Industrial Relations Commission of New South Wales CITATION: Inquiry into the Boeing Dispute at Williamtown, Re [2006] NSWIRComm 52 BY LEAVE Australian Industry Group Australian Workers' Union Australian Workers' Union, New South Wales PARTIES: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union Boeing Australia Ltd Commonwealth Government Minister for Industrial Relations Unions NSW FILE NUMBER(S): IRC 5639 of 2005 CORAM: Walton J Vice-President; Boland J; Ritchie C Ministerial Reference - Reference by Minister for Industrial Relations pursuant to s 146(1)(d) of the Industrial Relations Act 1996 in relation to an industrial dispute concerning Boeing Australia Ltd and the FA 18 Hornet aircraft maintenance workers at Williamtown Air Force Base in New South Wales - Five terms of reference: (1) the status of the disputing parties at the Royal Australian Air Force Airbase at Williamtown, (2) the actual or potential economic impact of the dispute on the community surrounding the Royal Australian Air Force Airbase at Williamtown and the State as a whole, (3) if, as a consequence of the disputation between Boeing Australia Ltd and its FA-18 Hornet aircraft maintenance workers and their union, the Australian Workers Union, there has been any endangerment or likely endangerment to the health and safety of the workers and/or the community surrounding the Royal Australian Air Force Airbase at Williamtown, (4) the adequacy of currently available remedies to encourage the parties to the dispute to resolve the dispute promptly, effectively and fairly, and (5) if there are any actions that the Industrial Relations Commission of New South Wales can take in order to assist the parties to the dispute to resolve the dispute - Full Bench constituted to inquire and report - Report provided to Minister - Conclusions reached in respect of each term of reference - Recommended that: (1) the WorkCover Authority fulfil its statutory duty by undertaking a full and proper investigation as to whether the use by Boeing of inexperienced personnel during the current strike action has led to any breach of the provisions of section 8 or any other section of the Occupational Health and Safety Act 2000, (2) the Minister give serious and urgent consideration as to whether he ought, under section 167(1) of the Industrial Relations Act 1996, initiate proceedings in the Industrial Relations Commission of New South Wales in respect of the Boeing dispute at Williamtown, and (3) in the event the Minister indicates an intention to initiate proceedings under s 167(1) of the Industrial Relations Act 1996, or any other interest lodges a dispute notification, steps be taken immediately to have the striking employees return to work at the earliest opportunity CATCHWORDS: Industrial dispute - Ministerial Reference - Reference by Minister for Industrial Relations pursuant to s 146(1)(d) of the Industrial Relations Act 1996 in relation to an industrial dispute concerning Boeing Australia Ltd and the FA 18 Hornet aircraft maintenance workers at Williamtown Air Force Base in New South Wales - Five terms of reference: (1) the status of the disputing parties at the Royal Australian Air Force Airbase at Williamtown, (2) the actual or potential economic impact of the dispute on the community surrounding the Royal Australian Air Force Airbase at Williamtown and the State as a whole, (3) if, as a consequence of the disputation between Boeing Australia Ltd and its FA-18 Hornet aircraft maintenance workers and their union, the Australian Workers Union, there has been any endangerment or likely endangerment to the health and safety of the workers and/or the community surrounding the Royal Australian Air Force Airbase at Williamtown, (4) the adequacy of currently available remedies to encourage the parties to the dispute to resolve the dispute promptly, effectively and fairly, and (5) if there are any actions that the Industrial Relations Commission of New South Wales can take in order to assist the parties to the dispute to resolve the dispute - Full Bench constituted to inquire and report - Report provided to Minister - Conclusions reached in respect of each term of reference - Recommended that: (1) the WorkCover Authority fulfil its statutory duty by undertaking a full and proper investigation as to whether the use by Boeing of inexperienced personnel during the current strike action has led to any breach of the provisions of section 8 or any other section of the Occupational Health and Safety Act 2000, (2) the Minister give serious and urgent consideration as to whether he ought, under section 167(1) of the Industrial Relations Act 1996, initiate proceedings in the Industrial Relations Commission of New South Wales in respect of the Boeing dispute at Williamtown, and (3) in the event the Minister indicates an intention to initiate proceedings under s 167(1) of the Industrial Relations Act 1996, or any other interest lodges a dispute notification, steps be taken immediately to have the striking employees return to work at the earliest opportunity Industrial Relations Act 1996 LEGISLATION CITED: Occupational Health and Safety Act 2000 Workplace Relations Act 1996 (Cth) Federated Ironworkers Association, NSW Division v Transport Workers Union of Australia, NSW Branch (1998) 78 IR 123 FMWU v CSR (1971) 18 FLR 386 Kingmill Australia Pty Ltd v Federated Clerks Union of Australia (NSW Branch) (2001) 106 IR 217 Maritime Union of Australia Ex parte CSL Pacific Shipping Inc., Re (2003) 214 CLR 397 CASES CITED: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 R v Neil (1976) 134 CLR 27 R v Watson Ex parte AWU (1972) 128 CLR 95 Short v F W Hercus Pty Ltd (1993) 40 FCR 511 Zoological Parks Board of New South Wales v Australian Workers Union (2004) 135 IR 56 HEARING DATES: 16/11/2005; 24/11/2005; 28/11/2005; 29/11/2005; 30/11/2005; 02/12/2005; 13/12/2005; 14/12/2005; 15/12/2005; 16/12/2005; 12/01/2006; 13/01/2006; 24/01/2006; 25/01/2006; 30/01/2006 DATE OF JUDGMENT: 02/17/2006 COUNSEL ASSISTING Mr M Einfeld, QC with Mr A Hatcher of counsel Ms K Kerr Solicitor Assisting the Inquiry MINISTER FOR INDUSTRIAL RELATIONS Mr R Kenzie, QC with Mr P Ginters of counsel Solicitor: Mr G Boyd Crown Solicitors Office BOEING AUSTRALIA LTD Mr R Buchanan, QC with Mr I Neil of counsel Solicitor: Mr D Williams Minter Ellison AUSTRALIAN WORKERS' UNION AUSTRALIAN WORKERS' UNION NSW BRANCH Ms C Howell of counsel LEGAL REPRESENTATIVES: Solicitor: Ms L Doust Maurice Blackburn Cashman AUSTRALIAN INDUSTRY GROUP Solicitor: Ms P Flynn Cutler Hughes & Harris UNIONS NSW Mr M Lennon - Assistant Secretary Ms A Hughes - Industrial Officer AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Mr A Neilson - Industrial Research Officer COMMONWEALTH GOVERNMENT Mr P Hastings, QC Solicitor: Mr T Glover Australian Government Solicitors JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM: Walton J, Vice President Boland J Ritchie C Friday 17 February 2006 Matter No. IRC 5639 of 2005 INQUIRY INTO THE BOEING DISPUTE AT WILLIAMTOWN Reference by the Minister for Industrial Relations pursuant to section 146(1)(d) of the Industrial Relations Act 1996 (NSW) REPORT TO THE MINISTER Table of Contents SECTION A: INTRODUCTION The Terms of Reference Conduct of the Proceedings SECTION B: BACKGROUND FACTS AND HISTORY OF THE DISPUTE Boeing in Australia Industrial Relations Arrangements in the Boeing Group Boeing's Activities at Williamtown Initial Boeing Industrial Relations Arrangements at Williamtown Introduction of Common Law Contracts and the TRP Origins of the Current Industrial Dispute Emergence of Other Issues Advent of the AWU Initial Activity by the AWU AWU's Application to the NSW Commission Initiation of the Bargaining Period Commencement of Industrial Action The Focus Group Process and Offers of Revised Contracts The Strike Further AIRC Proceedings The Current Position SECTION C: TERM OF REFERENCE 1 The Status of the Disputing Parties Who are the disputing parties? "Status" Issues in Dispute Position of the Striking Employees The Position of the AWU The Position of Boeing Current Prospects for Resolution of the Dispute by the Parties SECTION D: TERM OF REFERENCE 2 The actual or potential economic impact of the dispute on the community surrounding the Royal Australian Air Force Air Base at Williamtown and the State as a whole. Interpretation The evidence Conclusions as to Economic Effects SECTION E: TERM OF REFERENCE Has there has been any actual or likely endangerment to the health and safety of the workers and/or the community surrounding the Royal Australian Air Force Airbase at Williamtown? Interpretation Workplace Safety Potential for increased incidence of injury Reported injury levels Safety of the Community SECTION F: TERM OF REFERENCE 4 The Adequacy of Currently Available Remedies to Resolve the Dispute Scope of the Term of Reference Workplace Relations Act 1996 – the Statutory Scheme Adequacy of Available Remedies under the Workplace Relations Act 1996 Industrial Relations Act 1996 – the Statutory Scheme Availability of Remedies under the Industrial Relations Act 1996 Is there a federal award applicable at Williamtown? Possible Effect of Section 170MT(2) of the Workplace Relations Act 1996 Adequacy of Remedies under the Industrial Relations Act 1996 Other Remedies SECTION G: TERM OF REFERENCE 5 Actions that this Commission Can Take SECTION H: CONCLUSIONS AND RECOMMENDATIONS Term of Reference 1 Term of Reference 2 Term of Reference 3 Term of Reference 4 Term of Reference 5 APPENDIX '1' - Procedures Protocol APPENDIX '2' - List of Witnesses APPENDIX '3' - List of Exhibits APPENDIX '4' - Submissions on award coverage issue by Counsel Assisting APPENDIX '5' - A short supplementary note supplied by Counsel Assisting APPENDIX '6' - Submissions by AIG on award coverage issue INQUIRY INTO THE BOEING DISPUTE AT WILLIAMTOWN SECTION A: INTRODUCTION The Terms of Reference 1. On 4 November 2005, the Minister for Industrial Relations ("the Minister") referred to the Industrial Relations Commission of New South Wales ("the Commission"), pursuant to section 146(1)(d) of the Industrial Relations Act 1996 (NSW), a Reference in the following terms: Pursuant to s.146(1)(d) of the Industrial Relations Act 1996, the Minister for Industrial Relations hereby refers to the Industrial Relations Commission of New South Wales the following terms of reference in relation to the industrial dispute concerning Boeing Australia Ltd and the FA-18 Hornet aircraft maintenance workers at Williamtown Air Force Base in New South Wales ("the dispute") for inquiry and report: (1) the status of the disputing parties at the Royal Australian Air Force Airbase at Williamtown; (2) the actual or potential economic impact of the dispute on the community surrounding the Royal Australian Air Force Airbase at Williamtown and the State as a whole; (3) if, as a consequence of the disputation between Boeing Australia Ltd and its FA-18 Hornet aircraft maintenance workers and their union, the Australian Workers Union, there has been any endangerment or likely endangerment to the health and safety of the workers and/or the community surrounding the Royal Australian Air Force Airbase at Williamtown; (4) the adequacy of currently available remedies to encourage the parties to the dispute to resolve the dispute promptly, effectively and fairly; and (5) if there are any actions that the Industrial Relations Commission of New South Wales can take in order to assist the parties to the dispute to resolve the dispute. Conduct of the Proceedings 2. Public notices setting out the Terms of Reference and inviting interested parties to appear in the Inquiry proceedings were published in the Sydney Morning Herald on 14 and 15 November 2005, and the Newcastle Herald on 15 November 2005. 3. The hearing of the Inquiry commenced on 16 November 2005. On that occasion the Full Bench issued a Statement in which the Commission granted expedition for the hearing of the Inquiry. The subsequent dates for hearing were 24, 25, 28, 29 and 30 November 2005, 2, 13, 14, 15, and 16 December 2005, and 12, 13, 24, 25 and 30 January 2006. 4. The following persons and organisations sought and were granted leave on 16 November 2005 to appear before the Inquiry: The Minister Boeing Australia Limited ("Boeing") Australian Workers Union, registered under the Workplace Relations Act 1996 (Cth), and Australian Workers Union, New South Wales, registered under the Industrial Relations Act (collectively referred to as "the AWU"). 5. On 24 November, the following organisations sought and were granted leave before the Inquiry: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch ("AMWU") Newcastle Trades Hall Council Unions NSW. 6. The parties granted leave to appear took varying roles during the course of the Inquiry. In particular: (a) The AWU assisted by providing witness statements to the Office of the Inquiry, co-operated in producing documents pursuant to a summons to produce, cross-examined a number of witnesses, and made extensive written and oral submissions. (b) Boeing did not provide any witness statements (although requested to do so by the Office of the Inquiry), and chose not to cross-examine any witness. It did make written and oral submissions at the close of the Inquiry, and co-operated in the production of documents pursuant to two extensive summonses for production served upon it. (c) The Minister took a very limited role in the proceedings, largely confined to the making of written and oral submissions about the proper interpretation of the Terms of Reference (although the Minister did make some limited submissions about some other matters, notably an issue which arose during the proceedings as to whether employees at Boeing's Williamtown site were covered by a federal award). (d) The National Secretary of the AMWU, Mr Doug Cameron provided an extensive statement to the Inquiry (later supplemented) that provided helpful background information and addressed a range of issues relevant to the Inquiry. Mr Cameron also provided oral evidence to the Inquiry. 7. On 13 December 2005, the Commonwealth of Australia sought and was granted leave to appear for the limited purpose of being heard as to any issues of "public interest immunity" which might arise because Boeing's operation at Williamtown concerned RAAF front-line defence aircraft and therefore may have had national security implications. On 12 January 2006, the Australian Industry Group ("the AIG") sought and was granted leave to appear to make submissions in relation to the federal award coverage referred to above. 8. On 18 November 2005, a "Procedures Protocol" (Appendix 1) was adopted setting out the procedures applicable to the conduct and hearing of the Inquiry. 9. During the course of the Inquiry proceedings, the Commission heard evidence from a number of witnesses, and had placed before it a large number of documents. Appendix 2 hereto identifies the witnesses who gave evidence before the Inquiry. Appendix 3 hereto sets out those documents marked as exhibits during the Inquiry proceedings. 10. The Commission expresses its appreciation to Counsel Assisting the Inquiry, Mr Martin Einfeld QC and Mr Adam Hatcher of counsel, to Ms Kathleen Kerr, solicitor, and to the staff of the Inquiry. Counsel Assisting carried out their tasks with great efficiency, professionalism and courtesy in circumstances of limited resources and limited assistance from one of the main protagonists. The fact that the Inquiry, with such wide-ranging terms of reference, could be completed in less than three months owes much to the extraordinary effort of Counsel Assisting. SECTION B: BACKGROUND FACTS AND HISTORY OF THE DISPUTE 11. In order that the Terms of Reference may be properly considered and addressed, it is necessary to explain in some detail the background to the dispute and the history of its development. Boeing in Australia 12. Boeing is one of a number of related companies in Australia which are wholly owned by Boeing Australia Holdings Proprietary Limited ("Boeing Holdings") – a company which itself is wholly owned by the parent Boeing company in the United States, The Boeing Company Inc. The companies owned by Boeing Holdings include Hawker de Havilland Aerospace Pty Limited and Aerospace Technologies of Australia Limited. 13. Most of the businesses falling within the Boeing group of companies in Australia were acquired in the last decade. Boeing itself was formerly Rockwell Australia Limited, and was acquired in 1996 when Rockwell International sold its aerospace and defence businesses to The Boeing Company. The name change to Boeing occurred at the time of this acquisition. 14. Aerospace Technologies of Australia Limited had its origins in the Department of Aircraft Production (subsequently re-named the Government Aircraft Factories), established in 1939 by the Commonwealth Government to manufacture military aircraft for the RAAF. Over the following decades, the Government Aircraft Factories manufactured a wide range of well-known military aircraft, including the Beaufort Bomber, Beaufighter, Avro Lincoln, Canberra Bomber, and the Mirage. The Government Aircraft Factories also assembled the F/A-18 Hornets (which form part of the current RAAF fleet) in the 1980s. In 1985, the Government Aircraft Factories were "corporatised" and became Aerospace Technologies of Australia Limited. This company was fully "privatised" in 1995, with Rockwell Systems Australia (as Rockwell Australia Limited was then known) purchasing 100% of its shares, and consequently became part of the Boeing group in 1996 when Rockwell's aerospace and defence businesses were purchased by The Boeing Company Inc. One part of the business of Aerospace Technologies of Australia Limited known as ASTA Components was merged with the Hawker de Havilland business in late 2000. 15. Hawker de Havilland Aerospace Pty Limited wholly owns Hawker de Havilland Holdings Pty Limited, which in turns wholly owns Hawker de Havilland Pty Limited. Boeing acquired the Hawker de Havilland businesses in 2000. Hawker de Havilland has had a long history in Australia in the manufacture and repair of both civil and military aircraft. In 1995 Hawker de Havilland acquired the Commonwealth Aircraft Corporation, which itself had since 1936 been involved in the manufacture, repair and overhaul of civil and military aircraft. In the 1980s, both Hawker de Havilland and the Commonwealth Aircraft Corporation had involvement in the production of F/A-18 Hornet aircraft in Australia. 16. The Boeing group of companies currently operates at more than twenty locations in Australia and employs about 3,300 people. The current structure of the Boeing group of companies in Australia, whereby Boeing Holdings acts as the holding company, occurred as a result of the consolidation of The Boeing Company's interests in Australia in 2003. 17. The current business of Boeing is the provision of aerospace and communications services, primarily for the Australian Defence Force. Boeing is divided into two business units: Network Enabled Systems and Aerospace Support. The Network Enabled Systems unit operates and supports command, control, communications and surveillance systems at a number of locations around Australia. 18. Aerospace Support is itself divided into three divisions: Military Aerospace Support, Commercial Aircraft Services and Product Support. It is apparent that Military Aerospace Support is the predominant division in terms of the extent of the business activities of Aerospace Support. It employs almost 1,000 people, and conducts six major programs at five sites across Australia. These sites and programs are: (a) Amberley, Queensland: the F-111 and 707 tanker programs. (b) Oakey, Queensland: army helicopter maintenance. (c) Williamtown, New South Wales: the F/A-18 program. (d) Fishermans Bend, Victoria: the DSTO engineering support project. (e) Jervis Bay, New South Wales: the Kalkara project. 19. Commercial Aircraft Support's activities are confined to the provision, predominantly by tertiary-qualified engineers, of engineering and maintenance planning services. These professional engineers do not perform work on aircraft. Product Support provides integrated logistic support, including logistic support analysis, publications, development, and training. Both these divisions carry out their activities largely at Boeing's head office in Brisbane. 20. Boeing's Amberley F-111 operation had its genesis in an avionics upgrade program which was carried out by Rockwell Australia Limited, under a contract which Rockwell International had won in the United States and which Boeing inherited upon purchasing the Rockwell aerospace and defence businesses. Subsequently, in 1999, the RAAF put out to tender its heavy maintenance and through-life support activities for the F-111, which work it had previously performed itself. Boeing won the contract and commenced work under it in 2000. 21. Boeing's Williamtown operation first commenced in 2000, when it won a contract to carry out the Hornet Upgrade Program. Boeing moved into a hangar facility (known as Hangar 11) previously used by the RAAF to perform this work. However, Boeing was not the first business to perform maintenance work on the F/A-18 Hornets for the RAAF. During the 1990s, at least one other business, Hunter Aerospace, performed work of this nature, and during the 1990s it occupied the hangar which Boeing now uses. 22. The F/A-18 Hornet is a single or two-seat, twin engine, multi-mission fighter/attack aircraft. It is designed for both air-to-air and air to ground missions and is capable of filling a variety of roles. It is widely regarded as one of the most potent fighter and accurate strike attack aircraft in the world. 23. The key personnel of Boeing with responsibilities pertinent to the management of the Williamtown site are: (a) Mr David Gray, Boeing's Managing Director; (b) Mr Colin Giles, Manager, Aerospace Support; (c) Mr Anthony Trew, Manager, Military Aerospace Support; (d) Mr Mark Brownsey, National Human Resources Manager, Aerospace Support; (e) Mr Peter Best, Operations Manager, Military Aerospace Support; (f) Mr Stephen Parker, F/A-18 Hornet Project Manager, Williamtown. Industrial Relations Arrangements in the Boeing Group 24. Industrial relations arrangements vary as between different sites operated by the companies in the Boeing group in Australia. In respect of Hawker de Havilland, it has operations in Victoria and New South Wales which are covered by a federal award, the Aerospace Industry (Hawker de Havilland) Award 1998. In addition, the former ASTA Components part of the business of Aerospace Technologies of Australia Limited which was merged with Hawker de Havilland in 2000 is treated as still being covered by the federal Aerospace Technologies of Australia Limited Award 1998. Overlying these awards are three current collective agreements which Hawker de Havilland entities have negotiated with various unions and which have been certified by the Australian Industrial Relations Commission under the provisions of the Workplace Relations Act 1996 (Cth): (a) The Hawker de Havilland Aerospace Pty Ltd (Port Melbourne) Certified Agreement 2004. The parties to this agreement are Hawker de Havilland Aerospace Pty Ltd, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union ("AMWU"), the National Union of Workers ("NUW"), and the Association of Professional Engineers, Scientists and Managers of Australia ("APESMA"). (b) The Hawker de Havilland (Bankstown) Certified Agreement 2003 . The parties are Hawker de Havilland Pty Limited, the AMWU, the AWU, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ("CEPU"), and the Australian Services Union ("ASU"). (c) The Hawker de Havilland Aerospace Pty Ltd ACN 103 165 466 ('HdH') US Export Compliance Certified Agreement 2005 , the parties to which are Hawker de Havilland Aerospace Pty Ltd, the AMWU, the AWU and the CEPU. 25. Aerospace Technologies of Australia Limited is covered by a federal award, the Aerospace Technologies of Australia Limited Award 1998 [AW767847]. In addition, it is party to two collective agreements certified under the Workplace Relations Act: (a) The ASTA DSTO Certified Agreement 2004 . The union parties are the AMWU and the APESMA. (This agreement appears to relate to the DSTO project in the Military Aerospace Support division of Boeing, but Boeing is not the actual employing entity). (b) The Aerospace Technologies of Australia Limited Redundancy Agreement 2002 , to which the union parties are the AMWU, the NUW and the APESMA. 26. Boeing itself is party to at least one collective agreement certified under the Workplace Relations Act, the NCS HEH Agreement 2003. The other parties to this agreement are LeBlanc Communications Australia Pty Ltd and the AMWU. This agreement applies at the Naval Communication Station Harold E Holt at Exmouth in Western Australia – and so, presumably, applies to a business operation conducted by the Network Enabled Systems unit of Boeing. We note in passing that the Boeing Company Inc. has collective agreements with employees and their unions in the US. 27. There is also an agreement in evidence certified under the Workplace Relations Act entitled the Boeing Constructors Certified Agreement 2002. The evidence does not make clear if and how the employer party to that agreement, Boeing Constructors Incorporated, relates to the Boeing group of companies discussed earlier. 28. No collective agreement has been identified as applying to any employees of Boeing in the Military Aerospace Support division – in particular at Williamtown. Whether and which (if any) award applied at the Williamtown site was a matter of debate for us which we address below. 29. In the Military Aerospace Support division, a policy has historically applied of dealing with employees on an individual basis in relation to their terms and conditions of employment. The evidence did not disclose the precise origins of that policy. However, it is clear that even prior to the purchase of the Rockwell businesses in 1996, the company which is now Boeing had its employees at Amberley engaged on individual contracts. The policy was consistently applied at an early stage at Amberley. For example, Hawker de Havilland had previously held a sub-contract to perform trades work there, and a collective agreement had applied to that work. However, when Boeing subsequently (whether before 1996 in its previous guise as Rockwell or after is not clear) bought out this contract, and took over the employment of the workers (about 40 in number) formerly employed by Hawker de Havilland, Boeing (according to Mr Trew) "sat with those people and worked with them through a similar process", with the result that the employees all agreed to enter into individual contracts. 30. Boeing's policy of dealing with employees on an individual basis is fundamental to the current dispute, as we discuss later. Boeing's Activities at Williamtown 31. Boeing's operation at Williamtown is located on the premises of the RAAF Base at that location, inside the RAAF secure perimeter. The actual work on the F/A-18 Hornets is conducted in Hangar 11, which Boeing leases from the RAAF. Boeing's management and support staff are located in demountable offices at each end of the hangar. 32. The hangar permits eight aircraft to be worked upon at any one time. There are eight bays in the interior of the hangar, arranged in two rows of four with a walkway running between them down the centre of the hangar. Each bay may contain one F/A-18 Hornet aircraft and the ground support equipment needed to perform upon it. 33. Boeing performs both modifications and deep maintenance upon the F/A-18 Hornets. The modifications are carried out as part of the Hornet Upgrade Program, under which upgrade modules purchased by the RAAF are incorporated into each of the F/A-18 Hornets according to a schedule agreed to with the RAAF. This program is being carried out in a number of phases, with work on Phase 2.2 having commenced in late 2005. Deep maintenance is maintenance on the aircraft of a significant nature which cannot be performed by the RAAF and requires the aircraft to be taken "off-line". Deep maintenance is sometimes carried out simultaneously with the incorporation of an upgrade module. 34. The employees at Williamtown who perform the actual work of maintaining and upgrading the F/A-18 Hornets fall within that part of Boeing's workforce known as the "Operations Stream". These employees have, since 2004, been organised into four work teams, each of which is headed by a Team Leader. Each team is responsible for two of the eight work bays within Hangar 11. 