Industrial Relations Commission of New South Wales CITATION : Broken Hill Commerce and Industry Consent Award 2001 [2004] NSWIRComm 200 APPLICANT: PARTIES : Broken Hill Chamber of Commerce Inc RESPONDENT: Construction, Forestry, Mining and Energy Union (NSW Branch) FILE NUMBER: 5570 of 2003 CORAM: Sams DP Application to vary award - contractors to Broken Hill mining industry - application to remove 4.5% wage loading and reduce double time for all overtime - economic difficulties in Broken Hill - changed circumstances for employees at the mine site - previous decisions of the Commission - State Wage Case - Special Case Principle - Economic Incapacity Principle - whether sufficient reason to vary award - public interest - evidence of Chamber of Commerce. CATCHWORDS : Held, application must meet Special Case requirements - Economic Incapacity Principle also relevant - lack of direct evidence of affected employers - evidentiary onus not satisfied - Special Case not made out - sufficient reason not established - public interest test not satisfied - Commission's earlier decisions distinguished - application dismissed. LEGISLATION CITED : Industrial Relations Act 1996 Australian Insurance Employees Union, Ex parte Academy Insurance Pty Ltd and others (1988) 78 ALR 466 Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award 2004 [2003] NSWIRComm 405 Elura Mine Enterprise (Consent) Award 2001 [2003] NSWIRComm 218 Iron and Steel Works Employees (Australian Iron and Steel Limited - Port Kembla) and other awards (1945) 44 AR 64 Notification under s.130 by Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch of a dispute with Fillery Antiwear Products & Sandblasting (unreported, Bishop C, IRC1294/98, 13 November 1998) Notification under s130 by Broken Hill Chamber of Commerce Inc. of a dispute with Barrier Industrial Council re Broken Hill Commerce and Industry Consent Award [2002] NSWIRComm 89 Notification under section 130 by the Construction, Forestry, Mining and Energy Union (New South Wales) of a dispute with the Broken Hill Chamber of Commerce and others re alleged breach of award [2003] NSWIRComm 250 Operational Ambulance Officers (State) Award [2001] NSWIRComm 331 O'Sullivan v Farrer (1989) 168 CLR 210 CASES CITED : Public Hospital Nurses (State) Award [2002] NSWIRComm 100 Re, Broken Hill Commerce and Industry Consent Award (No 2) [2002] NSWIRComm 309 Re Pastoral Industry (State) Award (2000) 104 IR 268 Re Queensland Electricity Commission & Ors, Ex parte Electrical Trades Union of Australia (1987) 21 IR 151 Safety Net Review - Wages May 2004 Print: PR002004 State Wage Case (2003) 121 IR 446 Storeworkers - IGA Distribution [2002] NSWIRComm 156 AWARDS: Broken Hill Commerce and Industry Consent Award 2001 336 IG 885 HEARING DATES: 03/23/2004; 04/21/2004; 05/19/2004; 06/02/2004 DATE OF JUDGMENT: 07/20/2004 APPLICANT: Mr Paul Edwards (Agent) INSTRUCTED BY: Mrs Sharon Hocking, Broken Hill Chamber of Commerce Inc LEGAL REPRESENTATIVES: RESPONDENT: Mr Alex Bukarica, Construction, Forestry, Mining and Energy Union, NSW Branch INSTRUCTED BY: Mr Eddie Butcher JUDGMENT: - 27 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 20 July 2004 Matter No IRC03/5570 Broken Hill Commerce and Industry Consent Award 2001 Application by Broken Hill Chamber of Commerce Inc for variation re loadings for work on mine leases. DECISION [2004] NSWIRComm 200 1 On 8 October 2003 the Broken Hill Chamber of Commerce Inc ('the applicant') filed an application pursuant to s17(3)(c) of the Industrial Relations Act, 1996 ('the Act') to vary the Broken Hill Commerce and Industry Consent Award 2001 336 IG 885 ('the Award'). 2 The application was expressed in terms which sought to vary the metalliferous mining section of the Award in two respects: i. The removal of a 4.5 per cent loading on wages paid to Award employees when working on mine leases. ii. Payment of overtime at time and a half for the first two hours and double time thereafter rather than double time for all overtime. 3 The matter was first listed in Broken Hill on 19 November 2003. Mr P Edwards (Agent) with Mrs S Hocking appeared for the applicant; Mr A Bukarica with Mr E J Butcher appeared for the Construction, Forestry, Mining and Energy Union (NSW) ('the Union') and Mr B Campbell appeared for the Barrier Industrial Council ('BIC'). 4 At that time, Mr Edwards informed the Commission that the parties had unsuccessfully attempted to resolve the matter. Mr Bukarica said that the Union had rejected the terms of the application as it amounted to a significant reduction in wages for contractor employees. Both parties acknowledged, having regard for the history of the issue, that it was unlikely that the matter would be resolved though conciliation. In those circumstances the Commission directed the parties to file an outline of contentions and submissions. The proceedings were thereupon adjourned to 23 March 2004 in Broken Hill. 5 The Union's outline of submissions, filed on 3 March 2004, stated in unequivocal terms, its view that the Chamber's application raised Special Case considerations, that must be considered under Principle 10 of the State Wage Case 2003 (2003) 121 IR 446. It followed that as the processes under the Special Case Principle had not been attended to, the Commission as presently constituted, could not proceed to determine the matter. 6 On the occasion the matter was listed in Broken Hill (23 March 2004), Mr Bukarica pressed his submission that the application must be considered as a Special Case, not only on the basis of its intended result, but because the Chamber's submissions amounted, inter alia, to an argument based on economic incapacity to pay. That being so, the application also raised Special Case considerations pursuant to Principle 15 of the State Wage Case Principles. 7 Notwithstanding that the parties were ready to proceed with the case, the Commission adjourned the proceedings to consult with the President Wright, J. I directed the parties to confer during the adjournment. In order to expedite the matter, the President conditionally agreed to have the matter dealt with by me with a view to reconsidering the question in the light of any particular matters requiring Full Bench consideration. (I note that on 14 April 2004 the President pursuant to s193 of the Industrial Relations Act 1996 and Principle 10 of the State Wage Case Principles, determined that the matter including any Special Case aspect of it was to be dealt with by me). 8 The matter was adjourned until the following day - 24 March 2004. At that time, the parties advised that an agreement in part settlement of the application, had been reached. 9 The agreement was that long term contractors on the mine, i.e. where work is performed in excess of four weeks, employees would continue to be paid according to the current arrangements. However, no agreement could be reached on what was termed intermittent or short terms contractors - although I note that Mr Edwards proposed "grandfathering" the current arrangements for existing employees. This proposal was rejected by the Union, on the basis that it would create inequities in a two tiered system and encourage employers to use existing and new employees in contrived and unfair work arrangements. 