a shortage that is placing a strain on the public hospital system and its ability to be responsive to the health needs of the people of New South Wales. However, it would appear that the nursing shortage is not uniformly across the board. In some areas of the State, hospitals are not experiencing shortages and in others, such as the Sydney metropolitan area, the shortage of permanent full time nurses in high dependency and intensive care areas particularly, would appear to be quite severe. 18 Wage increases, being a classic labour market tool for addressing skills shortages, may be an option to consider in assisting to overcome the nursing shortage. Moreover, it may not be inconsistent with the provisions of the Act for the Commission to increase wages for this purpose. In carrying out its functions under the Act, including the setting of remuneration, s 146(2) provides that the Commission must take into account the public interest. There may be significant public interest grounds for taking reasonable steps, including increasing rates of pay, to assist in overcoming shortages in such a vitally important profession as nursing in the public hospital system. 19 Wage increases are not the only means of addressing the nursing shortage. Indeed, it would appear from some of the material before us that rates of pay might not be the most important consideration for nurses in deciding whether or not to stay in the profession. Other considerations include: family responsibilities; inflexibility of working hours, including the requirement to work shift work; heavy workload; and, "having a job more suited to my lifestyle and responsibilities". 20 Wage increases are unlikely to be a panacea in addressing the nursing shortage and a proper balance will need to be struck between the level of wage increase awarded, if any, and other initiatives that may be appropriate or necessary. There is unlikely to be long-term benefit in granting wage increases as a contribution to resolving the nursing shortage unless other initiatives, which are arguably just as, or more, important, are set in train. Many of these initiatives have been identified in the 85 recommendations arising out of a Senate Community Affairs References Committee Inquiry into Nursing entitled "The Patient Profession: Time for Action", tabled on 26 June 2002. 21 Despite the fact we have received most of the evidence in these proceedings, subject possibly to some material tendered today, we do not appear to have convincing evidence that a coherent, multi-factorial strategy that has a real likelihood of resolving the nursing shortage has been, or is about to be, put in place. 22 The other difficulty we have with the nursing shortage issue is that its boundaries are ill defined. It is not clear to us precisely where the shortages lie. For example, it is acknowledged by the HAC that there is a shortage of nurses willing to work on a permanent basis either full time or part time. Is the corollary to the shortage of permanent nurses that there is no shortage of agency nurses and, if so, what is the justification for granting wage increases to agency nurses? Further, although there may be a shortage of permanent nurses, that shortage apparently does not exist in all areas of the State. There are also shortages in specialty areas of nursing but this seems to vary from site to site and hospital to hospital. 23 It is necessary that there be a clearer understanding of the nature and extent of the nursing shortage before the Commission will be in a position to properly address the question of wage increases and target them if appropriate. The prime responsibility in that respect rests with the parties and the Government. 24 If we find that wage increases are warranted, either on the basis that a special case exists for bringing nurses' rates of pay into line with the rates for comparable professional employees and/or on the basis of the nursing shortage, the appropriate course may be to make an interim award to give effect to such a decision. The option of an interim award may be relevant if the Commission were to decide to address the question of nursing rates of pay on the more limited basis that we have referred to in this Statement. There would be outstanding issues that remain to be addressed in a more thoroughgoing review of the Award's classification and wages structure after the expiry of the MOU. This would include the relative position of pay rates for enrolled nurses and assistants in nursing in the hierarchy of nursing rates, if it were determined not to deal with those matters now as they might be important longer-term issues. 25 Accordingly, each of the parties are directed to: 1. Prepare submissions on the issues referred to in para [15], [16], [17], [22], [23], (with the possible exception, for the present, of the "economic impact" issue), and if the parties consider it appropriate, par [24], on the basis that those submissions will be heard by the Full Bench on the next hearing day fixed, that is, 28 October, 2002. 2. Prior to that date the parties shall exchange and file a written outline of their submissions. 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.