35. The majority of the workforce at Williamtown are qualified tradespersons, who each fall within one of three trades areas: avionics, structures and mechanical. These employees are graded as either "A Stamp", "B Stamp" or "C Stamp". The A Stamp is the highest grading, being certified to supervise all other employees and sign off that work has been satisfactorily completed. B Stamps are trades supervisors, and C Stamps are trade-qualified personnel. Graded below the A, B and C Stamps are Aircraft Workers, who may or may not be trade qualified, and trades assistants. There is in addition a small, specialised group of Non-Destructive Testers. 36. Boeing also makes use of supplementary staff engaged through labour hire businesses. The labour hire business currently used by Boeing is Bermil Pty Ltd. Initial Boeing Industrial Relations Arrangements at Williamtown 37. After Boeing commenced its Williamtown operation in 2000, its trades employees were, until 2002, required on engagement to enter into Australian Workplace Agreements ("AWAs") under the Workplace Relations Act. None of the Boeing management witnesses called to give evidence knew or could recall why Boeing chose to use AWAs, instead of individual contracts, at Williamtown. However, Mr Trew made it clear that the decision to use AWAs was based on the success, so far as Boeing was concerned, of the individual contracts used at Amberley. 38. A sample AWA, entered into in March 2001, was placed into evidence. It had the following relevant features: (a) For an "Avionics Tradesperson Level 1" it provided for a nominated fortnightly base payment, plus superannuation, but inclusive of annual leave loading. This remuneration rate was stated to be "a confidential matter between the employer and the employee" (cl.4). (b) Remuneration would be periodically reviewed in accordance with "employer policy", and any increase would take "quality of job performance" into account (cl.5). (c) The employee was required to understand and act in accordance with the employer's policies, as issued from time to time, that applied to the employment relationship. Where the policies amounted to a benefit to employees, they did not form part of the contract of employment unless expressly specified. Boeing was able to change the policies and their contents at its discretion (cl.6). (d) It was a condition of employment that to be entitled to payment under the agreement, the employee had to be available to perform such work as the employer lawfully required, including working shift work, Saturday or Sunday work and undertaking training programs (cl.6). (e) Normal hours of work were to be 160 hours per 4-week cycle. Hours worked in addition to 160 in a 4 week cycle were to be treated as overtime, and paid at the rate of time-and-a-half for the first 20 hours and double time thereafter (cl.8). 39. It is apparent that these AWAs did not have as a feature the "Total Remuneration Package" ("TRP") concept which was later to become the subject of controversy. Instead, it was based on a traditional hours and overtime structure – albeit with a 40 rather than the standard 38 hour week, and with the flexibility of overtime being calculated over a four-week period rather than weekly. However, remuneration levels were clearly adjusted having regard to individual work performance from the commencement of the Williamtown operation. 40. Documents received into evidence [Exs 88 and 89] suggest that there was a degree of employee dissatisfaction with these employment arrangements as early as October 2001. Exhibit 88, which is a Boeing document headed "Performance Review Process Information Session – Questions" and is dated 24-25 October 2001, appears to contain a series of issues raised by Williamtown employees and the answers provided by Boeing management. These issues reveal that various employees had concerns about individualised performance reviews (with a question being asked as to why across the board pay rises could not be introduced), overlaps in salary between the various Stamp classifications (with Boeing conceding that it was possible for a B Stamp to be paid more than an A Stamp), and a lack of responsiveness on the part of Boeing management (with one question stating that "The shopfloor employees feel everything is being pushed aside"). Boeing in this document explicitly recognised that "a number of employees are unhappy" and that "There is an issue of how the company responds to such issues and it does not always do this well". 41. In answer to the question "Is Boeing paying above award wages?" the recorded reply was: The answer to this question depends on which award is used for comparison. Certainly if the NSW or federal Metals award is used BAL is paying more than the award rates for the relevant classifications. This answer expresses a lack of certainty on Boeing's part as to which award applied to its Williamtown operation – which lack of certainty continued, as will be seen, into at least early 2005. 42. Exhibit 89, which is headed "Questions from Williamtown Information Session – 13 & 14 November 2001" is in a similar format to exhibit 88, being apparently a series of issues raised by employees to which Boeing management responds. It is evident that by the time of this information session, Boeing had proposed that employees enter into new individual common law contracts under which employees would be paid a total salary in lieu of a wages and overtime remuneration structure. Boeing identified the advantages to it of a system "having employees on similar conditions of employment" as follows: * It is equitable and fair to all * It enables a smoother transfer of staff between sites * It promotes a consistent approach to the management of employees * It enables individuals and manager to come to suitable arrangements for their work patterns * It provides incentive for employees to contribute to the success of the business * It promotes the convergence of individual and organisational objectives. 43. Boeing explained the reasoning behind its original decision to implement AWAs at Williamtown in the following terms: At the time of commencement of the HUG contract AWAs were thought to be the most appropriate contract for employees. This was because of the decision to pay a wage, instead of a salary and because it was consistent with what was happening in organisations such as BAE Systems. The company now believes these reason [sic] are no longer valid and it is more important to move to a common approach across the organisation. It must be observed that, on its face, and leaving aside the reference to BAE Systems, this explanation is less than clear. There is no reason given as to why, from the outset, a wages and overtime system could not have been implemented by way of common law contracts, or, conversely, why a salary system could not have been implemented by way of AWAs (unless it was thought that the proposed salary system was incapable of complying with the requirements for approval of AWAs under the Workplace Relations Act , including the "no disadvantage" requirement established by section 170VPB). 44. Exhibit 89 also shows that there was some consideration at this time given to union involvement and a collective agreement. The first question in the document was "Do you think Union involvement is a bad thing?" to which Boeing's answer was: Union involvement may or may not be a bad thing. However it is also fair to say that unions are organisations in their own right, with their own organisational priorities and objectives. These do not always correspond to those of employers or the employees working for those employers . A further question was " Is there a flat rate for each trade level under a collective agreement? " to which the answer was: Most collective agreements specify a single rate for each classification in the agreement. There are very few which have a range within which people are paid. 45. The inferences which might be drawn from these answers (as well as Exhibit 89 as a whole) are, firstly, that at least some employees had some level of interest in union involvement and a collective agreement; and secondly, that Boeing expressed a moderate predisposition against both of these. Notwithstanding this, it is significant that Boeing acknowledged that it was possible for a collective agreement to accommodate a system in which employees could be paid within a range of pay rates – thus permitting individual performance to be rewarded. Introduction of Common Law Contracts and the TRP 46. Despite the fact that Exhibit 89 stated that individual common law contracts would be offered to employees not later than the end of March 2002, it appears from the evidence that the contracts were not actually offered until August 2002. When Adam Burgoyne, an Avionics B Stamp tradesperson, was first employed by Boeing in May 2002 (having since February 2002 worked for Boeing at Williamtown through the Lawler labour hire business), he was required to enter into an AWA which appears to have been in the same terms as the earlier AWAs, providing as it did for a wages and overtime remuneration system. The offer to him to "transfer to a salary based remuneration arrangement and set of employment conditions" was by way of a letter dated 19 August 2002. This letter to Mr Burgoyne identified the proposed employment conditions, which included the following: (a) His designated salary (for a position described as "Avionics Tradesperson Level 2") was inclusive of superannuation (cl.2). (b) Boeing was entitled to apply the salary under the employment terms against any entitlement to any payment or benefit owing under any relevant industrial award (not identified), including for overtime, excess hours outside the span of hours, hours worked in excess of the standard hours of work, public holiday penalties, and allowances and other benefits (cl.2). (c) Remuneration was a confidential matter being Boeing and the employee (cl.2). (d) The employee was required to understand and act in accordance with the employer's policies, as issued from time to time, that applied to the employment relationship. Where the policies amounted to a benefit to employees, they did not form part of the contract of employment unless expressly specified. Boeing was able to change the policies and their contents at its discretion (cl.3). (e) Remuneration would be reviewed annually in accordance with Boeing policy, taking into account quality of job performance (cl.4). (f) The employee was required, as a condition of employment, to work a minimum of 40 hours per week, Monday to Friday inclusive. There would be occasion where the employee would be required to work in excess of, or outside these hours, to meet the needs of the business. The salary took account of this, and no additional payment would be made in respect of such extra hours of work (cl.5). 47. It appears that the TRP salaries offered to employees as part of these new employment arrangement involved an increase of about $2,000 in addition to their existing base annual rates of pay. Boeing subsequently contended, during the course of the current industrial dispute, that the salary rates offered as part of these new employment arrangements included payment for three hours per week overtime in addition to the basic 40-hour week. However, Boeing's offer of 19 August 2002, which was (apart from the classification and salary rate) in standard terms, made no mention of this. 48. Some employees, including Mr Burgoyne and Mr Robert Mitchell, attempted to organise opposition to the new contracts. However, given that most employees at that time were working little or no overtime, the offer of a salary increase in lieu of overtime rights proved attractive to most employees, and they readily signed on to the new arrangements. Only a small number of employees - half a dozen at most - refused to agree to the new arrangements, and consequently remained on their AWAs. These included Mr Mitchell and Mr Darryl Payne. At the current time, Mr Mitchell and Mr Payne, and perhaps one other employee remain the only aircraft maintenance employees at Williamtown regarded by Boeing as still being subject to AWAs, having resisted later attempts by Boeing to persuade them to move to the common law contracts. 49. It remains unclear on the evidence whether, in respect of those employees who accepted the offer of common law contracts in August 2002, the formal steps required under the Workplace Relations Act to terminate the AWAs applicable to them were ever taken. When asked about this matter during final submissions, Senior Counsel for Boeing was unable to inform us as to the position. Indeed, although all parties appearing before the Commission proceeded on the basis that the AWAs had originally been filed and approved in accordance with the provisions of the Workplace Relations Act, there was no actual evidence that this had in fact occurred. Consequently, we are not in a position to make any findings about the current status of the AWAs. Origins of the Current Industrial Dispute 50. Although, as earlier discussed, there appeared to be dissatisfaction amongst aircraft maintenance employees about certain issues as early as 2001, the current industrial dispute seems to have had its genesis in about mid-2004. The crucial event was commencement of work upon a new phase of the Structural Repair Program for the F/A-18 Hornet aircraft which required extensive work to be carried out inside the aircraft's fuel tanks – a type of work which hitherto had been required only occasionally. The evidence did not clearly identify the date upon which this occurred, but it was about in mid-2004. This work was principally required to be performed by the mechanical and structural tradespersons. 51. A detailed description of the nature of this type of work viewed from the perspective of a mechanical tradesperson was given in the statement of evidence of Mr Dylan Edwards, employed by Boeing as an Aircraft Maintenance Engineer – Mechanical (C Stamp). His evidence was as follows: I found the work to be very physically demanding, because of the extent to which I had to work in the confined spaces of the fuel tanks. The FA-18s have a bladder tank, which is a heavy duty lining made of a material somewhat like rubber which fits inside the fuel tank cavity. There is mechanical equipment such as pumps, pipes and valves which are inside the bladder tank. I and other mechanical tradespersons would have to remove the internal equipment, then fold and remove the bladder, so that the structural tradespersons could access the cavity to carry out a certain modification. When they had finished their work, I and other mechanical tradespersons would have to reinsert the bladder and the pumps, valves and pipes. Each FA-18 has 4 centre-barrel tanks, and we were required to work on 3 of them. The smallest of the 3 was 1.5 metres cubed. It was accessible by a manhole that was little bigger than my waist measurement. It is necessary to get fully inside the tank in order to perform much of the work, and sometimes I would have to physically contort my limbs in order to remove or re-insert certain parts. While this work was being performed, I was required to wear a chemical suit, because a substance called "10-10" oil is used to purge fuel out of the system, and this substance damages the skin if any contact is made. I also had to wear breathing apparatus because of the oil and fuel fumes in the tank. When the bladder is being removed and re-inserted, it is also necessary to wear a cool suit inside the chemical suit because the bladder needs to be heated in order that it can be folded and unfolded. The heat that needs to be used to fold and unfold the bladders is quite intense, so that you cannot spend more than five or so minutes in the tank at a time while doing this. The oil makes the tank slippery, which makes it very difficult to distribute your weight when you need to apply strength to any task. Under Boeing's procedure, this work was done on a one hour on, one hour off basis with another employee, and we were not allowed to do work requiring breathing apparatus for more than 3 ½ hours per day. Mr Edwards went on to say that this work came to constitute about 60% of all work he was required to perform. Some employees had to bear a disproportionate burden in the performance of this work because others could not perform the work at all for medical reasons. 52. The onerous and unpleasant nature of this work, as described by Mr Edwards, was confirmed by other witnesses, and was not placed in issue by Boeing. We accept without reservation the evidence that there are special disabilities associated with the performance of work inside the fuel tanks of the F/A-18 Hornet aircraft. 53. As a consequence of the requirement to perform this work extensively, a number of the Williamtown employees began to: (a) agitate for an allowance to be paid to them for time spent performing this work; and/or (b) make enquiries of Boeing as to whether any such allowance was already provided for or incorporated into their TRP salaries (which subsequently expanded into a broader enquiry as to the " breakdown " of the salaries, an issue addressed below). 54. Initially, employees pursued these matters through their Team Leaders and raised them at team meetings. Subsequently, these matters were raised more directly with management, including with Mr Parker, the Williamtown manager. The response that was forthcoming was negative as to both matters. In respect of the claim for an allowance, Boeing rejected outright any notion that a separate and additional payment would be made for fuel tank work. At a meeting called of the structural tradespersons, Mr Parker said words to the effect of "As long as I am manager, you will never get a fuel tank allowance". A similar response was given to employees who had individually raised the issue. 55. In his evidence, Mr Parker explained that, prior to the commencement of the fuel tank work, he had already had a conversation with a Mr Geoff Farrell, a Human Resources Manager located in Boeing's Brisbane office, about the matter, and that Mr Farrell had told him that "the TRP covered all the applicable allowances" – which Mr Parker took as meaning that allowances for things such as confined spaces were covered in the TRP. According to Mr Parker, his complete rejection of the workers' claim for payment of a fuel tank allowance was based on his understanding that a fuel tank allowance was "already paid for in the TRP" . 56. However, Mr Parker accepted that a confined space allowance was not identifiable as being incorporated in the TRP, and also said that in "subsequent discussions with HR" he was told, "it was impossible to break down the TRP". Consequently, it is difficult to discern the basis for the propositions that were being advanced by Boeing to the workforce about this matter during 2004. The original AWAs had contained no references to allowances at all, and the 2002 contracts had only mentioned allowances insofar as it allowed the TRP salary to be offset against any entitlement to any allowance under a relevant award. Given that little if any fuel tank work was being performed at the time the 2002 contracts were entered into, it is not easy to conclude that the contracting parties contemplated that the TRPs incorporated an allowance for fuel tank work. 57. Boeing's position that the TRPs incorporated an allowance for fuel tank work led to a request from employees for a full breakdown of elements which went to make up the TRP. Boeing's subsequent response was that the TRP could not be broken down. Mr Parker conceded that there were deficiencies in the position adopted by Boeing in this regard. He said that he had "a lot of sympathy" for the views of the employees on this issue at the time, and further said: I am not saying that the Boeing position was the right position. I'm saying to you that it was investigated and the information was provided to me and my staff and we conveyed that. In hindsight, we should have had the transparency for the people and that's what we have to do . Emergence of Other Issues 58. The evidence tends to demonstrate that the fuel tank issue served as the catalyst for a range of other grievances being agitated by aircraft maintenance engineers. Significant amongst these was the operation of the performance review system. 59. There was a perception among employees that the process of performance review, undertaken by the Team Leaders, inter alia, for the purpose of assessing individual salary adjustments, was not conducted fairly or impartially, and that it was leading to anomalous and inequitable outcomes. Mr Burgoyne described the process as a "personality contest" in which those who won the favour of their Team Leader would achieve the best results. Ms Wendy Bell, who was from March 2004 until March 2005 employed by Boeing as a Human Resources Advisor at Williamtown (reporting to the then Human Resources Manager at Williamtown, Ms Colette Simon), described a perception amongst employees that the results of performance reviews were based on the "personal prejudices" of the Team Leaders. Ms Bell said that the Team Leaders had not been trained to assess objectively the performance of employees under their supervision. There was also a complaint that the Team Leaders were not necessarily qualified in the trade areas of the employees whose performance they were reviewing. 60. There was, in addition, a systemic problem in the way in which salaries were adjusted arising out of performance reviews. Ms Bell said that salary adjustments were supposed to occur within prescribed bands for each classification level. However, she said, this was neither monitored nor enforced, with the result that overlaps in salary began to occur as between the different classification levels. This problem was exacerbated by the fact that in late 2004, Boeing, which had had difficulties in attracting appropriately qualified new employees in sufficient numbers to meet its growing demand for labour, began recruiting new employees, whose work required direct supervision, at rates of salary which were, in some cases, higher than those employees who had the task of supervising them. 61. This situation was discovered by a number of employees in the later part of 2004 – mainly as a result of employees talking with each other about their grievances concerning the fuel tank issue and Boeing's failure to identify the components of the TRP. This occurred notwithstanding that discussion by employees of their remuneration levels was nominally forbidden by the confidentiality provision of their contracts. 62. What the employees found was that not only were employees being paid significantly differently (up to $5,000 per annum) for doing the same work in the same classification, but also that some employees on higher classifications were being paid less than other employees in lower classifications. Mr Burgoyne conducted among his fellow employees an informal survey of salary rates. He found, for example, that there were B Stamp employees who were performing extensive fuel tank work who were being paid less than persons in the lower Aircraft Worker classification, who were not required to do any such work. 63. Other issues which became of concern to Williamtown employees in later 2004 and 2005 included the following: (a) Some employees believed that the actual quantum of salary rates applied by Boeing at Williamtown, or the amount of increases in salaries being awarded, were lower than for the aircraft industry generally. Ms Bell provided some support for this belief. Ms Bell, who in 2004 had responsibility for recruitment for Boeing at Williamtown, deposed that BAE Systems, also based at Williamtown, had greater success than Boeing in recruitment of appropriately qualified aircraft maintenance workers because it offered better wages and conditions. However, other evidence adduced before us tended to suggests that the picture was less clear than this, and we find it unnecessary to make any firm finding about this matter. (b) Some employees had to work significant amounts of overtime – which, in peak periods, might be 10-12 hours per week - for which, under the TRP model, there was no additional remuneration above the base salary. Notionally, Boeing's policy was that such employees were entitled to take time off in lieu. However, there was evidence that as a matter of practicality the Team Leaders (who kept their own records of overtime hours worked) would not permit employees to take off the time that had been accumulated when desired by the employees. In addition, there was a related issue as to whether the standard hours should be 38 instead of 40. (c) As has earlier been identified, both the original AWAs and the common law contracts permitted Boeing to alter unilaterally conditions of employment contained in policy documents - both in terms of requirements with which employees had to comply and of benefits applicable to them. Employees became concerned that this could, and in some cases did, work to their disadvantage. Their concern was exemplified by Boeing's reduction of the amount of compassionate leave - a step which was only discovered when one employee attempted to access this benefit upon the impending death of his father. (d) There was a further issue concerning the suitability of the employees' lunchroom. 64. Boeing, at least during 2004 and early 2005, failed to give any response in respect of these additional issues which was satisfactory to the employees. Indeed, notwithstanding that these grievances were agitated by employees through the proper channels at Boeing, it is difficult to identify any action taken by Boeing to address or ameliorate these grievances and problems during this period. Boeing's attitude at this time was simply that the grievances lacked validity. Its stated response was to the effect that if employees were dissatisfied with their conditions of employment, they ought leave Boeing's employment. Mr Burgoyne's evidence was that at one meeting of employees, Mr Parker said words to the effect of: "If you're not happy – there's the door." Mr Parker denied using those words, but gave evidence that he said: "… if people were not happy doing the job that they were doing and didn't want to be here, then … we would help them move on". The general tenor of either version of the words used by Mr Parker seems to us to be the same – that is, that Boeing was rejecting any accommodation at all of the employees' grievances. Advent of the AWU 65. There was no evidence that, prior to the final quarter of 2004, the AWU had any members at the Boeing Williamtown site or had attempted to recruit there. Nor did any other union have any presence at that site, although at least some employees retained union membership which they had obtained during previous employment. 66. The position changed when in October 2004, officials of the Newcastle, Central Coast and Northern Regions Branch of the AWU decided to target the local aviation industry for recruitment of new members. The officials involved in this recruitment exercise were Mr John Boyd and Mr Richard Downie. In October 2004, either Mr Boyd or Mr Downie made contact with Ms Simon (then the Williamtown Human Resources Manager) and requested permission for the AWU to hold a meeting with the employees at the workplace during their lunch break to discuss the benefits of union membership. Ms Simon agreed that such a meeting could be held. It appears that Ms Simon facilitated the occurrence of such a meeting. Ms Bell's evidence was that Boeing did this because it believed at this time that its employees remained loyal to it and would not join the AWU. 67. When Mr Boyd first met Ms Simon in October or early November 2004, he asked her what award was being applied by Boeing at the site. Her reply was "The State Metals Award". Ms Bell confirmed that at about that time, to the extent that Boeing referred to any award at all in relation to its employment arrangements at Williamtown, it referred to the "Metals Award in New South Wales", which she understood to be an award of this Commission, not the Australian Industrial Relations Commission. 68. As it turned out, the AWU was permitted to hold about six meetings with employees at the Boeing workplace during late 2004. Some of these meetings were attended by Mr Kevin Maher, the Secretary of the Newcastle, Central Coast and Northern Regions Branch of the AWU. Although the employees at these meetings made the AWU officials aware of the grievances they had in relation to their employment conditions, it appears that at this stage there was no move by the employees to join the AWU or otherwise request its assistance. 