10 The matter then proceeded to hearing. The Evidence 11 The only evidence adduced by the applicant was from Mrs Sharon Hocking who has been President of the Broken Hill Chamber of Commerce for four years. 12 In a statement tendered in the proceedings, Mrs Hocking quoted statistics regarding membership income of the Chamber and the reduction in the number of businesses covered by the Award from 978 in 2000 to 820 in 2003. Mrs Hocking believed the economy of Broken Hill was depressed due to "declining work, less work opportunities and a diminishing client base." 13 She said that various companies employing labour in the metals industry had told her words to the effect of, "I simply cannot afford it anymore." She named employers in the industry which have closed, reduced services or stopped employing tradespersons. These included Eimco, Tamrock, Sandvik Rock Tools, Kizarco, Ausminco, Galpin Engineering, Boart and Atlas Copco. 14 Mrs Hocking outlined the effect on contractors of the change of ownership of the mine when Pasminco sold its Broken Hill operations to Perilya. She said that Perilya now insisted on contract rates of $43.00 per hour. This rate meant that the contractors were not viable in that they were required to pay the Award rate, plus 4.5 per cent loading and double time for all overtime plus weekend and shift penalties. 15 Mrs Hocking put that it was not the Chamber's intention to reduce the wages of employees. Rather it was to bring wage rates paid by metal industry contractors, servicing the mining industry, into line with the rates they pay to employees performing the same work outside the mining industry. 16 Mrs Hocking described her thirty years experience as a book keeper which included providing payroll information to numerous employers. With this experience, she had calculated the effect of the changes in the industry and concluded that the current mining rates were not sustainable for small business in the long term. She claimed this conclusion was supported by Ms Isabelle Eriksson, Administration Manager for Bobos Engineering. 17 Mrs Hocking referred to the difficulties local businesses had in competing with large employers, such as Skilled Engineering. She mentioned the impact of freight and labour costs from Adelaide and the closure of the local TAFE's trade section. 18 Mrs Hocking highlighted a number of features of the Broken Hill community which impact on the local economy: i. a reduction in population from 37,000 to 20,000, ii. the heavy reliance by many people on Government benefits with more unemployment services, iii. the halving of mining employment since 1993 (800 - 400), iv. the downgrading of the local hospital, v. a fall in school student numbers and closure of all secondary Catholic schools, vi. the closure of many hotels and retail businesses, v. the end of the mines amenities schemes, sickness and pension schemes, vi. the closure of most churches, vii. annual events becoming biennial or ceasing altogether. 19 Mrs Hocking concluded with this statement: Unfortunately, now, the good times are behind us. We are currently struggling to retain local businesses, and employment levels and the union tells us we have to continue to pay higher wages and allowances. 20 In cross examination, Mrs Hocking agreed that she had never employed any tradesmen at the mine site. Mrs Hocking was asked about her knowledge of the Full Bench's decision in Re, Broken Hill Commerce and Industry Consent Award (No 2) [2002] NSWIRComm 309. She acknowledged that the Chamber's evidence in that case was described by the Commission as "very weak." Submissions 21 Both parties filed detailed and helpful submissions. The Chamber's submissions addressed firstly the history of this matter. 22 In May 2002 Pasminco sold its Broken Hill operations to Perilya Ltd. The sale process involved the retrenchment of all Pasminco employees, the hiring of a vastly reduced workforce and the negotiation and registration of a new enterprise agreement in April 2002. 23 Mr Edwards then referred to three decisions of the Commission in the context of the background to this application. 24 Firstly, in 1998 the Union had sought the same rate of pay for contractors on the mine site as the actual mine rate applicable to Pasminco's employees. (Notification under s.130 by Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch of a dispute with Fillery Antiwear Products & Sandblasting (unreported, Bishop C, IRC1294/98, 13 November 1998)) 25 Bishop, C dealt with the matter in 1998 and 1999 and concluded as follows: I am not prepared to grant the application as sought by the Union. That application was that contractors covered by the Broken Hill Commerce and Industry Award who go onto mine sites be paid, pursuant to clause 16 of that Award, the actual mine hourly rate of pay that would be applicable to a mine worker. I do this because history has changed over the last two or three years. Up to and including 1996, mine workers were paid in the traditional way receiving a weekly rate which was then reduced to an hourly rate that then had shift allowances, overtime and other penalties added to it. As a consequence of negotiations between Pasminco and the trades based unions and also Pasminco and the CFMEU covering the underground workers, a move has been made to twelve hour continuous shift system with an hourly rate that now includes a mine productivity incentive, a cashing out of averaged overtime for mine employees over the twelve month period, the combining of seven day continuous roster allowances and an averaging of the previous three shift allowance penalties. Also included have been adjustments for a total salary concept inclusive of payments for additional ordinary hours as a result of the continuous twelve hour process and a loading for public holidays when rostered on. In addition, negotiated arrangements for sickness, workers' compensation and productivity benefits paid as superannuation improvements have also been included. Clearly the hourly rate for a mine worker, be they an underground worker, above ground worker or a tradesman, now incorporates a whole host of payments that would not be attracted by a contract worker going out and working at the mine. 26 As a consequence of the Commissioner's decision, the 4.5 per cent loading for employees covered by the Award, when working on the mine lease was introduced. Mr Edwards submitted that this was the first time an attempt had been made to strike a rate that would apply to town contractors when they went on a mine lease. 