69. In early December 2004, however, Mr Burgoyne and some other employees made contact with the AWU and requested that a further meeting be arranged, but this time outside of working hours. What prompted the employees to take this course appears to have been their general dissatisfaction with Boeing's failure to respond in any substantive way to their grievances. In addition, the employees had become aware that the AWU was party to collective agreements with Hawker de Havilland in Sydney and Melbourne, and some employees hoped that the AWU might obtain a similar agreement for them. 70. The requested meeting was arranged by the AWU, and was held on 10 December 2004. It was attended by Mr Maher, Mr Boyd, Mr Downie and about 30 of the employees. About 17 employees signed application forms to become members of the AWU at this meeting, and several others did so shortly afterwards. Mr Adam Burgoyne and Mr Dan Rodgers were elected as the AWU delegates for the site. AWU membership in the following months continued to grow, peaking in April 2005 at about 45-48 aircraft maintenance employees out of a total of about 70 at Williamtown (excluding apprentices). Initial Activity by the AWU 71. Following the meeting which occurred on 10 December 2004, Mr Maher sent a letter dated 13 December 2004 to Ms Simon identifying the fact that a number of Boeing employees had joined the AWU. He identified workplace amenities as being of concern to employees, and requested that arrangements be made for him to inspect Boeing's facilities on 16 December 2004. He further indicated in the letter that on that day, he would like to take the opportunity to discuss the issue of payroll deduction of union dues, and "also the role the Union will be taking on behalf of our members in future". Curiously, no mention was made in this letter of the issues which, the evidence has demonstrated, were of most pressing concern to the employees at that time. 72. When Mr Maher and Mr Boyd attended at the Williamtown Airbase on 16 December 2004, they were refused access by the RAAF because Boeing management would not come to the front gate to sign them in. This caused Mr Maher to send a further letter to Ms Simon, dated 16 December 2004, requesting that Boeing facilitate a meeting of AWU officials with employees at lunchtime on 17 December 2004, to be followed by a meeting with her. 73. This letter apparently caused a meeting to be held between AWU officials and Boeing management on or about 17 December 2004 at the Williamtown site. Attending this meeting were Mr Boyd, Mr Downie, the then AWU workplace delegates, and Mr Parker and Ms Simon. Mr Boyd described the main issues for discussion as being "the provision of an outdoor screened lunch area for the employees, and the negotiation of a collective agreement to cover the employment of the employees". 74. This was the first time that a claim for a collective agreement was made on behalf of the employees by the AWU. The claim was immediately rejected by the Boeing representatives. Mr Boyd characterised the response given by Boeing at the meeting as follows: … the position taken by the company was that they were not interested in engaging in such negotiations, they believed their employees were happy with the individual contracts and believed that a collective agreement didn't suit the needs of their business. Further, they didn't want to discuss the terms and conditions of employment with a 'third party' being the AWU. 75. This evidence suggests that Boeing's rejection of the claim was consistent with a pre-existing policy not to enter into any such agreements. Further, given that the AWU had not at this time identified the terms and conditions of any proposed collective agreement, it is clear that Boeing's opposition was to a collective agreement per se. 76. Consistently with this proposition, Ms Bell deposed to a meeting of Boeing management which had occurred in October or November 2004 "to discuss the issue of industrial relations and how any union issues would be managed" . The meeting, according to Ms Bell, was attended by herself, Mr Parker, Ms Simon, and Mr Trew (Manager, Military Aerospace Support), and a number of other persons including the Team Leaders. Ms Bell said that Mr Parker "expressed hostility to the notion of any union becoming involved in the operations at Williamtown, and told us that we were not to do anything to encourage a union presence at the site". When Ms Bell ventured the opinion that unions could be a positive influence if properly managed, and, realistically, their existence had to be acknowledged, Mr Parker and Ms Simon indicated to her that such views "were contrary to Boeing's approach, were not welcome and definitely not to be expressed". Neither Mr Trew nor Mr Parker could remember such a meeting having taken taking place. 77. Ms Bell also gave evidence that she had been informed that towards the end of 2004, after the AWU had begun to have meetings with the employees, Boeing had sought and obtained advice as to how to deal with the AWU. Ms Bell thought that such advice came from the AIG. The advice was that Boeing's strategy towards the union of "individual negotiation and relations with employees and no third party intervention" was likely to be effective and should be continued. Again, this evidence supports the existence of the policy of Boeing to avoid any collective bargaining process with a union. AWU's Application to the NSW Commission 78. A further meeting between the AWU and Boeing representatives took place on 22 December 2004. At this meeting, the question of award coverage of the Boeing employees was apparently raised, because Ms Simon wrote the next day a letter to Mr Maher in which she stated that Boeing had "agreed to clarify the award coverage of Boeing Australia employees". The letter stated: While Boeing Australia employs staff on individual common law contracts, it utilises the federal Metal, Engineering and Associated Industries Award as it's [sic] reference award for the purposes of pay and other conditions of employment. The Company's employment contracts provide above award entitlements, including rates of pay. 79. That this letter indicated a change of position by Boeing on the question of award coverage was confirmed by Ms Bell, who said, "as soon at [sic] the union came on site we were suddenly covered by the Australian Award". It is to be noted, however, that even in the 23 December letter, Boeing did not assert that it was actually bound by the federal Metal, Engineering and Associated Industries Award 1998 ("the Metals Award"). Similarly, in her letter dated 24 January 2005, Ms Simon again stated that Boeing was able, by virtue of its membership of the AIG, to utilise the Metal Industry Award for "guidance and coverage". 80. On 25 January 2005, Mr Maher notified to the Registry of this Commission an industrial dispute with Boeing pursuant to section 130 of the Industrial Relations Act. That notification described the subject matter of the dispute as "The company 'Boeing', failing to acknowledge the Australian Workers Union as a legal representative of Boeing employees". The notification asserted that the award applicable to the employees was the "State Metal Industry Award". 81. The dispute was the subject of a compulsory conference before Commissioner Cambridge on 27 January 2005. Mr Downie appeared for the AWU and a Ms Patterson appeared for Boeing. The transcript discloses that Mr Downie identified three main issues: (a) Boeing's change of position as to which award applied; (b) Boeing's failure to respond to a request for a break-down of the TRP; and (c) Boeing's failure to acknowledge the AWU as the representative of its members at the Williamtown site. Perhaps contrary to the award coverage position asserted in the AWU's dispute notification, Mr Downie in his submissions expressed surprise " as to why they wouldn't be answering to the General Aviation Award as that is the industry that they're in…". We understand the award to which Mr Downie was referring was the federal Aircraft Engineers (General Aviation) Award 1999 ("the General Aviation Award"). 82. Ms Patterson in reply submitted that Boeing did acknowledge the AWU's right to represent its members, that Boeing had agreed to respond to the AWU on a number of matters, and that the employees were covered by the Metals Award. The Commissioner identified the issue of award coverage as a threshold question going to jurisdiction, and the conference concluded on the basis that Boeing agreed to confirm to the AWU, in writing, its position on award coverage prior to a meeting with the AWU the following day. 83. Later that day Ms Simon wrote to Mr Maher, stating: We confirm that Boeing Australia is covered by the federal Metal, Engineering and Associated Industries Award in respect of most of its employees, including those at RAAF Williamtown, by virtue of it's [sic] membership of the Australian Industry Group. 84. For the purpose of the Commission proceedings, the AWU did not contest this assertion. To the contrary, Mr Downie by letter dated 9 February 2005 addressed to Commissioner Cambridge, sought a discontinuance of the Commission proceedings "as the company are applying the Federal Award for their employees, therefore, we have to seek assistance from the Federal Commission". The Commission accordingly granted leave to discontinue on 9 February 2005. (This very question of the applicable award, if any, became of major significance to this Inquiry and is addressed in detail below in the context of Term of Reference 4). 85. Following the cessation of the proceedings in this Commission, there was a meeting between representatives of Boeing on 2 February 2005. Internal memoranda of both the AWU and Boeing indicate that meeting addressed the question of the applicable award; also discussed were the request for the break-down of the TRP, allegations of award under-payments, the provision of a facility for payroll deduction of union fees, and a request to enter into discussions for an enterprise agreement. 86. The AWU memorandum of 2 February 2005 (from Mr Boyd and Mr Downie to Ms Mary Lambert, a National Industrial Officer) indicated the AWU's strategy at this time. The key features of this strategy were that employees were to write to Boeing management requesting a "transparent breakdown" of the TRP, that a dispute was to be notified (presumably in the Australian Industrial Relations Commission – "the AIRC") to seek clarification as to whether the Metals Award or the General Aviation Award applied, and that the AWU would "Notify Intention to Bargain" and "Issue Log of Claims". The Boeing memorandum of the same day (from Mr Kennedy to Mr Parker, Mr Giles, Ms Simon and another) gave a report of the meeting, and said in relation to the question of award coverage: Among the other issues discussed were: … The claim that the federal metal industry award is inappropriate and that an aviation industry award is the correct award to cover our people. I expected this to be raised and it is an issue that will need to be addressed by our legal eagles. I think we are vulnerable in this regard. Initiation of the Bargaining Period 87. The next step taken by the AWU was that Mr Bill Shorten, the AWU's National Secretary, by correspondence dated 25 February addressed to Mr Gray, Boeing's Managing Director, requested a meeting between the AWU and Boeing to discuss an enterprise agreement to cover workers employed by Boeing "under the F/A-18 Refurbishment Program, Williamtown". Mr Shorten asserted that over half of those workers were members of the AWU and that this fact was known by Mr Gray. (Other evidence shows that there were 38 members of the AWU at this time). 88. Before Boeing responded to this letter, the AWU on 4 March 2005 gave notice to the AIRC of the initiation of a bargaining process pursuant to section 170MI(2) of the Workplace Relations Act. The notice stated that the AWU intended to try make an agreement under Division 2 of Part VIB of the Workplace Relations Act to apply to Boeing at Williamtown, and that the employees to be subject to the agreement would be employees who were members of, or eligible to be members of, the AWU and who performed work described in classifications in the Metals Award and the General Aviation Award. A wide range of matters were identified in the notice for inclusion in the agreement. The identified matters do not appear to have been drafted with the specific grievances of the Williamtown employees in mind, but rather have the flavour of a standard log of claims. 89. Almost immediately, the AWU sought that the AIRC exercise its conciliation powers under section 170NA of the Workplace Relations Act with respect to the bargaining period it had initiated. On 8 March 2005, Senior Deputy President Marsh of the AIRC conducted a conciliation conference (with the proceedings being given the matter number BP2005/38). At this conference, Boeing requested more time to provide a written response to the AWU. 90. In due course, on 22 March 2005, Boeing provided a written response to Mr Shorten's letter of 25 February 2005. This letter, written by Boeing's Managing Director Mr Gray, we set out in full (omitting formal parts) because of its significance as an authoritative statement of Boeing's position with respect to the negotiation of a collective agreement with the AWU: Thank you for your letter dated 25 February 2005. It has taken me until now to respond because at the time the letter was received I was heading overseas. Since my return I have given careful consideration to your request. In doing so, I wanted to be sure that I understood the position at Williamtown in some detail, particularly as I understand that your union has raised some concerns about the employment conditions, which apply at that site. I have noted from your correspondence that a number of our employees at Williamtown are members of your union. Of course Boeing respects that choice. For our own part, Boeing has a policy of engaging directly with our employees on all matters relevant to their employment, and I hope your Union and officials will also respect that position. As you would know, Boeing adopts a Total Remuneration Package (TRP) approach to salaries at Williamtown. Through salary reviews, this gives us the ability to reward employees for higher than expected performance. We also have other programs, including our Instant Recognition Scheme, which has a similar (but more immediate) impact. Discussions about remuneration issues, including salary reviews, are addressed on an individual basis. Boeing does not favour a collective approach to wage negotiation, because that approach does not fit with our business objectives. I recognise that there are different approaches to these issues, and I also take at face value your union's advice that some of our employees are dissatisfied with this approach to our relationship with them. I note your advice that some of our employees would prefer the approach set out in your letter of 25 February 2005, as supplemented by your notice of initiation of bargaining period dated 4 March 2005. Against this, however, I believe the TRP remuneration system has succeeded at Williamtown for all of the five years the site has been in operation. I have been advised that a review of the arrangements in place carried out since your letter has established that employees are paid competitively as against the award arrangements, which might otherwise apply. I expect that this would be the case because the employees at Williamtown are competent and highly skilled, and the market for their services requires us to pay competitive remuneration. I am satisfied that they have not been disadvantaged by our approach to remuneration, and that in fact the system has worked very well for their benefit as well as for Boeing's benefit. I have also taken into account the fact that at Williamtown we have staff in a wide range of roles, not just roles in which your union would have an interest. I believe our approach to these issues should generally be consistent across the workforce. I have given very careful consideration to whether your proposal is consistent with our business objectives. Having taken all the matters that I think are relevant into account, including those issues raised by our employees through your union, I am not convinced that there is any advantage to Boeing or to its workforce in moving away from the current arrangements. Accordingly, Boeing does not wish to enter into discussions concerning a proposal for an Enterprise Bargaining Agreement between the AWU and Boeing in respect of employees at Williamtown. I thank you for raising with us concerns, which our employees have raised with your Union. I understand these issues are being considered and addressed with a view to providing staff with a detailed response and, where appropriate, options for resolving the concerns, which they have. 91. At about this time, in late March 2005, Boeing issued a document to all Military Aerospace Support Trade employees, including those at Williamtown, entitled "Employee Information Kit – Questions and Answers on the your [sic] Total Remuneration Package (TRP)". In the introduction signed by Mr Trew, it said that: In recent weeks a number of employees have raised questions about the way their current Total Remuneration Package (TRP) is calculated and what it includes … This 'Employee Information Kit' has been prepared to directly answer these questions. The document would appear therefore to be the "detailed response" referred to in the last paragraph of Mr Gray's letter. 92. The introduction to the Employee Information Kit notably contained a concession, made for the first time, that Boeing's responses to the grievances raised by employees had not been adequate: There has also been clear feedback that some employees are frustrated with some of the communication from management – in particular, that issues and concerns raised by employees are not being answered as clearly as they could be. Management accepts that criticism. This kit is the first step in a concerted effort to improve our communications with you and ensure everyone has an opportunity to have their questions answered and their voice heard. 93. The document itself adopted a question and answer format. The key points made by Boeing were: (a) The TRP could not be broken down into specific payments. (b) A mathematical analysis set out in the document (described as the " Award Safety Net Test" ) demonstrated that employees were paid more in total than as provided for by the Metals Award. (c) In response to the question " I've been told the General Aviation Award should cover us. Why does Boeing use the Federal Metals Award? ", Boeing said that " no Federal Award fits our operation perfectly ", but that it " uses " the Metals Award because it believed it was " the most appropriate given the work " undertaken (emphasis added - these expressions are indicative of a continued ambivalence on Boeing's part as to whether any, and if so which, federal award applied at Williamtown). (d) Boeing was able, under its remuneration system, to pay an employee in a lower classification more than an employee in a higher classification. A driver for this was that " historical remuneration for an individual ... is a matter between that employee and Boeing ". However, Boeing was happy to consider any changes to improve the classification system, and employee feedback was welcomed. (e) The advantage of the TRP system over a wages and overtime system was that it allowed Boeing more flexibility to recognise and reward individuals for their performance and contributions to the success of the business. (f) Boeing had chosen its current remuneration and common law arrangement over a collective agreement with a union because that arrangement had worked well for many years, in terms of growth, profits, customer satisfaction and over-Award remuneration. No union had demonstrated that any changes to the pay system would benefit the business, the employees or the customers. (g) Further opportunity for discussion on the viability and impact of any refinements to the remuneration system would be provided once the company had a thorough understanding of any opportunities for improvement. 94. Following receipt of the Employee Information Kit document by employees at Williamtown, the AWU members compiled a list of questions arising from that document – such members having been generally dissatisfied with the information provided by Boeing. The document setting out the questions was dated 1 April 2005. The list of questions was provided to Boeing management, and on 14 April 2005 Boeing provided a written response. Important points made by Boeing in its answers included the following: (a) The Boeing TRPs were above both the Metal Industry Award and the General Aviation Award. (b) Boeing worked a 40 rather than a 38 hour week " to ensure we meet the needs of our customer ". (c) There was no way of breaking down the TRP to value how many hours of overtime were included, nor could it be broken down into individual components like allowances. However, the "Award Safety Net Test" contained in the Employee Information Kit factored in three hours of overtime per week. (d) Boeing management recognised the need to improve its communication with employees and better listen to employees, and also recognised that some employees were unhappy with the current system. (e) Boeing had initiated a process involving employees to identify and consider any improvements to the TRP model whilst maintaining the fundamental concept. (f) Boeing would not provide comparisons on rates of pay with other employers or industries. Commencement of Industrial Action 95. A further conciliation conference before Senior Deputy President Marsh occurred on 6 April 2005, at which Boeing maintained its refusal to negotiate a collective agreement. It appears likely that at about this time the AWU and its members began to consider the taking of industrial action, since on 15 April 2005 the AWU gave notice pursuant to section 170MR of the Workplace Relations Act that its members had authorised it to engage in industrial action against Boeing in connection with the bargaining period. There followed stop-work meetings on 21 April and 4 May 2005. On 5 May 2005, the AWU gave notice to Boeing pursuant to section 170MO of the Workplace Relations Act of its intention to undertake industrial action by way of a ban on the filling out of timesheets recording work performed. The ban was to commence on 11 May and to continue thereafter indefinitely. 96. On 10 May 2005, a memorandum was sent to the AWU and the employees stating, inter alia, that if the timesheet ban continued as of 19 May 2005, Boeing would not pay any employee for any day upon which they were not prepared to carry out all their work requirements (including completing timesheets), and would not require or permit any such employee to perform work at all on any such day. Notwithstanding this, on 11 May, consistently with the notice earlier provided by the AWU, 42 employees at Williamtown who were members of the AWU commenced industrial action by way of a refusal to fill out timesheets. 97. On 17 May the AWU gave notice to Boeing pursuant to section 170MO of the Workplace Relations Act of its intention to undertake industrial action by way of a 24-hour strike by all AWU members on 23 May. On 19 May, Boeing acted in accordance with its memorandum of 10 May, and refused to allow to work, or to pay, those employees who continued to participate in the timesheet ban. As a consequence, the AWU members participating in the industrial action did not work and were not then paid (until there was a change in position by Boeing, which is discussed below, which permitted these employees to return to work, whilst continuing their ban, on 20 June). 98. In response to Boeing's stand-down of the employees engaged in the timesheet ban, the AWU notified the AIRC of an industrial dispute between it and Boeing pursuant to sections 99 and 170NA of the Workplace Relations Act. This notification, dated 23 May 2005, identified the subject matter of the dispute as concerning the AWU's initiation of a bargaining period, Boeing's refusal to enter into discussions, and Boeing's stand-down and non-payment of employees participating in the protected industrial action. Interestingly, the notification stated, "There are no awards and/or certified agreements binding on the parties to the dispute". 99. A Conciliation Conference in relation to this notification occurred before Senior Deputy President Marsh on 27 May 2005. At this conference, Boeing maintained its refusal to negotiate an agreement with the AWU. The Focus Group Process and Offers of Revised Contracts 100. At the same time as the AWU and its members began to engage in industrial action, Boeing was initiating and undertaking a process of conducting meetings of a "Focus Group" in order to provide itself with a means of receiving and considering views of employees as to the TRP system. By letter dated 15 April 2005 addressed to all Boeing trades staff at Williamtown, Mr Trew indicated that Boeing had been examining aspects of the remuneration system based on recent feedback to see if there were any opportunities to make improvements. The issues investigated included the overlap between classifications, how to reward employees where there was significant additional work effort required, and the recognition of value adding qualifications. Mr Trew said in the letter that Boeing had developed a number of preliminary concepts in relation to these issues which "we would like to now develop further with you to see if they have the potential to answer your concerns and improve our current pay system", but that any changes to the system had to adhere to a number of fundamental principles, including the need for the outcome to be within budget constraints, and the maintenance of the ability to "reward and recognise our high performing employees". The intended process was described in the following terms: … we will be inviting employees to attend a focus group session within the next 2 weeks to discuss the way forward. The group attending the meeting will include employees from each of the sites and a vertical slice of employees involved in Operations. The timing of the meeting will be subject to employee availability. At the conclusion of this focus group we will provide opportunities to discuss the outcomes with all employees potentially affected. 101. The Focus Group established by Boeing consisted of employees drawn from the three sites of Williamtown, Amberley and Oakey, as well as management representatives including Mr Trew, Mr Brownsey and Mr Parker. The employee representatives were not elected, but appear to have been invited by Boeing to attend. They also included the two AWU delegates at Williamtown, by then Mr Burgoyne and Mr Szady. Boeing refused to allow any AWU official to participate in the process on behalf of AWU members at Williamtown generally. 102. The first meeting of the Focus Group occurred in Brisbane on 28 April 2005. The minutes of the meeting record that a "frank, open and wide-ranging discussion" occurred, and that the general consensus was that: (a) payment by salary was the preferred option of most employees and Boeing; (b) that a formal system be established to reward the working of additional hours; and (c) that there ought be recognition of " value adding skills required and utilised by the company in an employee's job ". 103. The minutes of the meeting also note issues raised at the meeting which were outside the Focus Group's "Terms of Reference". These issues, which were said to be "valid", were left "for discussion at another time". They included: The type of employment contract covering employees, eg a collective as currently sought by Unions and some staff at Williamtown . 104. However, the minutes do not quite tell the full story in this respect. The evidence of Mr Burgoyne, who was present at the meeting, disclosed that as well as he himself advocating a collective agreement, one of the employees from Amberley made a presentation calling for a collective agreement to be negotiated similar to that applying at a company called Australian Aerospace operating at Brisbane Airport. However, Boeing did not respond to this proposal. Boeing's general position concerning any consideration of a collective agreement at the Focus Group was made clear by Mr Brownsey: "I simply stated from the organisation's perspective that … we were not going to discuss that matter because we were talking about issues that relate to terms and conditions, not form". 