27 The second decision in Notification under s130 by Broken Hill Chamber of Commerce Inc. of a dispute with Barrier Industrial Council re Broken Hill Commerce and Industry Consent Award [2002] NSWIRComm 89 followed a dispute lodged by the Chamber in February 2002 concerning the interpretation of clause 19.16 of the Award. The Commission as presently constituted concluded: In my view, the correct analysis of the contemporary position is no different to that which was resolved by Bishop C in 1998 and 1999. I respectfully concur with the Commissioner's soundly based conclusions. I see no reason to revisit or overturn the Commissioner's reasons or findings. Indeed, as I am being asked to interpret the same provision, I intend to apply the same principles to this matter. I reaffirm that the mineworkers' conditions of employment and the basis for such conditions have changed too dramatically such as to make it impossible for a comparable assessment to the rates and conditions under the Award. The Award clause should be interpreted and operate in the following manner: A 4.5per cent loading is applicable to the Award rates of pay. The rates of pay in the Award comprehend all "mine privileges"; save for the lead bonus, which will continue to be paid. It follows that employees under the Award shall receive shift penalties, and overtime rates according to the Hours of Work, Overtime and Shift provisions of the Award, not according to past practice or the former mineworkers' agreement. As my interpretation of the clause should make it abundantly clear as to what is to apply in the future, I do not consider it appropriate to vary the clause in the manner sought by the Broken Hill Chamber of Commerce. I am reluctant to do so for two reasons. Firstly, a new Consent Award was made recently by the Commission in Matter IRC 1503 of 2002, on 11 April 2002. Secondly, a first enterprise agreement binding the prospective buyer of the Broken Hill Mine, Peryilya Pty Ltd, and the Unions was ratified by the Commission on 19 April 2002. The parties to this dispute may well wish to review their present arrangements in light of the terms and conditions in the Perilya Broken Hill Mine Enterprise Agreement 2002. 28 In August 2002, the Union lodged a dispute, Notification under section 130 by the Construction, Forestry, Mining and Energy Union (New South Wales) of a dispute with the Broken Hill Chamber of Commerce and others re alleged breach of award [2003] NSWIRComm 250 concerning the continued payment of the lead bonus to the employees of contractors. In that matter, the Commission as presently constituted said: In my view, there is absolutely no ambiguity with the meaning of cl 19.16. Applying the plain, ordinary English meaning must result in a conclusion that if a mine privilege, ie. the lead bonus, is no longer paid to mine workers on the mine, it cannot be claimed to apply to Award employees working on the mine for contractors. This approach is entirely consistent with my interpretation of the same provision in similar circumstances in the 2002 decision. Like here, that condition (compulsory overtime) no longer applies to mine employees. It is relevant to the interpretation of cl 19.16 to have regard to the terms and conditions of another industrial instrument; namely the Perilya Broken Hill Mine Enterprise Agreement . This is so because the interpretation of cl 19.16 is wholly dependant on what " mine rate or wages and all mine privileges " are being paid to mine workers at the mine. Put another way, the terms and conditions of Award employees are to be considered in the context of what now applies to employees of Perilya. Another canon of award construction is to have regard to the intentions of the parties at the time the Award was made. I have already found that there is no ambiguity in the words used in cl 19.16. However, what is the practical result of what the Union proposes? Obviously, it would mean that an Award employee would receive a mineworker's benefit, which the mineworkers themselves no longer enjoy. This cannot be a fair or logical result; nor can it be what the parties intended when the provision was first introduced in the Award. Indeed, it would be an absurd and impractical outcome. It would give a meaning to the words that they are not fairly capable of bearing. At para 45 of the decision the Commission said: It is not unreasonable or unexpected for the chamber to seek to review the present arrangements in light of the significant change in mineworker conditions under the Perilya Agreement. 29 Acting upon the Commission's observations in both these later cases, Mr Edwards said that the present application was lodged after the Chamber's failed efforts to negotiate an agreed arrangement with the Union. 30 Mr Edwards referred to the powers of the Commission to vary an award pursuant to s17(3) and s10 of the Act. See Re Pastoral Industry (State) Award (2000) 104 IR 268, Storeworkers - IGA Distribution [2002] NSWIRComm 156. In particular, Mr Edwards relied on my comments at para 118 and 119 of Elura Mine Enterprise (Consent) Award 2001 [2003] NSWIRComm 218. 31 Mr Edwards submitted that there had been significant changes in employment conditions at the mine. This formed the basis for a review of the current arrangements for contract mine employees. He said that the current Perilya rates were now significantly less than when Bishop, C introduced the 4.5 per cent loading in 1998. Perilya Enterprise Agreement Award Surface $62728.90 $68620.00 32 Mr Edwards said that in 2003 Perilya had insisted on contract rates of $43.00 per hour. As a result he said that the return on labour costs for the normal 12-hour shift on weekdays was below acceptable margins for labour hire and was not worth the risk of employing. When the comparison was made for overtime payments in accordance with the Award it can be seen that the local contractor under the existing mine loading cannot sustain a profit if the work requires weekend shifts. Further, he put that the overtime i.e. Saturday and Sunday cannot be treated in isolation as the mine operates on a 24 hour 7 day a week cycle, 365 days of the year, with down days i.e. maintenance days falling as required irrespective of penalties. 33 The Chamber's submission on overtime detailed the history of double time for all overtime. Prior to 1998 this provision had applied to all employees under the Award. However, this was reduced to time and a half for the first two hours in 1998, except for work performed on the mine lease. This was because double time for all overtime remained for Pasminco's employees. The situation had now changed with the Perilya Agreement providing an "all up" rate calculated on a survey of NSW metalliferous mines which applied a calculation based on time and a half for the first two hours. The Chamber's application would have the practical effect of bringing overtime for contract employees on the mine site in line with other Award employees. 34 In a supplementary submission, Mr Edwards gave an example of two identical employees, working the same overtime on two identical pieces of equipment in the same workshop off the mine lease. Different rates of overtime would apply if one of the pieces of equipment was owned by the mine. This would create disagreement and disharmony within the workforce. 35 The Chamber argued that its application was clearly in the public interest. Mr Edwards relied on the relevant provisions of the Act s146(2) and s17(3)) and the authorities of O'Sullivan v Farrer (1989) 168 CLR 210, Re Queensland Electricity Commission & Ors; Ex parte Electrical Trades Union of Australia (1987) 21 IR 151 and Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd and others (1988) 78 ALR 466. 36 Mr Edwards said that the local industry consists of eighteen small businesses, employing over eighty employees. It was in the public interest to ensure the local industry remained competitive so that it could tender for work, unencumbered by penalties and allowances, that were inappropriate to the changed circumstances. 37 In its supplementary submission the Chamber accepted that the application raised Special Case considerations and that the onus rested with it to establish a proper evidentiary basis for the grant of the application. However, Mr Edwards noted that the application was confined to a small group of employees and employers operating only in Broken Hill. 38 Mr Edwards argued that the Chamber's application did not fall within the Economic Incapacity Principle. Therefore, this was not a case involving "very serious or extreme economic adversity." This was a case about undisputed changed circumstances. Fair and reasonable conditions no longer apply. Mr Edwards said that the Chamber has made a number of offers to phase out the mine loading - all of which have been rejected by the Union. However, this was an outcome available to the Commission if the Chamber's primary submission was rejected. 39 Turning to Mrs Hocking's evidence, Mr Edwards highlighted the impact of the changed circumstances on the employers and the community, which was not challenged in cross examination by the Union. Union's Submissions 40 Mr Bukarica put that the Chamber's application failed to meet the conditions precedent required by s17(3)(c) of the Act. In particular, he submitted that: 1. The present circumstances were not substantially different to the last time the matter was agitated before the Commission in 2002. There was no substantial reason for reopening the Commission's earlier findings. 2. The proposed variation entails a substantial and drastic reduction in employee entitlements which should not be undertaken lightly. 3. The Chamber's evidence was insufficient to meet the onus upon it. It has committed the same error as it did in Re Broken Hill Commerce and Industry Consent Award (No 2) in failing to bring first hand evidence. 4. The public interest requires a balancing of competing interests and rights. The application is so one sided as to be unjustified. 41 Mr Bukarica referred to the relevant State Wage Case Principles. He said that the Chamber had not made out a Special Case and the application should be refused. As to the economic evidence, the Union put that it was so inadequate as to provide no proper evidentiary basis such as to meet the requirements of a Special Case. 42 As to the merits of the application, Mr Bukarica said that the Chamber relied on the following matters: i. General evidence and submissions concerning the economic circumstances of contractor employers in Broken Hill; ii. changes in industrial arrangements at the principle mine site in Broken Hill; and iii. a particular reading of the decisions by Commissioner Bishop in matter IRC98/1294 and Deputy President Sams in [2002] NSWIRComm 89 43 The Union challenged the validity of the comparisons between the rates and conditions applying to Perilya employees and Award employees. The nature and basis of the two forms of employment were radically different, making such comparisons misleading and inaccurate. Three examples served to make this point: i. The Perilya roster is 5 days on and 5 days off (that is, an average of 44 hours per week). ii. The Perilya rate does not include non-rostered over-time. iii. Superannuation, annual leave, long service and other entitlements are paid in the basis of the "all-up" salary rate. 44 It its second submission, the Union pointed out that the Chamber's real concern was during weekend work or in periods of excessive overtime during the week. Mr Bukarica proposed a flat or percentage loading that would "even out" the differences. This proposal had been rejected by the Chamber. 45 Mr Bukarica addressed the proper meaning and effect of the Commission's earlier decisions and said: a) The decisions recognised the industrial practice in Broken Hill of requiring contractors coming on to mine sites to pay an allowance or supplement to their employees. The purpose of such payments was to bring contractor rates of pay closer to that of direct employees. b) As a result of fundamental changes in the employment structure of direct employees at the mine (starting first with the Pasminco ownership of the mine), it was no longer possible to directly equate rates between contractors and direct employees. Consequently, the Commission could only attempt to achieve equalisation in a broad-brush or general way. c) The Commission had recognised that notwithstanding the difficulties of achieving equalisation, the original purpose of the exercise should be borne in mind and that new developments or changes might justify a different approach to that currently in place. 46 The Union put that the application should not be granted without a proper consideration of alternative means of giving effect to the principle of equalisation. In its later submission, the Union noted that the Chamber's members could not even agree on the proposals advanced to settle the claim. 47 Mr Bukarica dealt with the Chamber's submission that this was not a case based on economic incapacity. He said that by so doing, the Chamber had effectively confirmed that their application was not about the economic survival of its member companies. Rather, the purpose of the application was to redistribute the profits of the industry. Either way, there was no direct evidence from any of the effected employers. The Chamber had been unable to address any of the public interest tests required by their claim. 48 Mr Bukarica submitted that Mrs Hocking's evidence was unhelpful and unreliable. She had sought to establish a causal connection between labour costs and a decrease in economic activity in Broken Hill. He said that industrial tribunals, as recently as the last National Wage Case, had cautioned against a ready acceptance of any proposition asserting a direct relationship between wage levels, employment and economic competitiveness. 49 Mr Bukarica put that the decision in Elura Mine Enterprise Consent Award was readily distinguished from the facts in this case in the following respects. 1) The decision concerned the rescission of an existing Award where a new owner was to assume control of the mine. 2) There was direct evidence from the outgoing and incoming employers. 