105. The next meeting of the Focus Group was on 16 May 2005. Between the first and second Focus Group meetings, an internal Boeing memorandum entitled "Trades Remuneration Model Changes" was generated which contained a proposal for changes to the remuneration system for "trades/support" employees. The key features of the proposal were: (a) removal of salary overlaps between classifications, with salary bands to be introduced for each classification; (b) increasing the starting rate of pay for all classifications except that of Trades Assistant, in order to " assist in retention and recruitment "; (c) introduction of an overtime payment system; (d) introduction of payment of certain allowances (but not the confined space or fuel tank allowance sought by employees); and (e) the classification bands and allowances to be adjusted by Boeing's budgeted annual labour cost increase. 106. Importantly, this document contains some frank observations about the position in which Boeing then found itself. By way of "Background", the document said: Boeing Australia has been engaged in a dialogue with its trades employees as a result of Union activity at the Williamtown site and a range of issues being raised at Amberley, including the some [sic] employees handing back their stamps in protest over remuneration issues. This dialogue has identified a significant level of discontent with the current remuneration system among other issues. 107. The document also identified some of the problems which Boeing was facing. These included a significant employee retention issue; difficulty in recruiting employees to fill vacant positions; a tightening labour market with significant skills shortages; competitors targeting Boeing employees for recruitment; and, remuneration levels at Boeing significantly lower than a number (but not all) of its competitors. The document also showed that Boeing management was alive to a perception that it was offering improvements to the remuneration system as a result of the AWU's activity, since it identified one risk of the proposal for change as being that: Other disaffected groups of employees may see that joining a Union has resulted in resolution of issues for the Trades employees and consider the same course of action. Nonetheless, the recommendation in the document was for the proposal to be approved and presented to the Focus Group at its next meeting on 16 May 2005. 108. It appears from the minutes of the Focus Group meeting held on 16 May 2005 that the recommended proposal was in fact presented to the Focus Group. The minutes show that the proposal was discussed "and a number of changes were made to reflect the feedback from the Focus Group". It is not clear from the minutes whether Boeing agreed to these changes at the meeting of the Focus Group itself, or whether they were made by Boeing, after the meeting, having considered the views of the employees. In any event, the key points of the modified proposal were identified in the minutes, and included the following: (a) The creation of new entry level TRP amounts for each classification, which were a significant increase on then current entry points and would affect about half of the employees in each classification. (b) The introduction of an overtime payment system, under which a rate of time and a half would be paid after six additional hours had been worked in a fortnight, or for any additional day. (c) New allowances would be payable, including an allowance of $600 per year for those certified for confined space entry. The minutes also indicated that further matters would continue to be reviewed, including the annual performance review process. 109. The day after the second Focus Group meeting (17 May 2005), Mr Parker conducted a meeting of employees at Williamtown (presumably excluding those employees who had been stood down because of their participation in the timesheet ban) to communicate the proposal for changes to the salary system which had been developed during the focus group process. There was a further presentation to Williamtown employees about the proposed changes on 9 June 2005. 110. The proposals presented to the focus group meetings culminated in an offer by Boeing, made to each of the aircraft maintenance employees at Williamtown, Amberley and Oakey, incorporating a package of alterations to their existing employment agreements (whether common law contracts or AWAs). These offers were communicated to the Williamtown employees by way of letters signed by Mr Parker dated 14 June 2005. Acceptance of the proposal was to be signified by the employee signing at the end of the letter above the words "I accept the modification to my Employment Agreement set out in this letter" and returning it to Human Resources. If the employee so accepted, the alterations were to take effect from the next full pay period after the date of signature. It is clear that the offers were put on the basis that the proposed changes were not negotiable between individual employees and Boeing. 111. It is also clear that, in making the offers, Boeing intended to achieve a position whereby all employees at each of its three sites were subject to a uniform set of employment conditions with the only departure being that salaries could be set according to individual performance but within a prescribed salary band. Such an arrangement was entirely amenable to being negotiated collectively and incorporated into a collective agreement. 112. At the same time as making these offers, Boeing also proposed to those members of the AWU stood down for their participation in the timesheet ban that they could return to work while continuing the timesheet ban, until 24 June 2004, and receive full pay, in order that they might consider whether to accept the offer of alterations to their existing employment agreements. Boeing referred to this as a "cooling off period". This proposal was communicated by way of a memorandum signed by Mr Parker. The Strike 113. None of the AWU members participating in the timesheet ban at this time accepted the proposed alterations to their employment agreements. By letter dated 16 June 2005 addressed to Mr Trew and signed by Mr Shorten, the AWU notified Boeing that it intended to take further industrial action by way of a strike of all AWU members for an indefinite period of time on and from 22 June 2005. 114. We would infer that the decision to escalate the industrial action was taken in response to Boeing's offers of alterations to the existing employment agreements of 14 June 2005 – which implicitly maintained and entrenched Boeing's refusal to negotiate a collective agreement. It is clear that the taking of strike action was decided, or at least approved, at a meeting of AWU members, although when precisely this meeting took place is unclear. It is, however, clear that both AWU officials and members believed that strike action would be successful in forcing Boeing to agree to negotiate a collective agreement. It was in no way anticipated that Boeing would, in the face of strike action, maintain indefinitely its refusal to negotiate such an agreement. 115. AWU members returned to work in response to Boeing's "cooling off" proposal on 20 June 2005. However, on 22 June 2005, strike action began in accordance with the AWU notice of 16 June 2005. 116. Initially, about 35 AWU members participated in the strike action. These employees constituted a cross-section of the Boeing F/A-18 Hornet maintenance workforce of about 80 (excluding apprentices) at the time. They included employees from each of the three trade areas, at each of the three Stamp levels, as well as employees in Non-Destructive testing and Aircraft Workers. However, a disproportionate number of Avionics and Structures tradespersons took part in the strike (constituting a clear majority of such employees), whilst only a relatively small proportion of Mechanical tradespersons participated. Generally speaking, the striking employees had no background or experience in negotiating employment arrangements or in participating in industrial action in support of improved wages and employment conditions. For a significant number of them their prior work experience was as a member of the defence force where the industrial relations environment is quite different. 117. Boeing reacted to the strike by obtaining substitute labour, principally from two sources: (a) It increased its use of workers sourced from Bermil, a labour hire business which had for some time been used by Boeing. (b) It brought from its Amberley and Oakey operations employees to work temporarily at Williamtown. 118. Boeing also engaged in recruitment of new employees (although, as discussed below, with what degree of success is doubtful). Boeing also required its employees to work extended shifts and undertake weekend work in order to mitigate the effects of the strike. 119. Boeing's response to the strike also included the payment of additional remuneration to those employees who remained at work. This initially took the form of a $40 per day additional payment to all aircraft maintenance employees. However, from about November 2005 this was changed to a $100 per week payment to all Boeing's employees at Williamtown. The payments ceased just prior to Christmas 2005. Mr Parker attempted to characterise these payments as part of Boeing's "Instant Recognition System" of rewards to individual employees in recognition of their performance. Prior to the strike, this program had primarily consisted of the award of vouchers at Bunnings hardware stores on an occasional basis to individual employees. Mr Parker contended in his evidence that, despite the across-the-board and long-term nature of the additional payments, they constituted rewards for individual performance and payments for the achievement of "milestones". However, Mr Parker was unable to identify what these particular milestones were – apart from the general requirement to maintain quality of work and to run to schedule, which requirement applied before as well as after the strike. Other evidence demonstrated in any event that the quality of work declined and Boeing fell behind schedule (see Sections D and E below) after the strike commenced. We would infer that the additional payments were in fact an incentive for employees to remain at work rather than participate in the strike. 120. There is clear evidence that the strike impacted upon Boeing's capacity to meet its contractual obligations with the RAAF. Boeing correspondence to the RAAF demonstrated that extensive delays, due to the strike action, were experienced in respect of work undertaken on at least two F/A-18 Hornets. In addition, the strike may have adversely affected Boeing's capacity to recruit new employees. 121. Since the strike began, the AWU and its members have maintained a picket at the entrance to the Airbase at Williamtown. There has been no evidence that this picket has on any occasion blocked access to or egress from the Airbase. However, there have been allegations of harassment and intimidation, including assertions that some striking employees have verbally abused employees entering or leaving the Airbase and employees from Amberley and Oakey at the hotels at which they were staying. The NSW Police were involved in investigating these matters, but there is no evidence of any charges having been laid. Boeing has, however, dismissed two employees engaged in the strike action because of alleged conduct of this nature (which dismissals are currently the subject of proceedings in the AIRC). 122. In September 2005, the AIG took some steps in an endeavour to assist in a resolution of the dispute. Mr Stephen Smith, Director – National Industrial Relations of the AIG, made contact with Mr Shorten to explore ways in which the dispute might be resolved consistently with each party's principles. Mr Smith then advanced a proposal to Boeing to settle the dispute by way of a collective agreement with the AWU which would generally reflect the existing arrangements in place together with applicable legal minimum standards. However, Boeing decided not to act on this proposal. 123. Also in September, Boeing undertook a further process of focus group consultation concerning its performance review system. As a result, Boeing implemented a revised performance review regime which included expanded assessment criteria, steps to improve standardisation of scoring, and a dispute resolution procedure for any employee unhappy with the outcome of his or her review outcome. Further AIRC Proceedings 124. In September 2005, the AWU re-activated the conciliation proceedings in the AIRC (BP2005/38) by filing an application for directions pursuant to section 111(1)(t) of the Workplace Relations Act for a ballot of aircraft maintenance employees at Williamtown. The ballot was intended to ascertain whether they preferred regulation of their terms and conditions of employment by a collective agreement certified under the Workplace Relations Act or by individual contracts. At a directions hearing before Senior Deputy President Marsh on 16 September 2005, her Honour raised the possibility of further conciliation by the AIRC of the dispute. The AWU indicated that it would consent to such conciliation, but Boeing, while indicating its preparedness to meet with the AWU to discuss any issue which the AWU wished to raise, regarded conciliation as being without any utility. 125. The hearing of the AWU's application occurred before Marsh SDP on 18 and 19 October and 8 November 2005. At the end of the hearing on 19 October 2005, the AWU sought that further conciliation occur, but again Boeing declined to participate. At the hearing on 8 November 2005 (during which closing submissions on the application were taken), Marsh SDP made a strong recommendation that the parties engage in further conciliation, and indicated that for that purpose, Commissioner Deegan was available to conduct a conference the following day, 9 November 2005. Both parties on this occasion accepted that recommendation. 126. The agreed conciliation conference took place before Commissioner Deegan on 9 November 2005. Arising out of that conference, the Commissioner made the following statement: At a conference held in the Commission today the parties confirmed their respective positions concerning the negotiation of a collective agreement for striking Boeing employees at Williamtown. The AWU wish to negotiate a collective agreement. Boeing prefers to retain the status quo of individual agreements negotiated on an award base. Boeing has, however, offered to enter into discussions with the AWU and affected employees (in a conference overseen by the Commission) to determine whether individual agreements could be formulated which would meet the majority of the concerns of the employees. The AWU has agreed convey [sic] this offer to a meeting of the affected members and to seek instructions from them as to a response. 127. We would read the above as stating that Boeing was prepared, through the auspices of the AIRC, to negotiate with the AWU and the striking employees about their grievances concerning their terms and conditions of employment, provided that any agreed outcomes would be implemented by way of individual contracts. In closing submissions, Boeing confirmed this position. However, there was evidence given to the Inquiry that Boeing's officers had a different perception as to Boeing's position: (a) An e-mail recording a discussion about the dispute between various Boeing managers in Australia and in the United States, which occurred on 14 November 2005, has Mr Trew characterising Commissioner Deegan's statement as follows: The guidance from the Australian Industrial Relations Council [sic] (AIRC) in a recent decision was that the Company meet individually with the workers who are 'striking' to secure a mutual understanding of the issues and a solution which would facilitate the employee's [sic] return to work. Leaving aside whether there is anything in Commissioner Deegan's statement which could be read as an endorsement by the Commissioner of Boeing's proposal, the resolution process described in the Commissioner's statement appears to us to be essentially collective in nature (albeit leading to individual contracts), whereas Mr Trew refers to an individualised process which would not appear to involve the AWU. (b) Mr Brownsey in his evidence said that while Boeing was prepared to " discuss any … matters that may facilitate the settlement of the dispute ", Boeing's position was: " … we have been very clear with the union that we don't see any changes to our terms and conditions and we have articulated this to the workforce as well. So we wouldn't be discussing things like salary adjustments ". Elsewhere, although Mr Brownsey indicated that Boeing would consider changes to individual contracts which were cost neutral, he said that the 9 November 2005 offer did not involve a negotiating process with the AWU, but rather that the AWU should table its concerns through the AIRC and then " see what happened ". (c) Similarly, Mr Trew's evidence was that Boeing was not prepared to enter into negotiations with the AWU about substantive workplace issues. 128. In any event, the AWU rejected the proposal described by the Commissioner (which involved negotiation for individual agreements). AWU officers recommended at a meeting of the striking workers on the picket line that the proposal be rejected, and the meeting accepted that recommendation. The rejection was subsequently communicated to Boeing by way of a letter from Mr Maher to Brownsey dated 29 November 2005. In that letter, the AWU offered to enter into direct discussions with Boeing about all issues in dispute (including, as Mr Shorten explained in his evidence, the AWU's claim for a collective agreement). 129. Shortly before the adjournment of the hearings before us for the Christmas break, we were informed that there was to be a meeting between the parties occurring on 19 December 2005. That meeting was to be held in an attempt to resolve the current dispute. Upon the resumption of the hearings of the Inquiry in January 2006, we were informed that such a meeting had occurred, but that it was conducted in the absence of the relevant national officers of the AWU, Mr Shorten (its National Secretary) and Mr Swan (National Industrial Officer). Boeing was represented by Mr Giles, Mr Trew, Mr Brownsey and Mr Richard Kelly on the part of Boeing. No explanation was proffered by the AWU to us as to why neither Mr Shorten nor Mr Swan was able to attend what was obviously an important and, at least on Boeing's part, high-level meeting. The meeting was not successful in achieving any resolution of the dispute. 130. Senior Deputy President Marsh issued her decision with respect to the AWU's ballot application on 25 November 2005. Her Honour determined that a ballot should take place in order to further the AIRC's conciliation role. The parties were directed to confer on the terms of a question to be put to employees as to their preference for an individual common law contract or a collective agreement. The AWU was required to file an order within 14 days, or the matter could be relisted upon request if no agreement had been reached. As at 25 January 2006, no agreement had been reached between the parties as to this matter, nor had the proceedings been relisted. The Current Position 131. The strike continues. The number of employees currently on strike is 25. This number has reduced for three reasons: firstly, two employees have been dismissed for misconduct, as discussed earlier; secondly, some employees have returned to work; and thirdly, some employees have decided to leave their employment with Boeing. 132. The bargaining period initiated under the Workplace Relations Act with respect to the Williamtown operation also remains in place. Neither party has indicated any intention to apply to the AIRC to have the bargaining period terminated pursuant to section 170MW of the Workplace Relations Act (the AWU's view being that none of the grounds for termination in section 170MW could be made out). SECTION C: TERM OF REFERENCE 1 The Status of the Disputing Parties Who are the disputing parties? 133. The principal parties in dispute are Boeing, the AWU (both in its federal and state manifestations as registered under the Workplace Relations Act and the Industrial Relations Act respectively) and those employees at Williamtown currently engaged in strike action. 134. Some employees who participated initially in the strike action on 22 June 2005 (and/or in the earlier phases of industrial action) returned to work and/or resumed normal duties. Some of these employees have maintained their AWU membership and/or continue to desire that their terms and conditions of employment be regulated by a collective agreement negotiated on their behalf. The size of this group is not able to be determined (absent the holding of the ballot as determined by Marsh SDP), but at least includes Mr Allan Goodwin, an A Stamp Avionics Technician, who gave evidence in the proceedings that, despite deciding to return to work, the views he had held which caused him to participate in the industrial action had not changed. However, since, by definition, this group would have the same position on the relevant issues as the striking workers, it is not necessary that their position be given separate consideration. 135. There is also evidence that some employees never participated in the industrial action but nonetheless supported the issues advanced by those who did. Given, for example, that AWU membership reached 48 at its highest point, but that no more than about 35 joined in the strike action (and only 42 engaged in the timesheet ban), this group may be reasonably significant in number. However, no person in this group gave evidence, making it impossible to determine the extent to which they might regard themselves as being in dispute with Boeing, if at all. Accordingly, we do not propose to consider this group further in the context of Term of Reference 1. "Status" 136. In order to determine the status of the parties – i.e. their standing or position vis-à-vis the dispute – it is necessary to consider the following matters: (a) the issues in dispute; (b) the recent and current position adopted by each disputing party with respect to the issues in dispute; and (c) the basis of or reasons underlying the respective positions of the disputing parties. Issues in Dispute 137. The evidence makes plain that there are two overriding issues which are currently in dispute: (a) Whether the terms and conditions of employment of Boeing's aircraft maintenance employees at Williamtown ought be governed by a collective agreement, or by individual common law contracts of employment. (b) Whether, substantively, there ought be any change to the terms and conditions of employment currently applying to such employees. 138. There are a number of sub-issues underlying each of these two main issues. The first issue involves important questions as to whether Boeing's employees are, in practical terms, to have a right to negotiate their terms and conditions of employment, and whether in any such negotiations they may be represented by a union. In respect of the second issue, specific areas of grievance about terms and conditions of employment include: (a) The quantum of employees' base salaries. (b) The method of adjustment of salaries – in particular, whether managerial review of individual work performance ought play a role in this regard, and, if so, how such performance is to be fairly assessed. (c) Anomalies in salary levels among employees performing the same or equivalent work at the same classification levels. (d) A breakdown of the components of and transparency in the TRP. (e) The number of ordinary hours of work – 38 or 40. (f) Payment for overtime work – in particular, when should payment begin, and what should be the rate of payment. (g) The extent of any specific allowance to be paid for time worked inside the F/A-18 Hornet fuel tanks. (h) Boeing's entitlement to vary, unilaterally, employment benefits contained in policy documents. 139. We would observe at this stage that the issues as to particular terms and conditions of employment identified above seem to us to be of a routine and unremarkable nature. It would be inconceivable in normal circumstances that a dispute concerning issues of this nature could not be promptly and efficiently resolved by this Commission in conciliation, or, if necessary, by the exercise of arbitration powers consistent with the wage-fixing principles (assuming the Commission had jurisdiction). What is unusual about this dispute, and has made it so intractable, is the issue between the parties as to collective versus individual bargaining, and the associated issue of the employees' claim to the right of union representation. Position of the Striking Employees 140. The evidence before the Commission makes it plain that the striking employees have held, and continue to hold, a series of grievances in relation to their terms and conditions of employment. The nature of these grievances we have earlier described. We find that these grievances have been and are genuinely held, in that they have not been raised for any ulterior purpose but arise from a real and widespread sense of serious dissatisfaction with conditions prevailing in the workplace. Further, we find that these grievances are not unreasonable in themselves, in that the evidence shows that they have a rational and factual foundation. For example, the claim for a fuel tank allowance arose out a change in the nature of the work being performed, with a number of the employees required to perform, for the first time, a substantial amount of work inside the F/A-18 Hornet fuel tanks. The evidence demonstrates that such work is difficult and unpleasant, and further demonstrates that it is common for employees in the aircraft industry to be paid an allowance for such work, in amounts of a dollar to ten dollars per hour. This is not to say, however, that this claim, or any of the claims of the employees, is necessarily of such merit that they would be upheld in an arbitration context under the current wage-fixing principles. 141. The employees continue to hold their grievances with respect to terms and conditions of employment notwithstanding that Boeing, through the modified employment agreements offered in June 2005, has addressed some of those issues to at least some degree. For example, as earlier discussed, Boeing now pays a $600 per annum allowance to any employee who is certified and required to perform confined space entry. The striking employees hold the view that this allowance does not resolve their grievance because the amount is inadequate and below industry standards, and bears no relationship to the amount of time employees are actually required to spend inside the fuel tanks. Again, without expressing any view as to whether the confined space allowance paid by Boeing is fair and reasonable in all the circumstances, the maintenance by the striking employees of their grievances about this matter has at least been explained in a rational way. 142. The position of the striking employees is that they wish to have their grievances resolved by way of a collective agreement negotiated between their union, the AWU, and Boeing. However, they do not desire a collective agreement solely for this purpose. It is apparent that, independently of their specific grievances as to terms and conditions of employment, the striking employees have now reached the position where, as a general proposition, they want all dealings with their employer concerning terms and conditions of employment, now and in the future, to be conducted collectively through the auspices of the AWU rather than on the basis of the individual having to directly negotiate with the company. 