3) The public interest imperative was the very survival of the Elura Mine. 4) Encouragement had been given to the possibility of a mutually agreed industrial instrument. In reply 50 Mr Edwards put that for the Union to argue that the circumstances were not substantially different than in 2002, was totally wrong and showed a complete lack of understanding and ignorance of the history of the matter. 51 Mr Edwards rejected the proposition that the Chamber's case lacked sufficient evidence. Mrs Hocking had direct involvement with the relevant employers and a long personal involvement with their financial circumstances. Her evidence was not to sustain an argument of economic incapacity, but rather to support an argument of substantially changed circumstances. In any event, the Full Bench's decision was not relevant as this case involved a small industry sector in which its circumstances were unchallenged. There was no greater evidentiary burden than in any other case. 52 Mr Edwards submitted that the earlier Commission decisions were intended to bring contractor rates closer to mine worker rates, but not to have contractors rates exceed mine rates - which is the current situation. Mr Edwards agreed that comparisons between the two groups was difficult. However, in the past eighteen months the Chamber and its members were in the best position to assess the practical effect of Perilya's purchase of the mine. Moreover, the examples cited by the Union were misleading and incorrect. 53 The Chamber rejected any suggestion that the Union had attempted to compromise a settlement of the matter. The Union's proposals retained the loading by another name. In addition, Mr Edwards put that the Union provided no alternative cost analysis to challenge the Chamber's calculations. CONSIDERATION Special Case Principle 54 The President has directed that the Commission as presently constituted is to deal with any Special Case aspects of this application. 55 The Special Case Principle has existed in its current form for many years: 10 Special Case Except for the flow on of test case provisions, any claims for increases in wages and salaries, or changes in conditions in awards, other than those allowances elsewhere in the principles, will be processed as a special case before a Full Bench of the Commission, unless otherwise allocated by the President. This principle does not apply to application for awards consented to by the parties, which will be dealt with in the terms of the Act, or to enterprise agreements, which will be dealt with in accordance with the Enterprise Arrangements principle. 56 In Public Hospital Nurses (State) Award [2002] NSWIRComm 100, the Full Bench said : There was no overarching submission by the Association about the principles relevant to its application. Nor was it entirely clear from the Association's submission which of the wage fixing principles was applicable in respect of each of the claims although, in most cases, the nature of the individual claim suggested which principle might be relevant. We have taken the view that in considering each of the claims by the Association we should test it against what we consider to be the relevant principle. In that respect we note that the most recent authoritative discussion on the nature of a special case was that by the Full Bench in Re Social and Community Services Employees (State) Award [2001] NSWIRComm 274 and by a subsequent Full Bench in Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331. In Re Social and Community Services Employees (State) Award the Full Bench said: As Mr Reitano for the Union argues, the present Special Case principle is not relevantly different from that found in the State Wage Case, May 1991 (1991) 36 IR 362 which was considered in Re Crown Employees (Administrative and Clerical Officers State) Award and Other Awards (No 2) (1993) 52 IR 243. In the latter decision the Full Commission held at 376 - 377: "In our view, the special cases section of the principles provides a mechanism whereby a claim for enhanced wages or conditions beyond those normally allowed under the principles may be brought before the Commission. The hearing of such a claim is to be conducted by the Full Commission (formerly the Commission in Court Session) thus emphasising the special nature of the case. It will be a matter for the Full Commission, after hearing the evidence and submissions, particularly relating to the matters relied on to take the case "out of the ordinary" and thus to make it "special", to decide whether the claim, in part or in whole, should succeed. Some of the cases brought under the special cases provision have relied, it is true, on the Work Value Changes principle, a principle which is not relied on here. But other cases, some of which have earlier been identified, have substantially been brought on the basis that developments in workplace reform of a structural efficiency kind, in which employees have participated or to which they have contributed, have been such as to justify wage increases beyond those normally allowable under the principles. On a number of occasions such applications have been approved by the Commission. In some of them the amounts of wage increase have been agreed by the parties but in others they have not, and the Commission has made an arbitrated decision in the matter. In our view the present application can fit comfortably into the class of case to which we have just referred, certainly so far as it seeks wage increases by way of award prescription … … We therefore find that the applicants are entitled to bring their case under the special cases provisions of the principles. That, of course, is not the end of the matter. The Full Commission must decide whether, on the whole of the material before it, and bearing well in mind the respondent's opposition, the claim should in whole or in part succeed, and, if so, what increase should be awarded and what conditions, if any, should be prescribed. But we repeat our view that, in accordance with the principles, it is entirely appropriate for this claim to be heard and for the Commission to grant the claim in whole or in part if considered justified on the merits. It is also entirely appropriate, if it is concluded that, in general, the claim should succeed, the Commission have regard to economic considerations, including the changing value of money over time, when deciding the amount of increase which should be awarded. Matters which may be considered in that regard are the date on which the last wage increase for employees in question took effect, and changes in money values which have occurred since that time or are forecast during the prescribed life of the award to be made." Further in Re Transport Industry (State) Award (1996) 95 IR 126 a Full Bench of the Commission observed at 130-131: "Mr. Warren submitted the Carpenters case principle is irrelevant to the determination of a special case; but the principles of wage fixation operate, in effect, as a code which provides all the principles of application. We are unable to accept this view. The approach adopted by the Full Commission in the Crown Employees case was that a case, if made out to be "special", may be determined according to its circumstances. That approach requires, in effect, that the Commission be satisfied that the case is not an ordinary one, but has special attributes which warrant its approval despite the restrictive considerations imposed generally by the principles of wage fixation. That does not mean that the Commission is precluded in an appropriate case, from deciding that an award should be made over the objection of a particular employer or group thereof. Indeed, a special case does not require consent at all." Thus it can be seen, as in our view Mr Reitano correctly submits, that strict compliance with the wage fixing principles generally or with the work value principle and structural efficiency considerations in particular is not required where as here a case is advanced as a special case. In saying that we should not be taken to mean that such considerations will necessarily be excluded from the special case. As much is clear from the Crown Employees case. It is however appropriate to observe, again as Mr Reitano submits, that the present Special Case principle unlike its 1990 predecessor does not require that cases be considered "in accordance with the structural efficiency and other relevant principles". It requires, as was said in the Transport Industry case, that special attributes exist which warrant approval by the Commission despite the restrictive considerations imposed generally by the principles of wage fixation and that is the essential basis upon which the Commission will approach the determination of the present application. … We are persuaded that this is a special case that warrants the granting if not in whole then in significant part, of the Union's claim. In that regard we note in addition to what has been observed earlier that a Full Bench of the Australian Industrial Relations Commission recently expressed a view as to what constitutes a special case within the meaning of the wage fixing principles. In Metal, Engineering and Associated Industries Award , 1998 - Part 1 (Print T4991, 29 December 2000) [(2000) 110 IR 247 at 266 - 267] the Full Bench said: "In our view, "special case", as used in Principle 10, is not a self defining term. The identification of a special case is reserved to a Full Bench level of determination. It is not necessary or desirable to attempt to paraphrase that requirement into a set of principles, or a code of considerations for general application. A case by case approach is necessary. The circumstances of the Award and the industry in which it operates are of fundamental importance in determining whether the requirement is satisfied. In this matter, the special case requirement entails that the AMWU has the task of satisfying the Commission that there are sufficiently compelling reasons for awarding, as minimum rate conditions to apply across the industries covered by the Award, the substantive changes that it seeks. Should the AMWU satisfy that requirement, it will, in our view, have made out a special case in the circumstances applying to the Award." At least for the purpose of these proceedings we do not consider the approach set out in that decision is materially different to the approaches laid down in the 1993 Crown Employees case and the 1996 Transport Industry case. Particular reference has, however, been made to the unique history of this award and we note in the recent Full Bench decision in Re Corrections Health Service Nurses' (State) Award (No 2) [2001] NSWIRComm 58 at [31], that one of the factors which led to the Full Bench determining a special case had been established was the history of industrial regulation of the relevant employees. After referring to the decision in the Social and Community Services Employees case and other decided cases, the Full Bench in Re Operational Ambulance Officers (State) Award stated: A number of principles may be distilled from these authorities bearing upon the contention advanced by the HAC. In order to make out a special case the applicant is required to make out that the variation is necessary to establish fair and reasonable conditions of employment and that the matter has special attributes. In doing so, the applicant is not required to meet a higher onus or standard of proof. The evidentiary requirements of a special case are no more strict than would apply in an ordinary matter, although the applicant to a special case will need to establish an adequate evidentiary foundation for those factors which are relied upon as showing the special case attributes of the case. Whilst respect will be afforded earlier decisions of the Commission or its predecessors, the conditions of employment earlier established need to be ultimately tested against the requirements of s 10 of the Act and that which we have discussed as being applicable to making out a special case. Where, as here, the former decision involved a test case, particular care should be taken to ensure that the factors relied upon by an applicant in support of its claim do not replicate factors which were taken into account by the Commission or its predecessors in establishing the general standard emerging from such case. In any event, the basis for and circumstances under which the conditions in the award were established will be significant considerations in the Commission's deliberations in order to assess whether the factors relied upon by the applicant in support of a special case have already been accommodated by the earlier made award (in which case the present prescription may adequately compensate for those factors). We respectfully agree with the observations of the Full Benches in the Social and Community Services Employees case and the Operational Ambulance case. We emphasise the need to "establish an adequate evidentiary foundation for those factors which are relied upon as showing the special case attributes of the case." Further, although there is no general requirement that a special case must, to succeed, satisfy other specific principles ( Employers First and NSW/ACT Independent Education Union [2002] NSWIRComm 113 at [8]) other principles may have relevance; for example, because of the way in which the case is advanced: see also the passages cited above from the decisions in the Social and Community Services Employees and Operational Ambulance cases. 57 I note that in the passages just cited it is recognised that other wage fixing principles might have relevance in a particular case. Nature of the Application 58 Of course, the application is correctly brought pursuant to s17(3)(c) of the Act which provides as follows: (3) An award may be varied or rescinded in any of the following circumstances only: (a) ... (b) ... (c) during its nominal term if the Commission considers that it is not contrary to the public interest to do so and that there is a substantial reason to do so. 59 This section plainly mandates two conditions which the Commission must consider when an application is made to vary an award during its nominal term and in the absence of consent. Firstly, that it would not be contrary to the public interest and secondly, there is a substantial reason to do so. I shall return to these statutory requirements in due course. 