143. The reasons why they now hold this position were expressed in various ways by those of the employees who gave evidence. For example Mr Bruce Foster, a Non-Destructive Testing Technician Level 2, said: A collective agreement is strongly preferable to me as I believe it is the only way I can have true bargaining power when I am sitting across the table from Boeing. I know that there will be not only me but my 27 colleagues with me. I will also have more confidence in the outcome. We will have more security in terms of employment and rate of pay, and better conflict resolution. And Mr Doug Abrahall, an A Stamp Mechanical tradesperson, said: A collective agreement is preferable to me because it will allow us to negotiate out terms and conditions. The details of the terms and conditions will be in black and white. Where there is a situation that the agreement does not cover it will be necessary to reach agreement between the workers and Boeing. Boeing won't be able to decide terms and conditions without our input. This will provide me with a sense of security. 144. However, to understand properly how the striking employees arrived at their current insistence upon a collective agreement, it is essential to identify why they came to reject the notion of individual contracts in the first place. A fundamental cause of this was their experience in 2004 when they attempted to raise their grievances through the proper channels (i.e. at team meetings and through Team Leaders, and subsequently with more senior managers). Not only did they not receive any proper or reasonable response to those grievances, there was not even any recognition that those grievances had any validity. 145. A recurring theme amongst the employee witnesses was the loss of trust in Boeing and its system of individual contracts which resulted from this experience – and which required a collective union agreement as a remedy. For example, Mr Geoffrey Means, an Aircraft Worker – Electrical, said: I am not happy with the individual contract as I feel as though we've been told lie after lie … I am also not happy with the individual contract as there is a lack of respect and trust and I can't work directly with Boeing without respect and trust in both directions. Mr Means also said: When I first started with Boeing I thought Boeing was a great company, respectful – times change. Mr Jamie Storer, a B Stamp Structures tradesperson, said: I'm on strike because Boeing won't answer our questions … I don't trust Boeing anymore and the only way we can have that trust is for our terms and conditions to be in black and white. And Mr Goodwin said: The change, we wanted a collective – we were unhappy with our performance reviews. We were unhappy with our old TRP. We just felt that we couldn't trust it enough … We just felt that it was time that we stand collectively like because we were not succeeding individually. I didn't like personally go and ask for pay rises or anything like that but going back to what I said when the A stamp people got $2 an hour less than mine, they went up to the office at times and with no luck, no success so to us the individual contract just wasn't wasn't working. 146. On the evidence, the striking employees' loss of trust in the individual contract system manifested itself in a number of ways: (a) A sense of being powerless, as individuals, to achieve a change of position by Boeing on any matter, however legitimate the grievance. (b) A feeling that Boeing's processes for dealing with individual employees, which gave the appearance of being designed to treat the employee fairly and as an equal, were in fact based upon a gross inequality of power and were incapable of producing a fair result. (c) A lack of trust that any agreement reached with Boeing would not later be unilaterally altered by Boeing. 147. Of course, as the history of the dispute shows, after the intervention of the AWU and the initiation of the bargaining period, Boeing did begin to change its position and respond, through the focus group process and the offer of alterations to the employment agreement, to the issues the employees had raised. However, it is likely that amongst many employees, this simply reinforced the view that in order to achieve any change, it was necessary to act collectively and have the assistance of a union. Indeed, the facts leave little room for doubt that Boeing's change of position occurred primarily because of the AWU's intervention. 148. We have already found that the decision of the employees to engage in indefinite strike action was based upon a belief, seriously mistaken in hindsight, that Boeing would concede their demand for a collective agreement. However, notwithstanding Boeing's continued resistance to that demand after over seven months of strike action, the current position of the employees is that they will remain on strike until Boeing concedes their demand for a collective agreement. For example, Mr Abrahall said: I am on strike because we have put a lot of time and effort into this and I can't (won't) walk away from it now. I also can't walk away from those people who have shown us their support and encouragement. I am committed to sticking it out until we get the result we're after. The Position of the AWU 149. The AWU's position is that a collective agreement between itself and Boeing is essential to protect the interests of its members. The proposal referred to in the Statement issued by Commissioner Deegan on 9 November 2005, whereby the AWU might be involved in the negotiation of new individual common law contracts, was not acceptable to the AWU, even though it arguably involved a quasi-collective bargaining process. The reasons for this opposition, and the AWU's insistence upon a collective agreement, were explained by Mr Shorten and Mr Boyd. They include: (a) There would be no impediment to Boeing, once the contracts had been negotiated with the AWU, later approaching individual employees to seek variations to those contracts without reference to the union. (b) The capacity of Boeing to do this would mean that any negotiated common outcome, or the duration of that outcome, would be rendered uncertain and vulnerable to change. (c) The AWU would be removed from the collective bargaining regime established under the Workplace Relations Act under which it can undertake protected industrial action; this would diminish the bargaining power of it and its members. (d) There would be practical difficulty in the need for the AWU to negotiate and administer a large number of individual contracts. Mr Shorten described the idea as a "fairytale". (e) It would be impossible for the AWU to determine whether Boeing was adhering to the agreed common outcome with respect to new employees. (f) There would be no guarantee that Boeing would deal with the AWU when the contracts came up for re-negotiation in the future, thus risking a repetition of the current dispute. The Commission accepts that, from the point of view of the AWU's interests and those of its members, the AWU's position that a collective agreement is necessary is genuinely held and has, on the facts of this dispute, a reasonable and rational foundation. 150. Like the striking employees themselves, the AWU did not intend or expect, at the outset, that the strike action would last anywhere near as long as it has, since it mistakenly believed that Boeing would concede its demand for a collective agreement. Indeed, we would infer from the AWU's conduct during this dispute that, at least until the strike began (and probably somewhat beyond then), its officials believed themselves to be dealing with a "common or garden variety" industrial dispute that would resolve itself in the ordinary way, and completely under-estimated how far Boeing was willing to go in its opposition to negotiating a collective agreement with the AWU (and consequently, we note, the AWU appears to have given no consideration to any alternative strategy). However, notwithstanding this, the AWU has consistently maintained its insistence upon a collective agreement during the duration of the strike. 151. The AWU's current intention remains that without some appropriate concession by Boeing, it will not take any steps to bring the strike to an end. As Mr Boyd put it: "We will continue on until we can find a suitable outcome for both parties". However, what concession Boeing needs to make in order to persuade the AWU to bring about an end to the strike is not clear. For example, even a concession by Boeing that it was prepared in principle to negotiate a collective agreement would not by itself be sufficient to end the strike; Mr Boyd's evidence was: I think we would have to have a couple of meetings just to find out the good faith of the bargaining process that was going to lie ahead. The guys have been on strike for a long time and they are not going to go back to work lightly. Nor would an offer by Boeing of a collective agreement containing the same terms and conditions as the individual contracts be acceptable. 152. As earlier noted, the AWU has offered to enter into discussions with Boeing about all issues, including whether there should be a collective agreement, without predetermination. However, even if Boeing acceded to such an offer, there is no evidence that such a concession would, by itself, bring the industrial action to an end. Nor is it at all probable that such discussions would result in a resolution of the dispute, since there is no indication that either party would resile from their respective positions concerning a collective agreement. 153. However, it does appear that the AWU would be prepared to take steps to bring the strike to an end if arbitration was available to resolve the issues in dispute. The AWU's written submissions contain an important statement of intention as follows: In the event the Commission is persuaded that it has the jurisdiction to arbitrate the dispute, the AWU will recommend to striking members that they call an end to the strike and that they authorise the termination of the Bargaining Period currently in place pursuant to the Workplace Relations Act . It is clear that "the Commission" being referred to is this Commission, with the AWU submitting that the AIRC is not, under the Workplace Relations Act, endowed with adequate power to resolve the dispute. There was some equivocation on Mr Shorten's part when he was asked questions about the option for the AWU to terminate the bargaining period and open up the opportunity to have his members' claims arbitrated. It was not apparent from his answers whether that option had been fully considered. Nonetheless, as we shall later discuss, the option of arbitration under the Workplace Relations Act was not a realistic option at all. The Position of Boeing 154. The fundamental position of Boeing in this dispute is that it is not prepared to enter into a collective agreement with the AWU under any circumstances, even if: (a) all of its employees at Williamtown voted in favour of a collective agreement in any ballot to occur following the decision of Marsh SDP; and (b) the collective agreement contained the same terms and conditions as the current individual contracts. 155. The Boeing witnesses identified four reasons in particular why Boeing adopted this position: (a) A collective agreement does not fit with Boeing's " business objectives ". (b) Boeing's current individual common law contract model has served its business well, and it does not want to take the risk of changing to a new, untried model involving collective agreements. (c) Individual contracts give Boeing a single, " seamless " mode of employment which could not be maintained if a collective agreement were to be introduced. (d) Boeing prefers to deal with its employees on an individual basis, and this could not be maintained if it entered into a collective agreement. 156. Each of these reasons bears closer analysis, since on the evidence there are real grounds to doubt whether these reasons have any objective, rational foundation. 157. As to the first of the reasons, Mr Gray in his letter of 22 March 2004, earlier set out in full, stated that a collective agreement did not fit with Boeing's business objectives. However, that letter did not identify those business objectives of Boeing with which a collective agreement was said not to fit. Nor did Boeing managers provide in their evidence to this Commission, despite ample opportunity to do so, any practical, financial or organisational reasons as to why a collective agreement was or would be incompatible with Boeing's business objectives. Mr Trew, the most senior Boeing manager to give evidence in the proceedings, described the relevant business objectives as being the "four pillars" of shareholder, employee, community and customer satisfaction. However, Mr Trew was unable to give any explanation as to why a collective agreement would not fit with those business objectives. The relevant part of his evidence was as follows: Q. Are you able to offer any explanation to the members of the Full Bench as to any manner in which a collective approach to wage negotiation does not fit with the business objectives you have just described? A. I don't know. Q. Do we take it that you are not able to offer any such explanation? A. No, I don't know, we haven't got it, we currently work on individual arrangements. It works, our staff like it, our staff want to stay with it, so the answer is I don't know, and you are asking me to, in a theoretical sense, as to what would be the outcome and I don't know. The reality is we work in an environment which does not have it and it works. Q. Do we take it from those recent answers that you are not able to proffer to the Full Bench a reason why a collective approach to wage negotiations does not fit with Boeing's business objectives as you have described those objectives, do we take that to be your position? A. I gave you the model as far as individually recognising and rewarding people. That is the reason for it. Q. Do we take the answer to my question to be no? A. I don't know, I don't know. 158. Mr Best, Boeing's Operations Manager, Military Aerospace Support, was likewise unable to give any explanation as to why a collective agreement did not fit Boeing's business objectives, apart from making reference to the alleged success of the existing individual contract arrangements. 159. The second reason given is also highly problematic: (a) The relevant Boeing managers could not advance any reason why a collective agreement could not serve its business equally as well as individual contracts. Indeed, there had been no attempt by Boeing management to assess any advantages or disadvantages that might attach to a collective agreement. (b) Other business operations run by Boeing, and by other companies in the Boeing group in Australia, are subject to collective agreements (e.g. Boeing's communications operation at Exmouth and the Hawker de Havilland businesses in Sydney and Melbourne). There was no suggestion by Boeing that these businesses operations were less than successful by reason of their adoption of the collective bargaining model, nor any explanation as to why, in that context, a model used in one part of Boeing's business (e.g. the individual contract model at Amberley) was chosen for Williamtown in preference to a model used in other parts of Boeing's business. (c) The evidence makes it difficult to conclude that, at Williamtown at least, the individual contract system had, at least by normal industrial relations criteria, been a success, in circumstances where: (i) There has been extensive industrial action, including a strike by a substantial number of Williamtown employees. (ii) At least at one stage, a majority of those employees had joined the AWU out of dissatisfaction with the individual contract system. (iii) Boeing has fallen behind schedule in its delivery of aircraft to the RAAF. (iv) Quality of work has suffered, as instanced by an increased number of reworks (see below). (v) A local council, the Newcastle City Council, has passed a resolution critical of Boeing's position. (vi) Boeing has encountered difficulty in recruiting new employees. (d) In any event, when confronted with discontent over its individual contract system, Boeing significantly altered its approach to industrial relations to one much more closely resembling that of collective bargaining. The focus groups involved a central form of consultation that (whilst excluding union officials) involved union delegates. The outcomes were not "negotiated" in the sense of Boeing reaching a bargained outcome but what flowed from the meeting was a new contract with uniform conditions across its operations. The fact that Boeing could so closely mimic collective bargaining processes and outcomes would indicate that it could easily embrace such an approach to deal with adjustments to wages and conditions of employment or other related issues. Its continued opposition to such an approach in light of the creation of this surrogate collective bargaining process would suggest, as will be discussed below, that Boeing was really motivated by an underlying philosophy to exclude union representation (which was essentially the major element omitted from the surrogate collective bargaining process applied by it). 160. The third reason, namely the desirability of a "seamless" or common and consistent set of employment arrangements across the various sites of Boeing's Military Aerospace Support division, was not supported by a rational explanation. The Boeing witnesses were simply unable to explain why the same outcome could not be attained under a collective agreement. Mr Best, who in evidence given in the earlier AIRC proceedings had expressed the view that a collective agreement would damage the seamless operation of Boeing's business, gave the following evidence before us: Q. Are you able to proffer to the Commission any reason why a collectively bargained employment agreement would not ensure what you have described as a seamless capability arising from your company's business model any differently than could individual employment agreements ? A. I'm not able to do that because I'm not an expert in that area. …. Q. You acknowledge then that quite possibly a collective agreement, if entered into at Williamtown, would permit the maintenance of consistency of terms and conditions across the three sites of Amberley, Williamtown, and Oakey ? A. That's what I said, it's a possibility. Q. And you have no basis at all which you can proffer to suggest otherwise ? A. Other than the company does not want it. Similarly, on the assumption that a collective agreement maintained common conditions across Boeing's sites, Mr Parker could not identify any impediment to Boeing's capacity to transfer employees from one site to another as part of a " seamless workforce ". 161. As we earlier observed, a collective agreement which applied to all the relevant sites might provide a more practical means of achieving consistency of terms and conditions of employment than having hundreds of individual contracts. Equally, a collective agreement at Williamtown which applied to employees the same terms and conditions as applied at the other sites (as was, in effect, proposed by Mr Smith of the AIG) would appear to create no obstacle whatever to the achievement of that consistency. Therefore, we do not accept that the third reason proffered by Boeing could rationally constitute a reason not to even entertain the negotiation of a collective agreement. 162. As for the fourth reason, the evidence makes clear that Boeing places great store upon it having the capacity to deal individually with its employees about all employment matters without the involvement of "third parties". However, less clear is why Boeing places such value upon this. 163. It is certainly not the case that there is any intention on the part of Boeing management that individual dealings with employees would result in any employee's individual contract being changed to accommodate the needs of that particular individual. Mr Parker emphasised that, apart from salary levels, the contracts were "stock standard" across the company. Accordingly, it cannot be said that Boeing in any sense negotiates its employment contracts with each individual. 164. Indeed, Mr Brownsey was at pains to point out that even the focus group process which occurred in 2005 "was not a negotiation" but merely a process of receiving "feedback" from employees about issues of widespread concern amongst employees, which Boeing then went away to consider. Therefore, on the evidence of the Boeing witnesses, there would not appear to be, in the ordinary course, any context in which Boeing would be prepared to engage in collective negotiations as such about the terms and conditions of employment of its employees at Williamtown. Indeed, we are prepared to infer from the evidence of those witnesses, in the absence of evidence to the contrary and the lack of any substance in the other reasons put forward by Boeing, that a fundamental reason why Boeing values dealing with its employees individually is that it maximises its capacity to determine unilaterally the terms and conditions of employment for its employees, rather than having to accept a negotiated outcome with the inevitable compromises that such an outcome would carry with it. 165. Fundamental to Boeing's position is also that its approach necessarily excludes, in nearly all circumstances, any capacity for employees to be represented by a union. This was made clear by Mr Trew in the following evidence: Q. Do you see then any role for union representation in relation to any of the workplace issues that might arise at Williamtown? A. No, our preference is obviously to deal directly with our own people. Having said that, our individuals are quite free to join the union. Q. Can you suggest any purpose they might have other than to advance their circumstances as an employee of Boeing? A. No, I don't, we don't enquire of it. Mr Brownsey identified a very limited role for unions at Williamtown: Q. Can you tell me to what extent at all Boeing is prepared to allow employees at Williamtown to be represented by a registered union in relation to any workplace issues that might arise from time to time? A. As per the provisions of the Workplace Relations Act, so we recognise the union's role as a representative, they are entitled to visit the site, we provide access, we provide a room for them to meet and we recognise if someone is dealing with a disciplinary matter that they may be represented by that union. Q. In particular would Boeing allow any union representation in relation to grievances or disputes or difficulty [sic] that might arise concerning the outcome, for example, of performance reviews? A. No, we wouldn't in my view because that is a matter that is just an employment relationship issue between the manager and the employee. Q. What about negotiation … of any salary adjustments? A. No, we wouldn't, I believe. 166. Accordingly, while Boeing nominally recognises a right for employees to belong to a union, it adopts an approach which, in practical terms, largely denudes that right of any value or substance. In our experience, whilst employees may have many reasons as to why they might choose to become or to remain a member of a union, the most significant of these is usually that the employee wishes to have the union deal with his or her employer on the employee's behalf concerning the employee's rate of pay and conditions of employment. Under the Industrial Relations Act the right of an employee to join a union carries with it the consequential right to have that union represent the employee in collective bargaining processes and ultimately, arbitration. This is a corollary of the right afforded to unions under the scheme of dispute resolution contained in the Act (see Ch 3, Pt 1 and the Objects of the Act, in particular, s 3(d)). 167. As Mr Trew and Mr Brownsey made clear in the evidence quoted above, Boeing denies the capacity of its employees to have a union act on their behalf in this regard. This position, as stated by them, extends beyond the question of collective bargaining, so that, apart from disciplinary matters, Boeing appears to recognise no circumstance in which an employee is entitled to have a union deal with Boeing on his or her behalf. 168. Therefore, we consider that the fourth reason advanced by Boeing to justify its position is properly characterised as one whereby it wishes to avoid, as far as possible, any context in which it is required to engage in negotiations about terms and conditions of employment of its employees, and to limit any capacity for its employees to be represented in such negotiations by a union. We accept that this approach, from the point of view of Boeing's self-interest, provides a rational basis for Boeing's refusal to enter into negotiations for a collective agreement. The system of individual contracts which it has established is one, however, which entrenches an inequality in economic and workplace power between Boeing and each of its employees at Williamtown, and thereby maximises Boeing's discretionary capacity to set and change terms and conditions of employment to suit its own interests. A departure from that system to one of collective bargaining with a union would, for Boeing, carry the risk of diminishing this inequality of power and limiting or removing Boeing's discretionary capacity to determine terms and conditions of employment. 169. However, our acceptance that Boeing's approach in this regard has a rational foundation is not to be taken as acceptance that it is reasonable. Indeed, it is an approach which runs contrary to the statutory scheme under which this Commission operates, given that one of the objects of the Industrial Relations Act is "to encourage participation in industrial relations by representative bodies of employees and employers…" (section 3(d)). It is also an approach which runs contrary to usual industrial relations experience, whereby employers will, absent some compelling reason otherwise such as union misbehaviour, usually accept the need to deal with a relevant union to which a substantial proportion of its employees belong. Certainly, it is not usually the case that a union is required to demonstrate, in order to have its role as the representative of its members recognised, that such recognition would advance the interests of the employer. Essentially, Boeing's approach belongs in an industrial relations paradigm which is radically different from that which is contemplated by the Industrial Relations Act and which normally applies to employer-employee relations in this State. 170. Boeing's position in respect of collective bargaining will not change as a result of the continuation of the current industrial action. As earlier stated, although Boeing is prepared to discuss with the AWU how the dispute might be resolved, it does not appear in that context to be willing to discuss changes to terms and conditions of employment. Boeing, rather, regards any legitimate grievances of the employees with respect to their terms and conditions of employment to have been addressed by its offers of revised employment agreements in June 2005 which, Boeing emphasised, were accepted by a majority of the relevant employees (although the reasons why individuals accepted those offers was not in evidence). The only proposal for resolution of the dispute advanced by Boeing is for the employees to cease their industrial action and return to work. Current Prospects for Resolution of the Dispute by the Parties 171. Given the respective positions of the parties as described above, we find that there is virtually no prospect of the parties resolving this dispute between themselves. There are no negotiations that we know of currently occurring between the parties, nor (leaving aside the implementation of the ballot order by Marsh SDP) are the parties currently engaged in any conciliation process in the AIRC. Assuming the ballot proceeds, it does not appear that any foreseeable result of that ballot is likely to change the position of any party. Consequently, it is likely, absent any other development, that the strike will continue for as long as the striking employees are capable, financially and personally, of sustaining it. SECTION D: TERM OF REFERENCE 2 The actual or potential economic impact of the dispute on the community surrounding the Royal Australian Air Force Air Base at Williamtown and the State as a whole. "The total economic cost of strikes is not easily measured" (Fox, Howard & Pittard, "Industrial Relations in Australia", 1995, p.65) Interpretation 172. The Williamtown RAAF Base is located in the Hunter Region of New South Wales. It lies approximately 15 kilometres (30 kilometres by road) north of the city of Newcastle. 173. The area surrounding the Williamtown RAAF Base is predominately farmland, Hunter District water catchments and areas used for sand mining. Approximately 15km to the north-west is Raymond Terrace, and within that radius lie the smaller townships of Salt Ash to the north-east and Tomago to the west. Apart from two service stations located about 1km from the entrance to the Base, the nearest retail shops are at Salt Ash (approximately 7kms to the north). 174. The immediate "community surrounding" the Airbase may, in that geographical context, be considered to include at least the areas identified above. However, Boeing's employees at the Airbase (including striking employees) reside at various locations extending further afield at least to the Port Stephens Shire in the north, to the Maitland District in the west and to Lake Macquarie in the south. 175. Accordingly, the community surrounding the Williamtown Airbase may for present purposes, be regarded as being the Hunter Region of New South Wales. 176. An "economic impact" is one which pertains "to the production, distribution and use of income and wealth": Macquarie Dictionary, Revised ed, 1985. It would encompass not only macro-economic effects throughout the Hunter Region but also micro-economic effects applicable to Boeing's staff and their families and other members of the community. 177. The "actual impacts" of the present dispute will be those which, as a matter of fact, have existed or currently exist; they must be discernible and identifiable. The "potential impacts" will be those that may possibly arise in the future. In both cases, the relevant impact must have a causal connection with the dispute. The evidence 178. The length of the strike has had a direct, tangible impact upon the financial circumstances of at least some of the striking employees. Notwithstanding some support by way of union subsidies and other donations, individual workers have struggled in the absence of regular income to meet their financial commitments. 179. At the broader level, evidence as to economic impact was given to the Inquiry by Mr Richard Cox, Director Economic Strategy, New South Wales Treasury. Mr Cox has extensive experience in private industry and Treasury in economic forecasting and modelling. He currently exercises responsibility for economic management issues in the Economics & Fiscal Directorate Office of Financial Management within Treasury. 180. Mr Cox applied a standard "value added" measure for economic activity, comprising (from the income side) wages and profit, rather than addressing gross turnover. 181. The more immediate economic impact from an industrial stoppage by aircraft maintenance employees, Mr Cox said, might be expected to consist of lost wages of the striking employees, associated profit unearned by reason of the stoppage, and a reduction in expenditure by Boeing on intermediate inputs into the maintenance process which would otherwise have included the labour of striking employees. 182. Data provided by the Centre for Agricultural and Resource Economics Pty Limited on behalf of the New South Wales Department of State and Regional Development provided an indication of the hypothetical value added by application of the labour of each full-time equivalent employee employed in the Aircraft Manufacturing Sector in the Hunter Region. By extraction from this data, which Mr Cox considered to be analogous, Mr Cox estimated that the "direct impact" on the economy of the Hunter Region could have an "upper bound" of approximately $2 million annually during the period of the strike. 183. Mr Cox also estimated that, based upon departmental data as to average spending per full-time employee in the Hunter Region, a reduction in spending of approximately $1.8 million annually could occur. 184. Mr Cox further concluded that any direct State-wide economic impacts of the Williamtown dispute were "very small", in light of a State economy with a Gross State Product of nearly $300 billion. 185. In practice, Mr Cox accepted that the economic impacts he estimated would likely be reduced to the extent that expenditure undertaken by striking employees, but for the strike, would have in part been applied to goods and services sourced from external areas. He also accepted, of course, that the estimates undertaken could be significantly affected by the extent to which the assumptions upon which his estimates were based were displaced factually. 186. Those assumptions were twofold: firstly, that the striking Williamtown employees received no income in compensation for their lost wages; secondly, that Boeing undertook no compensatory expenditure in satisfying its obligations to the RAAF in the upgrading, maintenance and repair of F/A-18 Hornet aircraft (e.g. by payment of wages for replacement labour, or of overtime to existing non-striking employees). 187. In fact, the evidence indicated that the assumptions underlying the estimates of economic impact may not be sound: (a) Some union subsidies and other donations (of unknown amount) have been provided to at least some of the striking employees. (b) Further, following commencement of the strike, Boeing introduced replacement labour into the Williamtown workplace. It did this by bringing to Williamtown, and paying for, a number of aircraft maintenance personnel located at its Queensland depots at Amberley and Oakey in Queensland, and contract labour supplied by Bermil (it is not possible to identify the precise number of persons engaged by way of replacement labour as a result of the strike, because of the recruitment of labour to accommodate the increasing demands of its present Hornet program). (c) Moreover, the introduction to the Williamtown workforce of staff from other areas might well bring to the community an increase in spending upon accommodation, food and other necessities. These factors would combine to offset to an unknown extent the adverse economic impacts which the present industrial stoppage might otherwise be thought to produce. 188. A separate attempt was made to assess the possible long-term effect of the strike upon future investment in the Hunter Region and the State, if the dispute could not be resolved "to the satisfaction of Boeing" (meaning, presumably, that the strike continued or was otherwise settled on terms regarded by Boeing as unsatisfactory). Boeing envisages future projects entailing significant increase in employment levels at Williamtown, anticipated even to treble over the next few years. Were Boeing to resolve at some future time not to pursue its planned development or to shift some or all of its operations from Williamtown to interstate because the strike continued or a resolution unsatisfactory to it was imposed upon it (e.g. through arbitration), it is thought that significant loss would be suffered by the New South Wales' economy. The NSW Department of State and Regional Development has estimated that the cost to the State's economy could exceed $200 million (in present value terms) over the decade, accompanied by a loss of about 600 jobs (direct and flow-on), the substantial portion of which would be borne by the Hunter Region. 189. It is also possible that continuation of the present strike may adversely impact upon business confidence so as to discourage other investment or expansion in the region; this may have other flow-on effects of limiting engineering apprenticeships and inviting the relocation elsewhere of business engaged in or connected with the aerospace engineering industry in the Hunter Region. Conclusions as to Economic Effects 190. It is quite possible that the industrial stoppage at Williamtown has had and continues to have some economic impact upon the regional and State-wide economies. While the absence of income has had an obvious immediate effect on the families of the striking employees, the effects of the stoppage upon the economies of the Hunter Region and the State are not self-evident. The reduction in the spending power of striking employees may have been offset by expenditure undertaken by, or on account of, replacement labour brought to Williamtown by Boeing. Any adverse economic impact which might otherwise have been measurable (and we do not consider that it is really capable of accurate measurement) is further obscured by the natural accretion in the workforce consequent upon recent expansion in Boeing's operations at Williamtown. 191. Although, hypothetically, a decision by Boeing to pursue planned development if the present dispute does not soon conclude or if its outcome be unsatisfactory to Boeing may have adverse consequences for the regional and State economies, such an outcome remains at this point entirely speculative. The extent to which Boeing might downgrade its future projects or shift operations, if at all, is unknown and, in any event, that would largely depend on whether the RAAF would be prepared to accommodate such a downgrade or shift. Whilst the immediate impact of the dispute on the striking employees and their families and on Boeing is apparent, in a real and practical sense, both the short-term and long-term economic impacts of a continuation of the present strike are not readily identifiable. SECTION E: TERM OF REFERENCE 3 Has there has been any actual or likely endangerment to the health and safety of the workers and/or the community surrounding the Royal Australian Air Force Airbase at Williamtown? Interpretation 192. For the purposes of this section of the Report, we take the "community surrounding" the Williamtown Airbase to be that described above in the context of Term 2, namely the Hunter Region. 193. The question of any actual or likely "endangerment" to the health and safety of workers and the surrounding community raises distinct issues. It will be necessary to consider the consequences of the present dispute for the health and safety of Boeing's employees, and then, quite separately, the effects (if any) upon the external community. Within the workplace, the dispute may have in turn had an actual impact, or it may have created merely the potential for such an impact. Workplace Safety 194. The task of ascertaining the existence of any "endangerment or likely endangerment" to workers' health and safety has not been an easy one. The concept entails not just the actual occurrence of physical or mental harm but also, importantly, the risk of or potential for such harm. In this respect, it is pertinent to have regard to the broad requirements of the Occupational Health and Safety Act 2000 (NSW), section 8 of which provides: 8 Duties of employers (1) Employees An employer must ensure the heath, safety and welfare at work of all the employees of the employer. That duty extends (without limitation) to the following: (a) ensuring that any premises controlled by the employer where the employees work (and the means of access to or exit from the premises) are safe and without risks to health, (b) ensuring that any plant or substance provided for use by the employees at work is safe and without risks to health when properly used, (c) ensuring that systems of work and the working environment of the employees are safe and without risks to health, (d) providing such information, instructions, training and supervision as may be necessary to ensure the employees' health and safety at work, (e) providing adequate facilities for the welfare of the employees at work. (2) Others at workplace An employer must ensure that people (other than the employees of the employer) are not exposed to risks to their health or safety arising from the conduct of the employer's undertaking while they are at the employer's place of work. 195. The WorkCover Authority of New South Wales is one of the authorities charged with enforcement of the Occupational Health and Safety Act. Its Regional Inspector, Mr Steven McMartin, attended Hangar 11 and examined records of Boeing and WorkCover for the purpose of preparing a report to the Inquiry. His Report was provided to the Inquiry upon the basis that it was subject to WorkCover's overall supervision and approval. To that Report we return below. Potential for increased incidence of injury 196. The immediate consequence of the commencement on 22 June 2005 of the strike by aircraft maintenance employees was, of course, the absence from the hangar floor of many experienced aircraft technicians who engaged in the stoppage. Boeing's technical workforce was "effectively halved". Unsurprisingly, this substantial depletion in Boeing's workforce produced delays in scheduled aircraft maintenance, repair and upgrading work. 197. In an attempt to mitigate the effects of this labour shortage, but also as part of an overall expansion of the size of its Williamtown workforce, Boeing undertook a wide-ranging recruitment campaign. Notwithstanding evidence of Mr Parker, Boeing's own documents indicate that, at least by September 2005, Boeing's recruitment program had had only limited success. At the same time, Boeing engaged in a process of reallocating to Williamtown a number of employees from its Amberley and Oakey sites, and engaged additional tradespersons whose labour was supplied under contract by Bermil Pty Limited. 198. Employees brought to Williamtown from Amberley had extensive work experience and expertise with the RAAF's F-111 fleet, and those from Oakey had experience and expertise working upon the Army's Kiowa helicopters. Generally, they lacked experience and proficiency in working upon F/A-18 Hornets, which differed in their function and structure from the aircraft at Amberley and Oakey. 199. Work undertaken on the F/A-18s could be quite specialised. Adam Szady, a structural maintenance engineer (B Stamp) with lengthy F/A-18 experience who remains on strike, described the F/A-18 as a "close tolerance" aircraft requiring technical precision in its maintenance and repair of a higher degree than some other aircraft. 200. Various features of the F/A-18 aircraft require the application of specialised skilled labour. In particular, the incorporation of carbon fibre as a structural component requires special attention. Mr Szady said of the Hornet: Well, it has certain characteristics that if you're not aware of what you are doing you can chip sections of carbon fibre because carbon fibre is like fibreglass. It's …layered upon layer upon layer and if you are not knowledgeable in how to perform certain tasks you can create quite a bit of damage as opposed to just working with steel or …aluminium. You know,. It has different characteristics. It takes quite a while to learn how to mill and ream the skins, especially on the wings…. Mr Szady was involved in a seven-month training program conducted at Williamtown by a Canadian entity, during which he came to understand the idiosyncratic features of work involving the carbon fibre componentry of the F/A-18 Hornet. 201. The difference in work practices created by the presence of carbon fibre was also described by Mr Bruce Foster, a Non-Destructive Tester who had extensive experience working on F/A-18 Hornets with the RAAF before moving to Boeing in 2001. According to Mr Foster: Another difference is that the Hornet has a high percentage of Carbon Fibre. Carbon fibre can be extremely hazardous. When it is drilled or sanded, special precautions have to be taken, including eye protection and a breathing apparatus. 202. Mr Foster also pointed to the existence of ejection seats and the "Chaff and Flare" active-missile-counter-measure, explosively-operated systems as necessitating special requirements of care and skill when undertaking maintenance and upgrade on the Hornets. 203. Mr Foster, who joined the strike when it began, expressed concerns that persons brought into Hangar 11 to perform work on the Hornets after the strike began did not have the "specialised knowledge to be aware of these distinctive characteristics of the Hornet and to take appropriate safety measures". 204. WorkCover's Inspector McMartin examined records of Boeing relating to training given to Williamtown employees in the latter half of 2005. In his Report, Mr McMartin identified the training programs undertaken by tradespersons newly introduced to the workplace. Whilst Mr McMartin's analysis is inconclusive in some respects, it does illustrate that some newly recruited staff were receiving facets of their induction program training after they had actually commenced work in the hangar. 205. One factor which had the potential to create an increased risk of injury was the extension of overtime work during the strike, at various times up to approximately 300 hours per week (spread among perhaps 20 to 40 people). Boeing's Safety Health and Environment Coordinator, Mr Robert Jenkins, accepted at a general level that worker fatigue may have a role as an important element in occupational health and safety considerations. However, he was adamant that excessive overtime was not worked by any individuals so as to create a safety risk through fatigue. 206. The evidence revealed one effect of the strike to be an increase in the volume of "reworks" required. Rework became necessary where performance of work on the aircraft was inadequate or defective, i.e. through faulty workmanship. Mr Yeatman, Boeing's Quality Assurance Officer, gave examples. He attributed the upsurge in the requirement for rework to the introduction into the labour force at Williamtown of new tradespeople and the need for them to become proficient and "get up to speed" with the fairly complex aerospace work involved. Mr Yeatman assessed the extent of the increase in reworks at between 50 and 100 per cent above the norm. It is inherently possible that a situation in which inexperienced tradespersons produced faulty workmanship also carried with it a correspondingly enhanced risk of injury to those persons engaged directly in the work or located nearby. 207. One particular incident is worthy of note. Some six weeks after the strike began, damage was caused to one of the Hornet aircraft which had been brought into the Hangar for maintenance and modification work. Relevantly, a replacement tank cavity floor was required to be fitted into a place a number of times to ensure accuracy of fastener holes and fit generally. Initially the work was undertaken by a supervising B Stamp technician and a tradesperson classified UDS (Under Direction and Supervision). For reasons that are not clear, the supervising B Stamp technician came to be replaced by another UDS tradesperson, leaving to undertake the task two UDS tradespersons, neither of whom apparently had appropriate training or experience for the task. In consequence, the two tradespeople utilised a wholly inappropriate method of installation resulting in the loss of control of the cavity floor. This in turn resulted in one of the operators losing his balance, causing a former post to bend and crack. This damage led to considerable delay in the completion of modification and maintenance work on the aircraft and its return to the RAAF. 208. Fortunately, whilst the manoeuvrings by the UDS tradespersons led to one of them losing his balance during the process, actual physical injury was avoided. An internal incident Report prepared by Boeing personnel attributed the accident "squarely to lack of task experience" and to a lack of "knowledge of those operators used to perform the work"; this occurred in an "environment of low experience levels". 209. The combination of these expressions leads us to infer that this accident occurred as a result, indirectly if not directly, of the presence of inexperienced labour on the workshop floor introduced into the workforce as a remedial measure to overcome the effects of the continuing industrial stoppage. 210. The introduction of new tradespersons, their general lack of experience working upon the F/A-18 aircraft, the highly specialised and technical nature of some of the work required on those aircraft, and the significant jump in the requirement for reworks to rectify faulty workmanship, combine to suggest that there was an inherently increased risk to the health and safety of those in the workplace. Whether that potential for harm materialised in the form of an increased level of workplace injury is, of course, another matter. Reported injury levels 211. In the course of his investigation, Inspector McMartin reviewed Boeing's occupational health and safety records and the workers' compensation records of WorkCover for both Boeing and the contract labour hire company, Bermil Pty Limited. His purpose in so doing was to undertake a comparison of workplace injury patterns in the respective periods before and after the commencement of the strike in June 2005, with a view to determining whether the onset and continuation of the strike had produced any increase in injury levels in Boeing's workplace. In his Report, the Inspector provided to the Inquiry statistics recording the incidence of injury in those periods. In addition, Mr Jenkins, Boeing's Safety Health and Environment Coordinator gave evidence about these matters. 212. In terms of physical injuries reported, a statistical comparison of the number of injuries reported in the period since the strike commenced and an equivalent period preceding the strike revealed that there has been a discernible increase in injuries reported since June. However, Mr Jenkins explained that this was attributable not so much to an increase in the incidence of injury, but rather to an increased consciousness on the part of staff of the requirement to report even minor injuries, a requirement instilled in the workforce as a result of an education program directed to that end that had been in place in the period shortly before the strike. Moreover, the evidence before us does not establish that there was necessarily a causal nexus between any physical injury suffered after 22 June and the onset and continuation of the strike, in particular by the replacement of experienced tradespersons by workers of lesser experience. 213. What did emerge, however, was a series of "stress" injuries or complaints, not previously detected. Whereas it might be open to speculate that increased stress levels may have been experienced as a result of working with and in the vicinity of inexperienced trades personnel, there was no evidence to support such a conclusion. Rather, Mr Jenkins, in his role as Health and Safety Coordinator, considered that the cause, whilst related to the strike, was more likely the "personal conflict" of workers torn between a need to continue working and a desire to show solidarity with their striking work colleagues. Some but not all of those suffering stress "from the effects of the strike" (as Mr Jenkins described it) required time away from work. In an attempt to redress the problem, Boeing has enlisted the services of a psychologist on-site once a week to provide counselling to those suffering stress-related symptoms. 214. We consider that the evidence adduced at the Inquiry does not permit a conclusion as to whether or not the shortage of experienced aircraft technicians following the onset of the strike on 22 June 2005, and the introduction into the workplace of persons without experience working with F/A-18 Hornets, was causative of any physical injury or any increased level of physical injuries amongst staff. Such a causal link to complaints of stress, however, does find support in the evidence before the Inquiry. 215. Moreover, the use of tradespeople lacking in the specialised skills required for F/A-18 work has in our view entailed (certainly in the weeks after the strike began) an enhanced level of potential danger and risk of injury (though not actual injury to Boeing employees engaged in servicing RAAF F/A-18 Hornet aircraft at Williamtown). 216. There is sufficient evidence of workplace practices in which Boeing engaged following commencement of the strike to suggest that the health, safety and welfare on Boeing's employees in the hangar was not at all times ensured by Boeing. It has not been the function of the Inquiry to investigate for itself whether any breaches of the requirements of the Occupational Health and Safety Act did in fact occur or are occurring. Nevertheless, a full and complete investigation of all aspects of occupational health and safety matters at the Boeing workplace since 22 June 2005 (not possible having regard to the resources and time available to the Inquiry) may reveal possible breaches of the Occupational Health and Safety Act. In the circumstances, we recommend: That the WorkCover Authority fulfil its statutory duty by undertaking a full and proper investigation as to whether the use by Boeing of inexperienced personnel during the current strike action has led to any breach of the provisions of section 8 or any other section of the Occupational Health and Safety Act. 217. Before leaving our consideration of the effects of the strike upon the health and safety of Boeing employees, we record that employees who have been on strike have, unsurprisingly, suffered considerable hardship. This may well have included adverse consequences for their physical and mental health. This hardship cannot be so lightly dismissed by suggesting the employees were the cause of their own suffering as Boeing sought to do. Such a suggestion implies the whole, or most of the responsibility, for the dispute lies with the striking employees, which is clearly not the case. Safety of the Community 218. Counsel for Boeing submitted that Term 3 of the Terms of Reference does not extend so as to permit investigation of the supervision and effectiveness of maintenance of military aircraft carried out by Boeing under its contracts with the RAAF. We disagree. 219. The only practical and sensible construction of Term 3 requires an appreciation that any impact of the strike upon the health and safety of those outside the Airbase is likely to arise from inadequate or defective servicing of the Hornets. Were they to be flown in an unsafe condition by reason of faulty workmanship of inadequately-supervised trades personnel, then such an outcome would fall to be reported within the context of Term 3. 220. We should state at the outset that there was no evidence given to the Inquiry that any F/A-18 Hornet was returned by Boeing to service in dangerous or defective condition such as would have exposed residents of the Hunter region to the danger of aircraft falling from the sky. The Inquiry's investigations did not extend so far. Firstly, neither the time nor the resources available to the Commission permitted any in-depth investigation of such matters. In any event, Inspector McMartin's inspection of Boeing's records produced at the Inquiry revealed no instance of any aircraft being returned to the RAAF in an unsafe condition. Secondly, the Commonwealth sought and was granted leave to appear to object to the production of evidence touching upon matters involving capabilities and operations of the defence forces. Objection was in fact taken to some evidence which was marked and is to be treated as confidential, but which we can say did not reveal any danger to the community. 