60 It must be stressed that in determining any application made under the Act, the Commission must not only have regard for the statutory requirements relevant to the particular section under which the application is made, but must also have regard for any relevant principle or principles under the State Wage Case Principles. 61 As Mr Bukarica submitted, (and Mr Edwards properly conceded), the Chamber's application must be considered under the Special Case Principle of the State Wage Case Principles. One could hardly imagine an application which more appropriately requires the application of the Special Case Principle than the one which the Chamber makes in this matter. It must be generally said that any contested application to vary an award which seeks to materially reduce the wages and/or conditions for employees, particularly those recently determined by the Commission, must attract Special Case considerations. This must also be so because of the presumption that when an award is made, whether by consent or otherwise, it must comply with s10 of the Act in "setting fair and reasonable conditions of employment for employees." 62 I hasten to add that these observations do not mean that the terms and conditions of a particular award are immutable from review having regard for changed circumstances. In this regard I refer to what I said in Elura Mine Enterprise (Consent) Award 2001 at paras 118 -119: On the other hand, the fact that an award is presumed to set fair and reasonable conditions for employees when it is made (my emphasis) cannot mean, that in all cases, fair and reasonable conditions will apply for the duration of the Award. That this must be so, is obvious from the ability to vary or rescind an award under s17 during its nominal term, subject to the tests outlined therein. Circumstances may well change - and dramatically so - such as to require a reassessment of whether the test of fair and reasonable conditions is still relevant or appropriate. These occasions will be rare, but that doesn't mean it won't be necessary from time to time for parties, by consent or otherwise, to rely on s17(3) of the Act to respond to changed circumstances. In this regard I refer to what was said by the Full Bench in Storeworkers at para 44: It may be also demonstrated that the conditions are no longer fair and reasonable having regard to changed circumstances, including changes in the respective positions or conduct of the parties, developments in a business, industry or the economy generally and changes in the factors which had underpinned the particular condition or conditions in question at the time of the making of an award. See also Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award 2004 [2003] NSWIRComm 405 in which reference was made to Iron and Steel Works Employees (Australian Iron and Steel Limited - Port Kembla) and other awards (1945) 44 AR 64 and in particular Kinsella , J's comments at p83. 63 That being said, let me make it pellucidly clear as to what I believe is the true nature of the Chamber's application. 64 It is difficult to imagine how this case could be characterised as anything other then a claim based on alleged economic incapacity to pay. Indeed, if the case was only concerned with demonstrating changed circumstances, as Mr Edwards maintained, (which I would have thought was self evident) then one must wonder why the application was brought in the first place. Nevertheless, it must be readily observed that, the Chamber's case is replete with claims of difficult economic circumstances for employers, the inability to compete and the generally poor economic climate in Broken Hill. Indeed, Mrs Hocking's evidence addresses little more than that. 65 It follows, in my view, that there can be absolutely no doubt that this application involves alleged economic incapacity, simpliciter. Any suggestion to the contrary is just nonsense and is rejected. In these circumstances, I am satisfied that Principle 15 of the State Wage Case Principles must also be a relevant consideration in this case. The principle is expressed thus: Economic Incapacity Any employer or group of employers bound by an award may apply to, temporarily or otherwise, reduce, postpone and/or phase in the application of any increase in labour costs determined under the principles on the ground of very serious or extreme economic adversity. The merit of such an application shall be determined in the light of the particular circumstances of each case and any material relating thereto shall be vigorously tested. Significant unemployment or other serious consequences for the employees and employers concerned are significant factors to be taken into account in assessing the merit of any application. Such an application shall be processed according to the Special Case principle. Any decision to temporarily reduce or postpone an increase will be subject to a further review, the date of which will be determined by the Commission at the time it decides any application under this principle. The Evidence 66 The Chamber's evidence in this case rested exclusively on a statement and oral evidence from Mrs Sharon Hocking, President of the Broken Hill Chamber of Commerce. 67 With due respect, Mrs Hocking not only does not employ any persons directly affected by the application, but her relevant experience is in a field which is far removed from contract mining. There was no evidence from persons directly involved with the contract companies who work on the mine site; let alone evidence to support the claim that these companies are either severely, or at all, economically disadvantaged in the present circumstances. 68 Mr Bukarica referred to the Full Bench comments in Broken Hill Commerce and Industry Consent Award (No2), where it was said that the evidentiary case advanced by the Chamber in that case was "very limited." While each case will stand or fall on its own evidentiary foundation, in my opinion, the applicant's evidence in this case was not only limited, but practically non existent. 69 The state of the evidence in these proceedings bears striking similarities to what was before the Full Bench in the case referred to above in which the Commission said: 28. Dealing initially with the economic incapacity argument, the evidence provided by the Chamber was very limited. This conclusion does not detract from the present serious economic circumstances facing the Broken Hill community. However, the evidence provided by the Chamber fell well short of demonstrating "very serious or extreme economic adversity" as required by the wage fixing principles. 29. ... 