221. The evidence disclosed the maintenance by Boeing of a rigorous quality assurance program capable of detecting inadequacies in maintenance, repair or upgrade of aircraft before their return to the RAAF. Mr Yeatman, Boeing's Quality Assurance Officer, engaged as such since Boeing's contract with the RAAF began, identified the means by which Boeing assured compliance with the relevant Aerospace Standard and with the technical airworthiness regulations issued by the Director-General of Technical Airworthiness. Mr Yeatman explained the processes of inspection, documentation review, reports and audits by which Boeing's quality assurance team monitored the airworthiness of aircraft prior to their redelivery to the RAAF. 222. There has been no evidence before us of any instance of an aircraft being returned to the RAAF in an unsafe condition. Although there is evidence that a lack of supervision of aircraft technicians during the period of the strike has led to an increased rate of non-conformance with product quality requirements, there is no basis for concluding that all such instances have not been detected and corrected. The evidence before the Inquiry discloses no adverse effect on the health and safety of residents and businesses in the Hunter region by reason of the dispute. SECTION F: TERM OF REFERENCE 4 The Adequacy of Currently Available Remedies to Resolve the Dispute Scope of the Term of Reference 223. Term of Reference 4 requires the Commission to consider the adequacy of the range of legal remedies that are currently available to encourage the resolution of the dispute in an appropriate way. It was submitted by Boeing that this Term of Reference, and Term of Reference 5, do not permit the consideration of arbitration powers (federal or state), since arbitration would not operate to "encourage" or "assist" resolution of the dispute. We reject that submission for the following reasons (consistently with the submissions of Counsel Assisting and of the Minister): (a) Decisions or orders made in the exercise of arbitral powers would assist to the maximum level the resolution of the present dispute. (b) Moreover, the pendency of the arbitration process, if available, might well itself encourage the parties to resolve the dispute as between themselves. (c) The expressions used in Terms of Reference 4 and 5 are to be read in their context. The use of the word " remedies " in Term of Reference 4 lends itself conceptually to a determinative process conducted by a court or tribunal, such as arbitration. Given that Term 5 is sequential to Term 4, it is to be interpreted in the same way. 224. The consideration required by Term of Reference 4 will necessarily concentrate on the remedies available under the Workplace Relations Act and the Industrial Relations Act. In relation to those Acts, we have concluded (and no party submitted otherwise) that the Terms of Reference require us to deal with them in the form that they are as at the time of the writing of this Report. In addition, as submitted by the Minister, it will also be necessary to examine (albeit briefly) any other available legal remedies available. Workplace Relations Act 1996 – the Statutory Scheme 225. The Workplace Relations Act contains, in Part VIB, a set of provisions under which employers, employees and unions can bargain for and reach enterprise agreements of a collective nature and have those agreements certified by the AIRC. It is fundamental to the scheme established by Part VIB that, in the process of seeking to obtain an agreement, employers, employees and unions are free, subject to certain requirements and limitations, to engage in "industrial warfare" with each other. This aspect of the scheme is established in Division 8 of Part VIB, and its main features may be summarised as follows: (a) An employer, union or employee wishing to negotiate an agreement to apply to a single business or part of a single business may initiate a "bargaining period", by way of written notification to the AIRC and to the other proposed party or parties to the agreement (section 170MI). (b) Subject to specified requirements as to written notice (under section 170MO), and provided there has been a genuine attempt to reach an agreement (section 170MP), a negotiating party may engage in "protected" industrial action during a bargaining period for the purpose of supporting or advancing claims made in respect of the proposed agreement, or responding to industrial action by another negotiating party. (c) In respect of "protected" industrial action, " no action lies under any law (whether written or unwritten) in force in a State or Territory in respect of any industrial action that is protected action ", subject to certain exceptions relating to personal injury, property and defamation (section 170MT(2) and (3)). (d) The AIRC may not make an order under section 127 that a party cease or refrain from industrial action if that action is "protected" (section 127(5A)). (e) The AIRC may exercise its conciliation powers during a bargaining period (section 170NA), but it may not exercise its arbitration powers (section 170N). (f) The AIRC may suspend or terminate a bargaining period, but only if satisfied that any of the identified circumstances exists (section 170MW). (g) If a bargaining period is terminated by the AIRC under section 170MW, the AIRC is required to exercise conciliation powers, and if the negotiating parties do not reach a settlement and it is not likely conciliation will result in a settlement in a reasonable time, the AIRC must exercise arbitration powers if it considers it appropriate. (h) Unless a bargaining period is terminated by the AIRC, it may otherwise only come to an end if an agreement is reached, or if the party which initiated the bargaining period gives written notice to the other negotiating parties that it no longer wishes to reach an agreement with them (section 170MV). 226. It is significant to note that under the Workplace Relations Act there is no obligation on an employer to engage in collective bargaining, notwithstanding that Australia has ratified the International Labour Organisation's Convention 98 - Right to Organise and Collective Bargaining. The absence of any obligation on an employer to recognise the right of a trade union to bargain collectively on behalf of its members and to engage in collective bargaining has been a significant factor contributing to the intractability of this dispute. 227. Absent the existence of a bargaining period, the AIRC has under the Workplace Relations Act the capacity to exercise conciliation and arbitration powers with respect to industrial disputes (sections 102 and 104 respectively). However, the industrial dispute must extend beyond the limits of any one State and must be about matters pertaining to the relationship of employer and employee (section 4). The AIRC must make a finding that such a dispute exists, and identify the parties to the dispute and the matters in dispute, if any alleged dispute comes before it (section 101). 228. There are important restrictions upon the AIRC's capacity to deal with an industrial dispute by arbitration imposed by section 89A: (a) The dispute is, for arbitration purposes, taken to include only 20 "allowable matters" (which are set out in section 89A(2)), so that no matter that is not an "allowable matters" may be the subject of arbitration, unless the AIRC is satisfied that it constitutes an "exceptional matter" in accordance with the requirements of section 89A(7). (b) The AIRC's power to make an award dealing with "allowable matters" is limited to the making a minimum rates award (section 89A(3)) – that is, the AIRC cannot make an award setting actual terms and conditions of employment to apply at a particular workplace. Its limited power in this regard must be exercised consistently with the object stated in section 88A(b) – that awards must " act as a safety net of fair and minimum wages and conditions of employment ". Adequacy of Available Remedies under the Workplace Relations Act 1996 229. The current position applying in respect of the dispute at Williamtown is that there is a bargaining period currently in place, and the AWU and its members are taking protected industrial action. The AIRC has exercised conciliation powers in respect of the bargaining period (in which may be included the decision of Marsh SDP that a ballot of employees be held), but this has not resulted in any settlement of the matter, nor, as we have earlier found, is it likely to. 230. We accept the submission of Counsel Assisting and the AWU (not contradicted by Boeing) that, on the facts of this dispute, none of the circumstances upon which the AIRC may terminate the bargaining period under section 170MW exists here. Given that arbitration may not otherwise occur during the bargaining period, we conclude that there is no remedy available under the Workplace Relations Act by which the dispute might be resolved while the bargaining period remains in place. This is not a surprising conclusion: the scheme established under Part VIB of the Workplace Relations Act is predicated on the proposition that, except in very limited circumstances, intervention by the AIRC and the courts is not permitted during a bargaining period. This implicitly carries with it the associated proposition that the negotiating party with the greater economic and/or bargaining power will often be able to determine the substantive outcome that will flow from the bargaining period. In this dispute, Boeing's determination and ability to carry on indefinitely its business in the face of the industrial action by the AWU and its members provide a capacity to ensure that its position, absent outside intervention, will prevail. 231. The Workplace Relations Act contains no guarantee that a bargaining period will result in a collective bargain. Indeed, as Boeing admitted, even if all of its employees sought by their vote in the proposed secret ballot, a collective agreement, it would not enter into such an arrangement. Moreover, the Workplace Relations Act would not require the company to make such an agreement. By this it should be understood that, unless the striking employees have the power to force a collective agreement then none would emerge in this dispute. And as Senior Counsel for Boeing submitted, even if arbitration were available it would not produce such a result. Nor, we would add for the reasons discussed below, would arbitration under the Workplace Relations Act be likely to produce a resolution given the constraints on the award making power of the AIRC under that Act. However, to say that Boeing may ultimately "win" the dispute is not to say that the dispute has been resolved, in the words of Term of Reference 4, promptly, effectively or fairly. 232. Boeing submitted that the AWU need only terminate the bargaining period itself under section 170MV in order to be able to access the power of the AIRC to arbitrate an industrial dispute under section 104. However, that submission fails to recognise the severe limitation upon arbitration under the Workplace Relations Act to resolve the issues in this dispute. A question was raised by Counsel Assisting as to whether the current industrial dispute at Williamtown is, or is part of, a dispute extending beyond the limits of any one State, such as to make available the exercise by the AIRC of section 104 arbitration powers. There has been no finding made by the AIRC that such a dispute exists pursuant to section 101. While there is some evidence to suggest that some of the issues which have arisen at Williamtown have also arisen at Amberley in Queensland, some doubt remains and it is likely that issue would be the subject of debate if the s 99 process under the Workplace Relations Act is initiated. 233. More significantly, even if the remedy of arbitration were available in an abstract sense under the Workplace Relations Act, we are not satisfied that a remedy would be available to bring about a resolution of the dispute. Putting to one side the question of collective as against individual bargaining, the dispute at Williamtown fundamentally concerns the actual terms and conditions of employment which are to apply to the aircraft maintenance employees. However, the restriction on the arbitration power of the AIRC contained in section 89A(3) earlier identified means that the AIRC cannot, by arbitration under section 104, make an award setting the actual terms and conditions of employment at Williamtown (i.e. it is not empowered to make a "paid rates" award). It may only set minimum terms and conditions of employment. The consequence of this is that any arbitration decision by the AIRC will not serve to resolve the actual substance of the present dispute. 234. Whether such a situation is "fair" in some abstract sense is a matter for debate, as Senior Counsel for Boeing correctly submitted. But what is clear is the federal system of industrial regulation substantially limits the ability of employees to have their claims and grievances arbitrated by an independent tribunal applying the usual criterion of fairness in the resolution of industrial disputes. It should be added that the same failing in the federal system affects employers who find themselves with little opportunity to gain relief in the face of industrial action by a union or unions that hold the upper hand in terms of bargaining power. It is a bargaining system based on survival of the fittest. 235. The bargaining process that obtains federally does not have sufficient regard to substantial imbalances in bargaining power. Its operation depends almost entirely upon the economic and industrial power of the participants without reference to the public interest. 236. Accordingly, we conclude that such remedies as are available under the Workplace Relations Act are inadequate to resolve the current industrial dispute. There is no power presently available under the Workplace Relations Act to bring about a cessation of the industrial action and the employees have no prospect of obtaining a collective agreement or of obtaining a remedy for their grievances based on some objective, independent consideration of their claims (subject to the usual constraints of fairness, reasonableness and economic balance). Having regard to the statutory scheme of the Industrial Relations Act 1996, this could not be described as adequate because it entrenches inequality, removes redress for those in weak bargaining positions and largely disregards the public interest. Industrial Relations Act 1996 – the Statutory Scheme 237. Section 3(g) of the Industrial Relations Act provides that it is an object of that Act "to provide for the resolution of industrial disputes by conciliation and, if necessary, by arbitration in a prompt and fair manner and with a minimum of legal technicality". The scheme by which that object is given effect is set out in Chapter 3, which may briefly be summarised as follows: (a) The Commission may be notified of an industrial dispute for the purpose of resolving that dispute by a relevant union, employer, employer organisation, State peak council, or person subject to a secondary boycott (section 130(1)). The dispute may be notified informally. In addition, the Commission may act of its own initiative to resolve an industrial dispute (section 130(2)), and the Minister may also initiate dispute resolution proceedings (section 167(1)). (b) "Industrial dispute" is broadly defined in the Dictionary to the Act to mean a dispute about an "industrial matter" – which latter expression is also given a broad definition in section 6(1) to mean " matters or things affecting or relating to work done or to be done in any industry, or the privileges, rights, duties or obligations of employers or employees in any industry ". The definition is further extended by the addition of " examples " of industrial matters set out in section 6(2). (c) The Commission must first attempt to resolve an industrial dispute by conciliation (section 133). In attempting conciliation, the Commission is required to do everything that seems to be proper to assist the parties to agree on terms for the resolution of the dispute (section 134(1)). It may make a recommendation or give a direction to the parties to the dispute (section 134(2)), including a recommendation or direction to bargain in good faith (section 134(4)), and may direct the convening and conduct of conferences of the parties, whether presided over by a member of the Commission or not (section 134(3)). (d) If an industrial dispute is not resolved by conciliation, or if the Commission finds that there is no reasonable likelihood that the dispute will be resolved by conciliation, or if its decides that industrial action or duress necessitates the exercise of arbitral powers, it may issue a certificate of attempted conciliation and deal with the dispute by arbitration (section 135). (e) The Commission may, in arbitration proceedings, amongst other things: (i) make a recommendation or give a direction (section 136(1)(a)); (ii) make or vary an award (section 136(1)(b)); and (iii) make a dispute order (section 136(1)(c)), including a dispute order requiring a person to cease or refrain from taking industrial action (section 137(1)(a)). (f) Arbitration powers may be exercised on application by a person authorised to notify the Commission of a dispute or by the Commission on its own initiative (section 136(2)). (g) The power of the Commission to make an award in arbitration proceedings is as provided for in section 10 – that is, the Commission " may make an award … setting fair and reasonable conditions of employment for employees ". Availability of Remedies under the Industrial Relations Act 1996 238. It is clear (and no party submitted otherwise) that the current dispute at Williamtown is an industrial dispute within the meaning of the Industrial Relations Act to which the dispute resolution scheme in Chapter 3 would apply. However, the availability and/or effectiveness, in a practical sense, of the remedies in respect of industrial disputes contained in the Chapter 3 set out above – in particular, the power to make an award in arbitration proceedings – is, because of section 152(1) of the Workplace Relations Act, dependent upon the question of whether any award of the AIRC binds Boeing in respect of its aircraft maintenance employees at Williamtown. 239. Section 152(1) of the Workplace Relations Act provides as follows: 152(1) Subject to this section, if a State law or a State award is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid. (There are exceptions to this provision contained in section 152 which are not relevant for present purposes). The effect of this provision in the current context would be that any award applicable to Boeing and its Williamtown aircraft maintenance employees made by this Commission in arbitration proceedings would be invalid to the extent that it was inconsistent with, or dealt with a matter dealt with in, any applicable federal award (we leave aside for present purposes, other remedies that may be available under the Industrial Relations Act). Is there a federal award applicable at Williamtown? 240. At various times, two federal awards have been suggested as having application to Boeing's aircraft maintenance employees at Williamtown – the Metals Award, and the General Aviation Award. However, as is apparent from our earlier description of the history of this dispute, the position of both parties as to the award coverage question has changed over time. Boeing's initial position was that it was covered by a state award, but, shortly after the initial intervention of the AWU at its site, it began to contend that it utilised the Metals Award for "reference", and only later asserted that it was covered by the Metals Award. The AWU, for its part, has at various times contended that Boeing is covered by a state award, no award, the Metals Award, and the General Aviation Award. Even in its closing submission in this Inquiry, the AWU contended that Boeing's employment contracts at Williamtown were in breach of the Metals Award, but later submitted that the Commission should find that no federal award applied. This confusion in approach exhibited by Boeing and the AWU themselves reflects the degree of uncertainty as to the applicability of any federal award to the Williamtown site. 241. On 16 December 2005, Counsel Assisting the Inquiry supplied to the parties having leave to appear before the Inquiry a memorandum setting out a number of issues which Counsel Assisting had identified as arising with respect to the question of whether any federal award had relevant application. Those issues, as set out in the memorandum, were as follows: (1) In respect of the Metal, Engineering and Associated Industries Award 1998 ("the Metals Award"): (a) Whether or not the aircraft maintenance business conducted by Boeing Australia Limited ("Boeing") at the Williamtown Airbase (relating, as it does, to non-civil aircraft) falls within the scope of the industries referred to in clause 1.6 and Schedule A of the Metals Award, such as to make the Metals Award applicable to Boeing in respect of that business; and (b) Whether or not, having regard to the terms of rule 5 of the Rules of the Australian Industry Group and to the nature of Boeing's business in maintaining and servicing non-civil aircraft, Boeing's membership of the Australian Industry Group is valid such as to make it bound by the Metals Award by virtue of the Australian Industry Group's respondency to that award. (2) In respect of the Aircraft Engineers (General Aviation) Award 1982 ("the General Aviation Award"): (a) Whether or not, having regard to the application of the award to "the industry of, and the employment of persons employed in General Aviation" (clause 5.2), the award applies to the aircraft maintenance business conducted by Boeing at the Williamtown Airbase (relating, as it does, to non-civil aircraft); and (b) Whether or not the Metal Trades Industry Association (as the Australian Industry Group was previously known) is a respondent to the General Aviation Award in its capacity as an industrial organisation (as distinct from merely being a respondent as an employer), having regard to clause 6 and Appendix A of that award, such as to make Boeing bound by the General Aviation Award by virtue of its membership, or purported membership, of the Australian Industry Group; and (c) Whether or not, having regard to the terms of rule 5 of the Rules of the Australian Industry Group and to the nature of Boeing's business in maintaining and servicing non-civil aircraft, Boeing's membership of the Australian Industry Group is valid such as to make it bound by the General Aviation Award by virtue of the Metal Trades Industries Association's respondency to that award. 242. Counsel Assisting, in their submissions to the Inquiry, explained the issues as follows: Issues (1)(a) and (2)(a) ("the Award Coverage Issue") concern the proper interpretation of the coverage clauses of the Metals Award 1998 and the General Aviation Award 1999. Issue (2)(b) ("the Respondency Issue") concerns the nature of the respondency of the Australian Industry Group ("AIG") to the General Aviation Award 1999. Issues 1(b) and (2)(c) ("the Rules Issue") concern whether Boeing's membership of the AIG is valid having regard to the eligibility rule of the AIG. 243. Counsel Assisting prepared comprehensive submissions on the award coverage issue and these were provided to the parties on 16 December 2005 in order that they might respond if they chose to do so on 24 and 25 January 2006, the dates set aside for final submissions. The submissions of Counsel Assisting on the award coverage issue are set out in Appendix 4. A short supplementary note supplied by Counsel Assisting is set out in Appendix 5. 244. The conclusions which Counsel Assisting invited the Commission to reach with respect to the question of whether any federal award applied to Boeing at Williamtown were as follows [Appendix 4 par 5]: (a) Upon a proper construction of the Metals Award 1998 and the General Aviation Award 1999, the preferable view is that neither award covers the Williamtown employees because: (i) the Metals Award 1998 has no application to the aircraft industry at all; and (ii) the General Aviation Award 1999 does not apply to military or non-civil aircraft. (b) It is also arguable that the General Aviation Award 1999 does not cover the Williamtown employees because the AIG is not respondent - as an organisation - to that award. (c) Further, upon a proper construction of the AIG's eligibility rule and having regard to the evidence, it is likely that neither award applies to the Williamtown employees because Boeing may not be an eligible member of the AIG. 245. With respect to the conclusion (a) above, the submissions of Counsel Assisting analysed in detail the history of the predecessor awards to the current Metals Award and General Aviation Award. That analysis demonstrated that: (a) From 1938 until 1970, the aircraft industry (both civil and military) was comprehensively regulated, in terms of manufacture, assembly, repair and maintenance, by series of awards named the Aircraft Industry Award . Federal industrial courts and tribunals regarded the aircraft industry as separate and distinct from the industries covered during that period by the predecessor awards to the current Metals Award. (b) From 1970, federal award regulation of the aircraft industry fragmented, with a number of company-specific awards being made. Those companies which at the time were identifiable, historically, as being involved in the manufacture and maintenance of military aircraft, were amongst those companies which obtained their own awards. (c) By 1974, there remained two awards with general (i.e. non-company specific) incidence provisions applying in the trades area of the aircraft industry: the Aircraft Industry (Manufacture, Maintenance, Overhaul and Servicing Award 1971 and the Aircraft Engineers (General Aviation) Award 1974 . In relation to these awards: (i) The former award was superseded by the Aerospace Industry Award 1986 , which was set aside in 1997 and not replaced. (ii) The latter award, and its successors (including the current General Aviation Award) applied to "general aviation". Decisions and extrinsic materials demonstrated that that expression referred to civil aviation outside of the major airlines. 246. On the basis of that historical analysis (which was supported by two volumes of decisions, awards and other materials, Counsel Assisting submitted that the proper conclusions to be drawn were that: (a) The Metals Award and its predecessors have not, since 1938, been treated as having application to the aircraft industry. (b) The General Aviation Award has never had application to military aircraft. (c) The fragmentation of aircraft industry award coverage federally led to a lacuna with respect to companies involved in military aviation not covered by company-specific awards. Boeing is such a company. 247. Counsel Assisting next drew attention to the language of the incidence provisions of the Metals Award which, though drawn in wide and general terms, omitted any reference to the aircraft industry or to work on aircraft (in contrast to specific references to other transport-related industries). Counsel Assisting also pointed to the lack of any identifiable aircraft industry respondents. These matters, Counsel submitted, indicated that it was not contemplated that the Metals Award would have application to the aircraft industry. The General Aviation Award contained provisions specifically concerned with aircraft maintenance, but a number of provisions referring to the civil aviation regime indicated that the award did not operate with respect to military aircraft. The language of the coverage provisions of the two awards, it was submitted, considered within the overall context of each award, pointed to the conclusion that neither award applied at Williamtown, and the historical context strongly supported this conclusion. 248. With respect to conclusion (b) in paragraph 245 above, Counsel Assisting submitted that the respondency provisions of the General Aviation Award, read literally, bound the Metal Trades Industry Association (now the AIG) as an employer, not as an organisation, and therefore Boeing's membership of the AIG did not bind it to the General Aviation Award. 249. As to conclusion (c) in paragraph 245 above, Counsel Assisting submitted that Boeing was not eligible to be a member of the AIG, so that AIG's respondency to the Metals Award and the General Aviation Award could not have the effect of binding Boeing to those awards. The AIG eligibility rule [ rule 5], insofar as it specifically referred to aircraft work, was cast in terms which excluded repair and maintenance of military aircraft – indicating (calling in aid of the maxim of construction expressio unius est exclusio alterius) that that field of activity was intended to be omitted from the rule. The historical context supported this conclusion: when, in 1958, the organisation sought to confirm by way of rules changes what it contended was its existing coverage in relation to aircraft activity, those rule changes were drawn in terms of civil aircraft and civil airlines. No Boeing activity outside of its Military Aerospace Division, it was submitted, otherwise brought it within the scope of the AIG eligibility rule. 250. Written submissions as to the award coverage issue were received from the AIG (Appendix 6) to the effect that: (a) Boeing's business at Williamtown fell within the scope of the industries referred to in the Metals Award. (b) Having regard to the breadth of AIG's "description of industry" rule and "eligibility" rule, the AIG's rules enabled it to enrol members in respect of all operations concerned with the manufacture, repair, servicing and maintenance of flying aircraft. (c) The AIG's "description of industry" and "eligibility" rules are sufficiently wide to cover Boeing as a member. 251. The other submissions received may briefly be summarised as follows: (a) The AWU stated that the Commission should find that no federal award applied at Williamtown, but, apart from adopting the submissions of Counsel Assisting, made no substantive submissions of its own in support of this. (b) Unions NSW supported the position of the AWU. (c) The Minister for Industrial Relations submitted that, on the basis of the submissions and supporting material advanced by Counsel Assisting, there would be " reasonable grounds " upon which the Commission might conclude that neither the Metals Award nor the General Aviation Award had application to the Boeing employees at the RAAF base and that Boeing is not bound by the Metals Award or the General Aviation Award by virtue of its membership of the AIG. (d) Boeing endorsed, with some brief supplementation, the submissions put by the AIG. At the same time, Boeing submitted that the question of award coverage was essentially a matter for the parties, that any conclusion reached by the Commission in the course of this Inquiry would have no legally binding effect, that if the Commission were inclined to deal with award coverage it should do so on a conditional or tentative basis, and that the question was properly a matter for the Federal Court of Australia under s 413 of the Workplace Relations Act 1996 (Cth). 252. It is important to observe that: (a) No party submitted that the General Aviation Award applies to Boeing at Williamtown. (b) No party contradicted Counsel Assisting's analysis of the award history or suggested that there was any relevant omission. (c) No party, with one minor exception next discussed, submitted that the conclusions sought to be drawn from that historical analysis by Counsel Assisting were incorrect. 253. The exception just referred to is that Boeing, in a brief submission, suggested that the fact that four identifiable aircraft industry businesses were listed as respondents to the 1941 Metals Award, as identified in Counsel Assisting's supplementary note, was "destructive of [their] thesis". Boeing submitted that, as not all aircraft industry employers were wholly removed from the 1941 Metals Award, it could not have been intended that the Metals Award would no longer have application to aircraft industry. However, in our view, Boeing's submission does not overcome the conclusions as to the historical context for which Counsel Assisting contended because (as noted by Counsel Assisting): (a) There were only four identifiable aircraft industry employers listed as respondents to the 1941 Metals Award out of a total of approximately 16,000. (b) Three of those four respondents were at the same time also respondents to the Aircraft Industry Award , which exempted employer respondents from every other federal award in relation to the industry or industries to which the Aircraft Industry Award applied (namely the manufacturing, assembling, repairing and maintaining of aircraft or parts thereof). To the extent that the three companies were also bound by the 1941 Metals Award, it could not have been in respect of aircraft work. (c) Apart from its name ("Commercial Aviation Company"), nothing is known of the fourth company, including whether it was actually involved in aircraft work at this time or not. This by itself could not deny the proposition that over many decades the aircraft industry has been regarded as distinct, and regulated distinctly, from those industries currently covered by the Metals Award. 254. We have carefully considered the historical analysis undertaken by Counsel Assisting. Noting the absence of any challenge to that analysis by any of the parties having leave to appear, we accept and conclude that from a historical viewpoint that the Metals Award and its predecessors have not been regarded as having application to the aircraft industry, which industry has been the subject of a separate and distinct stream of award coverage. We further conclude, for the purposes of the General Aviation Award and its predecessors, that "general aviation" is not an expression which has been taken to extend to military aircraft. Finally, we accept that the historical development of award regulation of the aircraft industry has left a gap in federal award coverage for companies undertaking military aircraft work where no company-specific award applies. 255. Notwithstanding these conclusions, it is of course necessary that primacy be given to the text of the awards themselves. In response to Counsel Assisting's submission, earlier noted, AIG contended that clause 1.6 and Schedule A of the Metals Award created a wide scope of industries that were covered by the award. Clause 1.6.2 provides that: Subject to the exemptions and exceptions prescribed in Schedule B of this award, the industries covered by this award are the metal working and engineering and fabricating industries, and all allied industries including those industries referred to in Schedule A. Coverage of the award extends to every operation, process, duty and function carried on or performed in or in connection with or incidental to any of the foregoing industries. 256. The AIG submitted that the applicable industries there described are extremely wide, particularly as the words "in connection with or incidental" give an expanded meaning to all industries in Schedule A. The AIG cited FMWU v CSR (1971) 18 FLR 386, R v Neil (1974-76) 134 CLR 27 and R V Watson; Ex parte AWU (1972) 128 CLR 95 in support of this proposition. 257. The AIG further submitted that because of the expansive nature of clause 1.6.2, Boeing's business at Williamtown fell within the scope of the industries referred to in the Metals Award. The fact that the coverage provisions of the Metals Award made no direct reference to the aircraft industry or work on aircraft was, the AIG submitted, negated by the expansive nature of the coverage clause. Additionally, the nature of the work performed by Boeing's employees fell within the scope of the definitions of the expressions "engineering streams" and "vocational fields" in clause 1.4 of the Metals Award. 258. The AIG's submission initially proceeded on the basis that the coverage of the Metals Award is drawn on the basis of industries, and that the industries referred to are the industries of the employer. We consider this to be the correct approach. The "summary" of Clause 1.6 contained in the clause itself states "This clause identifies the geographical and industry coverage of the award". Clause 1.6.1 concerns the geographical aspect of the coverage (which clearly includes New South Wales), and clause 1.6.2 then refers to the "industries covered by this award". In the industrial context, references to industries are normally taken to mean the industries of the employer (albeit usually in relation to union coverage): see Federated Ironworkers Association, NSW Division v Transport Workers Union of Australia, NSW Branch (1998) 78 IR 123 at 159 and the cases cited therein. 259. However, the AIG's further submission as to clause 1.4 of the award appeared to involve the suggestion that coverage might also have an occupational basis, in that identified definitions in that clause refer to vocations of employees. We note, though, that those definitions in clause 1.4 are not referable to any of the terms of the incidence provisions in clause 1.6 or in Schedule A, and are thus irrelevant to the question of coverage of the Metals Award. Clause 1.4 therefore provides no basis for a conclusion that the coverage of the Metals Award may be occupationally as well as industry based. 260. The AIG might have pointed to the use of the word "callings" in Schedule A. The preamble to Schedule A provides (emphasis added): … the industries and callings covered by this award are the engineering, metal working and fabricating industries in all their branches, and all industries allied thereto …. On one view, the use of the word "callings" could have been intended to cast the coverage in terms of the "calling" or occupation of the employee as well as the industry of the employer. 261. There was no real debate before us regarding the inclusion of the word "callings" as providing an occupational basis of coverage and we do not seek to make any general finding in that respect. But we do note that clause 1.6.2, as earlier discussed, is cast entirely in terms of industries, and makes no reference to callings. Schedule A, as an essentially ancillary provision, must be taken as governed by clause 1.6.2. In any event, Schedule A, includes in the "industries and callings" only the "engineering, metal working and fabricating industries … and all industries allied thereto" (emphasis added). 262. The AIG relied upon Boeing's own description of its business on its application to become a member of the AIG: "Defence contractor producing aerospace and communications services primarily for the Australian Defence Force – design, maintenance, modification and upgrade"; but the AIG did not explain why such a business would necessarily fall within the industries covered by the Metals Award. It is not, in our view, a self-evident proposition that it does. Indeed, the evidence of Mr Doug Cameron, the National Secretary of the AMWU, that in his extensive experience he was not aware of any application of the Metals Award at sites where work has been performed upon military aircraft, reinforces our view. 263. In construing the terms of the award, regard must be had to the language of the instrument viewed as a whole: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc. (2003) 214 CLR 397 at 411. Reading the incidence provisions in their full context, the absence of specific reference to the aircraft or aerospace industries tends to vitiate the submission of AIG, supported by Boeing, that the Metals Award clearly provides coverage in these areas. At the least, the language of the award can be described as ambiguous in this respect. In particular the very width of expression in clause 1.6.2, combined with the lack of any definition as to what constitutes the industries referred to, does not permit the ready assignment of any plain and ordinary meaning to the words used. 264. On any view, this conclusion would permit recourse to the factual and historical context. Indeed, "even if the language, read alone, appeared pellucidly clear", recent decisions suggest that the court ought look at that context: Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 518-9 per Burchett J; Kingmill Australia Pty Ltd v Federated Clerks Union of Australia (NSW Branch) (2001) 106 IR 217 at 229-230 [68]-[69]; and see Zoological Parks Board of New South Wales v Australian Workers Union (2004) 135 IR 56 at [43]-[47]. 265. Having regard to the conclusions previously expressed as to the historical and award context, it is our view that the industries described in the coverage provisions of the Metals Award were never intended, and ought not be construed, to include the aircraft/aerospace industry and aircraft work. In the result, we consider, on the basis of the materials and submissions presented to the Inquiry, that the Metals Award does not cover the Boeing site at Williamtown. In coming to this view we emphasise that we are not making any general finding about the scope of coverage of the Metals Award. 266. We also conclude that the General Aviation Award has no application at Williamtown. No party contended otherwise. Clause 5.2 of the General Aviation Award states that the award applies to "the industry of, and the employment of persons employed in General Aviation …". The expression "General Aviation" is not defined in the award. However, as we have earlier concluded, the historical context makes it clear that that expression has never been regarded as including military aircraft. 267. No other federal award is identifiable as having application to Boeing at Williamtown. 268. The absence of federal award coverage which we have identified on the analysis thus far undertaken makes it unnecessary to consider in any detail the further submissions of Counsel Assisting concerning the nature of AIG's respondency to the General Aviation Award and the validity of Boeing's membership of the AIG. While we consider the position propounded by Counsel Assisting to be at least arguable, we also note that the AIG provided a detailed and reasoned response upon the issue of Boeing's membership. Possible Effect of Section 170MT(2) of the Workplace Relations Act 1996 269. Section 170MT(2) of the Workplace Relations Act, to which we have earlier made reference, may also have an effect upon the availability of remedies under the Industrial Relations Act. That provision may operate to prevent the Commission arbitrating, or at least making a dispute order that the current industrial action cease, while that industrial action remains "protected" under the Workplace Relations Act. However, we note again the AWU's submission that it will take steps to end the strike and terminate the bargaining period if the Commission finds that it has jurisdiction to arbitrate in respect of the dispute. We take this to mean that if this Commission finds (as we now do) that there is no applicable federal award, so that section 152(1) of the Workplace Relations Act poses no impediment to the Commission determining the dispute by arbitration, the AWU would endeavour to bring about an end to the protected industrial action. Assuming (which we think we can) that this statement of intention will, if necessary, be carried to fruition, section 170MT(2) would not be applicable and thus would not pose any possible obstacle to arbitration. Adequacy of Remedies under the Industrial Relations Act 1996 270. In our view, assuming their availability in law, the remedies under the Industrial Relations Act would be adequate to resolve the dispute promptly, fairly and effectively. It is inconceivable that the Boeing dispute would have taken the quite extraordinary course it has if the matter fell within this jurisdiction. In our view it is highly likely that the industrial action would have ceased at an early time by the intervention of the Commission (if necessary by dispute order) and the rather routine issues in dispute resolved by either conciliation or arbitration undertaken consistent with the requirements of the statute (see, in particular, the requirement of section 10 of the Industrial Relations Act to make awards that set fair and reasonable conditions of employment) and the wage fixing principles. The AWU and its members may or may not have been successful in such endeavours (although the claims would seem to at least be arguable). But the dispute would have been resolved. That is, there would have been a reasonably early resolution of the dispute. 271. This conclusion represents no criticism of the AIRC but experience indicates that the panoply of powers available to this Commission would produce such a result (as it regularly does even in relation to the most intractable disputes). This requires some brief further explanation. Take, for example, conciliation. We would not wish it to be taken that we are of the view that a member of this Commission possesses any greater conciliatory skills than a member of the AIRC. However, the powers available under the Industrial Relations Act enhance the prospect of reaching a conciliated outcome (such as the power to direct parties to confer in good faith, to summons parties to compulsory conferences and to make recommendations or give directions). Further, the prospect of arbitration in itself is a real catalyst for a conciliated outcome. 272. Ultimately, however, the efficacy of the remedies under the Industrial Relations Act lies with the power to arbitrate. This power is not subject to the restrictions contained in the Workplace Relations Act earlier identified - in particular, there is no requirement that any award made must be a minimum rates, and not a paid rates, award. Thus, it would be open to the Commission, if persuaded to do so, to make an award which dealt directly with the issues between the parties by setting actual terms and conditions of employment for the relevant employees at Williamtown. While the Commission cannot directly order the parties to negotiate - or not to negotiate - a collective agreement, any determination by the Commission to make - or not to make - an award would effectively resolve the collective/individual bargaining aspect of the dispute. Further (assuming remedies under the Industrial Relations Act are available), to the extent that any strike action persisted after the Commission moved into the arbitration phase, it would be open to the Commission to make a dispute order requiring that industrial action to cease. 273. All of these powers are facilitated by statutory provisions that enable industrial disputes to be dealt with quickly and depending upon the stage of the process, with a minimum of legal form and technicality. Other Remedies 274. We cannot identify (nor has any party identified) any remedies available at common law which would serve to resolve the dispute. Section 170MT(2) of the Workplace Relations Act operates to protect the striking employees from any common law action while it remains "protected". SECTION G: TERM OF REFERENCE 5 Actions that this Commission Can Take 275. We have earlier addressed submissions made by the parties about the scope of Term of Reference 5 in the context of Term of Reference 4. We do not need to address this matter further. Having regard to the conciliation and arbitration powers available to the Commission under the Industrial Relations Act discussed in our consideration of Term of Reference 4, it is equally unnecessary to consider these again. It is sufficient to reiterate that the actions the Commission can take to resolve the dispute include the exercise of its conciliation and arbitration powers earlier identified. 276. In order that the Commission may exercise those powers, the dispute must obviously be brought before it by some appropriate means. Notwithstanding its view that arbitration is desirable and ought be facilitated, the AWU has not notified the Commission of the dispute pursuant to section 130(1)(a), nor has it indicated any clear intention to do so. Unions NSW, which has also the capacity to notify a dispute under section 130(1)(d), has essentially adopted the same position as the AWU. It is most unlikely, having regard to the approach it adopted throughout the Inquiry, that Boeing would take the step of notifying the dispute. 277. As we have earlier observed, the Commission has the power to act on its own initiative to resolve a dispute (section 130(2)), but there may be reasons why it is not appropriate for the Commission to do so in this case. This might include, without in any way being determinative of the matter, the fact that the Commission has been required to undertake this Inquiry. 278. The Minister also has the power to initiate the necessary proceedings: section 167(1). Given extraordinary nature and inordinate length of this dispute, the intractable position of the parties and the relevant public interest considerations, it may well be that the Minister is the appropriate person to notify the dispute. In this context, we make a second recommendation as follows: That the Minister give serious and urgent consideration as to whether he ought, under section 167(1) of the Industrial Relations Act 1996 , initiate proceedings in the Industrial Relations Commission of New South Wales in respect of the Boeing dispute at Williamtown. 279. Finally, the employees engaged in the strike action have undoubtedly suffered considerable hardship. Given that the strike is continuing, that neither party is showing any sign of compromise and that it appears most likely this Commission has the necessary power to deal with the dispute, we consider it desirable to take what might be regarded as the unusual step of recommending that, in the event the Minister indicates an intention to initiate proceedings under s 167(1) of the Industrial Relations Act, or any other interest lodges a dispute notification, steps be taken immediately to have the employees return to work at the earliest opportunity. We, therefore, recommend: That in the event the Minister indicates an intention to initiate proceedings under s 167(1) of the Industrial Relations Act 1996, or any other interest lodges a dispute notification, steps be taken immediately to have the striking employees return to work at the earliest opportunity. SECTION H: CONCLUSIONS AND RECOMMENDATIONS 280. We summarise our conclusions and recommendations as follows: Term of Reference 1 (1) The issues in dispute between the parties are: (a) Whether the terms and conditions of employment of aircraft maintenance employees at Williamtown should be regulated by a collective agreement between Boeing and the AWU or by individual common law contracts. (b) The substantive terms and conditions of employment with respect to the following subject matters: (i) The quantum of employees' base salaries. (ii) The method of adjustment of salaries – in particular, whether managerial review of individual work performance ought play a role in this regard, and, if so, how such performance is to be fairly assessed. (iii) Whether employees performing the same or equivalent work at the same classification level ought receive the same salary levels. (iv) The number of ordinary hours of work – 38 or 40. (v) Payment for overtime work – in particular, when should payment begin, and what should be the rate of payment. (vi) The allowance, if any, to be paid for time worked inside the F/A-18 Hornet fuel tanks. (vii) Whether Boeing ought to be able to vary employment benefits contained in policy documents unilaterally. (c) The lack of transparency in, and Boeing's refusal to breakdown, the components of the Total Remuneration Package applicable to employees at Williamtown. (2) The grievances of the striking employees with respect to their current terms and conditions of employment (specifically, the matters identified in (1)(b) above) are genuinely held and are not unreasonable. That is not to say, however, that those claims should be resolved in any particular way in conciliation or that those grievances would necessarily, in an arbitration context, be found to have merit. (3) The striking employees desire that a collective agreement with Boeing be negotiated on their behalf by the AWU. Their position in that respect arises from their belief that as individuals they are incapable of persuading Boeing to address any grievance they might have or to effect any change to their benefit, that they are in a grossly unequal bargaining position with respect to Boeing, and that Boeing cannot be trusted to maintain any agreement that might be reached. Again, their position in that respect is genuinely held and not unreasonable. (4) The AWU believes that the interests of its members are best protected and advanced by the achievement of a collective agreement. This position, from the point of view of the interests of the AWU and its members, has a reasonable and rational foundation. (5) Absent some appropriate concession by Boeing or any outside development, it currently appears that the AWU and the striking employees intend to and will continue with the strike for as long as they can sustain it. (6) Boeing's fundamental position is that it wishes to retain its current system whereby employees at Williamtown have their terms and conditions of employment determined by individual common law contracts, and that it will not contemplate negotiating a collective agreement with the AWU (or any union). (7) There are no identifiable circumstances which would cause Boeing to change its position in this respect. Boeing has stated that even if every one of its employees (through a ballot ordered by the AIRC) indicated that they desire a collective agreement, it will still refuse to negotiate such an agreement. (8) Boeing's system of individual contracts is not intended to allow individualised terms and conditions of employment, since these are in standard terms across all contracts (save for salary levels within a band). These uniform conditions are perfectly amenable to a collective agreement. The individual contract system allows Boeing, as far as it can, to set unilaterally, terms and conditions of employment and, in any event, to exercise greater power in its industrial and employment relationships with employees. (9) Boeing could provide no reasoned explanation as to why, given that other parts of its business, and other companies in the Boeing group of companies in Australia, are covered by collective agreements made with various unions, it refuses to contemplate such an agreement for the Williamtown site. (10) The limited reasons stated by Boeing for its preference for an individual contract system were not, on the evidence, objectively or rationally sustainable, except to the extent that Boeing's position is explicable by a desire to maximise its workplace power vis-a vis its employees by refusing to deal with unions as far as possible and refusing to become involved in negotiations with anybody (including its own employees) about the terms and conditions of employment of its employees. (11) Boeing has refused the AWU recognition as the organisation representing its members in negotiations for a collective agreement. (12) Boeing regards the grievances of the employees with respect to the specific matters set out in (1)(b) as having been addressed by the changes it made to the contracts in June 2005. (13) There is virtually no prospect of the dispute being resolved as between the parties themselves, nor is there any real likelihood that the current AIRC proceedings will resolve the dispute. (14) The AWU is now prepared, however, to take steps to bring the strike to an end if the Commission finds that it has jurisdiction to arbitrate the dispute. Term of Reference 2 (15) Aside from the effects of loss of income on the striking employees and their families, and any losses sustained by Boeing, it is not readily possible to identify any economic impact of the dispute on the community surrounding the RAAF Air Base at Williamtown or the State as a whole. Term of Reference 3 (16) Boeing's use of persons inexperienced in work upon F/A-18 Hornet aircraft in substitution for the striking workers created a workplace environment in which there was an increased risk to the health and safety of Boeing's aircraft maintenance employees at Williamtown. (17) The resultant potential endangerment to health and safety does not appear to have been manifested in any increase in the incidence of physical injuries at the Boeing workplace since the strike began. (18) There has however been a series of "stress" injuries and complaints which have emerged since the strike began and which were causally linked to the dispute. (19) We recommend that the WorkCover Authority fulfil its statutory duty by undertaking a full and proper investigation as to whether the use by Boeing of inexperienced personnel during the current strike action has led to any breach of the provisions of section 8 or any other section of the Occupational Health and Safety Act. Term of Reference 4 (20) Such remedies as are presently available under the Workplace Relations Act would not be adequate to encourage a prompt, effective and fair resolution of the dispute. (21) There are however remedies available under the Industrial Relations Act - in particular, the remedy of arbitration – which would serve to achieve a prompt, effective and fair resolution of the dispute. (22) No other remedies relevant to the resolution of the dispute may be identified. Term of Reference 5 (23) The exercise by the NSW Commission of its powers of conciliation and arbitration under Chapter 3 of the Industrial Relations Act would be highly likely to resolve the dispute. (24) We recommend that the Minister give serious and urgent consideration as to whether he ought, under section 167(1) of the Industrial Relations Act 1996 , initiate proceedings in the Industrial Relations Commission of New South Wales in respect of the Boeing dispute at Williamtown. (25) We recommend that in the event the Minister indicates an intention to initiate proceedings under s 167(1) of the Industrial Relations Act 1996, or any other interest lodges a dispute notification, steps be taken immediately to have the striking employees return to work at the earliest opportunity. _______________________ APPENDICES APPENDIX '1' - Procedures Protocol APPENDIX '2' - List of Witnesses APPENDIX '3' - List of Exhibits APPENDIX '4' - Submissions on award coverage issue by Counsel Assisting APPENDIX '5' - A short supplementary note supplied by Counsel Assisting APPENDIX '6' - Submissions by AIG on award coverage issue 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.