30. The Chamber relied on the evidence of Mr Fred Smith, Ms Hocking and Ms Wishart. Although the Chamber's witnesses provided a snapshot of the general troubled economic circumstances facing Broken Hill, there was no detailed or direct evidence to support the economic incapacity argument for employers affected by the application. In particular, there was no evidence from individual employers in the Broken Hill community regarding their financial position which demonstrated empirically that they were facing a "very serious or extreme economic adversity". The only business owner called by the Chamber was Ms Wishart. Given her business does not employ any staff, her evidence was of limited weight and significance. 70 Mr Edwards submitted however, that Mrs Hocking gave uncontested evidence which was not challenged by the Union. Indeed, he said, the Union brought no evidence in rebuttal. A number of observations need to be made about this submission. 71 Firstly, while the Commission is not bound by the strict rules of evidence (s162), this case imposes on the applicant the usual and ordinary evidentiary burden. See Operational Ambulance Officers (State) Award [2001] NSWIRComm 331. 72 Secondly, it is not enough to simply rely on generalised comments such as "I was informed by so and so 'or' told by many people" or "I believe this or that." Not only was this unhelpful, but Mrs Hocking didn't even identify who gave her the information. Moreover, no specific details were provided in respect to the individual circumstances of any of the affected employers. 73 Thirdly, it seems to me that the evidence of Mrs Hocking was accepted by the Union not for what it demonstrated, but for what it did not. In other words, my understanding of the Union's criticism was that Mrs Hocking's evidence was largely hearsay and opinion which, in the ordinary course, but must particularly in a case of economic incapacity, would be afforded very little weight. 74 Fifthly, even if the contractor employers are experiencing economic difficulties, it was impossible, in the absence of their direct evidence, to test whether other factors contributed to their plight. Put another way, the mere assertion that a 4.5 per cent loading and double time for all overtime are the sole or exclusive reasons for their economic circumstances, does not conclusively establish the basis for any claim of economic incapacity. Mr Bukarica's submission that contemporary industrial tribunals have expressed caution against a ready acceptance of a causal link between wage levels, employment and economic competitiveness, was well made. See Safety Net Review - Wages May 2004 (Print PR002004) at 229. 75 In that context, there is, much to commend Mr Bukarica's suggestion that if any employer can demonstrate a real hardship directly attributable to wages and conditions, then the Union would not be adverse to considering appropriate enterprise arrangements to assist an individual situation. 76 It is my assessment that Mrs Hocking's evidence was at best anecdotal and based largely on her own conclusions of what other people had told her. More importantly however, her evidence goes no where near satisfying the evidentiary burden which falls on the Chamber in justifying this application and in the words of the Full Bench, "fell well short of demonstrating very serious or extreme economic adversity as required by the wage fixing principles." 77 The finding I have just made would, in my view, be sufficient to conclude this matter - that is, by dismissing the application. However, for completeness, I find on the basis of the evidence earlier referred to, that the Chamber has not established a sufficient reason for approving the variation to the Award, nor would it be in the public interest to do so. 78 It is also necessary, I think, to disavow Mr Edwards' reliance on both Bishop C's decision and my own decisions in 2002 and 2003. In my view, this reliance was misplaced. Mr Edwards misunderstood the reasoning developed in these decisions. 79 On a proper reading of the Commissioner's decision the 4.5 per cent wage loading was in recognition of the difficulties of comparing mine rates and contractor rates. In other words, the 4.5per cent loading was awarded in direct recognition of the difficulties in comparing the different arrangements for mine workers and contractors. This proposition does not assist the Chamber in the present case. Indeed, it is rather ironic that on one hand, Mr Edwards relies on the Commissioner's decision, but on the other hand, seeks to rescind her conclusions. 80 In respect to my 2002 decision, Mr Edwards misunderstood what I there decided. Firstly, that decision was in respect to the interpretation of a particular provision in the Award, pursuant to s175 of the Act. Secondly, I found that there was no good reason to review Bishop C's decision and indeed, I emphasised that the 4.5 per cent loading should remain. Thirdly, the decision concerned an entitlement which the mine workers themselves no longer enjoyed. This situation is poles apart from seeking to remove a condition which mineworkers continue to enjoy - albeit as part of an "all up" annualised salary. 81 Mr Edwards emphasised and relied on the following passage of my decision: As the lead bonus no longer applies, it was not unreasonable or unexpected for the Chamber to seek to review the present arrangements in light of the significant change in mineworker conditions under the Perilya Agreement. 82 Two observations need to be made about this passage. Firstly, the extract does no more than predict what I expected the Chamber would do in light of changed circumstances at the mine. This application is a manifestation of that expectation. Importantly, the passage does not expressly, or implicitly, give any hint or encouragement that an application of the kind presently before the Commission, would succeed in the absence of a proper evidentiary case being made out. 83 In summary then, the correct meaning and effect of the Commission's earlier decisions established that the conditions and salaries of the two classes of employees are now so radically different as to make it virtually impossible to establish the comparators which Mr Edwards sought to make in this case. I concur with Mr Bukarica that these comparisons were both unrealistic and misleading. In my opinion, any attempt at equalisation is fraught with danger and, on the material presented here, was far too simplistic. In any event, I do not see any warrant for substantially reducing existing rates and conditions based on the paucity of the evidence of the economic circumstances of the relevant employers. 84 As to my decision in Elura Mine Enterprise (Consent) Award, I should say that the decision is clearly distinguishable from the facts and circumstances of this case. Direct evidence was adduced in those proceedings and the underlying theme of the decision was towards the very survival of the Elura mine - a matter of manifest public interest. These were two significant and decisive factors absent from this case. 85 For the aforementioned reasons, the Commission is satisfied that the onus on the applicant to establish a Special Case has not been made out. Accordingly, the application must be dismissed. The proceedings are concluded. Peter J. Sams AM Deputy President 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.